Exhibit 99.1
FOR IMMEDIATE RELEASE
THURSDAY, MAY 9, 2024
SOTHERLY HOTELS INC. REPORTS FINANCIAL RESULTS
FOR THE FIRST QUARTER ENDED MARCH 31, 2024
Williamsburg, Virginia – May 9, 2024 – 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 first quarter ended March 31, 2024. The Company’s results include the following*:
|
Three Months Ended |
|
|||||
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
|
($ in thousands except per share data) |
|
|||||
Total revenue |
$ |
46,548 |
|
|
$ |
43,491 |
|
Net loss attributable to common stockholders |
|
(659 |
) |
|
|
(582 |
) |
|
|
|
|
|
|
||
EBITDA |
|
10,785 |
|
|
|
9,948 |
|
Hotel EBITDA |
|
12,360 |
|
|
|
12,079 |
|
|
|
|
|
|
|
||
FFO attributable to common stockholders and unitholders |
|
3,961 |
|
|
|
3,941 |
|
Adjusted FFO attributable to common stockholders and unitholders |
|
5,178 |
|
|
|
4,658 |
|
|
|
|
|
|
|
||
Net loss per common share - diluted |
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
FFO per common share and unit |
$ |
0.20 |
|
|
$ |
0.20 |
|
Adjusted FFO per common share and unit |
$ |
0.26 |
|
|
$ |
0.24 |
|
(*) 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
Dave Folsom, President and Chief Executive Officer of Sotherly Hotels Inc., commented, "We were pleased with our first quarter results. Total revenues exceeded prior year by 7.0%, while EBITDA exceeded prior year by over 8.0%. We continued to see improvements at the property level, with overall RevPAR increasing nearly 4.0% in the quarter as compared to the prior year, driven by a strong 4.5% pickup in occupancy. Hotel EBITDA also showed improvement over prior year. All of these results reflect both continued strength in our portfolio as well as the markets in which we own hotels. Booking of group business remains strong, with our full-year booking pace up 6.9% compared to prior year. Leisure and business travel continue to show sustainability and improvement, respectively. On the corporate front, the Company executed an important mortgage refinancing of its Hotel Alba in Tampa, Florida, in the first quarter, where we realized over $10.0 million in net cash proceeds from the new loan. The headwinds associated with commercial mortgage markets continue to present challenges to real estate borrowers, but we are confident that we will be able to navigate upcoming maturities by either extending existing mortgages or refinancing them on favorable terms with new or existing lenders. Looking forward to the remainder of the year, we are optimistic about demand trends and our portfolio’s profitability outlook."
Balance Sheet/Liquidity
As of March 31, 2024, the Company had approximately $39.6 million of available cash and cash equivalents, of which approximately $10.3 million was reserved for real estate taxes, insurance, capital improvements and certain other expenses or otherwise restricted. The Company had principal balances of approximately $328.0 million in outstanding debt, including mortgage and unsecured principal balances, at a weighted average interest rate of approximately 5.43%.
Other Events
On February 7, 2024, affiliates of the Company entered into loan documents to refinance its loan in the principal amount of $35.0 million on the Hotel Alba Tampa located in Tampa, FL with Citi Real Estate Funding Inc. The Company received approximately $10.25 million in net proceeds. Pursuant to the amended loan documents, the mortgage loan has a principal balance of $35.0 million; matures on March 6, 2029; carries a fixed interest rate of 8.49%; requires payments of interest only; is guaranteed by the Operating Partnership only for traditional “bad boy” acts; cannot be prepaid until the last four months of the term; and contains customary representations, warranties, covenants and events of default for a mortgage loan.
On April 29, 2024, 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; and (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.
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 available to common stockholders and unitholders |
|
(6,377 |
) |
|
|
(5,382 |
) |
|
|
|
|
|
|
||
EBITDA |
|
39,858 |
|
|
|
40,853 |
|
Hotel EBITDA |
|
46,103 |
|
|
|
46,898 |
|
|
|
|
|
|
|
||
FFO available to common stockholders and unitholders |
|
12,373 |
|
|
|
13,368 |
|
Adjusted FFO available to common stockholders and unitholders |
|
12,778 |
|
|
|
13,773 |
|
|
|
|
|
|
|
||
Net loss per share available 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 first quarter 2024 conference call for investors and other interested parties at 10:00 a.m. Eastern Time on Thursday, May 9, 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 218035. 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 May 9, 2024 through May 23, 2024. To access the rebroadcast, dial 866-813-9403 and enter access code 940385.
