Related Party Transactions	12 Months Ended
Dec. 31, 2022
Related Party Transactions [Abstract]
Related Party Transactions	9. Related Party Transactions Our Town Hospitality. Our Town is currently the management company for each of our ten wholly-owned hotels, as well as the manager of our rental programs at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences. As of December 31, 2022, an affiliate of Andrew M. Sims, our Chairman, an affiliate of David R. Folsom, our President and Chief Executive Officer, and Andrew M. Sims Jr., our Vice President - Operations & Investor Relations, beneficially owned approximately 63.0%, 7.0%, and 15.0%, respectively, of the total outstanding ownership interests of Our Town. Mr. Sims, Mr. Folsom, and Mr. Sims Jr. serve as directors of Our Town. The following is a summary of the transactions between Our Town and us: Accounts Receivable – At December 31, 2022 and 2021, we were due approximately $0.3 million and $0.2 million, respectively, from Our Town Hospitality. Accounts Payable – At December 31, 2022 and 2021, we owed Our Town approximately $1.3 million and $1.0 million, respectively. Management Agreements – On September 6, 2019, we entered into a master agreement with Our Town related to the management of certain of our hotels, as amended on December 13, 2019 (as amended, the “OTH Master Agreement”). On December 13, 2019, and subsequent dates we entered into a series of individual hotel management agreements for the management of our hotels. The hotel management agreements for each of our ten wholly-owned hotels and the two rental programs are each referred to as an “OTH Hotel Management Agreement” and, together, the “OTH Hotel Management Agreements”. The Company agreed to provide Our Town with initial working capital of up to $1.0 million as an advance on the management fees that we will owe to Our Town under the OTH Hotel Management Agreements. The advanced funds were to be offset against future management fees otherwise payable to Our Town by means of a 25% reduction in such fees each month during 2020. In addition, the OTH Master Agreement provides for an adjustment to the fees payable by us under the OTH Hotel Management Agreements in the event the net operating income of Our Town falls below $250,000 for any calendar year beginning on or after January 1, 2021. The OTH Master Agreement expires on March 31, 2035 but shall be extended beyond 2035 for such additional periods as an OTH Hotel Management Agreement remains in effect. The base management fees for each hotel under management with Our Town is 2.50%. For any new individual hotel management agreements, Our Town will receive a base management fee of 2.00% of gross revenues for the first full year from the commencement date through the anniversary date, 2.25% of gross revenues the second full year, and 2.50% of gross revenues for every year thereafter. For the years ended December 31, 2022 and 2021, the base management fees earned by Our Town under the contract were approximately $4.1 million and $3.4 million, respectively, and the incentive management fees earned by Our Town were approximately $0.3 million and $0.3 million, respectively. We also paid Our Town approximately $0.3 million in termination fees in 2022 triggered by the sale of the Sheraton Louisville Riverside and DoubleTree by Hilton Raleigh-Brownstone University. Sublease – On December 13, 2019, we entered into a sublease agreement with Our Town pursuant to which Our Town subleases 2,245 square feet of office space from Sotherly for a period of 5 years, with a 5-year renewal subject to approval by Sotherly, on terms and conditions similar to the terms of the prime lease entered into by Sotherly and the third-party owner of the property. For the years ended December 31, 2022 and 2021, the Company received rent income from Our Town of $159,734 and $144,452, respectively. Credit Agreement – On December 13, 2019, we entered into a credit agreement with Our Town effective January 1, 2020, pursuant to which Sotherly agreed to provide Our Town with a working capital line of credit. The original agreement allowed Our Town to borrow up to $500,000. Our Town was allowed to draw against the line of credit from time to time prior to January 1, 2021. The credit agreement was amended by the parties on June 4, 2021 such that (i) the maximum amount of credit available is capped at $894,900; (ii) the total amount of advances, as of June 4, 2021, was agreed to be $894,900; (iii) no additional advances are permitted; (iv) principal payments are required to be made by the borrower in the amount of $100,000 on each of December 31, 2021 through 2025; (v) the maturity date was extended to December 31, 2026; and (vi) the aggregate unpaid principal amount and another other obligations are required to be paid at maturity. In addition, an affiliate of Mr. Sims entered into a conditional financing commitment with Our Town to provide funding to permit repayment of the loan in the event the principal balance of the loan made to