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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ___________ to ___________
 Commission file number 333-150612
 MOODY NATIONAL REIT I, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Maryland
    
    26-1812865(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)6363 Woodway Drive, Suite 110
Houston, Texas
(Address of Principal Executive Offices)
    
    77057
(Zip Code)
 (713) 977-7500
(Registrants Telephone Number, Including Area Code)
 þ o
 o   o
  Large Accelerated filer o
Accelerated filer o
Non-Accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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MOODY NATIONAL REIT I, INC.
INDEX
 PagePART I FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    2Condensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
(unaudited)
    
    
    2Condensed Consolidated Statements of Equity for the nine months ended
September 30, 2009 and for the Period from January 15, 2008 (date of inception) to
September 30, 2008 (unaudited)
    
    
    3Consolidated Statements of Cash Flow for the nine months ended September 30, 2009
and the Period from January 15, 2008 (date of inception) to September 30, 2008
(unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4T.
    
    Controls and Procedures
    
    
    23PART II OTHER INFORMATION
    
    
    24Item 1.
    
    Legal Proceedings
    
    
    24Item 1A.
    
    Risk Factors
    
    
    24Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3.
    
    Defaults Upon Senior Securities
    
    
    24Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    24Item 5.
    
    Other Information
    
    
    24Item 6.
    
    Exhibits
    
    
    25EX-31.1EX-31.2EX-32.1EX-32.2
  1




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS.
 
 MOODY NATIONAL REIT I, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 September 30, 2009
    
    
    December 31, 2008ASSETSCash
    
    $
    202,000
    
    
    $
    202,000Escrowed
investor proceeds
    
    
    96,502
    
    
    
    Total Assets
    
    $
    298,502
    
    
    $
    202,000LIABILITIES AND EQUITYLiabilities:Subscriptions for common stock
    
    $
    96,502
    
    
    $
    Total Liabilities
    
    
    96,502
    
    
    
    Special Partnership Units 100
Special Units of the Operating
Partnership
    
    
    1,000
    
    
    
    1,000Equity:Stockholders equity:Common stock, $0.01 par value
per share; 400,000,000 shares
authorized, 22,222 issued and
outstanding
    
    
    222
    
    
    
    222Preferred stock, $0.01 par
value per share; 50,000,000
shares authorized, none
issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    199,778
    
    
    
    199,778Total stockholders equity
    
    
    200,000
    
    
    
    200,000Noncontrolling interest-100
common units of the Operating
Partnership
    
    
    1,000
    
    
    
    1,000Total Equity
    
    
    201,000
    
    
    
    201,000TOTAL LIABILITIES AND EQUITY
    
    $
    298,502
    
    
    $
    202,000
  2




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MOODY NATIONAL REIT I, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 AdditionalCommon Stock
    
    
    Preferred Stock
    
    
    Paid-In
    
    
    Noncontrolling InterestNumber of Shares
    
    
    Par Value
    
    
    Number of Shares
    
    
    Par Value
    
    
    Capital
    
    
    Number of Units
    
    
    Par Value
    
    
    Total EquityBalance at January
15, 2008 (date of
inception)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    Issuance of common
stock, net
    
    
    22,222
    
    
    
    222
    
    
    
    
    
    
    
    
    
    
    
    199,778
    
    
    
    100
    
    
    
    1,000
    
    
    
    201,000Balance at
September 30, 2008
    
    
    22,222
    
    
    $
    222
    
    
    
    
    
    
    $
    
    
    
    $
    199,778
    
    
    
    100
    
    
    $
    1,000
    
    
    $
    201,000Balance at
January 1, 2009
    
    
    22,222
    
    
    $
    222
    
    
    
    
    
    
    $
    
    
    
    $
    199,778
    
    
    
    100
    
    
    $
    1,000
    
    
    $
    201,000Balance at
September 30, 2009
    
    
    22,222
    
    
    $
    222
    
    
    
    
    
    
    $
    
    
    
    $
    199,778
    
    
    
    100
    
    
    $
    1,000
    
    
    $
    201,000
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MOODY NATIONAL REIT I, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
 January 15, 2008 (date ofNine months ended
    
    inception) throughSeptember 30, 2009
    
    September 30, 2008Cash flows from financing activitiesIssuance of common stock
    
    $
    
    
    
    $
    200,000Issuance of non-controlling interests in operating partnership
    
    
    
    
    
    
    1,000Issuance of special partnership units
    
    
    
    
    
    
    1,000Change in subscriptions for common stock
    
    
    96,502
    
    
    
    Escrowed
investor proceeds
    
    
    (96,502
    )
    
    
    Cash provided by financing activities
    
    
    
    
    
    
    202,000Net change in cash and cash equivalents
    
    
    
    
    
    
    202,000Cash and cash equivalents at beginning of period
    
    
    202,000
    
    
    
    Cash and cash equivalents at end of period
    
    $
    202,000
    
    
    $
    202,000
  4




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
 1. Organization
      5




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
  2. Summary of Significant Accounting Policies
 Consolidation
     Interim Financial Information
  Organization and Offering Costs
  6




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
    Income Taxes
   Concentration of Credit Risk
  Valuation and Allocation of Real Property  Acquisition
  7




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
       8




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
  Valuation and Allocation of Real Property  Ownership
     YearsBuildings and improvements
    