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.
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
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 our recently negotiated forbearance agreements and 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 report and subsequent reports filed with the Securities and Exchange Commission. 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
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(unaudited) |
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Investment in hotel properties, net |
|
$ |
352,455,889 |
|
|
$ |
354,919,106 |
|
Cash and cash equivalents |
|
|
29,285,600 |
|
|
|
17,101,993 |
|
Restricted cash |
|
|
10,341,209 |
|
|
|
9,134,347 |
|
Accounts receivable, net |
|
|
6,968,335 |
|
|
|
5,945,724 |
|
Prepaid expenses, inventory and other assets |
|
|
5,637,355 |
|
|
|
6,342,310 |
|
TOTAL ASSETS |
|
$ |
404,688,388 |
|
|
$ |
393,443,480 |
|
LIABILITIES |
|
|
|
|
|
|
||
Mortgage loans, net |
|
$ |
325,106,994 |
|
|
$ |
315,989,194 |
|
Unsecured notes |
|
|
1,347,998 |
|
|
|
1,536,809 |
|
Accounts payable and accrued liabilities |
|
|
25,782,354 |
|
|
|
23,315,677 |
|
Advance deposits |
|
|
2,879,763 |
|
|
|
2,614,981 |
|
Dividends and distributions payable |
|
|
2,088,160 |
|
|
|
2,088,160 |
|
TOTAL LIABILITIES |
|
$ |
357,205,269 |
|
|
$ |
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, |
|
|
14,641 |
|
|
|
14,641 |
|
7.875% Series C cumulative redeemable perpetual preferred stock, |
|
|
13,461 |
|
|
|
13,461 |
|
8.25% Series D cumulative redeemable perpetual preferred stock, |
|
|
11,631 |
|
|
|
11,631 |
|
Common stock, par value $0.01, 69,000,000 shares authorized, 19,849,165 |
|
|
198,492 |
|
|
|
196,968 |
|
Additional paid-in capital |
|
|
176,000,351 |
|
|
|
175,779,222 |
|
Unearned ESOP shares |
|
|
(1,731,209 |
) |
|
|
(1,764,507 |
) |
Distributions in excess of retained earnings |
|
|
(125,680,386 |
) |
|
|
(125,021,013 |
) |
Total Sotherly Hotels Inc. stockholders’ equity |
|
|
48,826,981 |
|
|
|
49,230,403 |
|
Noncontrolling interest |
|
|
(1,343,862 |
) |
|
|
(1,331,744 |
) |
TOTAL EQUITY |
|
|
47,483,119 |
|
|
|
47,898,659 |
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
404,688,388 |
|
|
$ |
393,443,480 |
|
SOTHERLY HOTELS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
|
|
(unaudited) |
|
|
(unaudited) |
|
||
REVENUE |
|
|
|
|
|
|
||
Rooms department |
|
$ |
29,739,657 |
|
|
$ |
28,401,688 |
|
Food and beverage department |
|
|
9,752,449 |
|
|
|
8,748,726 |
|
Other operating departments |
|
|
7,056,326 |
|
|
|
6,340,863 |
|
Total revenue |
|
|
46,548,432 |
|
|
|
43,491,277 |
|
EXPENSES |
|
|
|
|
|
|
||
Hotel operating expenses |
|
|
|
|
|
|
||
Rooms department |
|
|
6,552,184 |
|