Our Town under the credit agreement has not been repaid prior to maturity and Sotherly declines to extend the maturity date. Interest accrued on the outstanding balance at 3.5% per annum and was payable quarterly in arrears. In the event of a default under the credit agreement, the Company had the right to offset any outstanding unpaid balance against amounts it owed to Our Town under the OTH Hotel Management Agreements. On June 4, 2021, the OTH Master Agreement and the related credit agreement were amended to provide for an increase in the balance outstanding under the credit agreement of $299,900 in satisfaction for an equivalent portion of unrepaid management fee advances and to provide for a guaranteed minimum incentive management fee of $250,000 for calendar year 2021 in satisfaction of the remainder of unrepaid management fee advances. On December 20, 2021, the Company received full payment on the credit agreement and was no longer available for use by Our Town. Employee Medical Benefits – We purchase employee medical benefits through Our Town (or its affiliate) for those employees that are employed by Our Town that work exclusively for our properties, starting January 1, 2020. For the years ended December 31, 2022 and 2021, the employer portion of the plan covering those employees that work exclusively at our properties under our management agreements with Our Town was approximately $3.2 million and $2.7 million, respectively. Chesapeake Hospitality. Chesapeake Hospitality was a company owned and controlled by individuals including Kim E. Sims and Christopher L. Sims, each a former director of Sotherly and a sibling of our Chairman, Andrew M. Sims. Prior to November 2019, Andrew M. Sims, owned approximately 19.3% of the total outstanding ownership interests of Chesapeake Hospitality, all of which have since been sold. The following is a summary of the transactions between Chesapeake Hospitality and us: Management Agreements – Chesapeake Hospitality was the management company for our DoubleTree Resort by Hilton Hollywood Beach hotel, the Hyde Resort & Residences, and the Hyde Beach House Resort & Residences until April 1, 2020. Effective April 1, 2020, Chesapeake no longer serves as manager for any of our properties and management of the remaining properties that had been managed by Chesapeake was transitioned to Our Town. Upon termination of the last remaining individual hotel management agreements with Chesapeake, the Chesapeake master agreement automatically terminated in accordance with its terms. Prior to January 1, 2020, Chesapeake Hospitality was the manager for each of our hotels that we wholly-owned, with the exception of the Hyatt Centric Arlington, under various hotel management agreements. On January 1, 2020, the management agreements for ten of our wholly-owned hotels expired. Those hotels are now managed by Our Town as described above. In connection with the termination of those ten Chesapeake management agreements, we paid approximately $0.2 million in termination fees. Base management fees earned by Chesapeake Hospitality totaled $0, $0 and $241,332 for the years ended December 31, 2022, 2021, and 2020, respectively. In addition, incentive management fees of $0, $0 and $(40,375) were expensed for the years ended December 31, 2022, 2021, and 2020, respectively. Other Related Parties – The Company employs Andrew M. Sims, Jr. the son of our Chairman, who currently serves as Vice President – Operations & Investor Relations, and Robert E. Kirkland IV, the son-in-law of our Chairman, who currently serves as General Counsel, as employees. Prior to February 1, 2022, the Company employed Ashley S. Kirkland, daughter of our Chairman, as Corporate Counsel and Compliance Officer. Compensation for these three employees, including benefits, for the years ended December 31, 2022, 2021, and 2020 totaled $605,163, $462,809 and $464,218, respectively. On July 1, 2022, a partnership controlled by a sibling of our Chairman converted 40,687 partnership units for an equivalent number of shares in the Company’s common stock, pursuant to the terms of the partnership agreement. On May 19, 2022, a trust in which our Chairman has a potential beneficial interest converted 50,000 partnership units for an equivalent number of shares in the Company’s common stock, pursuant to the terms of the partnership agreement. On December 16, 2021, a trust controlled in part by our Chairman converted 32,681 partnership units for an equivalent number of shares of the Company’s common stock, pursuant to the terms of the partnership agreement. On May 1, 2020, a partnership controlled by a sibling of our Chairman converted 57,867 partnership units, for an equivalent number of shares of the Company’s common stock, pursuant to the terms of the partnership agreement. On January 1, 2020, a partnership controlled by a sibling of our Chairman converted 410,000 partnership units for an equivalent number of shares of the Company’s common stock, pursuant to the terms of the partnership agreement.

