Sotherly Hotels Inc. (NASDAQ: SOHO),
(“Sotherly” or the “Company”), a self-managed and self-administered
lodging real estate investment trust (a “REIT”), today reported its
consolidated results for the second quarter ended June 30, 2024.
The Company’s results include the following*:
|
Three Months Ended |
|
|
Six Months Ended |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
($ in thousands except per share data) |
|
|
($ in thousands except per share data) |
|
Total revenue |
$ |
50,694 |
|
|
$ |
49,017 |
|
|
$ |
97,243 |
|
|
$ |
92,509 |
|
Net income
attributable to common stockholders |
|
2,622 |
|
|
|
3,133 |
|
|
|
1,962 |
|
|
|
2,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
14,292 |
|
|
|
14,103 |
|
|
|
25,076 |
|
|
|
24,051 |
|
Hotel EBITDA |
|
15,698 |
|
|
|
14,842 |
|
|
|
28,058 |
|
|
|
26,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO attributable to common
stockholders and unitholders |
|
7,356 |
|
|
|
7,251 |
|
|
|
11,317 |
|
|
|
11,192 |
|
Adjusted FFO attributable to
common stockholders and unitholders |
|
7,503 |
|
|
|
7,031 |
|
|
|
12,683 |
|
|
|
11,689 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share -
diluted |
$ |
0.13 |
|
|
$ |
0.16 |
|
|
$ |
0.10 |
|
|
$ |
0.13 |
|
FFO per common share and
unit |
$ |
0.37 |
|
|
$ |
0.37 |
|
|
$ |
0.57 |
|
|
$ |
0.58 |
|
Adjusted FFO per common share
and unit |
$ |
0.38 |
|
|
$ |
0.36 |
|
|
$ |
0.64 |
|
|
$ |
0.60 |
|
(*)
Earnings before
interest, taxes, depreciation and amortization (“EBITDA”), Hotel
EBITDA, Funds From Operations (“FFO”) attributable to common
stockholders and unitholders, Adjusted FFO attributable to common
stockholders and unitholders, FFO per common share and unit and
Adjusted FFO per common share and unit are non-GAAP financial
measures. See further discussion of these non-GAAP measures,
including definitions related thereto, and reconciliations to net
income (loss) later in this press release. The Company is the sole
general partner of Sotherly Hotels LP, a Delaware limited
partnership (the “Operating Partnership”), and all references in
this release to the “Company,” “Sotherly,” “we,” “us,” and “our”
refer to Sotherly Hotels Inc., its Operating Partnership and its
subsidiaries and predecessors, unless the context otherwise
requires or it is otherwise indicated.
HIGHLIGHTS
- RevPAR. Room revenue
per available room (“RevPAR”) for the Company’s composite
portfolio, which includes the rooms participating in our rental
programs at the Lyfe Resort & Residences (f/k/a Hyde Resort
& Residences) and the Hyde Beach House Resort & Residences,
increased 4.3% to $137.67, for the three months ended June 30,
2024, from $131.94 in the comparable period in 2023. Changes in
RevPAR were driven by a 5.8% increase in occupancy to 73.4% from
69.4% in the comparable 2023 period, and a 1.4% decrease in the
average daily rate (“ADR”) to $187.51 for the three months ended
June 30, 2024, from $190.15 for the comparable period in 2023. For
the six months ended June 30, 2024, RevPAR increased to $130.64,
from $125.53 in the comparable period in 2023. Changes in
RevPAR were driven by an increase in the occupancy to 69.2% for the
six months ended June 30, 2024, from 64.9% for the comparable
period in 2023 and by a decrease in ADR to $188.91 from $193.35 in
the comparable 2023 period.
- Revenue. Total revenue
increased to approximately $50.7 million, from approximately $49.0
million, for the three month periods ended June 30, 2024 and 2023,
respectively. For the six-month period ending June 30, 2024, total
revenue increased to approximately $97.2 million, from
approximately $92.5 million during the comparable period in
2023.
- Net income attributable to
common stockholders. For the three-month period ending
June 30, 2024, net income attributable to common stockholders
decreased approximately $0.5 million, compared to the three months
ended June 30, 2023, from an income of approximately $3.1 million
to an income of approximately $2.6 million. For the six-month
period ending June 30, 2024, net income attributable to common
stockholders decreased 23.1%, or approximately $0.6 million, over
the six months ended June 30, 2023, from an income of approximately
$2.6 million to an income of approximately $2.0 million.
- Hotel EBITDA. Hotel
EBITDA increased to approximately $15.7 million for the three
months ended June 30, 2024, from approximately $14.8 million for
the comparable period in 2023. Hotel EBITDA for the six months
ended June 30, 2024 increased approximately $1.2 million to
approximately $28.1 million, from approximately $26.9 million
generated in the comparable 2023 period.
- Adjusted FFO attributable to
common stockholders and unitholders. For the three-month
period ending June 30, 2024, Adjusted FFO attributable to common
stockholders and unitholders increased 6.7%, or approximately $0.5
million, over the three months ended June 30, 2023, from
approximately $7.0 million to approximately $7.5 million. For the
six-month period ending June 30, 2024, adjusted FFO attributable to
common stockholders and unitholders increased 8.5%, or by
approximately $1.0 million, over the six months ended June 30,
2023, from approximately $11.7 million to approximately $12.7
million.
- Preferred Dividends.
On July 30, 2024 the Company announced a quarterly cash dividend of
$0.50 per share of beneficial interest of the Company’s 8.0% Series
B Cumulative Redeemable Perpetual Preferred Stock; a quarterly cash
dividend of $0.492188 per share of beneficial interest of the
Company’s 7.875% Series C Cumulative Redeemable Perpetual Preferred
Stock; and a quarterly cash dividend of $0.515625 per share of
beneficial interest of the Company’s 8.25% Series D Cumulative
Redeemable Perpetual Preferred Stock. Each of the Series B, Series
C and Series D preferred dividends will be paid on September 16,
2024 to shareholders of record as of August 30, 2024.
Dave Folsom, President and Chief Executive Officer of Sotherly
Hotels Inc., commented, "Second quarter results generally met our
expectations, albeit we did see ADR soften slightly as the quarter
progressed, mainly due to increased price sensitivity amongst
transient leisure travelers. This was particularly evident in our
Florida markets, which are heavily weighted to the leisure segment.