|
|
6,413,094 |
|
Food and beverage department |
|
|
6,464,855 |
|
|
|
5,935,560 |
|
Other operating departments |
|
|
2,686,142 |
|
|
|
2,315,848 |
|
Indirect |
|
|
18,484,896 |
|
|
|
16,747,577 |
|
Total hotel operating expenses |
|
|
34,188,077 |
|
|
|
31,412,079 |
|
Depreciation and amortization |
|
|
4,769,717 |
|
|
|
4,578,311 |
|
Corporate general and administrative |
|
|
1,916,526 |
|
|
|
1,980,765 |
|
Total hotel operating expenses |
|
|
40,874,320 |
|
|
|
37,971,155 |
|
NET OPERATING INCOME |
|
|
5,674,112 |
|
|
|
5,520,122 |
|
Other income (expense) |
|
|
|
|
|
|
||
Interest expense |
|
|
(4,888,806 |
) |
|
|
(4,113,597 |
) |
Interest income |
|
|
214,772 |
|
|
|
146,665 |
|
Other income |
|
|
124,877 |
|
|
|
— |
|
Loss on early extinguishment of debt |
|
|
(241,878 |
) |
|
|
— |
|
Realized gain and unrealized (loss) on hedging activities |
|
|
335,446 |
|
|
|
(442,464 |
) |
PPP debt forgiveness |
|
|
— |
|
|
|
275,494 |
|
Gain on involuntary conversion of assets |
|
|
122,391 |
|
|
|
16,476 |
|
Net income before income taxes |
|
|
1,340,914 |
|
|
|
1,402,696 |
|
Income tax provision |
|
|
(18,093 |
) |
|
|
(15,182 |
) |
Net income |
|
|
1,322,821 |
|
|
|
1,387,514 |
|
Add: Net loss attributable to noncontrolling interest |
|
|
12,118 |
|
|
|
24,960 |
|
Net income attributable to the Company |
|
|
1,334,939 |
|
|
|
1,412,474 |
|
Undeclared distributions to preferred stockholders |
|
|
(1,994,312 |
) |
|
|
(1,994,312 |
) |
Net loss attributable to common stockholders |
|
$ |
(659,373 |
) |
|
$ |
(581,838 |
) |
Net loss per share attributable to common stockholders: |
|
|
|
|
|
|
||
Basic |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
Diluted |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
Weighted average number of common shares outstanding |
|
|
|
|
|
|
||
Basic |
|
|
19,359,151 |
|
|
|
18,635,004 |
|
Diluted |
|
|
19,359,151 |
|
|
|
18,635,004 |
|
SOTHERLY HOTELS INC.
KEY OPERATING METRICS
(unaudited)
The following tables illustrate the key operating metrics for the three months ended March 31, 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 Hyde 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 Hyde Resort & Residences and the Hyde Beach House Resort & Residences, during the three months ended March 31, 2024 and the corresponding period in 2023.
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Actual Portfolio Metrics |
|
|
|
|
|
|
||
Occupancy % |
|
|
64.2 |
% |
|
|
60.5 |
% |
ADR |
|
$ |
182.75 |
|
|
$ |
187.19 |
|
RevPAR |
|
$ |
117.30 |
|
|
$ |
113.27 |
|
Composite Portfolio Metrics |
|
|
|
|
|
|
||
Occupancy % |
|
|
64.9 |
% |
|
|
60.4 |
% |
ADR |
|
$ |
190.50 |
|
|
$ |
197.07 |
|
RevPAR |
|
$ |
123.59 |
|
|
$ |
119.06 |
|
SOTHERLY HOTELS INC.
