10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

SOTHERLY HOTELS INC.

(Exact name of registrant as specified in its charter)

Maryland	001-32379	20-1531029
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

SOTHERLY HOTELS LP

(Exact name of registrant as specified in its charter)

Delaware	001-36091	20-1965427
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

410 West Francis Street

Williamsburg, Virginia 23185

(757) 229-5648

(Address and Telephone Number of Principal Executive Offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Sotherly Hotels Inc.    Yes  ☒    No  ☐Sotherly Hotels LP    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

Sotherly Hotels Inc.    Yes  ☒    No  ☐Sotherly Hotels LP    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act. (Check one):

Sotherly Hotels Inc.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-accelerated Filer	☐	Smaller Reporting Company	☒
Emerging Growth Company	☐

Sotherly Hotels LP

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☒	Smaller Reporting Company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    

Sotherly Hotels Inc.    Yes  ☐    No  ☒Sotherly Hotels LP    Yes  ☐    No  ☒

As of November 1, 2019, there were 14,272,378 shares of Sotherly Hotels Inc.’s common stock issued and outstanding.  

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	SOHO	The NASDAQ Stock Market LLC
8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value	SOHOB	The NASDAQ Stock Market LLC
7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value	SOHOO	The NASDAQ Stock Market LLC
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value	SOHON	The NASDAQ Stock Market LLC

EXPLANATORY NOTE

We refer to Sotherly Hotels Inc. as the “Company,” Sotherly Hotels LP as the “Operating Partnership,” the Company’s common stock as “common stock,” the Company’s preferred stock as “preferred stock,” and the Operating Partnership’s preferred interest as the “preferred interest.”  References to “we” and “our” mean the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

The Company conducts virtually all of its activities through the Operating Partnership and is its sole general partner. The partnership agreement provides that the Operating Partnership will assume and pay when due, or reimburse the Company for payment of, all costs and expenses relating to the ownership and operations of, or for the benefit of, the Operating Partnership. The partnership agreement further provides that all expenses of the Company are deemed to be incurred for the benefit of the Operating Partnership.

This report combines the Quarterly Reports on Form 10-Q for the period ended September 30, 2019 of the Company and the Operating Partnership. We believe combining the quarterly reports into this single report results in the following benefits:

• combined reports better reflect how management and investors view the business as a single operating unit;

• combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

• combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

• combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

• Consolidated Financial Statements;

• the following Notes to Consolidated Financial Statements:

• Note 7 – Preferred Stock and Units;

• Note 8 – Common Stock and Units;

• Note 13 – Loss Per Share and Per Unit; and

• Note 14 – Subsequent Events;

• Item 4 - Controls and Procedures; and

• Item 6 - Certifications of CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.

3

SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

INDEX

		Page
PART I
Item 1.	Consolidated Financial Statements	5
	Sotherly Hotels Inc.
	Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	5
	Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	6
	Consolidated Statements of Changes in Equity (unaudited) for the Three Months Ended March 31, June 30 and September 30, 2019and 2018	7
	Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2019 and 2018	10
	Sotherly Hotels LP
	Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	11
	Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	12
	Consolidated Statements of Changes in Partners’ Capital (unaudited) for the Three Months Ended March 31, June 30 and September 30, 2019and 2018	13
	Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2019 and 2018	17
	Notes to Consolidated Financial Statements	18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4	Controls and Procedures	50
PART II
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53

4

PART I

Item 1. Consolidated Financial Statements

SOTHERLY HOTELS INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2019			December 31, 2018
	(unaudited)
ASSETS
Investment in hotel properties, net	$	446,839,580		$	435,725,814
Cash and cash equivalents		30,059,697			33,792,773
Restricted cash		5,192,730			4,075,508
Accounts receivable, net		6,298,119			6,766,696
Accounts receivable - affiliate		86,663			262,572
Prepaid expenses, inventory and other assets		5,494,165			5,262,884
Favorable lease assets, net		—			2,465,421
Deferred income taxes		4,679,010			5,131,179
TOTAL ASSETS	$	498,649,964		$	493,482,847
LIABILITIES
Mortgage loans, net	$	360,549,890		$	364,828,845
Unsecured notes, net		—			23,894,658
Accounts payable and accrued liabilities		24,308,930			16,268,096
Advance deposits		2,397,095			2,815,283
Dividends and distributions payable		4,210,494			3,409,593
TOTAL LIABILITIES	$	391,466,409		$	411,216,475
Commitments and contingencies  (See Note 6)		—			—
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,    liquidation preference $25 per share, 1,610,000 shares issued    and outstanding at September 30, 2019 and December 31, 2018, respectively.		16,100			16,100
7.875% Series C cumulative redeemable perpetual preferred stock,    liquidation preference $25 per share, 1,554,610 and 1,352,141 shares issued    and outstanding at September 30, 2019 and December 31, 2018, respectively.		15,546			13,521
8.25% Series D cumulative redeemable perpetual preferred stock,    liquidation preference $25 per share, 1,200,000 shares issued    and outstanding at September 30, 2019 and none at December 31, 2018.		12,000			—
Common stock, par value $0.01, 49,000,000 shares authorized, 14,222,378    shares and 14,209,378 shares issued and outstanding at September 30, 2019    and December 31, 2018, respectively.		142,223			142,093
Additional paid-in capital		180,415,231			147,085,112
Unearned ESOP shares		(4,175,564	)		(4,379,742	)
Distributions in excess of retained earnings		(68,687,461	)		(61,052,418	)
Total Sotherly Hotels Inc. stockholders’ equity		107,738,075			81,824,666
Noncontrolling interest		(554,520	)		441,706
TOTAL EQUITY		107,183,555			82,266,372
TOTAL LIABILITIES AND EQUITY	$	498,649,964		$	493,482,847

The accompanying notes are an integral part of these consolidated financial statements.

5

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
REVENUE
Rooms department	$	29,253,447		$	28,626,265		$	98,561,643		$	92,242,385
Food and beverage department		8,997,948			8,417,293			29,584,705			27,849,844
Other operating departments		4,300,780			4,374,504			13,336,834			14,614,915
Total revenue		42,552,175			41,418,062			141,483,182			134,707,144
EXPENSES
Hotel operating expenses
Rooms department		8,064,771			7,873,836			24,264,623			22,750,381
Food and beverage department		7,036,887			6,680,563			21,795,051			20,748,688
Other operating departments		1,352,205			1,661,128			5,007,651			4,870,037
Indirect		17,194,148			16,027,496			52,757,527			48,901,037
Total hotel operating expenses		33,648,011			32,243,023			103,824,852			97,270,143
Depreciation and amortization		4,980,168			4,547,043			16,117,278			15,783,174
Loss (gain) on disposal of assets		4,918			(7,555	)		32,088			(3,816	)
Corporate general and administrative		1,768,912			1,516,408			5,008,290			4,566,258
Total operating expenses		40,402,009			38,298,919			124,982,508			117,615,759
NET OPERATING INCOME		2,150,166			3,119,143			16,500,674			17,091,385
Other income (expense)
Interest expense		(4,722,456	)		(5,306,641	)		(15,115,690	)		(14,571,142	)
Interest income		102,768			88,484			357,576			236,693
Loss on early extinguishment of debt		-			(753,133	)		(1,152,356	)		(753,133	)
Unrealized (loss) gain on hedging activities		(226,491	)		123,443			(1,554,924	)		141,970
Gain on exercise of development right		3,940,000			—			3,940,000			—
Gain on involuntary conversion of assets		130,569			—			291,902			898,565
Net income (loss) before income taxes		1,374,556			(2,728,704	)		3,267,182			3,044,338
Income tax benefit (provision)		694,190			746,924			(439,323	)		(882,045	)
Net income (loss)		2,068,746			(1,981,780	)		2,827,859			2,162,293
Less: Net loss attributable to noncontrolling interest		13,337			385,616			311,642			245,298
Net income (loss) attributable to the Company		2,082,083			(1,596,164	)		3,139,501			2,407,591
Distributions to preferred stockholders		(2,188,910	)		(1,469,719	)		(5,631,799	)		(4,359,407	)
Net loss available to common stockholders	$	(106,827	)	$	(3,065,883	)	$	(2,492,298	)	$	(1,951,816	)
Net loss per share available to common stockholders
Basic	$	(0.01	)	$	(0.23	)	$	(0.18	)	$	(0.14	)
Weighted average number of common shares outstanding
Basic		13,636,706			13,513,996			13,624,760			13,491,807

The accompanying notes are an integral part of these consolidated financial statements.

6

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

									Additional			Unearned			Distributions
	Preferred Stock				Common Stock				Paid-			ESOP			in Excess of			Noncontrolling
	Shares		Par Value		Shares		Par Value		In Capital			Shares			Retained Earnings			Interest			Total
Balances at December 31, 2018		2,962,141	$	29,621		14,209,378	$	142,093	$	147,085,112		$	(4,379,742	)	$	(61,052,418	)	$	441,706		$	82,266,372
Net loss		—		—		—		—		—			—			(183,256	)		(206,949	)		(390,205	)
Issuance of restricted    common stock awards		—		—		13,000		130		92,203			—			—			—			92,333
Amortization of ESOP    shares		—		—		—		—		(1,141	)		67,234			—			—			66,093
Amortization of restricted    stock award		—		—		—		—		8,025			—			—			—			8,025
Preferred stock dividends declared:
Series B Preferred Stock, $0.50/share		—		—		—		—		—			—			(805,000	)		—			(805,000	)
Series C Preferred Stock, $0.492188/share		—		—		—		—		—			—			(665,507	)		—			(665,507	)
Common stock, $0.125/share dividends and    distributions declared		—		—		—		—		—			—			(1,699,906	)		(222,268	)		(1,922,174	)
Balances at March 31, 2019 (unaudited)		2,962,141	$	29,621		14,222,378	$	142,223	$	147,184,199		$	(4,312,508	)	$	(64,406,087	)	$	12,489		$	78,649,937
Net income		—		—		—		—		—			—			1,240,673			(91,356	)		1,149,317
Issuance of preferred stock		1,200,000		12,000		—		—		28,365,519			—			—			—			28,377,519
Amortization of ESOP    shares		—		—		—		—		—			67,160			—			—			67,160
Amortization of restricted    stock award		—		—		—		—		8,025			—			—			—			8,025
Preferred stock dividends declared:																						—
Series B Preferred Stock, $0.50/share		—		—		—		—		—			—			(805,000	)		—			(805,000	)
Series C Preferred Stock, $0.492188/share		—		—		—		—		—			—			(665,507	)		—			(665,507	)
Series D Preferred Stock, $0.41823/share		—		—		—		—		—			—			(501,876	)		—			(501,876	)
Common stock, $0.13/share dividends and    distributions declared		—		—		—		—		—			—			(1,682,361	)		(231,158	)		(1,913,519	)
Balances at June 30, 2019 (unaudited)		4,162,141	$	41,621		14,222,378	$	142,223	$	175,557,743		$	(4,245,348	)	$	(66,820,158	)	$	(310,025	)	$	104,366,056
Net income		—		—		—		—		—			—			2,082,083			(13,337	)		2,068,746
Issuance of preferred stock		202,469		2,025		—		—		4,858,988			—			—			—			4,861,013
Amortization of ESOP    shares		—		—		—		—		(9,525	)		69,784			—			—			60,259
Amortization of restricted    stock award		—		—		—		—		8,025			—			—			—			8,025
Preferred stock dividends declared:
Series B Preferred Stock, $0.50/share		—		—		—		—		—			—			(805,000	)		—			(805,000	)
Series C Preferred Stock, $0.492188/share		—		—		—		—		—			—			(765,160	)		—			(765,160	)
Series D Preferred Stock, $0.515625/share		—		—		—		—		—			—			(618,750	)		—			(618,750	)
Common stock, $0.13/share dividends and    distributions declared		—		—		—		—		—			—			(1,760,476	)		(231,158	)		(1,991,634	)
Balances at September 30, 2019 (unaudited)		4,364,610	$	43,646		14,222,378	$	142,223	$	180,415,231		$	(4,175,564	)	$	(68,687,461	)	$	(554,520	)	$	107,183,555

The accompanying notes are an integral part of these consolidated financial statements.

7

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

									Additional		Unearned			Distributions
	Preferred Stock				Common Stock				Paid-		ESOP			in Excess of			Noncontrolling
	Shares		Par Value		Shares		Par Value		In Capital		Shares			Retained Earnings			Interest			Total
Balances at December 31,    2017		2,910,000	$	29,100		14,078,831	$	140,788	$	146,249,339	$	(4,633,112	)	$	(48,765,860	)	$	1,154,775		$	94,175,030
Net income		—		—		—		—		—		—			1,206,501			(30,013	)		1,176,488
Issuance of unrestricted    common stock awards		—		—		2,250		23		13,454		—			—			—			13,477
Issuance of restricted    common stock awards		—		—		40,000		400		89,450		—			—			—			89,850
Amortization of ESOP    shares		—		—		—		—		—		60,170			—			—			60,170
Amortization of restricted    stock award		—		—		—		—		8,025		—			—			—			8,025
Preferred stock dividends declared:
Series B Preferred Stock, $0.50/share		—		—		—		—		—		—			(805,000	)		—			(805,000	)
Series C Preferred Stock, $0.492188/share		—		—		—		—		—		—			(639,844	)		—			(639,844	)
Common stock, $0.115/share dividends and    distributions declared		—		—		—		—		—		—			(1,553,864	)		(204,486	)		(1,758,350	)
Balances at March 31,    2018 (unaudited)		2,910,000	$	29,100		14,121,081	$	141,211	$	146,360,268	$	(4,572,942	)	$	(50,558,067	)	$	920,276		$	92,319,846
Net income		—		—		—		—		—		—			2,797,258			170,331			2,967,589
Amortization of ESOP    shares		—		—		—		—		—		61,673			—			—			61,673
Amortization of restricted    stock award		—		—		—		—		8,025		—			—			—			8,025
Preferred stock dividends declared:
Series B Preferred Stock, $0.50/share		—		—		—		—		—		—			(805,000	)		—			(805,000	)
Series C Preferred Stock, $0.492188/share		—		—		—		—		—		—			(639,844	)		—			(639,844	)
Common stock, $0.12/share dividends and    distributions declared		—		—		—		—		—		—			(1,605,893	)		(213,377	)		(1,819,270	)
Balances at June 30, 2018 (unaudited)		2,910,000	$	29,100		14,121,081	$	141,211	$	146,368,293	$	(4,511,269	)	$	(50,811,546	)	$	877,230		$	92,093,019
Net loss		—		—		—		—		—		—			(1,596,164	)		(385,616	)		(1,981,780	)
Issuance of preferred stock		50,541		505		—		—		1,187,561		—			—			—			1,188,066
Issuance of common stock		—		—		88,297		882		576,780		—			—			—			577,662
Amortization of ESOP    shares		—		—		—		—		—		64,294			—			—			64,294
Amortization of restricted    stock award		—		—		—		—		8,025		—			—			—			8,025
Preferred stock dividends declared:
Series B Preferred Stock, $0.50/share		—		—		—		—		—		—			(805,000	)		—			(805,000	)

8

Series C Preferred Stock, $0.492188/share	—		—	—		—		—		—			(664,719	)		—			(664,719	)
Common stock, $0.125/share dividends and    distributions declared	—		—	—		—		—		—			(1,754,486	)		(222,268	)		(1,976,754	)
Balances at September 30, 2018 (unaudited)	2,960,541	$	29,605	14,209,378	$	142,093	$	148,140,659	$	(4,446,975	)	$	(55,631,915	)	$	269,346		$	88,502,813

The accompanying notes are an integral part of these consolidated financial statements.