    
    27-45Exterior improvements
    
    
    10-20Equipment and fixtures
    
    
    5-10
 Investments in Real Estate Securities
  Debt-Related Investments
  Investment Impairments
  9




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
    Revenue Recognition
   Valuation of Accounts and Rents Receivable
  Recent Accounting Pronouncements
  10




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
    Amendments to FASB Interpretation No. 46(R) .
 3. Investments
    4. Capitalization
  11




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
   5. Distributions
 th
 6. Related Party Arrangements
       12




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Moody National REIT I, Inc.
 Notes to Condensed Consolidated Financial Statements
As of September 30, 2009
 (unaudited)
    7. Incentive Awards Plan
  8. Subordinated Participation Interest
  13




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
  Forward-Looking Statements
   
    
    the fact that we have no operating history and, as of September 30, 2009, our assets
total $298,502;
    
    our ability to effectively deploy the proceeds raised in our initial public offering;
    
    changes in economic conditions generally and the real estate and debt markets
specifically;
    
    legislative or regulatory changes (including changes to the laws governing the taxation
of REITs);
    
    the availability of capital;
    
    interest rates; and
    
    changes to generally accepted accounting principles, or GAAP.
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Overview
       15




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Market Outlook
   Liquidity and Capital Resources
  Results of Operations
  16




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Critical Accounting Policies
 General
  Income Taxes
   Valuation and Allocation of Real Property  Acquisition
  17




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18




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Valuation and Allocation of Real Property  Ownership
     YearsBuildings and improvements
    
    
    27-45Exterior improvements
    
    
    10-20Equipment and fixtures
    
    
    5-10
 Investments in Real Estate Securities
  Principles of Consolidation
   19




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Debt-Related Investments
  Investment Impairments
    Revenue Recognition
   20




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Valuation of Accounts and Rents Receivable
  Recent Accounting Pronouncements
    Amendments to FASB Interpretation No. 46(R) .
 Inflation
  REIT Compliance
  21




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Distributions
   Funds from Operations
  Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  22




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ITEM 4T. CONTROLS AND PROCEDURES.
   23




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PART IIOTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 1A. RISK FACTORS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
    
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 ITEM 5. OTHER INFORMATION.
  24




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Consolidated Balance Sheets
    
    December 31, 2008Equity, as previously reported
    
    $
    200,000Increase for reclassification of minority interest to
equity as non-controlling interest
    
    $
    1,000Equity, as adjusted
    
    $
    201,000
 
 ITEM 6. EXHIBITS.
 3.1
    
    Articles of Amendment and Restatement of Moody National REIT I, Inc. (filed as Exhibit 3.1 to
Pre-Effective Amendment No. 5 to the Companys Registration Statement on Form S-11 (No.
333-150612) and incorporated herein by reference).3.2
    
    Bylaws of Moody National REIT I, Inc. (filed as Exhibit 3.2 to the Companys Registration
Statement on Form S-11 (No. 333-150612) and incorporated herein by reference).3.3
    
    Amendment No. 1 to Bylaws of Moody National REIT I, Inc. (filed as Exhibit 3.3 to Pre-Effective
Amendment No. 4 to the Companys Registration Statement on Form S-11 (No. 333-150612) and
incorporated herein by reference).4.1
    
    Form of Subscription Agreement (included as Appendix B to prospectus, incorporated by reference
to Exhibit 4.1 to Pre-Effective Amendment No. 5 to the Companys Registration Statement on Form
S-11 (No. 333-150612)).4.2
    
    Moody National REIT I, Inc. Distribution Reinvestment Plan (included as Appendix C to prospectus,
incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 5 to the Companys
Registration Statement on Form S-11 (No. 333-150612)).31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
  MOODY NATIONAL REIT I, INC.Date: November 16, 2009
    By:
    /s/ Brett C, MoodyBrett C. MoodyChairman of the Board, Chief Executive Officer and
President
(Principal Executive Officer)Date: November 16, 2009
    By:
    /s/ Robert W. EngelRobert W. EngelChief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)




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EXHIBIT INDEX
 3.1
    
    Articles of Amendment and Restatement of Moody National REIT I, Inc. (filed as Exhibit 3.1 to
Pre-Effective Amendment No. 5 to the Companys Registration Statement on Form S-11 (No.
333-150612) and incorporated herein by reference).3.2
    
    Bylaws of Moody National REIT I, Inc. (filed as Exhibit 3.2 to the Companys Registration
Statement on Form S-11 (No. 333-150612) and incorporated herein by reference).3.3
    
    Amendment No. 1 to Bylaws of Moody National REIT I, Inc. (filed as Exhibit 3.3 to Pre-Effective
Amendment No. 4 to the Companys Registration Statement on Form S-11 (No. 333-150612) and
incorporated herein by reference).4.1
    
    Form of Subscription Agreement (included as Appendix B to prospectus, incorporated by reference
to Exhibit 4.1 to Pre-Effective Amendment No. 5 to the Companys Registration Statement on Form
S-11 (No. 333-150612)).4.2
    
    Moody National REIT I, Inc. Distribution Reinvestment Plan (included as Appendix C to prospectus,
incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 5 to the Companys
Registration Statement on Form S-11 (No. 333-150612)).31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002