Margins finished in line with our budgeted expectations,
demonstrating solid expense controls and operating efficiencies,
especially with respect to undistributed expenses, and the
realization of significant insurance savings resulting from our
April 1st renewal. Group and corporate bookings continue to
manifest to the upside, especially at the Hyatt Centric in
Arlington, Virginia, the DeSoto in Savannah, Georgia, and the
iconic Georgian Terrace in Atlanta, Georgia. The quarter was
capped off with the majority of our hotels capturing market share
within their respective competitive sets. As we look at the second
half of 2024, we are cautious, but nonetheless optimistic,
regarding the balance of the year. Economic concerns,
interest rates, weather events, as well as the uncertainty of the
impending election all present challenges which may continue the
trends we witnessed toward the end of Q2, especially with respect
to ADR. On the balance sheet front, by mid-year, we have
successfully addressed nearly $100 million in mortgage
refinancings, restructurings, and extensions, while concurrently
meeting all our capital and funding needs for life cycle
improvement plans at several of our hotels."
Balance Sheet/Liquidity
As of June 30, 2024, the Company had approximately $37.3 million
of available cash and cash equivalents, of which approximately
$18.4 million was reserved for real estate taxes, insurance,
capital improvements and certain other expenses or otherwise
restricted. The Company had principal balances of approximately
$323.2 million in outstanding debt, including mortgage and
unsecured principal balances, at a weighted average interest rate
of approximately 5.68%.
Other Events
On April 29, 2024, the affiliates of the Company entered into a
loan amendment to amend the existing mortgage on the DoubleTree by
Hilton Philadelphia Airport hotel with the existing lender, TD
Bank, N.A. Pursuant to the amended loan documents, the mortgage
loan: (i) has a principal balance of approximately $35.9 million;
(ii) extends the maturity date by two years to April 29, 2026;
(iii) continues to carry a floating interest rate of SOFR plus
3.50%; (iv) requires payments of interest only; (v) continues to be
guaranteed by the Operating Partnership; and (vi) contains
customary representations, warranties, covenants and events of
default for a mortgage loan. Concurrent with the execution of the
loan amendment, the Company (i) made a principal payment of $3.0
million; (ii) funded $0.3 million to the interest reserve escrow,
bringing the balance in the interest reserve escrow account to $1.3
million; (iii) funded $5.0 million into a PIP reserve account, and
(iv) provided $1.7 million in additional cash collateral, of which
$1.2 million can be released into the PIP reserve account as early
as June 30, 2025 assuming compliance with the financial covenants.
On May 3, 2024, an affiliate of the Company entered into an
interest rate cap with a notional amount of $26.0 million with
Webster Bank, N.A. The cap has a strike rate of 3.0%, is indexed to
SOFR, and expires on May 1, 2026.
On July 8, 2024, affiliates of the Company entered into loan
documents to secure a mortgage loan on the DoubleTree by Hilton
Jacksonville Riverfront hotel located in Jacksonville, FL with
Fifth Third Bank, N.A. Pursuant to the loan documents, the mortgage
loan: (i) has an initial principal balance of $26.25 million (the
"Initial Tranche"), with an additional $9.49 million available to
fund a product improvement plan at the hotel (the "Renovation
Tranche"); (ii) has a 5-year term maturing on July 8, 2029; (iii)
carries a floating interest rate of SOFR plus 3.00%; (iv) amortizes
the Initial Tranche on a 25-year schedule at 7.0% interest rate and
requires payments of interest only on the Renovation Tranche; (v)
is guaranteed by the Operating Partnership, with the guarantee
reducing to 25% upon achieving a 1.35x debt service coverage ratio
(DSCR) for two consecutive quarters following a renovation period;
and (vi) contains customary representations, warranties, covenants
and events of default for a mortgage loan.
2024 Outlook
Set forth below is the Company's previously issued guidance for
2024. The table below reflects the Company’s projections, within a
range, of various financial measures for 2024, in thousands of
dollars, except per share and RevPAR data:
|
2024 Guidance |
|
|
Low Range |
|
|
High Range |
|
|
|
|
Total revenue |
$ |
178,952 |
|
|
$ |
182,567 |
|
Net income |
|
1,598 |
|
|
|
2,593 |
|
Net loss attributable to
common stockholders and unitholders |
|
(6,377 |
) |
|
|
(5,382 |
) |
|
|
|
|
|
|
EBITDA |
|
39,858 |
|
|
|
40,853 |
|
Hotel EBITDA |
|
46,103 |
|
|
|
46,898 |
|
|
|
|
|
|
|
FFO attributable to common
stockholders and unitholders |
|
12,373 |
|
|
|
13,368 |
|
Adjusted FFO attributable to
common stockholders and unitholders |
|
12,778 |
|
|
|
13,773 |
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders |
$ |
(0.32 |
) |
|
$ |
(0.27 |
) |
FFO per common share and
unit |
$ |
0.62 |
|
|
$ |
0.67 |
|
Adjusted FFO per common share
and unit |
$ |
0.64 |
|
|
$ |
0.69 |
|
Rev PAR |
$ |
117.16 |
|
|
$ |
119.52 |
|
Hotel EBITDA margin |
|
25.8 |
% |
|
|
25.7 |
% |
Earnings Call/Webcast
The Company will conduct its second quarter 2024 conference call
for investors and other interested parties at 10:00 a.m. Eastern
Time on Tuesday, August 13, 2024. The conference call will be
accessible by telephone and through the Internet. Interested
individuals are invited to listen to the call by telephone at
833-470-1428 (United States) and enter access code 441747. To
participate on the webcast, log on to www.sotherlyhotels.com at
least 15 minutes before the call to download the necessary
software. For those unable to listen to the call live, a taped
rebroadcast will be available beginning one hour after completion
of the live call on August 13, 2024 through August 27, 2024. To
access the rebroadcast, dial 866-813-9403 and enter access code
636280.
About Sotherly Hotels Inc.