9

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	2,827,859		$	2,162,293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,117,278			15,783,174
Amortization of deferred financing costs		650,638			598,142
Amortization of mortgage premium		(18,511	)		(18,511	)
Gain on exercise of development right		(3,940,000	)		—
Gain on involuntary conversion of assets		(291,902	)		(898,565	)
Unrealized loss (gain) on hedging activities		1,554,924			(141,970	)
Loss (gain) on disposal of assets		32,088			(3,816	)
Loss on early extinguishment of debt		1,152,356			753,133
ESOP and stock - based compensation		309,920			313,540
Changes in assets and liabilities:
Accounts receivable		468,577			(1,942,179	)
Prepaid expenses, inventory and other assets		(1,395,457	)		1,045,824
Deferred income taxes		452,169			750,739
Accounts payable and other accrued liabilities		4,211,459			3,006,385
Advance deposits		(418,188	)		566,621
Accounts receivable - affiliate		175,909			(8,959	)
Net cash provided by operating activities		21,889,119			21,965,851
Cash flows from investing activities:
Acquisitions of hotel properties		(6,346,378	)		(79,732,716	)
Improvements and additions to hotel properties		(10,846,325	)		(18,497,781	)
Proceeds from involuntary conversion		291,902			898,565
Proceeds from the disposal of assets		4,934			7,555
Net cash used in investing activities		(16,895,867	)		(97,324,377	)
Cash flows from financing activities:
Proceeds of mortgage debt		—			145,795,332
Proceeds of unsecured debt		—			25,000,000
Proceeds from issuance of common stock, net		—			577,661
Proceeds from issuance of preferred stock, net		33,238,532			1,188,066
Redemption of unsecured notes		(25,250,000	)		—
Payments on mortgage loans		(4,582,990	)		(75,346,629	)
Payments of deferred financing costs		(106,950	)		(3,669,192	)
Dividends on common stock and distributions paid		(5,994,302	)		(5,318,695	)
Preferred dividends paid		(4,913,396	)		(4,256,328	)
Net cash (used in) provided by financing activities		(7,609,106	)		83,970,215
Net (decrease) increase in cash, cash equivalents and restricted cash		(2,615,854	)		8,611,689
Cash, cash equivalents and restricted cash at the beginning of the period		37,868,281			33,429,042
Cash, cash equivalents and restricted cash at the end of the period	$	35,252,427		$	42,040,731
Supplemental disclosures:
Cash paid during the period for interest	$	13,995,139		$	12,859,556
Cash paid (received) during the period for income taxes	$	(46,695	)	$	278,720
Non-cash investing and financing activities:
Deficiency of fair value of interest rate swap to cost	$	-		$	294,176
Change in amount of improvements to hotel property in accounts payable and accrued liabilities	$	335,331		$	251,195
Exercise of development right	$	3,940,000		$	-

The accompanying notes are an integral part of these consolidated financial statements.

10

SOTHERLY HOTELS LP

CONSOLIDATED BALANCE SHEETS

	September 30, 2019		December 31, 2018
	(unaudited)
ASSETS
Investment in hotel properties, net	$	446,839,580	$	435,725,814
Cash and cash equivalents		30,059,697		33,792,773
Restricted cash		5,192,730		4,075,508
Accounts receivable, net		6,298,119		6,766,696
Accounts receivable - affiliate		86,663		262,572
Loan receivable - affiliate		4,270,679		4,446,410
Prepaid expenses, inventory and other assets		5,494,165		5,262,884
Favorable lease assets, net		—		2,465,421
Deferred income taxes		4,679,010		5,131,179
TOTAL ASSETS	$	502,920,643	$	497,929,257
LIABILITIES
Mortgage loans, net	$	360,549,890	$	364,828,845
Unsecured notes, net		—		23,894,658
Accounts payable and other accrued liabilities		24,308,930		16,268,100
Advance deposits		2,397,095		2,815,283
Dividends and distributions payable		4,268,977		3,466,136
TOTAL LIABILITIES	$	391,524,892	$	411,273,022
Commitments and contingencies (see Note 6)		—		—
PARTNERS’ CAPITAL
Preferred units, 11,000,000 units authorized;
8.0% Series B cumulative redeemable perpetual preferred units, liquidation preference $25 per unit, 1,610,000 units issued and outstanding at September 30, 2019 and December 31, 2018, respectively.		37,766,531		37,766,531
7.875% Series C cumulative redeemable perpetual preferred units, liquidation preference $25 per unit, 1,554,610 and 1,352,141 units issued and outstanding at September 30, 2019 and December 31, 2018, respectively.		36,354,736		31,493,723
8.25% Series D cumulative redeemable perpetual preferred units, liquidation preference $25 per unit, 1,200,000 units issued and outstanding at September 30, 2019 and none at December 31, 2018.		28,377,519		—
General Partner: 160,006 units and 159,876 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively.		375,888		452,165
Limited Partners: 15,840,512 units and 15,827,642 units issued and outstanding as    of September 30, 2019 and December 31, 2018, respectively.		8,521,077		16,943,816
TOTAL PARTNERS’ CAPITAL		111,395,751		86,656,235
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	502,920,643	$	497,929,257

The accompanying notes are an integral part of these consolidated financial statements.

11

SOTHERLY HOTELS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	ThreeMonths Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
REVENUE
Rooms department	$	29,253,447		$	28,626,265		$	98,561,643		$	92,242,385
Food and beverage department		8,997,948			8,417,293			29,584,705			27,849,844
Other operating departments		4,300,780			4,374,504			13,336,834			14,614,915
Total revenue		42,552,175			41,418,062			141,483,182			134,707,144
EXPENSES
Hotel operating expenses
Rooms department		8,064,771			7,873,836			24,264,623			22,750,381
Food and beverage department		7,036,887			6,680,563			21,795,051			20,748,688
Other operating departments		1,352,205			1,661,128			5,007,651			4,870,037
Indirect		17,194,148			16,027,496			52,757,527			48,901,037
Total hotel operating expenses		33,648,011			32,243,023			103,824,852			97,270,143
Depreciation and amortization		4,980,168			4,547,043			16,117,278			15,783,174
Loss (gain) on disposal of assets		4,918			(7,555	)		32,088			(3,816	)
Corporate general and administrative		1,768,912			1,516,408			5,008,290			4,566,258
Total operating expenses		40,402,009			38,298,919			124,982,508			117,615,759
NET OPERATING INCOME		2,150,166			3,119,143			16,500,674			17,091,385
Other income (expense)
Interest expense		(4,722,456	)		(5,306,641	)		(15,115,690	)		(14,571,142	)
Interest income		102,768			88,484			357,576			236,693
Loss on early extinguishment of debt		—			(753,133	)		(1,152,356	)		(753,133	)
Unrealized (loss) gain on hedging activities		(226,491	)		123,443			(1,554,924	)		141,970
Gain on exercise of development right		3,940,000			—			3,940,000			—
Gain on involuntary conversion of assets		130,569			—			291,902			898,565
Net income (loss) before income taxes		1,374,556			(2,728,704	)		3,267,182			3,044,338
Income tax benefit (provision)		694,190			746,924			(439,323	)		(882,045	)
Net income (loss)		2,068,746			(1,981,780	)		2,827,859			2,162,293
Distributions to preferred unit holder		(2,188,910	)		(1,469,719	)		(5,631,799	)		(4,359,407	)
Net loss available to general and limited partnership unit holders	$	(120,164	)	$	(3,451,499	)	$	(2,803,940	)	$	(2,197,114	)
Net loss attributable per general and limited partner unit
Basic	$	(0.01	)	$	(0.22	)	$	(0.18	)	$	(0.14	)
Weighted average number of general and limited partner units outstanding
Basic		16,000,518			15,915,706			15,998,556			15,902,565

The accompanying notes are an integral part of these consolidated financial statements.

12

SOTHERLY HOTELS LP

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

	Preferred Units											General Partner					Limited Partner
	Units		Series B Amounts			Series C Amounts			Series D Amounts			Units		Amounts			Units		Amounts			Total
Balances at December 31, 2018		2,962,141	$	37,766,531		$	31,493,723		$	—			159,876	$	452,165			15,827,642	$	16,943,816		$	86,656,235
Issuance of general and limited    partnership units		—		—			—			—			130		923			12,870		91,410			92,333
Amortization of restricted    units award		—		—			—			—			—		80			—		7,945			8,025
Unit based compensation		—		—			—			—			—		908			—		89,860			90,768
Preferred units distributions declared:
Series B Preferred Units, $0.50/unit		—		(805,000	)		—			—			—		—			—		—			(805,000	)
Series C Preferred Units, $0.492188/unit		—		—			(665,507	)		—			—		—			—		—			(665,507	)
Partnership units, $0.125/unit    distributions declared		—		—			—			—			—		(17,806	)		—		(1,985,071	)		(2,002,877	)
Net loss		—		805,000			665,507			—			—		(18,607	)		—		(1,842,105	)		(390,205	)
Balances at March 31, 2019 (unaudited)		2,962,141	$	37,766,531		$	31,493,723		$	—			160,006	$	417,663			15,840,512	$	13,305,855		$	82,983,772
Issuance of preferred    partnership units		1,200,000		—			—			28,377,519			—		—			—		—			28,377,519
Amortization of restricted    units award		—		—			—			—			—		80			—		7,945			8,025
Unit based compensation		—		—			—			—			—		1,730			—		171,299			173,029
Preferred units distributions declared:
Series B Preferred Units, $0.50/unit		—		(805,000	)		—			—			—		—			—		—			(805,000	)
Series C Preferred Units, $0.492188/unit		—		—			(665,507	)		—			—		—			—		—			(665,507	)
Series D Preferred Units, $0.41823/unit		—		—			—			(501,875	)		—		—			—		—			(501,875	)
Partnership units, $0.13/unit    distributions declared		—		—			—			—			—		(16,622	)		—		(2,063,444	)		(2,080,066	)
Net income		—		805,000			665,507			501,875			—		(8,231	)		—		(814,836	)		1,149,315
Balances at June 30, 2019 (unaudited)		4,162,141	$	37,766,531		$	31,493,723		$	28,377,519			160,006	$	394,620			15,840,512	$	10,606,819		$	108,639,212
Issuance of preferred    partnership units		202,469		—			4,861,013			—			—		—			—		—			4,861,013
Amortization of restricted    units award		—		—			—			—			—		80			—		7,945			8,025
Unit based compensation		—		—			—			—			—		877			—		86,842			87,719
Preferred units distributions declared:
Series B Preferred Units, $0.50/unit		—		(805,000	)		—			—			—		—			—		—			(805,000	)
Series C Preferred Units, $0.492188/unit		—		—			(765,160	)		—			—		—			—		—			(765,160	)
Series D Preferred Units, $0.515625/unit		—		—			—			(618,750	)		—		—			—		—			(618,750	)
Partnership units, $0.13/unit    distributions declared		—		—			—			—			—		(18,487	)		—		(2,061,567	)		(2,080,054	)
Net income		—		805,000			765,160			618,750			—		(1,202	)		—		(118,962	)		2,068,746
Balances at September 30, 2019 (unaudited)		4,364,610	$	37,766,531		$	36,354,736		$	28,377,519			160,006	$	375,888			15,840,512	$	8,521,077		$	111,395,751

The accompanying notes are an integral part of these consolidated financial statements.

13

SOTHERLY HOTELS LP

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

14

	Preferred Units										General Partner					Limited Partner
	Units		Series B Amounts			Series C Amounts			Series D Amounts		Units		Amounts			Units		Amounts			Total
Balances at December    31, 2017		2,910,000	$	37,766,531		$	30,488,660		$	—		158,570	$	586,725			15,698,401	$	29,938,539		$	98,780,455
Issuance of general and limited    partnership units		—		—			—			—		423		1,034			41,827		102,294			103,328
Amortization of restricted    units award		—		—			—			—		—		—			—		8,025			8,025
Unit based compensation		—		—			—			—		—		—			—		87,267			87,267
Preferred units distributions declared:
Series B Preferred Units, $0.50/unit		—		(805,000	)		—			—		—		—			—		—			(805,000	)
Series C Preferred Units, $0.492188/unit		—		—			(639,844	)		—		—		—			—		—			(639,844	)
Partnership units, $0.115/unit    distributions declared		—		—			—			—		—		(18,285	)		—		(1,810,125	)		(1,828,410	)
Net income		—		805,000			639,844			—		—		11,765			—		(280,121	)		1,176,488
Balances at March 31, 2018    (unaudited)		2,910,000	$	37,766,531		$	30,488,660		$	—		158,993	$	581,239			15,740,228	$	28,045,879		$	96,882,309
Amortization of restricted    units award		—		—			—			—		—		—			—		8,025			8,025
Unit based compensation		—		—			—			—		—		—			—		93,254			93,254
Preferred units distributions declared:
Series B Preferred Units, $0.50/unit		—		(805,000	)		—			—		—		—			—		—			(805,000	)
Series C Preferred Units, $0.492188/unit		—		—			(639,844	)		—		—		—			—		—			(639,844	)
Partnership units, $0.12/unit    distributions declared		—		-			—			—		—		(19,080	)		—		(1,888,827	)		(1,907,907	)
Net income		—		805,000			639,844			—		—		29,676			—		1,493,069			2,967,589
Balances at June 30, 2018    (unaudited)		2,910,000	$	37,766,531		$	30,488,660		$	—		158,993	$	591,835			15,740,228	$	27,751,400		$	96,598,426
Issuance of general and limited partnership units		—		—			—			—		883		5,776			87,414		571,881			577,657
Issuance of preferred units		50,541		—			1,188,066			—		—		—			—		—			1,188,066
Amortization of restricted    units award		—		—			—			—		—		—			—		8,025			8,025
Unit based compensation		—		—			—			—		—		—			—		27,611			27,611
Preferred units distributions declared:
Series B Preferred Units, $0.50/unit		—		(805,000	)		—			—		—		—			—		—			(805,000	)
Series C Preferred Units, $0.492188/unit		—		—			(664,719	)		—		—		—			—		—			(664,719	)
Partnership units, $0.12/unit    distributions declared		—		-			—			—		—		(19,955	)		—		(1,975,673	)		(1,995,628	)
Net loss		—		805,000			664,719			—		—		(63,413	)		—		(3,388,086	)		(1,981,780	)

15

Balances at September 30, 2018    (unaudited) 2,960,541 $ 37,766,531 $ 31,676,726 $ - 159,876 $ 514,243 15,827,642 $ 22,995,158 $ 92,952,658

The accompanying notes are an integral part of these consolidated financial statements.