SUPPLEMENTAL DATA
(unaudited)
The following tables illustrate the key operating metrics for the three months ended March 31, 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
|
Q1 2024 |
|
|
Q1 2023 |
|
|
Q1 2022 |
|
|||
The DeSoto |
|
70.9 |
% |
|
|
64.4 |
% |
|
|
62.0 |
% |
DoubleTree by Hilton Jacksonville Riverfront |
|
70.2 |
% |
|
|
71.0 |
% |
|
|
64.5 |
% |
DoubleTree by Hilton Laurel |
|
47.2 |
% |
|
|
47.2 |
% |
|
|
47.8 |
% |
DoubleTree by Hilton Philadelphia Airport |
|
45.2 |
% |
|
|
54.5 |
% |
|
|
56.0 |
% |
DoubleTree Resort by Hilton Hollywood Beach |
|
75.5 |
% |
|
|
64.9 |
% |
|
|
63.4 |
% |
Georgian Terrace |
|
58.5 |
% |
|
|
46.7 |
% |
|
|
48.9 |
% |
Hotel Alba Tampa, Tapestry Collection by Hilton |
|
83.8 |
% |
|
|
83.4 |
% |
|
|
81.1 |
% |
Hotel Ballast Wilmington, Tapestry Collection by Hilton |
|
60.2 |
% |
|
|
55.8 |
% |
|
|
43.1 |
% |
Hyatt Centric Arlington |
|
73.0 |
% |
|
|
70.3 |
% |
|
|
43.8 |
% |
The Whitehall |
|
59.1 |
% |
|
|
48.6 |
% |
|
|
36.3 |
% |
Hyde Resort & Residences (1) |
|
78.7 |
% |
|
|
60.5 |
% |
|
|
62.2 |
% |
Hyde Beach House Resort & Residences (1) |
|
82.7 |
% |
|
|
56.6 |
% |
|
|
51.3 |
% |
All properties weighted average |
|
64.9 |
% |
|
|
60.4 |
% |
|
|
53.9 |
% |
(1) |
Reflects only those condominium units participating in our rental program for the period. |
ADR
|
Q1 2024 |
|
|
Q1 2023 |
|
|
Q1 2022 |
|
|||
The DeSoto |
$ |
213.38 |
|
|
$ |
211.97 |
|
|
$ |
200.95 |
|
DoubleTree by Hilton Jacksonville Riverfront |
$ |
148.38 |
|
|
$ |
160.63 |
|
|
$ |
148.26 |
|
DoubleTree by Hilton Laurel |
$ |
124.42 |
|
|
$ |
120.26 |
|
|
$ |
105.50 |
|
DoubleTree by Hilton Philadelphia Airport |
$ |
123.62 |
|
|
$ |
127.52 |
|
|
$ |
114.79 |
|
DoubleTree Resort by Hilton Hollywood Beach |
$ |
230.67 |
|
|
$ |
265.97 |
|
|
$ |
253.85 |
|
Georgian Terrace |
$ |
188.60 |
|
|
$ |
206.82 |
|
|
$ |
191.54 |
|
Hotel Alba Tampa, Tapestry Collection by Hilton |
$ |
215.30 |
|
|
$ |
214.33 |
|
|
$ |
187.56 |
|
Hotel Ballast Wilmington, Tapestry Collection by Hilton |
$ |
164.87 |
|
|
$ |
163.84 |
|
|
$ |
165.53 |
|
Hyatt Centric Arlington |
$ |
198.85 |
|
|
$ |
193.53 |
|
|
$ |
158.05 |
|
The Whitehall |
$ |
163.57 |
|
|
$ |
164.55 |
|
|
$ |
145.64 |
|
Hyde Resort & Residences (1) |
$ |
368.11 |
|
|
$ |
443.65 |
|
|
$ |
505.41 |
|
Hyde Beach House Resort & Residences (1) |
$ |
307.82 |
|
|
$ |
368.33 |
|
|
$ |
455.52 |
|
All properties weighted average |
$ |
190.50 |
|
|
$ |
197.07 |
|
|
$ |
187.23 |
|
|
|
(1) |
Reflects only those condominium units participating in our rental program for the period. |
RevPAR
|
Q1 2024 |
|
|
Q1 2023 |
|
|
Q1 2022 |
|
|||
The DeSoto |
$ |
151.37 |
|
|
$ |
136.43 |
|
|
$ |
124.54 |
|
DoubleTree by Hilton Jacksonville Riverfront |
$ |
104.15 |
|
|
$ |
114.05 |
|
|
$ |
95.60 |
|
DoubleTree by Hilton Laurel |
$ |
58.67 |
|
|
$ |
56.71 |
|
|
$ |
50.46 |
|
DoubleTree by Hilton Philadelphia Airport |
$ |
55.92 |
|
|
$ |
69.51 |
|
|
$ |
64.31 |
|
DoubleTree Resort by Hilton Hollywood Beach |
$ |
174.07 |
|
|
$ |
172.66 |
|
|
$ |
160.95 |
|
Georgian Terrace |
$ |
110.35 |
|
|
$ |
96.65 |
|
|
$ |
93.64 |
|
Hotel Alba Tampa, Tapestry Collection by Hilton |
$ |
180.37 |
|
|
$ |
178.83 |
|
|
$ |
152.11 |
|
Hotel Ballast Wilmington, Tapestry Collection by Hilton |
$ |
99.25 |
|
|
$ |
91.46 |
|
|
$ |
71.35 |
|
Hyatt Centric Arlington |
$ |
145.21 |
|
|
$ |
136.11 |
|
|
$ |
69.27 |
|
The Whitehall |
$ |
96.60 |
|
|
$ |
80.03 |
|
|
$ |
52.88 |
|
Hyde Resort & Residences (1) |
$ |
289.74 |
|
|
$ |
268.51 |
|
|
$ |
314.39 |
|
Hyde Beach House Resort & Residences (1) |
$ |
254.59 |
|
|
$ |
208.53 |
|
|
$ |
233.50 |
|
All properties weighted average |
$ |
123.59 |
|
|
$ |
119.06 |
|
|
$ |
100.89 |
|
|
|
(1) |
Reflects only those condominium units participating in our rental program for the period. |
|
|
SOTHERLY HOTELS INC.