Sotherly Hotels Inc. is a self-managed and self-administered
lodging REIT focused on the acquisition, renovation, upbranding and
repositioning of upscale to upper-upscale full-service hotels in
the Southern United States. Sotherly may also opportunistically
acquire hotels throughout the United States. Currently, the
Company’s portfolio consists of investments in ten hotel
properties, comprising 2,786 rooms, as well as interests in two
condominium hotels and their associated rental programs. The
Company owns hotels that operate under the Hilton Worldwide and
Hyatt Hotels Corporation brands, as well as independent hotels.
Sotherly Hotels Inc. was organized in 2004 and is headquartered in
Williamsburg, Virginia. For more information, please visit
www.sotherlyhotels.com.
Forward-Looking Statements
This news release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and as such may involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements, which are
based on certain assumptions and describe our current strategies,
expectations, and future plans are generally identified by our use
of words, such as “intend,” “plan,” “may,” “should,” “will,”
“project,” “estimate,” “anticipate,” “believe,” “expect,”
“continue,” “potential,” “opportunity,” and similar expressions,
whether in the negative or affirmative, but the absence of these
words does not necessarily mean that a statement is not
forward-looking. We also sometimes refer to our booking pace.
Booking pace is an industry term that we define as the estimated
value of committed future bookings at a given point in time.
Booking pace can be further separated into various segments,
including group booking pace or business travel booking pace. All
statements regarding our expected financial position, booking pace,
business and financing plans are forward-looking statements.
Factors which could have a material adverse effect on the
Company’s future operations, results, performance and prospects,
include, but are not limited to: national and local economic and
business conditions that affect occupancy rates and revenues at our
hotels and the demand for hotel products and services; risks
associated with the hotel industry, including competition and new
supply of hotel rooms, increases in wages, energy costs and other
operating costs; risks associated with the level of our
indebtedness and our ability to meet covenants in our debt
agreements, including loan modifications and, as necessary, to
refinance or seek an extension of the maturity of such indebtedness
or further modification of such debt agreements; risks associated
with adverse weather conditions, including hurricanes; impacts on
the travel industry from pandemic diseases, including COVID-19; the
availability and terms of financing and capital and the general
volatility of the securities markets; management and performance of
our hotels; risks associated with maintaining our system of
internal controls; risks associated with the conflicts of interest
of the Company’s officers and directors; risks associated with
redevelopment and repositioning projects, including delays and cost
overruns; supply and demand for hotel rooms in our current and
proposed market areas; risks associated with our ability to
maintain our franchise agreements with our third party franchisors;
our ability to acquire additional properties and the risk that
potential acquisitions may not perform in accordance with
expectations; our ability to successfully expand into new markets;
legislative/regulatory changes, including changes to laws governing
taxation of real estate investment trusts (“REITs”); the Company’s
ability to maintain its qualification as a REIT; and our ability to
maintain adequate insurance coverage. Although the Company believes
that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore there can be no assurance that such
statements included in this report will prove to be accurate. In
light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the
Company or any other person that the results or conditions
described in such statements or the objectives and plans of the
Company will be achieved.
Additional factors that could cause actual results to vary from
our forward-looking statements are set forth under the section
titled “Risk Factors” in our Annual Report on Form 10-K, in this
press release and subsequent reports filed with the Securities and
Exchange Commission. Except as required by law, the Company
undertakes no obligation to and does not intend to publicly update
or revise any forward-looking statement, whether as a result of new
information, future events or otherwise. Although the Company
believes its current expectations to be based upon reasonable
assumptions, it can give no assurance that its expectations will be
attained or that actual results will not differ materially.
Financial Tables Follow…
SOTHERLY HOTELS INC.CONSOLIDATED BALANCE
SHEETS |
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Investment in hotel properties, net |
|
$ |
351,187,539 |
|
|
$ |
354,919,106 |
|
Cash and cash equivalents |
|
|
18,904,793 |
|
|
|
17,101,993 |
|
Restricted cash |
|
|
18,411,015 |
|
|
|
9,134,347 |
|
Accounts receivable, net |
|
|
5,612,961 |
|
|
|
5,945,724 |
|
Prepaid expenses, inventory and other assets |
|
|
7,614,368 |
|
|
|
6,342,310 |
|
TOTAL
ASSETS |
|
$ |
401,730,676 |
|
|
$ |
393,443,480 |
|
LIABILITIES |
|
|
|
|
|
|
Mortgage loans, net |
|
$ |
320,244,252 |
|
|
$ |
315,989,194 |
|
Unsecured notes |
|
|
1,141,763 |
|
|
|
1,536,809 |
|
Accounts payable and accrued liabilities |
|
|
25,831,481 |
|
|
|
23,315,677 |
|
Advance deposits |
|
|
2,224,149 |
|
|
|
2,614,981 |
|
Dividends and distributions payable |
|
|
2,088,160 |
|
|
|
2,088,160 |
|
TOTAL
LIABILITIES |
|
$ |
351,529,805 |
|
|
$ |
345,544,821 |
|
Commitments and contingencies |
|
|
— |
|
|
|
— |
|
EQUITY |