16

SOTHERLY HOTELS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	2,827,859		$	2,162,293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,117,278			15,783,174
Amortization of deferred financing costs		650,638			598,142
Amortization of mortgage premium		(18,511	)		(18,511	)
Gain on exercise of development right		(3,940,000	)		—
Gain on involuntary conversion of assets		(291,902	)		(898,565	)
Unrealized loss (gain) on hedging activities		1,554,924			(141,970	)
Loss (gain) on disposal of assets		32,088			(3,816	)
Loss on early extinguishment of debt		1,152,356			753,133
ESOP and unit - based compensation		467,924			335,531
Changes in assets and liabilities:
Accounts receivable		468,577			(1,942,179	)
Prepaid expenses, inventory and other assets		(1,395,457	)		1,045,824
Deferred income taxes		452,169			750,739
Accounts payable and other accrued liabilities		4,211,459			3,006,385
Advance deposits		(418,188	)		566,621
Accounts receivable - affiliate		175,909			(8,959	)
Net cash provided by operating activities		22,047,123			21,987,842
Cash flows from investing activities:
Acquisitions of hotel properties		(6,346,378	)		(79,732,716	)
Improvements and additions to hotel properties		(10,846,325	)		(18,497,781	)
ESOP loan payments received		175,731			148,016
Proceeds from involuntary conversion		291,902			898,565
Proceeds from the disposal of assets		4,934			7,555
Net cash used in investing activities		(16,720,136	)		(97,176,361	)
Cash flows from financing activities:
Proceeds of mortgage debt		—			145,795,332
Proceeds of unsecured debt		—			25,000,000
Proceeds from issuance of general and limited partnership units, net		—			577,661
Proceeds from issuance of preferred partnership units, net		33,238,532			1,188,066
Redemption of unsecured notes		(25,250,000	)		—
Payments on mortgage loans		(4,582,990	)		(75,346,629	)
Payments of deferred financing costs		(106,950	)		(3,669,192	)
Distributions on general and limited partnership interests		(6,328,037	)		(5,488,702	)
Distributions on preferred partnership interests		(4,913,396	)		(4,256,328	)
Net cash(used in) provided by financing activities		(7,942,841	)		83,800,208
Net  (decrease) increase in cash, cash equivalents and restricted cash		(2,615,854	)		8,611,689
Cash, cash equivalents and restricted cash at the beginning of the period		37,868,281			33,429,042
Cash, cash equivalents and restricted cash at the end of the period	$	35,252,427		$	42,040,731
Supplemental disclosures:
Cash paid during the period for interest	$	13,993,340		$	12,859,556
Cash paid during the period for income taxes	$	(46,695	)	$	278,720
Non-cash investing and financing activities:
Deficiency of fair value of interest rate swap to cost	$	-		$	294,176
Change in amount of improvements to hotel property in accounts payable and accrued liabilities	$	335,331		$	251,195
Exercise of development right	$	3,940,000		$	-

The accompanying notes are an integral part of these consolidated financial statements.

17

SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Description of Business

Sotherly Hotels Inc. (the “Company”) is a self-managed and self-administered lodging real estate investment trust (“REIT”) that was incorporated in Maryland on August 20, 2004 to own full-service, primarily upscale and upper-upscale hotels located in primary and secondary markets in the mid-Atlantic and southern United States.  Currently, the Company is focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the southern United States.  The Company’s portfolio consists of investments in twelve hotel properties comprising 3,156 rooms, as well as interests in two condominium hotels and their associated rental programs.   The Company owns hotels that operate under the Hilton Worldwide, Marriott International, Inc., and Hyatt Hotels Corporation brands, as well as independent hotels.

The Company commenced operations on December 21, 2004 when it completed its initial public offering and thereafter consummated the acquisition of six hotel properties (the “Initial Properties”). Substantially all of the Company’s assets are held by, and all of its operations are conducted through, Sotherly Hotels LP (the “Operating Partnership”), which at September 30, 2019, was approximately 88.9% owned by the Company.  Pursuant to the terms of the Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of the Operating Partnership, the Company, as general partner, is not entitled to compensation for its services to the Operating Partnership.  The Company, as general partner, conducts substantially all of its operations through the Operating Partnership and the Company’s administrative expenses are the obligations of the Operating Partnership.  Additionally, the Company is entitled to reimbursement for any expenditure incurred by it on the Operating Partnership’s behalf.

For the Company to qualify as a REIT, it cannot operate hotels. Therefore, the Operating Partnership, through its subsidiaries, leases the hotels to direct and indirect subsidiaries of MHI Hospitality TRS Holding, Inc. (collectively, “MHI TRS”), which is a wholly-owned subsidiary of the Operating Partnership. MHI TRS then engages eligible independent hotel management companies, including MHI Hotels Services, LLC, which does business as Chesapeake Hospitality (“Chesapeake Hospitality”) and Highgate Hotels, L.P. (“Highgate Hotels”), to operate the hotels under management contracts. MHI TRS is treated as a taxable REIT subsidiary for federal income tax purposes.

All references in this report to “we”, “us” and “our” refer to the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

Significant transactions occurring during the current and prior fiscal year include the following:

On February 1, 2018, we received proceeds of $5.0 million on the Hotel Ballast mortgage loan after meeting certain requirements, per the mortgage documents.

On February 12, 2018, the Company and the Operating Partnership closed on a sale and issuance by the Operating Partnership of an aggregate $25.0 million of the 7.25% senior unsecured notes due 2021 (the “7.25% Notes”), unconditionally guaranteed by the Company, for net proceeds after all estimated expenses of approximately $23.3 million.  The Operating Partnership used the net proceeds from this offering, together with existing cash on hand and $57.0 million of asset-level mortgage indebtedness, to finance the acquisition of the Hyatt Centric Arlington and for working capital.

On February 26, 2018, we entered into a First Amendment to Loan Agreement, Amended and Restated Promissory Note, and other related documents with International Bank of Commerce to amend the terms of the mortgage loan on The Whitehall hotel located in Houston, TX.  Pursuant to the amended loan documents, payments of principal and interest on a 25-year amortization schedule have begun and the maturity date was extended until February 26, 2023.

On March 1, 2018, we acquired the 318-room Hyatt Centric Arlington located in Arlington, Virginia at an aggregate purchase price of approximately $79.7 million, including seller credits (the “Arlington Acquisition”).  Concurrently with the closing, we entered into a franchise agreement with an affiliate of Hyatt Hotels Corporation for the hotel to continue operating as the Hyatt Centric Arlington, and a management agreement with Highgate Hotels for the management of the hotel.  The management agreement: (i) has an initial term of three years commencing March 1, 2018; (ii) provides for a base management fee equal to 2.50% of gross revenues; and (iii)provides for an incentive management fee equal to 10% of the amount by which gross operating profit, as defined in the management agreement, for a given year exceeds the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any year shall not exceed 0.5% of the gross revenues of the hotel.  The Hyatt Centric Arlington is subject to a long-term ground lease agreement that covers all of the land underlying the hotel.  The ground lease requires usto make rental payments of $50,000 per year in base rent and percentage rent equal to 3.5% of gross rooms revenues in excess of

18

certain thresholds, as defined in the agreements.  The initial term of the ground lease expires in 2025 and may be extended by us for five additional renewal periods of 10 years each.

On March 1, 2018, we entered into a loan agreement, a first and second promissory note (“Note A” and “Note B”, respectively), and other loan documents, including a guarantee by the Operating Partnership, to secure an aggregate $57.0 million mortgage (the “Mortgage Loan”) on the Hyatt Centric Arlington with Fifth Third Bank.  Pursuant to the Mortgage Loan documents, Note A had an original principal balance in the amount of $50.0 million; had a term of 3 years, with two 1-year extension options, each of which was subject to certain criteria; bore a floating interest rate of one-month LIBOR plus 3.00%, payable monthly; and required monthly principal payments of $78,650.  Pursuant to the Mortgage Loan documents, Note B had an original principal balance in the amount of $7.0 million; had a term of 1-year, with two 1-year extension options, each of which was subject to certain criteria; bore a floating interest rate of three-month LIBOR plus 5.00%, payable monthly; and required monthly principal payments of $100,000 during the initial 1-year term, $150,000 during the first 1-year extended term, and $250,000 during the second 1-year extended term, with interest payments due monthly on the outstanding principal amount during all three terms.  The full amount of the loan proceeds, together with proceeds of the 7.25% Notes offering and cash on hand, were used to finance the Arlington Acquisition.

On July 2, 2018, we purchased a portion of the parking lot, previously leased, adjacent to the DoubleTree by Hilton Raleigh Brownstone-University for an aggregate purchase price of $3.5 million.  

On July 27, 2018, we entered into a loan agreement and other documents, including a promissory note, to secure a mortgage on the DoubleTree by Hilton Raleigh Brownstone-University with MetLife Commercial Mortgage Originator, LLC. The mortgage has an initial principal balance of $18.3 million, with an additional $5.2 million available upon the satisfaction of certain conditions. The mortgage has an initial term of 4 years with a 1-year extension and bears a floating rate of interest equal to the 1-month LIBOR rate plus 4.00%. The mortgage requires monthly interest-only payments and, following a 12-month lockout, can be prepaid with a penalty during its second year and without penalty thereafter. We entered into an interest-rate cap agreement to limit our exposure through August 1, 2022 to increases in LIBOR exceeding 3.25% on a notional amount of $23,500,000. We used a portion of the proceeds to repay the existing first mortgage on the DoubleTree by Hilton Raleigh Brownstone-University and to pay closing costs, and intend to use the balance of the proceeds for general corporate purposes.

On July 31, 2018, we entered into a second amendment to the loan and security agreement; an amended, restated and consolidated mortgage loan note; and other related documents with our existing lender, TD Bank, N.A., to amend the terms of our mortgage loan on the DoubleTree by Hilton Philadelphia Airport.  Concurrent with the loan modification, we also entered into a 5-year swap agreement with The Toronto-Dominion Bank.  Pursuant to the amended loan documents: (i) the principal balance of the loan was increased from approximately $30.0 million to $42.2 million; (ii) the loan’s maturity date was extended to July 31, 2023; (iii) the loan bears a floating interest rate equal to the 1-month LIBOR rate plus 2.27% (the “Loan Rate”); (iv) the loan amortizes on a 30-year schedule with payments of principal and interest beginning immediately; (v) the loan can be prepaid without penalty; and (vi) the loan will no longer be fully guaranteed by the Operating Partnership, but the Operating Partnership has guaranteed certain standard “bad boy” carveouts.  Pursuant to the swap agreement: (i) the Loan Rate has been swapped for a fixed interest rate of 5.237%; notional amounts of the swap approximate the declining balance of the loan; and (iii) we are responsible for any potential termination fees associated with early termination of the swap agreement.  We used a portion of the proceeds to repay in full the existing Note B to the mortgage loan on our Hyatt Centric Arlington and to pay closing costs associated with the amendment and will use the balance of the proceeds for general corporate purposes.

On August 31, 2018, we entered into a Sales Agency Agreement, with Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”), under which the Company may sell from time to time through Sandler O’Neill, as sales agent, shares of the Company’s common stock, par value $0.01 per share, having an aggregate gross sales price of up to $5,000,000 and up to 400,000 shares of the Company’s 7.875% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share.

On September 18, 2018, we entered into a loan agreement and other documents, including a promissory note, to secure a mortgage on the Hyatt Centric Arlington with MetLife Real Estate Lending LLC.  Pursuant to the loan documents, the Mortgage Loan has an initial principal balance of $50.0 million; has a term of 10 years; bears a fixed interest rate of 5.25%; amortizes on a 30-year schedule; and following a 5-year lockout, can be prepaid with penalty in years 6-10 and without penalty during the final 4 months of the term.  The Company used the proceeds to repay the existing first mortgage on the Hyatt Centric Arlington, to pay closing costs, and for general corporate purposes.

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On April 18, 2019, the Company closed a sale and issuance of 1,080,000 shares of its 8.25% Series D cumulative redeemable perpetual preferred stock (the “Series D Preferred Stock”), for gross proceeds of $27.0 million before underwriting discounts and commissions and expenses payable by the Company.  On May 1, 2019, the Company closed a sale and issuance of an additional 120,000 shares of its Series D Preferred Stock, for gross proceeds of $3.0 million before underwriting discounts and commissions and expenses payable by the Company, in connection with the partial exercise of the underwriters’ option to purchase additional shares of the Series D Preferred Stock.  Total net proceeds after all estimated expenses were approximately $28.4 million, which the Company contributed to its Operating Partnership for an equivalent number of Series D preferred units.  We used the net proceeds to redeem in full the Operating Partnership’s 7.25% Notes and for working capital.

On April 24, 2019, the Hyde Resort & Residences condominium association, 4111 South Ocean Drive Condominium Association, Inc., unilaterally terminated both (i) the existing Lease Agreement for the 400-space parking garage and meeting rooms associated with the condominium hotel and (ii) the Association Management Agreement relating to the operation and management of the hotel condominium association.  We continue to operate our rental program at the Hyde Resort & Residences.

On April 26, 2019, we entered into amended loan documents to modify the existing mortgage loan on the Hotel Alba (f/k/a Crowne Plaza Tampa Westshore) with the existing lender, Fifth Third Bank.  Pursuant to the modification, the mortgage loan principal balance remained at approximately $18.2 million; the maturity date was extended to June 30, 2022, and may be extended for two additional periods of one year each, subject to certain conditions; the mortgage loan continues to bear a floating interest rate of 1-month LIBOR plus 3.75% subject to a floor rate of 3.75%, with a new provision to reduce the floating interest rate to 1-month LIBOR plus 3.00% upon the successful achievement of certain performance hurdles; the mortgage loan amortizes on a 25-year schedule; and the mortgage loan continues to be guaranteed by Sotherly Hotels LP.

On May 20, 2019, the Operating Partnership redeemed the entire $25.0 million aggregate principal amount of its 7.25% Notes, at a redemption price equal to 101% of the principal amount of the 7.25% Notes, plus any accrued and unpaid interest to, but not including, the redemption date.

On September 6, 2019, we entered into a master agreement with Newport Hospitality Group, Inc., a Virginia corporation, and Our Town Hospitality LLC, a Virginia limited liability company relating to the management of ten of our hotels.  The master agreement is designed to address the scheduled termination on January 1, 2020 of certain individual hotel management agreements by and between us and Chesapeake Hospitality.  On July 15, 2019 we notified Chesapeake Hospitality of our intent not to renew or extend the expiring hotel management agreements.  The new master agreement establishes terms for new hotel management agreements governing the management of our hotels.  Chesapeake Hospitality has committed to providing assistance in transitioning the hotels to a new manager.