Related Party Transactions

12 Months Ended

Dec. 31, 2022

9. Related Party Transactions

Our Town Hospitality. Our Town is currently the management company for each of our ten wholly-owned hotels, as well as the manager of our rental programs at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences. As of December 31, 2022, an affiliate of Andrew M. Sims, our Chairman, an affiliate of David R. Folsom, our President and Chief Executive Officer, and Andrew M. Sims Jr., our Vice President - Operations & Investor Relations, beneficially owned approximately 63.0%, 7.0%, and

15.0%, respectively, of the total outstanding ownership interests of Our Town. Mr. Sims, Mr. Folsom, and Mr. Sims Jr. serve as directors of Our Town. The following is a summary of the transactions between Our Town and us:

Accounts Receivable – At December 31, 2022 and 2021, we were due approximately $0.3 million and $0.2 million, respectively, from Our Town Hospitality.

Accounts Payable – At December 31, 2022 and 2021, we owed Our Town approximately $1.3 million and $1.0 million, respectively.

Management Agreements – On September 6, 2019, we entered into a master agreement with Our Town related to the management of certain of our hotels, as amended on December 13, 2019 (as amended, the “OTH Master Agreement”). On December 13, 2019, and subsequent dates we entered into a series of individual hotel management agreements for the management of our hotels. The hotel management agreements for each of our ten wholly-owned hotels and the two rental programs are each referred to as an “OTH Hotel Management Agreement” and, together, the “OTH Hotel Management Agreements”.

The Company agreed to provide Our Town with initial working capital of up to $1.0 million as an advance on the management fees that we will owe to Our Town under the OTH Hotel Management Agreements. The advanced funds were to be offset against future management fees otherwise payable to Our Town by means of a 25% reduction in such fees each month during 2020.

In addition, the OTH Master Agreement provides for an adjustment to the fees payable by us under the OTH Hotel Management Agreements in the event the net operating income of Our Town falls below $250,000 for any calendar year beginning on or after January 1, 2021. The OTH Master Agreement expires on March 31, 2035 but shall be extended beyond 2035 for such additional periods as an OTH Hotel Management Agreement remains in effect. The base management fees for each hotel under management with Our Town is 2.50%. For any new individual hotel management agreements, Our Town will receive a base management fee of 2.00% of gross revenues for the first full year from the commencement date through the anniversary date, 2.25% of gross revenues the second full year, and 2.50% of gross revenues for every year thereafter.

For the years ended December 31, 2022 and 2021, the base management fees earned by Our Town under the contract were approximately $4.1 million and $3.4 million, respectively, and the incentive management fees earned by Our Town were approximately $0.3 million and $0.3 million, respectively. We also paid Our Town approximately $0.3 million in termination fees in 2022 triggered by the sale of the Sheraton Louisville Riverside and DoubleTree by Hilton Raleigh-Brownstone University.

Sublease – On December 13, 2019, we entered into a sublease agreement with Our Town pursuant to which Our Town subleases 2,245 square feet of office space from Sotherly for a period of 5 years, with a 5-year renewal subject to approval by Sotherly, on terms and conditions similar to the terms of the prime lease entered into by Sotherly and the third-party owner of the property. For the years ended December 31, 2022 and 2021, the Company received rent income from Our Town of $159,734 and $144,452, respectively.

Credit Agreement – On December 13, 2019, we entered into a credit agreement with Our Town effective January 1, 2020, pursuant to which Sotherly agreed to provide Our Town with a working capital line of credit. The original agreement allowed Our Town to borrow up to $500,000. Our Town was allowed to draw against the line of credit from time to time prior to January 1, 2021. The credit agreement was amended by the parties on June 4, 2021 such that (i) the maximum amount of credit available is capped at $894,900; (ii) the total amount of advances, as of June 4, 2021, was agreed to be $894,900; (iii) no additional advances are permitted; (iv) principal payments are required to be made by the borrower in the amount of $100,000 on each of December 31, 2021 through 2025; (v) the maturity date was extended to December 31, 2026; and (vi) the aggregate unpaid principal amount and another other obligations are required to be paid at maturity. In addition, an affiliate of Mr. Sims entered into a conditional financing commitment with Our Town to provide funding to permit repayment of the loan in the event the principal balance of the loan made to Our Town under the credit agreement has not been repaid prior to maturity and Sotherly declines to extend the maturity date. Interest accrued on the outstanding balance at 3.5% per annum and was payable quarterly in arrears. In the event of a default under the credit agreement, the Company had the right to offset any outstanding unpaid balance against amounts it owed to Our Town under the OTH Hotel Management Agreements.