|
|
|
|
|
|
Sotherly Hotels Inc. stockholders’ equity |
|
|
|
|
|
|
Preferred stock, $0.01 par value, 11,000,000 shares
authorized: |
|
|
|
|
|
|
8.0% Series B cumulative redeemable perpetual preferred stock,
1,464,100 and 1,464,100 shares issued and outstanding; aggregate
liquidation preference each $44,655,050, at June 30, 2024 and
December 31, 2023, respectively. |
|
|
14,641 |
|
|
|
14,641 |
|
7.875% Series C cumulative redeemable perpetual preferred stock,
1,346,110 and 1,346,110 shares issued and outstanding; aggregate
liquidation preference each $40,940,681, at June 30, 2024 and
December 31, 2023, respectively. |
|
|
13,461 |
|
|
|
13,461 |
|
8.25% Series D cumulative redeemable perpetual preferred stock,
1,163,100 and 1,163,100 shares issued and outstanding; aggregate
liquidation preference each $35,674,458, at June 30, 2024 and
December 31, 2023, respectively. |
|
|
11,631 |
|
|
|
11,631 |
|
Common stock, par value $0.01, 69,000,000 shares authorized,
19,849,165 shares issued and outstanding at June 30, 2024 and
19,696,805 shares issued and outstanding at December 31, 2023. |
|
|
198,492 |
|
|
|
196,968 |
|
Additional paid-in capital |
|
|
176,014,888 |
|
|
|
175,779,222 |
|
Unearned ESOP shares |
|
|
(1,697,916 |
) |
|
|
(1,764,507 |
) |
Distributions in excess of retained earnings |
|
|
(123,058,615 |
) |
|
|
(125,021,013 |
) |
Total Sotherly Hotels Inc. stockholders’ equity |
|
|
51,496,582 |
|
|
|
49,230,403 |
|
Noncontrolling interest |
|
|
(1,295,711 |
) |
|
|
(1,331,744 |
) |
TOTAL
EQUITY |
|
|
50,200,871 |
|
|
|
47,898,659 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
401,730,676 |
|
|
$ |
393,443,480 |
|
SOTHERLY HOTELS INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited) |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
$ |
34,575,890 |
|
|
$ |
33,253,523 |
|
|
$ |
64,315,546 |
|
|
$ |
61,655,211 |
|
Food and beverage department |
|
|
9,901,554 |
|
|
|
9,500,974 |
|
|
|
19,654,003 |
|
|
|
18,249,700 |
|
Other operating departments |
|
|
6,216,923 |
|
|
|
6,262,836 |
|
|
|
13,273,249 |
|
|
|
12,603,699 |
|
Total revenue |
|
|
50,694,367 |
|
|
|
49,017,333 |
|
|
|
97,242,798 |
|
|
|
92,508,610 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
|
7,452,407 |
|
|
|
7,016,339 |
|
|
|
14,004,590 |
|
|
|
13,429,434 |
|
Food and beverage department |
|
|
6,541,720 |
|
|
|
6,390,867 |
|
|
|
13,006,575 |
|
|
|
12,326,427 |
|
Other operating departments |
|
|
2,505,721 |
|
|
|
2,305,755 |
|
|
|
5,191,863 |
|
|
|
4,621,603 |
|
Indirect |
|
|
18,496,840 |
|
|
|
18,462,336 |
|
|
|
36,981,736 |
|
|
|
35,209,913 |
|
Total hotel operating expenses |
|
|
34,996,688 |
|
|
|
34,175,297 |
|
|
|
69,184,764 |
|
|
|
65,587,377 |
|
Depreciation and amortization |
|
|
4,817,523 |
|
|
|
4,763,193 |
|
|
|
9,587,240 |
|
|
|
9,341,504 |
|
Corporate general and administrative |
|
|
1,580,373 |
|
|
|
1,789,041 |
|
|
|
3,496,898 |
|
|
|
3,769,805 |
|
Total hotel operating expenses |
|
|
41,394,584 |
|
|
|
40,727,531 |
|
|
|
82,268,902 |
|
|
|
78,698,686 |
|
NET OPERATING
INCOME |
|
|
9,299,783 |
|
|
|
8,289,802 |
|
|
|
14,973,896 |
|
|
|
13,809,924 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5,000,995 |
) |
|
|
(4,288,367 |
) |
|
|
(9,889,801 |
) |
|
|
(8,401,964 |
) |
Interest income |
|
|
208,102 |
|
|
|
222,772 |
|
|
|
422,873 |
|
|
|
369,437 |
|
Other income |
|
|
142,353 |
|
|
|
— |
|
|
|
267,230 |
|
|
|
— |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(241,878 |
) |
|
|
— |
|
Realized gain on hedging activities |
|
|
— |
|
|
|
— |
|
|
|
1,041,994 |
|
|
|
— |
|
Unrealized gain (loss) on hedging activities |
|
|
(84,872 |
) |
|
|
286,831 |
|
|
|
(791,421 |
) |
|
|
(155,632 |
) |
PPP debt forgiveness |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
275,494 |
|
Gain on sale of assets |
|
|
4,400 |
|
|
|
— |
|
|
|
4,400 |
|
|
|
— |
|
Gain on involuntary conversion of assets |
|
|
112,645 |
|
|
|
763,169 |
|
|
|
235,037 |
|
|
|
779,645 |
|
Net income before income
taxes |
|
|
4,681,416 |
|
|
|
5,274,207 |
|
|
|
6,022,330 |
|
|
|
6,676,904 |
|
Income tax provision |
|
|
(17,184 |
) |
|
|
(16,537 |
) |
|
|
(35,277 |
) |
|
|
(31,719 |
) |
Net income |
|
|
4,664,232 |
|
|
|
5,257,670 |
|
|
|
5,987,053 |
|
|
|
6,645,185 |
|
Subtract: Net income attributable to noncontrolling interest |
|
|
(48,151 |
) |
|
|
(130,798 |
) |
|
|
(36,033 |
) |
|
|
(105,838 |
) |
Net income attributable to the
Company |
|
|
4,616,081 |
|
|
|
5,126,872 |
|
|
|
5,951,020 |
|
|
|
6,539,347 |
|
Undeclared distributions to preferred stockholders |
|
|
(1,994,313 |
) |
|
|
(1,994,313 |
) |
|
|
(3,988,625 |
) |
|
|
(3,988,625 |
) |
Net income attributable to
common stockholders |
|
$ |
2,621,768 |
|
|
$ |
3,132,559 |
|
|
$ |
1,962,395 |
|
|
$ |
2,550,722 |
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.13 |
|
|
$ |
0.16 |
|
|
$ |
0.10 |
|
|
$ |
0.13 |
|
Diluted |
|
$ |
0.13 |
|
|
$ |
0.16 |
|
|
$ |
0.10 |
|
|
$ |
0.13 |
|
Weighted average number of
common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,389,944 |
|
|
|
18,712,452 |
|
|
|
19,374,547 |
|
|
|
18,658,538 |
|
Diluted |
|
|
19,389,944 |
|
|
|
18,715,098 |
|
|
|
19,374,547 |
|
|
|
18,658,538 |
|
SOTHERLY HOTELS INC.KEY
OPERATING METRICS(unaudited)
The following tables illustrate the key operating metrics for
the three and six months ended June 30, 2024 and 2023,
respectively, for the Company’s wholly-owned properties (“actual”
portfolio metrics), accordingly, the actual data does not include
the participating condominium hotel rooms of the Lyfe Resort &
Residences and the Hyde Beach House Resort & Residences. The
composite portfolio metrics represent the Company’s wholly-owned
properties and the participating condominium hotel rooms at the
Lyfe Resort & Residences and the Hyde Beach House Resort &
Residences, during the three and six months ended June 30, 2024 and
the corresponding periods in 2023.