On September 26, 2019, we closed on the purchase of a commercial condominium unit of the Hyde Beach House Resort & Residences, a newly constructed 342-unit condominium hotel located in Hollywood, Florida (“Hyde Beach House”), from 4000 South Ocean Property Owner, LLLP.  In connection with the closing, we (i) acquired commercial unit 2 of the Hyde Beach House, along with rights to certain limited common elements appurtenant to the commercial unit, for an adjusted purchase price of approximately $5.4 million; (ii) purchased inventories and equipment for additional consideration in the amount of approximately $0.7 million; (iii) entered into a Second Addendum to the purchase agreement; (iv) entered into a 20-year parking and cabana management agreement for the parking garage and poolside cabanas associated with the Hyde Beach House; (v) entered into a 20-year management agreement relating to the operation and management of the Hyde Beach House condominium association; and (vi) received a pre-opening services fee of $1.0 million.  We began operating a condominium unit rental program for residential units in the facility in November 2019.  Also, in connection with the closing, our DoubleTree Resort by Hilton Hollywood Beach acquired a commercial condominium unit consisting of a 3,000 square foot ballroom and adjacent pre-function space, as well as 200 dedicated parking spaces within the parking garage adjacent to the hotel.

2. Summary of Significant Accounting Policies

Basis of Presentation – The consolidated financial statements of the Company presented herein include all of the accounts of Sotherly Hotels Inc., the Operating Partnership, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The consolidated financial statements of the Operating Partnership presented herein include all of the accounts of Sotherly Hotels LP, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. Additionally, all administrative expenses of the Company and those expenditures made by the Company on behalf of the Operating Partnership are reflected as the administrative expenses, expenditures and obligations thereto of the Operating Partnership, pursuant to the terms of the Partnership Agreement.

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Investment in Hotel Properties – Investments in hotel properties include investments in operating properties which are recorded at fair value on acquisition date and allocated to land, property and equipment and identifiable intangible assets. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is included in the statements of operations. Expenditures which constitute additions or improvements that extend the life of the property, are capitalized.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 7 to 39 years for buildings and building improvements and 5 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets.

We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse permanent changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceeds its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property’s estimated fair market value would be recorded and an impairment loss recognized.

Cash and Cash Equivalents – We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk – We hold cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) protection limits of $250,000. Our exposure to credit loss in the event of the failure of these institutions is represented by the difference between the FDIC protection limit and the total amounts on deposit. Management monitors, on a regular basis, the financial condition of the financial institutions along with the balances there on deposit to minimize our potential risk.

Restricted Cash – Restricted cash includes real estate tax escrows, insurance escrows and reserves for replacements of furniture, fixtures and equipment pursuant to certain requirements in our various mortgage agreements.

Accounts Receivable – Accounts receivable consists primarily of hotel guest and banqueting receivables. Ongoing evaluations of collectability are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible.

Inventories – Inventories, consisting primarily of food and beverages, are stated at the lower of cost or net realizable value, with cost determined on a method that approximates first-in, first-out basis.

Franchise License Fees – Fees expended to obtain or renew a franchise license are amortized over the life of the license or renewal. The unamortized franchise fees as of September 30, 2019 and December 31, 2018 were $428,223 and $471,996, respectively. Amortization expense for the three-month periods ended September 30, 2019 and 2018, totaled $14,869 and $14,868, respectively, and for the nine-month periods ended September 30, 2019 and 2018, totaled $43,773 and $45,204, respectively.

Right-of-Use Assets and Lease Obligations – In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively.

A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.  In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new lease standard. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, to give companies another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of implementing the new standard. The transition option allows companies to not apply the new lease standard in the comparative periods they present in their financial statements in the year of adoption.

We adopted this standard on January 1, 2019. We elected the practical expedients allowed under the guidance and retained the original lease classification and historical accounting for initial direct costs for leases existing prior to the adoption date. We also elected not to restate prior periods for the impact of the adoption of the new standard. The adoption of this standard has resulted in the recognition of right-of-use assets and related liabilities to account for our future obligations under the acquired operating ground lease,

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equipment, office space, parking and land leases for which we are the lessee. See Notes 4 and 6 to the accompanying financial statements for additional disclosures on the adoption of this standard.  As of September 30,2019, we had right of use assets, netof approximately $6.6 million, and lease obligations of approximately $4.4 million.  The right-of-use assets are included in investments in hotel properties, net or in prepaid expenses, inventory and other assets and the lease obligations are included in accounts payable and accrued liabilities on the consolidated balance sheets.

Deferred Financing and Offering Costs – Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt and are reflected in mortgage loans, net and unsecured notes, net on the consolidated balance sheets. Deferred offering costs are recorded at cost and consist of offering fees and other costs incurred in advance of issuing equity and are reflected in prepaid expenses, inventory and other assets on the consolidated balance sheets. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statements of operations.  

Deferred offering costs are netted against our equity offerings when the offering is complete, whereby the costs are offset against the equity funds raised in the future and included in additional paid-in capital on the consolidated balance sheets, or if the offering expires and the offering costs exceed the funds raised in the offering then the excess will be included in corporate general and administrative expenses in the consolidated statements of operations.

Derivative Instruments – Our derivative instruments are reflected as assets or liabilities on the consolidated balance sheets and measured at fair value. Derivative instruments used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as an interest rate risk, are considered fair value hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For a derivative instrument designated as a cash flow hedge, the change in fair value each period is reported in accumulated other comprehensive income in stockholders’ equity and partners’ capital to the extent the hedge is effective. For a derivative instrument designated as a fair value hedge, the change in fair value each period is reported in earnings along with the change in fair value of the hedged item attributable to the risk being hedged. For a derivative instrument that does not qualify for hedge accounting or is not designated as a hedge, the change in fair value each period is reported in earnings.

We use derivative instruments to add stability to interest expense and to manage our exposure to interest-rate movements. To accomplish this objective, we currently use interest rate caps and an interest rate swap which act as cash flow hedges and are not designated as hedges.  We value our interest-rate caps and interest rate swap at fair value, which we define as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We also have used derivative instruments in the Company’s stock to obtain more favorable terms on our financing. We do not enter into contracts to purchase or sell derivative instruments for speculative trading purposes.

Fair Value Measurements –

We classify the inputs used to measure fair value into the following hierarchy:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 Unobservable inputs for the asset or liability.

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We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table represents our assets and liabilities measured at fair value and the basis for that measurement (our interest rate caps and interest rate swapare the only assets or liabilities measured at fair value on a recurring basis, there is one asset added during the three month period ending September 30, 2019 in the amount of $3,940,000 which is non-recurring, and there were no non-recurring liabilitiesfor fair value measurements as of September 30, 2019 and December 31, 2018, respectively):

	Level 1			Level 2			Level 3
December 31, 2018
Interest Rate Caps (1)	$	—		$	94,697		$	—
Interest Rate Swap (2)	$	—		$	(984,677	)	$	—
Mortgage loans (3)	$	—		$	(357,279,949	)	$	—
Unsecured notes (4)	$	(25,390,000	)	$	—		$	—
September 30, 2019
Interest Rate Cap (1)	$	—		$	4,421		$	—
Interest Rate Swap (2)	$	—		$	(2,443,591	)	$	—
Development of ballroom and parking spaces	$	—		$	3,940,000		$	—
Mortgage loans (3)	$	—		$	(365,393,515	)	$	—

(1) Interest rate cap, which cap the 1-month LIBOR rate between 2.5% and 3.25%.

(2) Interest rate swap, which takes the Loan Rate and swaps it for a fixed interest rate of 5.237%; notional amounts of the swap approximate the declining balance of the loan.

(3) Mortgage loans are reflected at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

(4) Unsecured notes are recorded at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of December 31, 2018.

Noncontrolling Interest in Operating Partnership – Certain hotel properties were acquired, in part, by the Operating Partnership through the issuance of limited partnership units of the Operating Partnership. The noncontrolling interest in the Operating Partnership is: (i) increased or decreased by the limited partners’ pro-rata share of the Operating Partnership’s net income or net loss, respectively; (ii) decreased by distributions; (iii) decreased by redemption of partnership units for the Company’s common stock; and (iv) adjusted to equal the net equity of the Operating Partnership multiplied by the limited partners’ ownership percentage immediately after each issuance of units of the Operating Partnership and/or the Company’s common stock through an adjustment to additional paid-in capital. Net income or net loss is allocated to the noncontrolling interest in the Operating Partnership based on the weighted average percentage ownership throughout the period.

Revenue Recognition – Revenue consists of amounts derived from hotel operations, including the sales of rooms, food and beverage, and other ancillary services. Room revenue is recognized over a customer's hotel stay. Revenue from food and beverage and other ancillary services is generated when a customer chooses to purchase goods or services separately from a hotel room and revenue is recognized on these distinct goods and services at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and the Company assesses whether it is the principal or agent in these arrangements. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. If the Company is the principal, the Company recognizes revenue based upon the gross sales price. Some contracts for rooms or food and beverage services require an upfront deposit which is recorded as advanced deposits (or contract liabilities) and recognized once the performance obligations are satisfied and shown on our consolidated balance sheets.

Certain of the Company's hotels have retail spaces, restaurants or other spaces which the Company leases to third parties. Lease revenue is recognized on a straight-line basis over the life of the lease and included in other operating revenues in the Company's consolidated statements of operations.

The Company collects sales, use, occupancy and similar taxes at its hotels which are presented on a net basis on the consolidated statements of operations. Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. The Company maintains an allowance for doubtful accounts sufficient to cover estimated potential credit losses.

Lease Revenue – Several of our properties generate revenue from leasing commercial space adjacent to the hotel, the restaurant space within the hotel, apartment units and space on the roofs of our hotels for antennas and satellite dishes.  We account for the lease income as revenue from other operating departments within the consolidated statements of operations pursuant to the terms of each

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lease.  Lease revenue was approximately $0.4million and $0.3 million, for the three months endedSeptember 30, 2019 and 2018, respectively, and approximately $1.2million and $1.2million for the nine months ended September 30, 2019 and 2018, respectively.

A schedule of minimum future lease payments receivable for the remaining three and twelve-month periods is as follows:

For the remaining three months ending December 31, 2019	$	486,304
December 31, 2020		1,452,866
December 31, 2021		1,395,363
December 31, 2022		1,221,343
December 31, 2023		612,940
December 31, 2024 and thereafter		3,158,088
Total	$	8,326,904

Variable Interest Entities – The Operating Partnership is a variable interest entity. The Company’s only significant asset is its investment in the Operating Partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership and its subsidiaries. All of the Company’s debt is an obligation of the Operating Partnership and its subsidiaries.

Income Taxes – The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. MHI TRS, our wholly owned taxable REIT subsidiary which leases our hotels from subsidiaries of the Operating Partnership, is subject to federal and state income taxes.

We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  As of September 30, 2019 and December 31, 2018, deferred tax assets totaled approximately $4.7 million and $5.1 million, respectively, of which approximately $4.1 million and $4.4 million relate to net operating losses of our TRS Lessee.  A valuation allowance is required for deferred tax assets if, based on all available evidence, it is “more-likely-than-not” that all or a portion of the deferred tax asset will or will not be realized due to the inability to generate sufficient taxable income in certain financial statement periods.  The “more-likely-than-not” analysis means the likelihood of realization is greater than 50%, that we will or will not be able to fully utilize the deferred tax assets against future taxable income. The net amount of deferred tax assets that are recorded on the financial statements must reflect the tax benefits that are expected to be realized using these criteria.  We perform this analysis by evaluating future hotel revenues and expenses accounting for certain non-recurring costs and expenses during the current and prior two fiscal years as well as anticipated changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership. We have determined that it is more-likely-than-not that we will be able to fully utilize our deferred tax assets for future tax consequences, therefore no valuation allowance is required.  

As of September 30, 2019 and December 31, 2018, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of September 30, 2019, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2015 through 2017. In addition, as of September 30, 2019, the tax years that remain subject to examination, because of NOL carryforwards, by the major tax jurisdictions to which MHI TRS is subject include the years 2009 and 2014 through 2018.

The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership’s taxable income.

Stock-based Compensation – The Company’s 2013 Long-Term Incentive Plan (the “2013 Plan”), which the Company’s stockholders approved in April 2013, permit the grant of stock options, restricted stock, unrestricted stock and performance share compensation awards to its employees and directors for up to 350,000 and 750,000 shares of common stock, respectively. The Company believes that such awards better align the interests of its employees with those of its stockholders.

Under the 2013 Plan, the Company has made stock awards totaling 176,350 shares, including 143,350 non-restricted shares and 33,000 restricted shares issued to certain executives and employees and to its independent directors.  All awards have vested except for 20,000 shares issued to one employee, which will vest over 4 years, and 13,000 shares issued to the Company’s independent directors in February 2019, which will vest by December 31, 2019.  

Under the 2013 Plan, the Company may issue a variety of performance-based stock awards, including nonqualified stock options. The value of the awards is charged to compensation expense on a straight-line basis over the vesting or service period based on the value of the award as determined by the Company’s stock price on the date of grant or issuance.  As of September 30, 2019, no

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performance-based stock awards have been granted. Total compensation cost recognized under the 2013 Plan for the three months ended September 30, 2019 and 2018 was each $8,025 and for the nine months ended September 30, 2019 and 2018 was $116,408 and $127,402,respectively.

Additionally, the Company sponsors and maintains an Employee Stock Ownership Plan (“ESOP”) and related trust for the benefit of its eligible employees. We reflect unearned ESOP shares as a reduction of stockholders’ equity.  Dividends on unearned ESOP shares, when paid, are considered compensation expense. The Company recognizes compensation expense equal to the fair value of the Company’s ESOP shares during the periods in which they are committed to be released.  For the three months ended September 30, 2019 and 2018, the ESOP compensation cost was $60,259 and $64,294, respectively and for the nine months ended September 30 2019 and 2018, the ESOP compensation cost was $193,513 and $186,137, respectively. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the differential is recognized as additional paid in capital.  Because the ESOP is internally leveraged through a loan from the Company to the ESOP, the loan receivable by the Company from the ESOP is not reported as an asset nor is the debt of the ESOP shown as a liability in the consolidated financial statements.

Advertising – Advertising costs were $132,227 and $88,154 for the three months ended September 30, 2019 and 2018, respectively and were $319,947 and $334,271 for the nine months ended September 30, 2019 and 2018, respectively.  Advertising costs are expensed as incurred.

Involuntary Conversion of Assets – We record gains or losses on involuntary conversions of assets due to recovered insurance proceeds to the extent the undepreciated cost of a nonmonetary asset differs from the amount of monetary proceeds received. During the three-month periods ending September 30, 2019 and 2018, we recognized approximately $0.1 million and $0, respectively and during the nine-month periods ending September 30, 2019 and 2018, we recognized approximately $0.3 million and $0.9 million, respectively, in gain on involuntary conversion of assets, which is reflected in the consolidated statements of operations.

Comprehensive Income – Comprehensive income as defined, includes all changes in equity during a period from non-owner sources. We do not have any items of comprehensive income other than net income.

Segment Information – We have determined that our business is conducted in one reportable segment: hotel ownership.

Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements – In July 2018, FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, The FASB decided to provide another transition method and practical expedients in addition to the existing transition method (a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements) by allowing entities to initially apply the new leases standard at the adoption date (such as January 1, 2019, for calendar year-end public business entities) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  We adopted the practical expedients allowed under the guidance and retained the original lease classification and historical accounting for initial direct costs for leases existing prior to the adoption date on January 1, 2019. We also elected not to restate prior periods for the impact of the adoption of the new standard and instead recognized a cumulative-effect adjustment to beginning retained earnings as of the adoption date. These standards resulted in the recognition of right-to-use assets and related liabilities to account for our future obligations under the ground lease arrangements for which we are the lessee. The right of use assets and corresponding liabilities were recorded in the amount of approximately $6.3 million and $3.8 million, respectively as of January 1, 2019.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current GAAP and disclosing key information about leasing arrangements. The amendments in this ASU were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early application of this ASU was permitted for all entities. We created an inventory of our leases and have recorded current ground lease, office lease, other right-of-use assets and lease liabilities.  The standard required a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. This standard has been updated as noted above in ASU No. 2018-11. We adopted this ASU as of January 1, 2019. The adoption of this ASU did not have a material impact on our consolidated balance sheets, statements of operations or cash flows.

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3. Acquisition of Hotel Properties

Hyatt Centric Arlington.  On March 1, 2018, we acquired the Hyatt Centric Arlington hotel, for a total fair value of consideration transferred including inventory and other assets of approximately $79.7 million (after amendment of the initial purchase price of $81.0 million). We considered this acquisition to be an asset acquisition as opposed to a business combination, applying the screen test, as discussed in the Accounting Standards Update 2017-01 – Business Combinations – Clarifying the Definition of a Business (Topic 805).

The results of operations of the hotel are included in our consolidated financial statements from the date of acquisition. The total revenue and net income related to the Hyatt Centric Arlington acquisition for the period March 1, 2018 to September 30, 2018 were approximately $13.4 million and $1.6 million, respectively. The total revenue and net income related to the Hyatt Centric Arlington acquisition for the period January 1, 2019 to September 30, 2019 were approximately $16.3 million and $0.1 million, respectively.

Hyde Beach House Resort & Residences. On September 26, 2019, we acquired a commercial condominium unit of the Hyde Beach House condominium hotel, for a total fair value of consideration transferred including inventory and other assets of approximately $6.3 million.

The results of operations of the hotel commercial condominium unit are included in our consolidated financial statements from the date of the acquisition. The total revenue and net loss related to the acquisition for the period September 26, 2019 to September 30, 2019 are approximately $1.0 million and $0.3, respectively. There is no pro forma financial information, since this is a new operation without prior historical information.

The allocation of the respective purchase price is based on fair value as follows:

	Hyatt Centric Arlington			Hyde Beach House
Land and land improvements	$	190,916		$	500
Buildings and improvements		70,369,046			5,564,219
Furniture, fixtures and equipment		6,229,888			347,621
Favorable lease and other intangible assets		3,054,812			—
Investment in hotel properties		79,844,662			5,912,340
Accrued liabilities and other costs		(111,946	)		—
Prepaid expenses, inventory and other    assets		—			434,038
Net cash	$	79,732,716		$	6,346,378

4. Investment in Hotel Properties, Net

Investment in hotel properties, net as of September 30, 2019 and December 31, 2018 consisted of the following:

	September 30, 2019			December 31, 2018
	(unaudited)
Land and land improvements	$	66,055,121		$	64,409,730
Buildings and improvements		437,705,155			424,657,327
Right of use assets		6,576,971			—
Furniture, fixtures and equipment		56,809,756			57,830,987
		567,147,003			546,898,044
Less: accumulated depreciation and impairment		(120,307,423	)		(111,172,230	)
Investment in Hotel Properties, Net	$	446,839,580		$	435,725,814

On January 1, 2019, we adopted ASU 842, Leases and applied it prospectively. At adoption, we also elected the practical expedients which permitted us to not reassess our prior conclusions about lease identification, classification, and initial direct costs. Consequently, on January 1, 2019, we recognized right-of-use assets and related liabilities related to our acquired operating ground lease, equipment, parking, office space and land leases, all of which are operating leases. Since most of our leases do not provide an implicit rate, we used incremental borrowing rates, which averaged to 8.0%. All of these leases have terms ranging from less than one year to 50 years and we included the exercise of options to extend when it is reasonably certain we will exercise such option. See Note 6 for additional information about the acquired operating ground lease, parking, office space and land leases. The right-of-use assets and liabilities are amortized to rent expense and depreciation and amortization expense over the term of the underlying lease

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agreements. As of September 30, 2019, our right-of-use assets, net of approximately $6.6 million, are included in the investment in hotel properties, net or prepaid expenses, inventory and other assets and our related lease liabilities of approximately $4.4 million are presented in accounts payable and accrued expenses in our consolidated balance sheets. The adoption of this standard had minimal impact on our statements of operations.

5. Debt

Mortgage Loans, Net. As of September 30, 2019 and December 31, 2018, we had approximately $360.5 million and approximately $364.8 million of outstanding mortgage debt, respectively. The following table sets forth our mortgage debt obligations on our hotels.

	Balance Outstanding as of
	September 30,			December 31,			Prepayment	Maturity	Amortization	Interest
Property	2019			2018			Penalties	Date	Provisions	Rate
	(unaudited)
The DeSoto (1)	$	33,256,944		$	33,824,350		Yes	7/1/2026	25 years	4.25%
DoubleTree by Hilton Jacksonville    Riverfront (2)		34,366,547			34,773,546		Yes	7/11/2024	30 years	4.88%
DoubleTree by Hilton Laurel (3)		8,614,350			8,845,299		Yes	8/5/2021	25 years	5.25%
DoubleTree by Hilton Philadelphia Airport (4)		41,580,419			42,026,986		None	7/31/2023	30 years	LIBOR plus 2.27 %
DoubleTree by Hilton Raleigh-    Brownstone University (5)		18,300,000			18,300,000		Yes	7/27/2022	(5)	LIBOR plus 4.00 %
DoubleTree Resort by Hilton Hollywood    Beach (6)		56,396,039			57,064,824		n/a	10/1/2025	30 years	4.913%
Georgian Terrace (7)		43,627,014			44,202,968		n/a	6/1/2025	30 years	4.42%
Hotel Alba Tampa, Tapestry Collection by Hilton  (8)		18,107,352			18,307,000		None	6/30/2022	(8)	LIBOR plus 3.75 %
Hotel Ballast Wilmington, Tapestry Collection by Hilton(9)		33,683,726			34,236,104		Yes	1/1/2027	25 years	4.25%
Hyatt Centric Arlington (10)	$	49,355,146			49,885,045		Yes	9/18/2028	30 years	5.25%
Sheraton Louisville Riverside (11)		11,215,621			11,414,300		Yes	12/1/2026	25 years	4.27%
The Whitehall (12)		14,527,731			14,733,458		Yes	2/26/2023	25 years	LIBOR plus 3.50 %
Total Mortgage Principal Balance	$	363,030,889		$	367,613,880
Deferred financing costs, net		(2,628,780	)		(2,951,327	)
Unamortized premium on loan		147,781			166,292
Total Mortgage Loans, Net	$	360,549,890		$	364,828,845

(1)	The note amortizes on a 25-year schedule after an initial 1-year interest-only period (which expired in August 2017), and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(2)	The note is subject to a pre-payment penalty until March 2024. Prepayment can be made without penalty thereafter.
(3)	The note is subject to a pre-payment penalty until April 2021. Prepayment can be made without penalty thereafter.
(4)	The note bears a floating interest rate of 1-month LIBOR plus 2.27%, but we entered into a swap agreement to fix the rate at 5.237%.  Under the swap agreement, notional amounts approximate the declining balance of the loan and we are responsible for any potential termination fees associated with early termination of the swap agreement.
(5)	The note provides initial proceeds of $18.3 million, with an additional $5.2 million available upon the satisfaction of certain conditions; has an initial term of 4 years with a 1-year extension; bears a floating interest rate of 1-month LIBOR plus 4.00%; requires interest only monthly payments; and following a 12-month lockout, can be prepaid with penalty in year 2 and without penalty thereafter.  We entered into an interest-rate cap agreement to limit our exposure through August 1, 2022 to increases in LIBOR exceeding 3.25% on a notional amount of $23,500,000.
(6)	With limited exception, the note may not be prepaid until June 2025.
(7)	With limited exception, the note may not be prepaid until February 2025.
(8)	The note bears a floating interest rate of 1-month LIBOR plus 3.75% subject to a floor rate of 3.75%; with monthly principal payments of $26,812; the note provides that the mortgage can be extended for two additional periods of one year each, subject to certain conditions.
(9)	The note amortizes on a 25-year schedule after an initial 1-year interest-only period, and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(10)	Following a 5-year lockout, the note can be prepaid with penalty in years 6-10 and without penalty during the final 4 months of the term.
(11)	The note bears a fixed interest rate of 4.27% for the first 5 years of the loan, with an option for the lender to reset the interest rate after 5 years.
(12)	The note bears a floating interest rate of 1-month LIBOR plus 3.5%, subject to a floor rate of 4.0%, and is subject to prepayment penalties on a declining scale with a 3.0% penalty on or before the first anniversary date, a 2.0% penalty during the second anniversary year and a 1.0% penalty after the third anniversary date.

As of September 30, 2019, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, as amended or modified, with the exception of the mortgage on the Hotel Alba, for which we failed to meet the quarterly Debt Service Coverage Ratio (“DSCR”) requirement. The loan agreement contains a balancing provision that allows us to pay down the principal balance of the loan or provide cash collateral.  Should we be unable to obtain a waiver, we believe cash collateral of approximately $2.9 million will be required until the quarterly DSCR requirement is met.

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Total future mortgage debt maturities for the remaining three and twelve month periods, without respect to any extension of loan maturity, were as follows:

For the remaining three months ending December 31, 2019	$	1,611,840
December 31, 2020		6,611,161
December 31, 2021		14,815,761
December 31, 2022		42,273,913
December 31, 2023		59,921,466
December 31, 2024 and thereafter		237,796,748
Total future maturities	$	363,030,889

7.25% Unsecured Notes. On February 12, 2018, the Operating Partnership issued its 7.25% Notes in the aggregate amount of $25.0 million, unconditionally guaranteed by the Company. The indenture requires quarterly payments of interest and was to mature on February 15, 2021. The 7.25% Notes were redeemed on May 20, 2019 at 101% of face value.

6. Commitments and Contingencies

Ground, Building, Parking and Land Leases – We lease 2,086 square feet of commercial space next to The DeSoto for use as an office, retail or conference space, or for any related or ancillary purposes for the hotel and/or atrium space. In December 2007, we signed an amendment to the lease to include rights to the outdoor esplanade adjacent to the leased commercial space. The areas are leased under a six-year operating lease, which expired October 31, 2006 and has been renewed for the third of three optional five-year renewal periods expiring October 31, 2011, October 31, 2016 and October 31, 2021, respectively. Rent expense for this operating lease for each of the three and nine months ended September 30, 2019 and 2018 totaled $18,246 and $54,738, respectively.

We lease, as landlord, the entire fourteenth floor of The DeSoto hotel property to The Chatham Club, Inc. under a ninety-nine year lease expiring July 31, 2086. This lease was assumed upon the purchase of the building under the terms and conditions agreed to by the previous owner of the property. No rental income is recognized under the terms of this lease as the original lump sum rent payment of $990 was received by the previous owner and not prorated over the life of the lease.

We lease land adjacent to the Hotel Alba for use as parking under a five-year renewable agreement with the Florida Department of Transportation that commenced in July 2009.  In May 2014, we extended the agreement for an additional five years.  The agreement expires in July 2024. The agreement requires annual payments of $2,432, plus tax, and may be renewed for an additional five years. Rent expense for the three and nine months ended September 30, 2019, totaled $412 and $1,713, respectively, and for the three and nine months ended September 30, 2018, totaled $651 and $1,952, respectively.

We lease 5,216 square feet of commercial office space in Williamsburg, Virginia under an agreement, as amended, that commenced September 1, 2009 and was extended until such date as we take possession of new premises under a contingent lease with the same landlord, which is expected to occur in December 2019.  Rent expense for the three-month periods ended September 30, 2019 and 2018 totaled $26,984 and $23,775, respectively and for the nine-month periods ended September 30, 2019 and 2018, totaled $80,952 and $68,874.

We have agreed to lease approximately 8,500 square feet of commercial office space in Williamsburg, Virginia under an agreement with a ten-year term commencing upon occupancy of the premises, which is expected to occur in December 2019.  The initial annual rent under the agreement is $218,875, with the rent for each successive annual period increasing by 3.0% over the prior annual period’s rent. The annual rent will be offset by a tenant improvement allowance of $200,000, to be applied against one-half of each monthly rent payment until such time as the tenant improvement allowance is exhausted.

We lease the land underlying all of the Hyatt Centric Arlington hotel pursuant to a ground lease.  The ground lease requires us to make rental payments of $50,000 per year in base rent and percentage rent equal to 3.5% of gross room revenue in excess of certain thresholds, as defined in the ground lease agreement.  The initial term of the ground lease expires in 2025 and may be extended for five additional renewal periods of 10 years each. Rent expense for the three months ended September 30, 2019 and 2018, was $141,587 and $136,813, respectively and for the nine months ended September 30, 2019 and 2018 was $474,945  and $392,042, respectively.

We entered into a 20-year parking and cabana management agreement for the parking garage and poolside cabanas associated with the Hyde Beach House.  The parking and cabana embedded lease requires us to make rental payments of $270,100 per year in base rent.  The initial term of the parking garage and cabana lease expires in 2034 and may be extended for four additional renewal periods of 5 years each.  There was no rent expense for the 4 days of September 2019.

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We also lease certain parking space, storage facilities, furniture and equipment under financing arrangements expiring between July 2019 and June 2025.

A schedule of minimum future lease payments for the following three and twelve-month periods is as follows:

For the remaining three months ending December 31, 2019	$	112,769
December 31, 2020		423,331
December 31, 2021		412,099
December 31, 2022		400,100
December 31, 2023		363,529
December 31, 2024 and thereafter		2,898,146
Total	$	4,609,974

Employment Agreements - The Company has entered into various employment contracts with employees that could result in obligations to the Company in the event of a change in control or termination without cause.

Management Agreements – As of September 30, 2019, the Hyatt Centric Arlington hotel operated under a management agreement with Highgate Hotels L.P.  The management agreement has an initial term of three years expiring March 1, 2021.

As of September 30, 2019, the eleven remaining wholly-owned hotels and the rental program and condominium association of the Hyde Resort & Residences operated under management agreements with Chesapeake Hospitality (see Note 9).  The management agreements expire between January 1, 2020 and December 31, 2020, and may be extended for up to two additional periods of five years each subject to the approval of both parties.  Each of the individual hotel management agreements may be terminated earlier than the stated term upon the sale of the hotel covered by the respective management agreement, in which case we may incur early termination fees.