On June 4, 2021, the OTH Master Agreement and the related credit agreement were amended to provide for an increase in the balance outstanding under the credit agreement of $299,900 in satisfaction for an equivalent portion of unrepaid management fee advances and to provide for a guaranteed minimum incentive management fee of $250,000 for calendar year 2021 in satisfaction of the remainder of unrepaid management fee advances.

On December 20, 2021, the Company received full payment on the credit agreement and was no longer available for use by Our Town.

Employee Medical Benefits – We purchase employee medical benefits through Our Town (or its affiliate) for those employees that are employed by Our Town that work exclusively for our properties, starting January 1, 2020. For the years ended December 31, 2022 and 2021, the employer portion of the plan covering those employees that work exclusively at our properties under our management agreements with Our Town was approximately $3.2 million and $2.7 million, respectively.

Chesapeake Hospitality. Chesapeake Hospitality was a company owned and controlled by individuals including Kim E. Sims and Christopher L. Sims, each a former director of Sotherly and a sibling of our Chairman, Andrew M. Sims. Prior to November 2019, Andrew M. Sims, owned approximately 19.3% of the total outstanding ownership interests of Chesapeake Hospitality, all of which have since been sold. The following is a summary of the transactions between Chesapeake Hospitality and us:

Management Agreements – Chesapeake Hospitality was the management company for our DoubleTree Resort by Hilton Hollywood Beach hotel, the Hyde Resort & Residences, and the Hyde Beach House Resort & Residences until April 1, 2020. Effective April 1, 2020, Chesapeake no longer serves as manager for any of our properties and management of the remaining properties that had been managed by Chesapeake was transitioned to Our Town. Upon termination of the last remaining individual hotel management agreements with Chesapeake, the Chesapeake master agreement automatically terminated in accordance with its terms.

Prior to January 1, 2020, Chesapeake Hospitality was the manager for each of our hotels that we wholly-owned, with the exception of the Hyatt Centric Arlington, under various hotel management agreements. On January 1, 2020, the management agreements for ten of our wholly-owned hotels expired. Those hotels are now managed by Our Town as described above. In connection with the termination of those ten Chesapeake management agreements, we paid approximately $0.2 million in termination fees.

Base management fees earned by Chesapeake Hospitality totaled $0, $0 and $241,332 for the years ended December 31, 2022, 2021, and 2020, respectively. In addition, incentive management fees of $0, $0 and $(40,375) were expensed for the years ended December 31, 2022, 2021, and 2020, respectively.

Other Related Parties – The Company employs Andrew M. Sims, Jr. the son of our Chairman, who currently serves as Vice President – Operations & Investor Relations, and Robert E. Kirkland IV, the son-in-law of our Chairman, who currently serves as General Counsel, as employees. Prior to February 1, 2022, the Company employed Ashley S. Kirkland, daughter of our Chairman, as Corporate Counsel and Compliance Officer. Compensation for these three employees, including benefits, for the years ended December 31, 2022, 2021, and 2020 totaled $605,163, $462,809 and $464,218, respectively.

On July 1, 2022, a partnership controlled by a sibling of our Chairman converted 40,687 partnership units for an equivalent number of shares in the Company’s common stock, pursuant to the terms of the partnership agreement.

On May 19, 2022, a trust in which our Chairman has a potential beneficial interest converted 50,000 partnership units for an equivalent number of shares in the Company’s common stock, pursuant to the terms of the partnership agreement.

On December 16, 2021, a trust controlled in part by our Chairman converted 32,681 partnership units for an equivalent number of shares of the Company’s common stock, pursuant to the terms of the partnership agreement.

On May 1, 2020, a partnership controlled by a sibling of our Chairman converted 57,867 partnership units, for an equivalent number of shares of the Company’s common stock, pursuant to the terms of the partnership agreement.

On January 1, 2020, a partnership controlled by a sibling of our Chairman converted 410,000 partnership units for an equivalent number of shares of the Company’s common stock, pursuant to the terms of the partnership agreement.