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
Actual Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
74.0 |
% |
|
|
70.6 |
% |
|
|
69.1 |
% |
|
|
65.6 |
% |
ADR |
|
$ |
184.24 |
|
|
$ |
185.82 |
|
|
$ |
183.54 |
|
|
$ |
186.45 |
|
RevPAR |
|
$ |
136.38 |
|
|
$ |
131.16 |
|
|
$ |
126.84 |
|
|
$ |
122.27 |
|
Composite Portfolio
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
73.4 |
% |
|
|
69.4 |
% |
|
|
69.2 |
% |
|
|
64.9 |
% |
ADR |
|
$ |
187.51 |
|
|
$ |
190.15 |
|
|
$ |
188.91 |
|
|
$ |
193.35 |
|
RevPAR |
|
$ |
137.67 |
|
|
$ |
131.94 |
|
|
$ |
130.64 |
|
|
$ |
125.53 |
|
SOTHERLY HOTELS
INC.SUPPLEMENTAL
DATA(unaudited)
The following tables illustrate the key operating metrics for
the three and six months ended June 30, 2024, 2023, and 2022,
respectively, for each of the Company’s wholly-owned properties
during each respective reporting period, irrespective of ownership
percentage during any period.
Occupancy |
|
|
|
|
|
|
|
|
|
Q2 2024 |
|
|
Q2 2023 |
|
|
Q2 2022 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah,
Georgia |
|
81.0 |
% |
|
|
78.8 |
% |
|
|
76.4 |
% |
|
|
76.0 |
% |
|
|
71.6 |
% |
|
|
69.2 |
% |
DoubleTree by Hilton
Jacksonville Riverfront Jacksonville, Florida |
|
73.0 |
% |
|
|
75.1 |
% |
|
|
76.2 |
% |
|
|
71.6 |
% |
|
|
73.1 |
% |
|
|
70.4 |
% |
DoubleTree by Hilton Laurel
Laurel, Maryland |
|
72.6 |
% |
|
|
77.1 |
% |
|
|
71.9 |
% |
|
|
59.9 |
% |
|
|
62.2 |
% |
|
|
59.9 |
% |
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
|
72.6 |
% |
|
|
70.8 |
% |
|
|
76.0 |
% |
|
|
58.9 |
% |
|
|
62.7 |
% |
|
|
66.1 |
% |
DoubleTree Resort by Hilton
Hollywood BeachHollywood, Florida |
|
73.5 |
% |
|
|
63.1 |
% |
|
|
75.5 |
% |
|
|
74.5 |
% |
|
|
64.0 |
% |
|
|
69.5 |
% |
Georgian TerraceAtlanta,
Georgia |
|
61.5 |
% |
|
|
52.6 |
% |
|
|
47.8 |
% |
|
|
60.0 |
% |
|
|
49.7 |
% |
|
|
48.4 |
% |
Hotel Alba Tampa, Tapestry
Collection by Hilton Tampa, Florida |
|
86.3 |
% |
|
|
77.6 |
% |
|
|
80.2 |
% |
|
|
85.0 |
% |
|
|
80.5 |
% |
|
|
80.6 |
% |
Hotel Ballast Wilmington,
Tapestry Collection by HiltonWilmington, North Carolina |
|
82.5 |
% |
|
|
81.1 |
% |
|
|
73.0 |
% |
|
|
71.4 |
% |
|
|
68.5 |
% |
|
|
58.1 |
% |
Hyatt Centric Arlington
Arlington, Virginia |
|
80.7 |
% |
|
|
83.5 |
% |
|
|
78.2 |
% |
|
|
76.9 |
% |
|
|
77.0 |
% |
|
|
61.1 |
% |
The WhitehallHouston,
Texas |
|
60.4 |
% |
|
|
51.0 |
% |
|
|
42.0 |
% |
|
|
59.7 |
% |
|
|
49.8 |
% |
|
|
39.2 |
% |
Lyfe Resort & Residences
(1)Hollywood Beach, Florida |
|
63.2 |
% |
|
|
48.8 |
% |
|
|
63.1 |
% |
|
|
70.6 |
% |
|
|
54.6 |
% |
|
|
62.6 |
% |
Hyde Beach House Resort &
Residences (1)Hollywood Beach, Florida |
|
57.4 |
% |
|
|
40.7 |
% |
|
|
48.9 |
% |
|
|
69.9 |
% |
|
|
48.7 |
% |
|
|
50.1 |
% |
All properties weighted
average |
|
73.4 |
% |
|
|
69.4 |
% |
|
|
68.0 |
% |
|
|
69.2 |
% |
|
|
64.9 |
% |
|
|
60.8 |
% |
(1 |
) |
Reflects only those condominium
units participating in our rental program for the period. |
ADR |
|
|
|
|
|
|
|
|
|
Q2 2024 |
|
|
Q2 2023 |
|
|
Q2 2022 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah,
Georgia |
$ |
234.77 |
|
|
$ |
226.05 |
|
|
$ |
228.94 |
|
|
$ |
224.78 |
|
|
$ |
219.76 |
|
|
$ |
216.47 |
|
DoubleTree by Hilton
Jacksonville Riverfront Jacksonville, Florida |
$ |
144.96 |
|
|
$ |
142.14 |
|
|
$ |
146.36 |
|
|
$ |
146.63 |
|
|
$ |
151.07 |
|
|
$ |
147.23 |
|
DoubleTree by Hilton Laurel
Laurel, Maryland |
$ |
138.82 |
|
|
$ |
134.12 |
|
|
$ |
122.39 |
|
|
$ |
133.15 |
|
|
$ |
128.90 |
|
|
$ |
115.69 |
|
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
$ |
158.80 |
|
|
$ |
151.42 |
|
|
$ |
149.15 |
|
|
$ |
145.29 |
|
|
$ |
141.08 |
|
|
$ |
134.66 |
|
DoubleTree Resort by Hilton
Hollywood Beach Hollywood, Florida |
$ |
183.89 |
|
|
$ |
206.75 |
|
|
$ |
215.92 |
|
|
$ |
207.59 |
|
|
$ |
236.62 |
|
|
$ |
233.12 |
|
Georgian TerraceAtlanta,
Georgia |
$ |
178.19 |
|
|
$ |
191.87 |
|
|
$ |
195.32 |
|
|
$ |
183.27 |
|
|
$ |
198.86 |
|
|
$ |
193.42 |
|
Hotel Alba Tampa, Tapestry
Collection by Hilton Tampa, Florida |
$ |
170.96 |
|
|
$ |
176.32 |
|
|
$ |
167.44 |
|
|
$ |
192.81 |
|
|
$ |
195.91 |
|
|
$ |
177.50 |
|
Hotel Ballast Wilmington,
Tapestry Collection by HiltonWilmington, North Carolina |
$ |
201.68 |
|
|
$ |
202.92 |
|
|
$ |
196.93 |
|
|
$ |
186.15 |
|
|
$ |
187.09 |
|
|
$ |
185.35 |
|
Hyatt Centric Arlington
Arlington, Virginia |
$ |
245.85 |
|
|
$ |
235.80 |
|
|
$ |
202.29 |
|
|
$ |
223.52 |
|
|
$ |
216.59 |
|
|
$ |
186.51 |
|
The WhitehallHouston,
Texas |
$ |
154.89 |
|
|
$ |
167.78 |
|
|
$ |
149.69 |
|
|
$ |
159.18 |
|
|
$ |
166.21 |
|
|
$ |
147.82 |
|
Lyfe Resort & Residences