On September 6, 2019, we entered into a master agreement with Newport Hospitality Group, Inc., a Virginia corporation, and Our Town Hospitality LLC, a Virginia limited liability company relating to the management of ten of our hotels.  The master agreement is designed to address the scheduled termination on January 1, 2020 of certain individual hotel management agreements by and between us and Chesapeake Hospitality.  On July 15, 2019 we notified Chesapeake Hospitality of our intent not to renew or extend the expiring hotel management agreements.  The new master agreement establishes terms for new hotel management agreements governing the management of our hotels.  Chesapeake Hospitality has committed to providing assistance in transitioning the hotels to a new manager.

Franchise Agreements – As of September 30, 2019, nine of our hotels operated under franchise licenses from national hotel companies. Under the franchise agreements, we are required to pay a franchise fee generally between 3.0% and 5.0% of room revenues, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 2.5% and 6.0% of room revenues from the hotels. The franchise agreements expire between November 2021 and March 2038.  Each of our franchise agreements provides for early termination fees in the event the agreement is terminated before the stated term.

Restricted Cash Reserves – Each month, we are required to escrow with the lenders on the Hotel Ballast, The DeSoto, the DoubleTree by Hilton Raleigh Brownstone-University, the DoubleTree by Hilton Jacksonville Riverside, the DoubleTree Resort by Hilton Hollywood Beach, and the Georgian Terrace an amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties. We are also required by several of our lenders to establish individual property improvement funds to cover the cost of replacing capital assets at our properties. Each month, those contributions equal 4.0% of gross revenues for the Hotel Ballast, The DeSoto, the DoubleTree by Hilton Raleigh Brownstone–University, the DoubleTree by Hilton Jacksonville Riverside, the DoubleTree Resort by Hilton Hollywood Beach, The Whitehall and the Georgian Terrace and equal 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport and the Hyatt Centric Arlington.

ESOP Loan Commitment – The Company’s board of directors approved the ESOP on November 29, 2016, which was adopted by the Company in December 2016 and effective January 1, 2016.  The ESOP is a non-contributory defined contribution plan covering all employees of the Company.  The ESOP is a leveraged ESOP, meaning the contributed funds are loaned to the ESOP from the Company.  The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company’s common stock on the open market. Under the loan agreement, the

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aggregate principal amount outstanding at any time may not exceed $5.0 million and the ESOP may borrow additional funds up to that limit in the future, until December 29, 2036.

Litigation –We are involved in routine litigation arising out of the ordinary course of business, all of which we expect to be covered by insurance and we believe it is not reasonably possible such matters will have a material adverse impact on our financial condition or results of operations or cash flows.

7. Preferred Stock and Units

Preferred Stock - The Company is authorized to issue up to 11,000,000 shares of preferred stock.  The following table sets forth our Cumulative Redeemable Perpetual Preferred Stock by series:

	Per				Number of Shares				Quarterly
	Annum			Liquidation	Issued and Outstanding as of				Distributions
Preferred Stock - Series	Rate			Preference	September 30, 2019		December 31, 2018		Per Share
Series B Preferred Stock		8.000	%	$25.00		1,610,000		1,610,000	$	0.500000
Series C Preferred Stock		7.875	%	$25.00		1,554,610		1,352,141	$	0.492188
Series D Preferred Stock		8.250	%	$25.00		1,200,000		-	$	0.515625	(1)

(1) The initial quarterly distribution for the Series D Preferred Stock paid on July 15, 2019 was pro-rated per the terms of the security in the amount of $0.41823 per share.

The Company pays cumulative cash distributions on the preferred stock at rates in the above table per annum of the $25.00 liquidation preference per share.  Holders of the Company’s preferred stock are entitled to receive distributions when authorized by the Company’s board of directors out of assets legally available for the payment of distributions.  The preferred stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of the Company or its affiliates.

On August 31, 2018, we entered into a Sales Agency Agreement, with Sandler O’Neill, under which the Company may sell from time to time through Sandler O’Neill, as sales agent, up to 400,000 shares of the Company’s 7.875% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share.  Through the period ended December 31, 2018, the Company sold 52,141 shares of Series C Preferred Stock, for net proceeds of approximately $1.0 million.  For the three and nine months ended September 30, 2019, the Company issued and sold 202,469 shares of Series C Preferred Stock, for net proceeds after all estimated expenses of approximately $4.9 million, pursuant to the Sales Agency Agreement.  The Company contributed the net proceeds from the offering to its Operating Partnership for an equivalent number of Series C Preferred Units.

In April and May 2019, the Company issued 1,200,000 shares of Series D Preferred Stock, for net proceeds after all estimated expenses of approximately $28.4 million.  The Company contributed the net proceeds from the offering to its Operating Partnership for an equivalent number of Series D Preferred Units.

Preferred Units - The Company is the holder of the Operating Partnership’s preferred partnership units and is entitled to receive distributions when authorized by the general partner of the Operating Partnership out of assets legally available for the payment of distributions.  The following table sets forth our Cumulative Redeemable Perpetual Preferred Units by series:

	Per				Number of Units				Quarterly
	Annum			Liquidation	Issued and Outstanding as of				Distributions
Preferred Units - Series	Rate			Preference	September 30, 2019		December 31, 2018		Per Unit
Series B Preferred Units		8.000	%	$25.00		1,610,000		1,610,000	$	0.500000
Series C Preferred Units		7.875	%	$25.00		1,554,610		1,352,141	$	0.492188
Series D Preferred Units		8.250	%	$25.00		1,200,000		-	$	0.515625	(1)

(1) The initial quarterly distribution for the Series D Preferred Units paid on July 15, 2019 was pro-rated per the terms of the security in the amount of $0.41823 per unit.

The Company pays cumulative cash distributions on the preferred units at rates in the above table per annum of the $25.00 liquidation preference per unit.  Holders of the Operating Partnership’s preferred units are entitled to receive distributions when authorized by the Operating Partnership’s general partner out of assets legally available for the payment of distributions.  The preferred units are not redeemable by the holders, has no maturity date and is not convertible into any other security of the Operating Partnership or its affiliates.

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Through the period ended December 2018, the Operating Partnership issued a total of 52,141 units of 7.875% Series C Preferred Units, for net proceeds after all estimated expenses of approximately $1.0 million.  The Operating Partnership used the net proceeds for working capital.

In April and May 2019, the Operating Partnership issued 1,200,000 units of 8.25% Series D Preferred Units, for net proceeds after all estimated expenses of approximately $28.4 million.  The Operating Partnership used the net proceeds to redeem in full the Operating Partnership’s 7.25% Senior Unsecured Notes due 2021 and for working capital.

For the three and nine months ending September 2019, the Operating Partnership issued 202,469 units of 7.875% Series C Preferred Units, for net proceeds after all estimated expenses of approximately $4.9 million.  The Operating Partnership used the net proceeds to acquire a commercial condominium unit of the Hyde Beach House condominium hotel and for working capital.

8. Common Stock and Units

Common Stock – As of September 30, 2019, the Company was authorized to issue up to 49,000,000 shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders.  Holders of the Company’s common stock are entitled to receive distributions when authorized by the Company’s board of directors out of assets legally available for the payment of distributions.

On December 2, 2016, the Company’s board of directors authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock, par value $0.01 per share, at prevailing prices on the open market or in privately negotiated transactions, at the discretion of management.  The Company has and expects to continue to use available working capital to fund purchases under the stock repurchase program and intends to complete the repurchase program prior to December 31, 2019, unless extended by the board of directors.  Through December 31, 2018 the Company repurchased 882,820 shares of common stock for approximately $5.9 million and the repurchased shares have been returned to the status of authorized but unissued shares of common stock.  The Company did not repurchase any shares under the stock repurchase program during the nine months ended September 30, 2019.  

During 2017, the ESOP purchased 682,500 shares of the Company’s common stock for approximately $4.9 million.  There have been no more purchases of shares of common stock made by the ESOP in 2018 or 2019.

The following is a schedule of issuances, since January 1, 2018, of the Company’s common stock and related units of the Operating Partnership:

On January 1, 2018, the Company was issued 25,000 units in the Operating Partnership and awarded 25,000 shares of restricted stock to one of its employees.

On February 5, 2018, the Company was issued 17,250 units in the Operating Partnership and awarded 15,000 shares of restricted stock and 2,250 shares of unrestricted stock to its independent directors.

On August 31, 2018, we entered into a Sales Agency Agreement, with Sandler O’Neill, under which the Company may sell from time to time through Sandler O’Neill, as sales agent, shares of the Company’s common stock, par value $0.01 per share, having an aggregate gross sales price of up to $5,000,000.  Through December 31, 2018, the Company sold 88,297 shares of common stock, for net proceeds of approximately $0.6 million and none have been sold during the nine months ended September 30, 2019.

On February 11, 2019, the Company was issued 12,750 units in the Operating Partnership and awarded shares of restricted stock to its independent directors.

On February 22, 2019, the Company was issued 250 units in the Operating Partnership and awarded shares of restricted stock to an independent director.

As of September 30, 2019 and December 31, 2018, the Company had 14,222,378 and 14, 209,378 shares of common stock outstanding, respectively.

Operating Partnership Units – Holders of Operating Partnership units, other than the Company as general partner, have certain redemption rights, which enable them to cause the Operating Partnership to redeem their units in exchange for shares of the Company’s common stock on a one-for-one basis or, at the option of the Company, cash per unit equal to the average of the market price of the Company’s common stock for the 10 trading days immediately preceding the notice date of such redemption. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the limited partners or the stockholders of the Company.

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Since January 1, 2018, there have been no issuances or redemptions, of units in the Operating Partnership other than the issuances of units in the Operating Partnership to the Company described above.

As of September 30, 2019 and December 31, 2018, the total number of Operating Partnership units outstanding was 16,000,518 and 15,987,518, respectively.

As of September 30, 2019 and December 31, 2018, the total number of outstanding Operating Partnership units not owned by the Company was 1,778,140 and 1,778,140, respectively, with a fair market value of approximately $11.9 million and $10.0 million, respectively, based on the price per share of the common stock on such respective dates.

9. Related Party Transactions

Chesapeake Hospitality. Chesapeake Hospitality is owned and controlled by individuals including Andrew M. Sims, our chairman and chief executive officer, and Kim E. Sims and Christopher L. Sims, each a former director of Sotherly and immediate family member of our chairman and chief executive officer.  As of September 30, 2019, Andrew M. Sims, Kim E. Sims and Christopher L. Sims, beneficially owned, directly or indirectly, approximately 19.3375%, 20.0%, and 20.0%, respectively, of the total outstanding ownership interests of Chesapeake Hospitality.  Kim E. Sims and Christopher L. Sims are currently officers and employees of Chesapeake Hospitality. The following is a summary of the transactions between Chesapeake Hospitality and us:

Accounts Receivable – At September 30, 2019 and December 31, 2018, we were due $96,599 and $91,987, respectively, from Chesapeake Hospitality.

Management Agreements – As of September 30, 2019, all of our wholly-owned hotels (with the exception of the Hyatt Centric Arlington hotel) and the Hyde Resort & Residences operated under various management agreements with Chesapeake Hospitality.  On December 15, 2014, we entered into a master agreement and a series of individual hotel management agreements that became effective on January 1, 2015. The master agreement has a five-year term but may be extended for such additional periods as long as an individual management agreement remains in effect. The base management fee for the Whitehall and the Georgian Terrace remained at 2.00% through 2015, increased to 2.25% in 2016 and increased to 2.50% thereafter. The base management fees for the remaining properties in the current portfolio was 2.65% through 2017 and decreased to 2.50% thereafter. For new individual hotel management agreements, Chesapeake Hospitality 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.

Each management agreement sets an incentive management fee equal to 10.0% of the amount by which gross operating profit, as defined in the management agreement, for a given year exceeds the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any such year shall not exceed 0.25% of the gross revenues of the hotel included in such calculation.

Base management and administrative fees earned by Chesapeake Hospitality for our properties was approximately $1.1 million and $1.0 million for the three months ended September 30, 2019 and 2018, respectively and approximately $3.6 million and $3.2 million for the nine months ended September 30, 2019 and 2018, respectively.  In addition, estimated incentive management fees each of approximately $0.1 million were accrued for the nine months ended September 30, 2019 and 2018, respectively.  On July 15, 2019 we notified Chesapeake Hospitality of our intent not to renew or extend the management agreements for ten of our wholly-owned hotels when they expire on January 1, 2020.

Employee Medical Benefits – We purchase employee medical benefits through Maryland Hospitality, Inc. (d/b/a MHI Health), an affiliate of Chesapeake Hospitality for those employees that are employed by Chesapeake Hospitality that work exclusively for our hotel properties. Gross premiums for employee medical benefits paid by the Company (before offset of employee co-payments) were each approximately $1.4 million for the three months ended September 30, 2019 and 2018, respectively and were approximately $4.2 million and $4.3 million for the nine months ended September 30, 2019 and 2018, respectively.

Workers’ Compensation Insurance – Pursuant to our management agreements with Chesapeake Hospitality, we pay the premiums for workers’ compensation insurance under a self-insured policy owned by Chesapeake Hospitality or its affiliates, and which covers those employees of Chesapeake Hospitality that work exclusively for the properties managed by Chesapeake Hospitality. For the three months ended September 30, 2019 and 2018, we paid approximately $0.2 million and $0.3 million, respectively, and for the nine months ended September 30, 2019 and 2018, we paid approximately $0.8 million and $0.8 million, respectively, in premiums for the portion of the plan covering those employees that work exclusively for our properties under our management agreements with Chesapeake Hospitality.

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Loan Receivable – Affiliate. As of September 30, 2019 and December 31, 2018, approximately $4.3 million and $4.4 million, respectively, was due to the Operating Partnership for advances to the Company under a loan agreement dated December 29, 2016.  The Company used the proceeds to make advances to the ESOP to purchase shares of the Company’s common stock.

Others. We employ Ashley S. Kirkland, the daughter of our Chief Executive Officer as a legal analyst and Robert E. Kirkland IV, her husband, as our compliance officer.  We also employ Andrew M. Sims Jr., the son of our Chief Executive Officer, as a manager. Total compensation, including salary and benefits, for the three months ended September 30, 2019 and 2018 totaled $103,585 and $95,568, respectively and for the nine months ended September 30, 2019 and 2018 totaled $309,875 and $290,144, respectively, for all three individuals.  

During the three-month period ending September 30, 2019 and 2018, the Company reimbursed $26,157  and $27,491, respectively, and during the nine-month period ending September 30, 2019 and 2018, the Company reimbursed $113,415  and $87,847, respectivelyto a partnership controlled by the Chief Executive Officer for business-related air travel pursuant to the Company’s travel reimbursement policy.