RECONCILIATION OF NET INCOME (LOSS) TO
FFO, Adjusted FFO, EBITDA and Hotel EBITDA
(unaudited)
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Net income |
|
$ |
1,322,821 |
|
|
$ |
1,387,514 |
|
Depreciation and amortization - real estate |
|
|
4,754,911 |
|
|
|
4,564,625 |
|
Gain on involuntary conversion of assets |
|
|
(122,391 |
) |
|
|
(16,476 |
) |
FFO |
|
|
5,955,341 |
|
|
|
5,935,663 |
|
Distributions to preferred stockholders |
|
|
(1,994,312 |
) |
|
|
(1,994,312 |
) |
FFO attributable to common stockholders and unitholders |
|
|
3,961,029 |
|
|
|
3,941,351 |
|
Amortization |
|
|
14,806 |
|
|
|
13,686 |
|
ESOP and stock - based compensation |
|
|
255,956 |
|
|
|
260,463 |
|
Loss on early debt extinguishment |
|
|
241,878 |
|
|
|
— |
|
Unrealized loss on hedging activities |
|
|
704,671 |
|
|
|
442,464 |
|
Adjusted FFO attributable to common stockholders and unitholders |
|
$ |
5,178,340 |
|
|
$ |
4,657,964 |
|
|
|
|
|
|
|
|
||
Weighted average number of shares outstanding, basic |
|
|
19,359,151 |
|
|
|
18,635,004 |
|
|
|
|
|
|
|
|
||
Weighted average number of non-controlling units |
|
|
364,186 |
|
|
|
825,188 |
|
|
|
|
|
|
|
|
||
Weighted average number of shares and units outstanding, basic |
|
|
19,723,337 |
|
|
|
19,460,192 |
|
|
|
|
|
|
|
|
||
FFO per common share and unit |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
||
Adjusted FFO per common share and unit |
|
$ |
0.26 |
|
|
$ |
0.24 |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Net income |
|
$ |
1,322,821 |
|
|
$ |
1,387,514 |
|
Interest expense |
|
|
4,888,806 |
|
|
|
4,113,597 |
|
Interest income |
|
|
(214,772 |
) |
|
|
(146,665 |
) |
Income tax provision |
|
|
18,093 |
|
|
|
15,182 |
|
Depreciation and amortization |
|
|
4,769,717 |
|
|
|
4,578,311 |
|
EBITDA |
|
|
10,784,665 |
|
|
|
9,947,939 |
|
PPP loan forgiveness |
|
|
— |
|
|
|
(275,494 |
) |
Other income |
|
|
(124,877 |
) |
|
|
— |
|
Loss on early debt extinguishment |
|
|
241,878 |
|
|
|
— |
|
Gain on involuntary conversion of assets |
|
|
(122,391 |
) |
|
|
(16,476 |
) |
Subtotal |
|
|
10,779,275 |
|
|
|
9,655,969 |
|
Corporate general and administrative |
|
|
1,916,526 |
|
|
|
1,980,765 |
|
Realized (gain) and unrealized loss on hedging activities |
|
|
(335,446 |
) |
|
|
442,464 |
|
Hotel EBITDA |
|
$ |
12,360,355 |
|
|
$ |
12,079,198 |
|
Tables below are reflected in thousands of dollars:
Reconciliation of Outlook of Net Loss 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 Loss 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 share), Adjusted FFO (including Adjusted FFO per share), 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 accrued 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.