(1)Hollywood Beach, Florida |
$ |
282.58 |
|
|
$ |
338.68 |
|
|
$ |
417.95 |
|
|
$ |
327.80 |
|
|
$ |
396.59 |
|
|
$ |
462.92 |
|
Hyde Beach House Resort &
Residences (1)Hollywood Beach, Florida |
$ |
269.53 |
|
|
$ |
324.00 |
|
|
$ |
367.23 |
|
|
$ |
291.88 |
|
|
$ |
349.96 |
|
|
$ |
413.99 |
|
All properties weighted
average |
$ |
187.51 |
|
|
$ |
190.15 |
|
|
$ |
189.09 |
|
|
$ |
188.91 |
|
|
$ |
193.35 |
|
|
$ |
188.25 |
|
|
|
(1 |
) |
Reflects only those condominium
units participating in our rental program for the period. |
RevPAR |
|
|
|
|
|
|
|
|
|
Q2 2024 |
|
|
Q2 2023 |
|
|
Q2 2022 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah,
Georgia |
$ |
190.14 |
|
|
$ |
178.02 |
|
|
$ |
174.80 |
|
|
$ |
170.75 |
|
|
$ |
157.34 |
|
|
$ |
149.81 |
|
DoubleTree by Hilton
Jacksonville Riverfront Jacksonville, Florida |
$ |
105.79 |
|
|
$ |
106.76 |
|
|
$ |
111.54 |
|
|
$ |
104.97 |
|
|
$ |
110.38 |
|
|
$ |
103.61 |
|
DoubleTree by Hilton Laurel
Laurel, Maryland |
$ |
100.74 |
|
|
$ |
103.41 |
|
|
$ |
87.94 |
|
|
$ |
79.70 |
|
|
$ |
80.19 |
|
|
$ |
69.31 |
|
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
$ |
115.31 |
|
|
$ |
107.13 |
|
|
$ |
113.35 |
|
|
$ |
85.62 |
|
|
$ |
88.43 |
|
|
$ |
88.97 |
|
DoubleTree Resort by Hilton
Hollywood BeachHollywood, Florida |
$ |
135.11 |
|
|
$ |
130.46 |
|
|
$ |
163.12 |
|
|
$ |
154.59 |
|
|
$ |
151.44 |
|
|
$ |
162.04 |
|
Georgian TerraceAtlanta,
Georgia |
$ |
109.51 |
|
|
$ |
100.97 |
|
|
$ |
93.40 |
|
|
$ |
109.93 |
|
|
$ |
98.82 |
|
|
$ |
93.52 |
|
Hotel Alba Tampa, Tapestry
Collection by Hilton Tampa, Florida |
$ |
147.47 |
|
|
$ |
136.82 |
|
|
$ |
134.30 |
|
|
$ |
163.92 |
|
|
$ |
157.71 |
|
|
$ |
143.15 |
|
Hotel Ballast Wilmington,
Tapestry Collection by HiltonWilmington, North Carolina |
$ |
166.44 |
|
|
$ |
164.53 |
|
|
$ |
143.69 |
|
|
$ |
132.84 |
|
|
$ |
128.20 |
|
|
$ |
107.72 |
|
Hyatt Centric Arlington
Arlington, Virginia |
$ |
198.42 |
|
|
$ |
196.89 |
|
|
$ |
158.21 |
|
|
$ |
171.82 |
|
|
$ |
166.67 |
|
|
$ |
113.98 |
|
The WhitehallHouston,
Texas |
$ |
93.57 |
|
|
$ |
85.54 |
|
|
$ |
62.94 |
|
|
$ |
95.09 |
|
|
$ |
82.80 |
|
|
$ |
57.94 |
|
Lyfe Resort & Residences
(1)Hollywood Beach, Florida |
$ |
178.73 |
|
|
$ |
165.25 |
|
|
$ |
263.75 |
|
|
$ |
231.35 |
|
|
$ |
216.68 |
|
|
$ |
289.97 |
|
Hyde Beach House Resort &
Residences (1)Hollywood Beach, Florida |
$ |
154.74 |
|
|
$ |
131.96 |
|
|
$ |
179.45 |
|
|
$ |
203.97 |
|
|
$ |
170.55 |
|
|
$ |
207.43 |
|
All properties weighted
average |
$ |
137.67 |
|
|
$ |
131.94 |
|
|
$ |
128.63 |
|
|
$ |
130.64 |
|
|
$ |
125.53 |
|
|
$ |
114.46 |
|
|
|
(1 |
) |
Reflects only those condominium
units participating in our rental program for the period. |
|
|
SOTHERLY HOTELS INC.RECONCILIATION OF NET INCOME
TOFFO, Adjusted FFO, EBITDA and Hotel
EBITDA(unaudited) |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
Net income |
|
$ |
4,664,232 |
|
|
$ |
5,257,670 |
|
|
$ |
5,987,053 |
|
|
$ |
6,645,185 |
|
Depreciation and amortization - real estate |
|
|
4,802,717 |
|
|
|
4,750,322 |
|
|
|
9,557,629 |
|
|
|
9,314,947 |
|
Gain on sale of assets |
|
|
(4,400 |
) |
|
|
— |
|
|
|
(4,400 |
) |
|
|
- |
|
Gain on involuntary conversion of assets |
|
|
(112,645 |
) |
|
|
(763,169 |
) |
|
|
(235,037 |
) |
|
|
(779,645 |
) |
FFO |
|
|
9,349,904 |
|
|
|
9,244,823 |
|
|
|
15,305,245 |
|
|
|
15,180,487 |
|
Distributions to preferred stockholders |
|
|
(1,994,313 |
) |
|
|
(1,994,313 |
) |
|
|
(3,988,625 |
) |
|
|
(3,988,625 |
) |
FFO attributable to
common stockholders and unitholders |
|
|
7,355,591 |
|
|
|
7,250,510 |
|
|
|
11,316,620 |
|
|
|
11,191,862 |
|
Amortization |
|
|
14,806 |
|
|
|
12,871 |
|
|
|
29,611 |
|
|
|
26,557 |
|
ESOP and stock - based compensation |
|
|
47,827 |
|
|
|
54,488 |
|
|
|
303,783 |
|
|
|
314,951 |
|
Loss on early debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
241,878 |
|
|
|
— |
|
Unrealized loss (gain) on hedging activities |
|
|
84,872 |
|
|
|
(286,831 |
) |
|
|
791,421 |
|
|
|
155,632 |
|
Adjusted FFO
attributable to common stockholders and unitholders |
|
$ |
7,503,096 |
|
|
$ |
7,031,038 |
|
|
$ |
12,683,313 |
|
|
$ |
11,689,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic |
|
|
19,389,944 |
|
|
|
18,712,452 |
|
|
|
19,374,547 |
|
|
|
18,658,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of non-controlling units |
|
|
364,186 |
|
|
|
772,441 |
|
|
|
364,186 |
|
|
|
798,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares and units outstanding, basic |
|
|
19,754,130 |
|
|
|
19,484,893 |
|
|
|
19,738,733 |
|
|
|
19,457,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share and unit |
|
$ |
0.37 |
|
|
$ |
0.37 |
|
|
$ |
0.57 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FFO per common share and unit |
|
$ |
0.38 |
|
|
$ |
0.36 |
|
|
$ |
0.64 |
|
|
$ |
0.60 |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
Net income |
|
$ |
4,664,232 |
|
|
$ |
5,257,670 |
|
|
$ |
5,987,053 |
|
|
$ |
6,645,185 |
|
Interest expense |
|
|
5,000,995 |
|
|
|
4,288,367 |
|
|
|
9,889,801 |
|
|
|
8,401,964 |
|
Interest income |
|
|
(208,102 |
) |
|
|
(222,772 |
) |
|
|
(422,873 |
) |
|
|
(369,437 |
) |
Income tax provision |
|
|
17,184 |
|
|
|
16,537 |
|
|
|
35,277 |
|
|
|
31,719 |
|
Depreciation and amortization |
|
|
4,817,523 |
|
|
|
4,763,193 |
|
|
|
9,587,240 |
|
|
|
9,341,504 |
|
EBITDA |
|
|
14,291,832 |
|
|
|
14,102,995 |
|
|
|
25,076,498 |
|
|
|
24,050,935 |
|
PPP loan forgiveness |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(275,494 |
) |
Other income |
|
|
(142,353 |
) |
|
|
— |
|
|
|
(267,230 |
) |
|
|
— |
|
Loss on early debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
241,878 |
|
|
|
— |
|
Gain on sale of assets |
|
|
(4,400 |
) |
|
|
— |
|
|
|
(4,400 |
) |
|
|
— |
|
Gain on involuntary conversion of assets |
|
|
(112,645 |
) |
|
|
(763,169 |
) |
|
|
(235,037 |
) |
|
|
(779,645 |
) |
Subtotal |
|
|
14,032,434 |
|
|
|
13,339,826 |
|
|
|
24,811,709 |
|
|
|
22,995,796 |
|
Corporate general and administrative |
|
|
1,580,373 |
|
|
|
1,789,041 |
|
|
|
3,496,898 |
|
|
|
3,769,805 |
|
Realized and unrealized (gain) loss on hedging activities |
|
|
84,872 |
|
|
|
(286,831 |
) |
|
|
(250,573 |
) |
|
|
155,632 |
|
Hotel
EBITDA |
|
$ |
15,697,679 |
|
|
$ |
14,842,036 |
|
|
$ |
28,058,034 |
|
|
$ |
26,921,233 |
|
Tables below are reflected in thousands of dollars:
Reconciliation of Outlook of Net Income to EBITDA and Hotel
EBITDA |
|
|
|
|
|
|
|
|
2024 Guidance |
|
|
Low Range |
|
|
High Range |
|
|
|
|
|
|
|
Net income |
$ |
1,598 |
|
|
$ |
2,593 |
|
Interest expense |
|
19,885 |
|
|
|
19,885 |
|
Interest income |
|
(550 |
) |
|
|
(550 |
) |
Income tax provision |
|
120 |
|
|
|
120 |
|
Depreciation and
amortization |
|
18,805 |
|
|
|
18,805 |
|
|
|
|
|
|
|
EBITDA |
|
39,858 |
|
|
|
40,853 |
|
Loss on early extinguishment
of debt |
|
165 |
|
|
|
165 |
|
Other income |
|
(445 |
) |
|
|
(445 |
) |
Realized and unrealized gain
on hedging activities |
|
(250 |
) |
|
|
(250 |
) |
Corporate general and
administrative |
|
6,775 |
|
|
|
6,575 |
|
|
|
|
|
|
|
Hotel EBITDA |
$ |
46,103 |
|
|
$ |
46,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Outlook of Net Income to FFO and Adjusted
FFO |
|
|
|
|
|
|
|
|
2024 Guidance |
|
|
Low Range |
|
|
High Range |
|
|
|
|
|
|
|
Net income |
$ |
1,598 |
|
|
$ |
2,593 |
|
Depreciation and
amortization |
|
18,750 |
|
|
|
18,750 |
|
|
|
|
|
|
|
FFO |
|
20,348 |
|
|
|
21,343 |
|
Distributions to preferred
stockholders |
|
(7,975 |
) |
|
|
(7,975 |
) |
|
|
|
|
|
|
FFO attributable to common
stockholders and unitholders |
|
12,373 |
|
|
|
13,368 |
|
Amortization |
|
55 |
|
|
|
55 |
|
Realized and unrealized gain
on hedging activities |
|
(250 |
) |
|
|
(250 |
) |
Loss on early extinguishment
of debt |
|
165 |
|
|
|
165 |
|
ESOP stock based
compensation |
|
435 |
|
|
|
435 |
|
Adjusted FFO attributable to
common stockholders and unitholders |
$ |
12,778 |
|
|
$ |
13,773 |
|
|
|
|
|
|
|
Non-GAAP Financial Measures
The Company considers the non-GAAP financial measures of FFO
(including FFO per common share and unit), Adjusted FFO (including
Adjusted FFO per common share and unit), EBITDA and Hotel EBITDA to
be key supplemental measures of the Company’s performance and could
be considered along with, not alternatives to, net income (loss) as
a measure of the Company’s performance. These measures do not
represent cash generated from operating activities determined by
generally accepted accounting principles (“GAAP”) or amounts
available for the Company’s discretionary use and should not be
considered alternative measures of net income, cash flows from
operations or any other operating performance measure prescribed by
GAAP.
FFO
Industry analysts and investors use FFO as a supplemental
operating performance measure of an equity REIT. FFO is calculated
in accordance with the definition adopted by the Board of Governors
of the National Association of Real Estate Investment Trusts
(“NAREIT”). FFO, as defined by NAREIT, represents net income or
loss determined in accordance with GAAP, excluding extraordinary
items as defined under GAAP, gains or losses from sales of
previously depreciated operating real estate assets, gains or
losses from involuntary conversions of assets, plus certain
non-cash items such as real estate asset depreciation and
amortization or impairment, and adjustment for any noncontrolling
interest from unconsolidated partnerships and joint ventures.
Historical cost accounting for real estate assets in accordance
with GAAP implicitly assumes that the value of real estate assets
diminishes predictably over time. Since real estate values instead
have historically risen or fallen with market conditions, many
investors and analysts have considered the presentation of
operating results for real estate companies that use historical
cost accounting to be insufficient by itself.
The Company considers FFO to be a useful measure of adjusted net
income (loss) for reviewing comparative operating and financial
performance because we believe FFO is most directly comparable to
net income (loss), which remains the primary measure of
performance, because by excluding gains or losses related to sales
of previously depreciated operating real estate assets and
excluding real estate asset depreciation and amortization, FFO
assists in comparing the operating performance of a company’s real
estate between periods or as compared to different companies.
Although FFO is intended to be a REIT industry standard, other
companies may not calculate FFO in the same manner as we do, and
investors should not assume that FFO as reported by us is
comparable to FFO as reported by other REITs.
Adjusted FFO
The Company presents Adjusted FFO, including Adjusted FFO per
share and unit, which adjusts for certain additional items that are
not in NAREIT’s definition of FFO including changes in deferred
income taxes, any unrealized gain (loss) on hedging instruments or
warrant derivatives, loan impairment losses, losses on early
extinguishment of debt, gains on extinguishment of preferred stock,
aborted offering costs, loan modification fees, franchise
termination costs, costs associated with the departure of executive
officers, litigation settlement, over-assessed real estate taxes on
appeal, management contract termination costs, operating asset
depreciation and amortization, change in control gains or losses,
ESOP and stock compensation expenses and acquisition transaction
costs. We exclude these items as we believe it allows for
meaningful comparisons between periods and among other REITs and is
more indicative than FFO of the on-going performance of our
business and assets. Our calculation of Adjusted FFO may be
different from similar measures calculated by other REITs.
EBITDA
The Company believes that excluding the effect of non-operating
expenses and non-cash charges, and the portion of those items
related to unconsolidated entities, all of which are also based on
historical cost accounting and may be of limited significance in
evaluating current performance, can help eliminate the accounting
effects of depreciation and financing decisions and facilitate
comparisons of core operating profitability between periods and
between REITs, even though EBITDA also does not represent an amount
that accrues directly to shareholders.
Hotel EBITDA
The Company defines Hotel EBITDA as net income or loss
excluding: (1) interest expense, (2) interest income, (3) income
tax provision or benefit, (4) depreciation and amortization, (5)
impairment of long-lived assets or investments, (6) gains and
losses on disposal and/or sale of assets, (7) gains and losses on
involuntary conversions of assets, (8) realized or unrealized gains
and losses on derivative instruments not included in other
comprehensive income, (9) other income at the properties, (10) loss
on early debt extinguishment, (11) Paycheck Protection Program
(PPP) debt forgiveness, (12) gain on exercise of development right,
(13) corporate general and administrative expense, and (14) other
income not related to our wholly-owned portfolio. We believe this
provides a more complete understanding of the operating results
over which our wholly-owned hotels and its operators have direct
control. We believe Hotel EBITDA provides investors with
supplemental information on the on-going operational performance of
our hotels and the effectiveness of third-party management
companies operating our business on a property-level basis. The
Company’s calculation of Hotel EBITDA may be different from similar
measures calculated by other REITs.
Contact at the Company:
Mack Sims
Vice President – Operations & Investor Relations
Sotherly Hotels Inc.
306 South Henry Street, Suite 100
Williamsburg, Virginia 23185
757.229.5648
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