10. Retirement Plans

401(k) Plan - We maintain a 401(k) plan for qualified employees which is subject to “safe harbor” provisions and which requires that we match 100.0% of the first 3.0% of employee contributions and 50.0% of the next 2.0% of employee contributions. All employer matching funds vest immediately in accordance with the “safe harbor” provision.  Contributions to the plan totaled $12,892 and $12,568 for the three months ended September 30, 2019 and 2018, respectively and $63,453 and $61,607 for the nine months ended September 30, 2019 and 2018, respectively.

Employee Stock Ownership Plan - The Company adopted an Employee Stock Ownership Plan in December 2016, effective January 1, 2016.  The ESOP is a non-contributory defined contribution plan covering all employees of the Company. The Company sponsors and maintains the ESOP and related trust for the benefit of its eligible employees.  The ESOP is a leveraged ESOP, meaning funds are loaned to the ESOP from the Company.  The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company’s common stock on the open market, which serve as collateral for the loan.  Between January 3, 2017 and February 28, 2017, the Company’s ESOP purchased 682,500 shares of the Company’s common stock of an aggregate cost of $4.9 million.  

Shares purchased by the ESOP are held in a suspense account for allocation among participants as contributions are made to the ESOP by the Company.  The share allocations will be accounted for at fair value at the date of allocation.  As of September 30, 2019, the ESOP had purchased 682,500 shares of the Company’s common stock in the open market for approximately $4.9 million, which the ESOP borrowed from the Company pursuant to the loan agreement.  A total of 94,894 and 59,893 shares with a fair value of $634,843 and $416,088 remained allocated or committed to be released from the suspense account as of September 30, 2019 and 2018, respectively.  We recognized as compensation cost $170,700 and $173,856 during the nine months ended September 30, 2019 and 2018, respectively.  The remaining 584,594 unallocated shares have an approximate fair value of $3.9 million, as of September 30, 2019.  At September 30, 2019, the ESOP held a total of 66,308 allocated shares, 28,586 committed-to-be-released shares and 584,594 suspense shares.  Dividends on allocated and unallocated shares are used to pay down the ESOP loan from the Operating Partnership.  The share allocations are accounted for at fair value on the date of allocation as follows:

	September 30, 2019				December 31, 2018
	Number of Shares		Fair Value		Number of Shares		Fair Value
Allocated shares		66,308	$	443,601		33,832	$	189,798
Committed to be released shares		28,586		191,242		35,474		199,007
Total Allocated and Committed-to-be-Released		94,894	$	634,843		69,306	$	388,805
Unallocated shares		584,594		3,910,932		613,194		3,440,020
Total ESOP Shares		679,488	$	4,545,775		682,500	$	3,828,825

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11. Indirect Hotel Operating Expenses

Indirect hotel operating expenses consists of the following expenses incurred by the hotels:

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Sales and marketing		4,164,001	$	4,015,942	$	12,848,029	$	12,046,880
General and administrative		3,698,817		3,540,054		11,511,241		10,880,130
Repairs and maintenance		2,013,706		1,887,113		5,997,166		5,655,711
Utilities		1,750,826		1,749,562		4,761,352		4,735,195
Property taxes		1,751,234		950,148		5,212,700		4,113,025
Management fees, including incentive		1,053,456		1,066,120		3,792,643		3,570,974
Franchise fees		1,095,564		1,059,522		3,597,319		3,244,833
Insurance		823,420		746,175		2,497,230		2,114,351
Information and telecommunications		612,988		515,225		1,855,903		1,317,290
Other		230,136		497,635		683,944		1,222,648
Total indirect hotel operating expenses	$	17,194,148	$	16,027,496	$	52,757,527	$	48,901,037

12. Income Taxes

The components of the income tax (benefit) provision for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Current:
Federal	$	(33,254	)	$	—		$	(125,587	)	$	—
State		41,839			24,266			112,741			131,306
		8,585			24,266			(12,846	)		131,306
Deferred:
Federal		(569,928	)		(612,703	)		356,590			591,917
State		(132,847	)		(158,487	)		95,579			158,822
		(702,775	)		(771,190	)		452,169			750,739
	$	(694,190	)	$	(746,924	)	$	439,323		$	882,045

A reconciliation of the statutory federal income tax provision to the Company’s income tax provision is as follows:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Statutory federal income tax provision	$	290,535		$	(573,028	)	$	687,986		$	639,311
Effect of non-taxable REIT loss		(893,717	)		(39,675	)		(456,983	)		(47,394	)
State income tax provision		(91,008	)		(134,221	)		208,320			290,128
	$	(694,190	)	$	(746,924	)	$	439,323		$	882,045

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As of September 30, 2019 and December 31, 2018, we had a net deferred tax asset of approximately $4.7 million and $5.1 million, respectively, of which, approximately $4.1 million and $4.4 million, respectively, are due to accumulated net operating losses of our TRS Lessee. These loss carryforwards will begin to expire in 2028 if not utilized by such time.  As of September 30, 2019 and December 31, 2018, the remainder of the deferred tax asset is attributable to year-to-year timing differences of approximately $0.6 million and $0.7 million, respectively, for accrued, but not deductible, employee performance awards, vacation and sick pay, bad debt allowance and depreciation. 

We record a valuation allowance to reduce deferred tax assets to an amount that we believe is more likely than not to be realized. Because of expected future taxable income of our TRS Lessee, we have not recorded a valuation allowance to reduce our net deferred tax asset as of September 30, 2019 and December 31, 2018, respectively. We regularly evaluate the likelihood that our TRS Lessee will be able to realize its deferred tax assets and the continuing need for a valuation allowance.  At September 30, 2019 and December 31, 2018, we determined, based on all available positive and negative evidence, that it is more-likely-than-not that future taxable income will be available during the carryforward periods to absorb all of the consolidated federal and state net operating loss carryforward of our TRS Lessee.  A number of factors played a critical role in this determination, including:

• a demonstrated track record of past profitability and utilization of past NOL carryforwards,

• reasonable forecasts of future taxable income, and

• changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership. 

13. Loss Per Share and Per Unit

Loss per Share. The limited partners’ outstanding limited partnership units in the Operating Partnership (which may be redeemed for common stock upon notice from the limited partner and following our election to redeem the units for stock rather than cash) have been excluded from the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners’ share of loss would also be added back to net loss. The shares of the Series B Preferred Stock and Series C Preferred Stock and Series D Preferred Stock are not convertible into or exchangeable for any other property or securities of the Company, except upon the occurrence of a change of control and have been excluded from the diluted earnings per share calculation as there would be no impact on the current controlling stockholders. The non-committed, unearned ESOP shares are treated as reducing the number of issued and outstanding common shares and similarly reducing the weighted averagenumber of common shares outstanding.  The allocated and committed to be released shares have been included in the weighted average diluted earnings per share calculation, and the amount of compensation for allocated shares is reflected in net loss. There are no ESOP units, therefore there is no dilution on the calculation of earnings per unit. The computation of basic and diluted net loss per share is presented below.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Numerator
Net loss available to common stockholders for basic and diluted computation	$	(106,827	)	$	(3,065,883	)	$	(2,492,298	)	$	(1,951,816	)
Denominator
Weighted average number of common shares outstanding		14,222,378			14,154,414			14,220,416			14,141,273
Weighted average number of Unearned ESOP Shares		(585,672	)		(640,418	)		(595,656	)		(649,466	)
Total weighted average number of common shares outstanding for basic computation		13,636,706			13,513,996			13,624,760			13,491,807
Basic net loss per share	$	(0.01	)	$	(0.23	)	$	(0.18	)	$	(0.14	)

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Income Per Unit – The computation of basic and diluted net loss per unit is presented below.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Numerator
Net loss available to general and limited partnership unitholders for basic computation	$	(120,164	)	$	(3,451,499	)	$	(2,803,940	)	$	(2,197,114	)
Denominator
Weighted average number of general and limited partnership units outstanding		16,000,518			15,915,706			15,998,556			15,902,565
Basic and diluted net loss per general and limited partnership unit	$	(0.01	)	$	(0.22	)	$	(0.18	)	$	(0.14	)

14. Subsequent Events

On October 11, 2019, we paid a quarterly dividend (distribution) of $0.13 per common share (and unit) to those stockholders (and unitholders of the Operating Partnership) of record on September 13, 2019.

On October 15, 2019, we paid a quarterly distribution of $0.50 per share (and unit) of Series B Preferred Stock (and Series B Preferred Units) to holders of the Series B Preferred Stock (and Series B Preferred Units) of record as of October 1, 2019.

On October 15, 2019, we paid a quarterly distribution of $0.4921875 per share (and unit) of Series C Preferred Stock (and Series C Preferred Units) to holders of the Series C Preferred Stock (and Series C Preferred Units) of record as of October 1, 2019.

On October 15, 2019, we paid a quarterly distribution of $0.515625 per share (and unit) of Series D Preferred Stock (and Series D Preferred Units) to holders of the Series D Preferred Stock (and Series D Preferred Units) of record as of October 1, 2019.

On October 28, 2019, we authorized payment of a quarterly dividend (distribution) of $0.13 per common share (and unit) to the stockholders (and unitholders of the Operating Partnership) of record as of December 13, 2019. The dividend (distribution) is to be paid on January 10, 2020.

On October 28, 2019, we authorized payment of a quarterly distribution of $0.50 per share (and unit) of Series B Preferred Stock (and Series B Preferred Units) to holders of the Series B Preferred Stock (and Series B Preferred Units) of record as of December 31, 2019, to be paid on January 15, 2020.

On October 28, 2019, we authorized payment of a quarterly distribution of $0.4921875 per share (and unit) of Series C Preferred Stock (and Series C Preferred Units) to holders of the Series C Preferred Stock (and Series C Preferred Units) of record as of December 31, 2019, to be paid on January 15, 2020.

On October 28, 2019, we authorized payment of a quarterly distribution of $0.515625 per share (and unit) of Series D Preferred Stock (and Series D Preferred Units) to holders of the Series D Preferred Stock (and Series D Preferred Units) of record as of December 31, 2019, to be paid on January 15, 2020.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT incorporated in Maryland in August 2004 to pursue opportunities in the full-service, primarily upscale and upper-upscale segments of the hotel industry located in primary and secondary markets in the mid-Atlantic and southern United States.  Substantially all of the assets of Sotherly Hotels Inc. are held by, and all of its operations are conducted through, Sotherly Hotels LP. We commenced operations in December 2004 when we completed our initial public offering and thereafter consummated the acquisition of the Initial Properties.

Our hotel portfolio currently consists of twelve full-service, primarily upscale and upper-upscale hotels, comprising 3,156 rooms, as well as interests in two condominium hotels and their associated rental programs. The Company owns hotels that operate under well-known brands such as DoubleTree by Hilton, Tapestry Collection by Hilton, Sheraton and Hyatt Centric, as well as independent hotels.  We sometimes refer to our independent and soft-branded properties as our collection of boutique hotels.   As of September 30, 2019, our portfolio consisted of the following hotel properties:

	Number
Property	of Rooms			Location	Date of Acquisition	Chain/ClassDesignation
Wholly-owned Hotels
The DeSoto		246		Savannah, GA	December 21, 2004	Upper Upscale(1)
DoubleTree by Hilton Jacksonville Riverfront		293		Jacksonville, FL	July 22, 2005	Upscale
DoubleTree by Hilton Laurel		208		Laurel, MD	December 21, 2004	Upscale
DoubleTree by Hilton Philadelphia Airport		331		Philadelphia, PA	December 21, 2004	Upscale
DoubleTree by Hilton Raleigh Brownstone-University		190		Raleigh, NC	December 21, 2004	Upscale
DoubleTree Resort by Hilton Hollywood Beach		311		Hollywood, FL	August 9, 2007	Upscale
Georgian Terrace		326		Atlanta, GA	March 27, 2014	Upper Upscale(1)
Hotel Alba Tampa, Tapestry Collection by Hilton		222		Tampa, FL	October 29, 2007	Upscale
Hotel Ballast Wilmington, Tapestry Collection by Hilton		272		Wilmington, NC	December 21, 2004	Upscale
Hyatt Centric Arlington		318		Arlington, VA	March 1, 2018	Upper Upscale
Sheraton Louisville Riverside		180		Jeffersonville, IN	September 20, 2006	Upper Upscale
The Whitehall		259		Houston, TX	November 13, 2013	Upper Upscale(1)
Hotel Rooms Subtotal		3,156
Condominium Hotel
Hyde Resort & Residences		198	(2)	Hollywood, FL	January 30, 2017	Luxury(1)
Hyde Beach House Resort & Residences		-	(3)	Hollywood, FL	September 26, 2019	Luxury(1)
Total Hotel & Participating Condominium  Hotel Rooms		3,354

(1) Operated as an independent hotel.

(2) Reflects only those condominium units that were participating in the rental program as of September 30, 2019.  At any given time, some portion of the units participating in our rental program may be occupied by the unit owner(s) and unavailable for rental to hotel guests.  We sometimes refer to each participating condominium unit as a “room.”

(3) We launched the rental program for the Hyde Beach House in November 2019.

We conduct substantially all our business through our Operating Partnership.  We are the sole general partner of our Operating Partnership, and we own an approximate 88.9% interest in our Operating Partnership, as of the date of this filing, with the remaining interest being held by limited partners who were the contributors of our Initial Properties and related assets.

To qualify as a REIT, neither the Company nor the Operating Partnership can operate our hotels. Therefore, our wholly-owned hotel properties are leased to our TRS Lessees, which are indirect wholly owned subsidiaries of the Operating Partnership.  Our TRS Lessees then engage eligible independent hotel management companies to operate the hotels under a management agreement.  Our TRS Lessees have engaged Chesapeake Hospitality and Highgate Hotels to manage our hotels.  Our TRS Lessees, and their parent, MHI Hospitality TRS Holding, Inc., are consolidated into each of our financial statements for accounting purposes.  The earnings of MHI Hospitality TRS Holding, Inc. are subject to taxation similar to other C corporations.

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Our hotel management agreements with Chesapeake Hospitality for all of our hotels that it manages, other than the DoubleTree Resort by Hilton Hollywood Beach and the Hyde Resort & Residences, terminate according to their terms on January 1, 2020 (the “Expiring Agreements”).On July 15, 2019 we notified Chesapeake Hospitality of our intent not to renew or extend the Expiring Agreements.  On September 6, 2019, we entered into a master agreement with Newport Hospitality Group, Inc., a Virginia corporation, and Our Town Hospitality LLC, a Virginia limited liability company relating to the management of ten of our hotels.  The master agreement is designed to address the scheduled termination on January 1, 2020 of the Expiring Agreements.  The master agreement establishes terms relating to new hotel management agreements governing the management of our hotels.Chesapeake Hospitality has committed to providing assistance in transitioning the hotels to a new manager.

Key Operating Metrics

In the hotel industry, room revenue is considered the most important category of revenue and drives other revenue categories such as food, beverage, catering, parking, and telephone. There are three key performance indicators used in the hotel industry to measure room revenues:

• Occupancy, or the number of rooms sold, usually expressed as a percentage of total rooms available;

• Average daily rate, or ADR, which is total room revenue divided by the number of rooms sold; and

• Revenue per available room, or RevPAR, which is total room revenue divided by the total number of available rooms.

RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (such as housekeeping services, laundry, utilities, room supplies, franchise fees, management fees, credit card commissions and reservations expense), but could also result in increased non-room revenue from the hotel’s restaurant, banquet or parking facilities. Changes in RevPAR that are primarily driven by changes in ADR typically have a greater impact on operating margins and profitability as they do not generate all of the additional variable operating costs associated with higher occupancy.

When calculating composite portfolio metrics, we include available rooms at the Hyde Resort & Residences that participate in our rental program and are not reserved for owner-occupancy.

We also use FFO, Adjusted FFO and Hotel EBITDA as measures of our operating performance.  See “Non-GAAP Financial Measures.”

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Results of Operations

The following tables illustrate the key operating metrics for the three and nine months ended September 30, 2019 and 2018, respectively, for the Company’s wholly-owned properties (“actual” portfolio metrics), as well as eleven wholly-owned properties in the portfolio that were under the Company’s control during the nine months ended September 30, 2019 and the corresponding period in 2018 (“same-store” portfolio metrics). Accordingly, the actual data does not include the participating condominium hotel rooms at the Hyde Resort & Residences or the Hyde Beach House, and the same-store data does not reflect the performance of the Hyatt Centric Arlington which was acquired on March 1, 2018, or our interest in the Hyde Resort & Residences and the Hyde Beach House.  The composite portfolio metrics represent all of the Company’s wholly-owned properties and the participating condominium hotel rooms at the Hyde Resort & Residences during the nine months ended September 30, 2019 and the corresponding periods in 2018.  As of September 30, 2019, there were no participating condominium hotel rooms at the Hyde Beach House.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Actual Portfolio Metrics
Occupancy %		70.6	%		69.3	%		72.7	%		71.6	%
ADR	$	142.75		$	142.26		$	157.36		$	152.75
RevPAR	$	100.75		$	98.59		$	114.40		$	109.44
Same-Store Portfolio Metrics
Occupancy %		69.1	%		67.4	%		71.7	%		70.2	%
ADR	$	139.98		$	140.71		$	153.33		$	149.16
RevPAR	$	96.77		$	94.89		$	109.92		$	104.77
Composite Portfolio Metrics
Occupancy %		68.8	%		68.0	%		71.7	%		70.1	%
ADR	$	145.51		$	146.54		$	162.69		$	159.10
RevPAR	$	100.06		$	99.72		$	116.57		$	111.60

Comparison of the Three Months Ended September 30, 2019 to the Three Months Ended September 30, 2018

Revenue.  Total revenue for the three months ended September 30, 2019 increased approximately $1.2 million, or 2.7%, to approximately $42.6 million compared to total revenue of approximately $41.4 million for the three months ended September 30, 2018. The increase in revenue for the three months ended September 30, 2019 resulted mainly from revenues of the newly acquired Hyde Beach House of approximately $0.8 million and a net increase of approximately $0.4 million across most of the portfolio, including an aggregate increase at our fully renovated and rebranded property in Wilmington, North Carolina of approximately $0.6 million. A significant increase in our Houston, Texas property from favorable local market changes of approximately $1.0 million, offset by a noticeable seasonal trend for the quarter which included the effects of Hurricane Dorian impacting our properties in Savannah, Georgia, Atlanta, Georgia, Jacksonville, Florida and two properties in Hollywood, Florida, with a decrease of approximately $1.7 million, as well as a net increase of approximately $0.5 million at the remaining properties.

Room revenue increased approximately $0.6 million, or 2.2%, to approximately $29.2 million for the three months ended September 30, 2019 compared to room revenue of approximately $28.6 million for the three months ended September 30, 2018.  The increase in room revenue for the three months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated and rebranded properties in Wilmington, North Carolina and Savannah, Georgia of approximately $0.3 million, as well as a net increase of approximately $0.3 million at the remaining properties.

Food and beverage revenues increased approximately $0.6 million, or 6.9%, to approximately $9.0 million for the three months ended September 30, 2019 compared to food and beverage revenues of approximately $8.4 million for the three months ended September 30, 2018.   The increase in food and beverage revenues for the three months ended September 30, 2019 resulted mainly from an increase at our properties in Wilmington, North Carolina, Houston, Texas and Hollywood, Florida of approximately $0.9 million as well as a net decrease of approximately $0.3 million at the remaining properties.

Revenue from other operating departments decreased approximately $0.1 million, or 1.7%, to approximately $4.3 million for the three months ended September 30, 2019 compared to revenue from other operating departments of approximately $4.4 million for the three months ended September 30, 2018.  The decrease in revenue from other operating departments for the three months ended September 30, 2019 resulted mainly from an aggregate decrease of approximately $0.1 million at our three Hollywood, Florida properties.

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Hotel Operating Expenses.  Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses and management fees, were approximately $33.6million for the three months ended September 30, 2019, an increase of approximately $1.4million, or 4.4%, compared to total hotel operating expenses of approximately $32.2 million for the three months ended September 30, 2018.  The increase in hotel operating expenses for the three months ended September 30, 2019resulted mainly from an aggregate increase at our fully renovated properties in Wilmington, North Carolina and Savannah, Georgia of approximately $1.3million, as well as a net increase of approximately $0.1 million at the remaining properties.

Rooms expense for the three months ended September 30, 2019 increased approximately $0.2 million, or 2.4%, to approximately $8.1 million compared to rooms expense for the three months ended September 30, 2018 of approximately $7.9 million. The net increase in rooms expense for the three months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated properties in Wilmington, North Carolina and Savannah, Georgia of approximately $0.2 million.

Food and beverage expenses for the three months ended September 30, 2019 increased approximately $0.3 million, or 5.3%, to approximately $7.0 million compared to food and beverage expenses of approximately $6.7 million for the three months ended September 30, 2018. The net increase in food and beverage expenses for the three months ended September 30, 2019 resulted mainly from an aggregate increase of approximately $0.4 million at our Wilmington, North Carolina, Houston, Texas and Tampa, Florida properties, which was offset by an aggregate decrease of approximately $0.1 million at the remaining properties.

Expenses from other operating departments decreased approximately $0.3 million, or 18.6%, to approximately $1.4 million for the three months ended September 30, 2019 compared to expenses from other operating departments of approximately $1.7 million for the three months ended September 30, 2018.  The decrease in expenses from other operating departments for the three months ended September 30, 2019 resulted mainly from an decrease at our property the Hyde Resort & Residences in Hollywood, Florida of approximately $0.2 million, and by an aggregate decrease of approximately $0.1 million at the remaining properties.

Indirect expenses at our wholly-owned properties for the three months ended September 30, 2019 increased approximately $1.2 million, or 7.3%, to approximately $17.2 million compared to indirect expenses of approximately $16.0 million for the three months ended September 30, 2018.  The increase in indirect expenses for the three months ended September 30, 2019 resulted mainly from an increase in real estate and personal property taxes at our Savannah, Georgia property of approximately $0.8 million. There was also an aggregate increase in indirect expenses of approximately $0.4 million from the remaining properties.

Depreciation and Amortization.  Depreciation and amortization expense for the three months ended September 30, 2019 increased approximately $0.5 million, or 9.5%, to approximately $5.0 million compared to depreciation and amortization of approximately $4.5 million for the three months ended September 30, 2018.  The increase in depreciation was mainly related to our property in Arlington, Virginia with an increase of approximately $0.4 million.  There was also an aggregate increase in depreciation and amortization of approximately $0.1 million from our remaining properties.

Corporate General and Administrative.  Corporate general and administrative expenses for the three months ended September 30, 2019 increased approximately $0.3 million, or 16.7%, to approximately $1.8 million compared to corporate general and administrative expenses of approximately $1.5 million for the three months ended September 30, 2018.  The increase in corporate general and administrative expenses was mainly due to increased legal and professional fees by approximately $0.2 million, an increase in salaries of approximately $0.2 million offset in part by a reduction in audit and accounting fees of approximately $0.1 million.

Interest Expense.  Interest expense for the three months ended September 30, 2019 decreasedapproximately $0.6 million, or 11.0%, to approximately $4.7 million,as compared to interest expense of approximately $5.3 million for the three months ended September 30, 2018.  The decrease in interest expense for the three months ended September 30, 2019, was substantially related to the reduction of the 7.25% unsecured notes, which accounted for a decrease of approximately $0.5 million compared to the three-month period ending September 30, 2018.  

Interest Income.  Interest income for the three months ended September 30, 2019 increased slightly by $14,284, or 16.1%, to $102,768 compared to interest income of $88,484 for the three months ended September 30, 2018.   The increase is due to higher interest rates on our interest-bearing cash and cash equivalents held during the three-month period ending September 30, 2019 compared to the three-month period ending September 30, 2018.

Unrealized Gain (Loss) on Hedging Activities.  As of September 30, 2019, the fair market value of our interest rate caps is $4,421 and the fair market value of our interest rate swap liability is approximately $2.4 million.  The unrealized loss on hedging activities during the three months ended September 30, 2019, was approximately $0.2 million and during the three months ended September 30, 2018, the unrealized gain on hedging activities was approximately $0.1 million.

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Loss on Early Debt Extinguishment.  During the three months ended September 30, 2018 we refinanced mortgage loans, we had on the DoubleTree by Hilton Raleigh Brownstone University, the DoubleTree by Hilton Philadelphia Airport and the Hyatt Centric Arlington with an approximate aggregate loss on early debt extinguishment of $0.8 million.  There were no debt extinguishments for the three months ended September 30, 2019. 

Gain on Exercise of Development Right.  On September 26, 2019, we received title to a commercial condominium unit of the Hyde Beach House, consisting of a 3,000 square foot ballroom and adjacent pre-function space.  The unit will be available for use as an additional ballroom and function space for our adjacent hotel, the DoubleTree Resort by Hilton Hollywood Beach.  Conveyance of the ballroom condominium unit was required pursuant to an existing obligation on the part of the owner of the property as a condition to the development of the Hyde Beach House.  Accompanying the title to the ballroom condominium unit are dedicated rights to 200 parking spaces within the six-story parking structure adjacent to the ballroom.  The estimated fair value of the condominium unit and parking right is approximately $3.9 million.

Gain on Involuntary Conversion of Assets.  Gain on involuntary conversion of assets for the three months ended September 30, 2019 increased approximately $0.1 million to approximately $0.1 million compared to no gain on involuntary conversion of assets for the three months ended September 30, 2018.  During September 2019, we had mechanical failure and flooding damage from failure of the sewer system resulting in damage to the boiler at The DeSoto property with a one-time involuntary conversion in the amount of approximately $0.1 million.

Income Taxes.  We had an income tax benefit of approximately $0.7 million for the three months ended September 30, 2019 compared to an income tax benefit of approximately $0.7 million for the three months ended September 30, 2018.  The income tax benefit is primarily derived from the operations of our TRS Lessees. Our TRS Lessees realized operating losses for each of the three months ended September 30, 2019 and 2018.

Net Income.  We realized net income for the three months ended September 30, 2019 of approximately $2.1 million compared to a net loss of approximately $2.0 million for the three months ended September 30, 2018, because of the operating results discussed above.

Comparison of the Nine Months Ended September 30, 2019 to the Nine Months Ended September 30, 2018

Revenue.  Total revenue for the nine months ended September 30, 2019 increased approximately $6.8 million, or 5.0%, to approximately $141.5 million compared to total revenue of approximately $134.7 million for the nine months ended September 30, 2018. The increase in revenue for the nine months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated and rebranded properties in Wilmington, North Carolina and Savannah, Georgia of approximately $3.0 million.  There was also a significant increase in revenue in the nine-month period at our property in Atlanta, Georgia, of approximately $1.5 million, and a significant increase in revenue in the nine-month period at our property in Arlington, Virginia of approximately $2.9 million, which had two additional months of revenue this year versus the comparable period last year. These increases were offset by a net decrease of approximately $0.6 million at our remaining properties.

Room revenue increased approximately $6.4 million, or 6.9%, to approximately $98.6 million for the nine months ended September 30, 2019 compared to room revenue of approximately $92.2 million for the nine months ended September 30, 2018.  The increase in room revenue for the nine months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated and rebranded properties in Wilmington, North Carolina and Savannah, Georgia of approximately $1.7 million. Additionally, there was a significant aggregate increase in room revenue in the nine-month period at our properties in Atlanta, Georgia and Arlington, Virginia of approximately $4.1 million, as well as a net increase of approximately $0.6 million at our remaining properties.

Food and beverage revenues increased approximately $1.8 million, or 6.2%, to approximately $29.6 million for the nine months ended September 30, 2019 compared to food and beverage revenues of approximately $27.8 million for the nine months ended September 30, 2018.   The increase in food and beverage revenues for the nine months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated and rebranded properties in Wilmington, North Carolina and Savannah, Georgia of approximately $1.1 million. Additionally, there was a significant increase in food and beverage revenue in the nine-month period at our properties in Houston, Texas and Arlington, Virginia of approximately $1.2 million.  These increases were offset by a net decrease of approximately $0.5 million at our remaining properties.

Revenue from other operating departments decreased approximately $1.3 million, or 8.7%, to approximately $13.3 million for the nine months ended September 30, 2019 compared to revenue from other operating departments of approximately $14.6 million for the nine months ended September 30, 2018.  The decrease in revenue from other operating departments for the nine months ended September 30, 2019 resulted mainly from a decrease of approximately $1.0 million at our Hollywood, Florida property, due to higher

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revenues received in the nine months ended September 30, 2018 that were driven by a one-time event that did not occur this year.  Our remaining properties reported a net decrease of approximately $0.3million.

Hotel Operating Expenses.  Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses and management fees, were approximately $103.8 million for the nine months ended September 30, 2019, an increase of approximately $6.5 million, or 6.7%, compared to total hotel operating expenses of approximately $97.3 million for the nine months ended September 30, 2018.  The increase in hotel operating expenses for the nine months ended September 30, 2019 resulted mainly from the acquisition of our Hyatt Centric Arlington property, on March 1, 2018, which increased hotel operating expenses by approximately $2.8 million.  Additionally, there was an aggregate increase at our fully renovated properties in Wilmington, North Carolina, Hollywood, Florida and Savannah, Georgia of approximately $2.8 million, as well as an increase from our newly acquired Hyde Beach House adding approximately $0.7 million and a net increase of approximately $0.2 million at the remaining properties.

Rooms expense for the nine months ended September 30, 2019 increased approximately $1.5 million, or 6.7%, to approximately $24.3 million compared to rooms expense for the nine months ended September 30, 2018 of approximately $22.8 million. The net increase in rooms expense for the nine months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated properties in Wilmington, North Carolina, Hollywood, Florida and Savannah, Georgia of approximately $0.4 million. Additionally, there was a significant aggregate increase in room expense in the nine-month period at our properties in Atlanta, Georgia, Houston, Texas and Arlington, Virginia of approximately $1.0 million and a net increase of approximately $0.1 million at our remaining properties.

Food and beverage expenses for the nine months ended September 30, 2019 increased approximately $1.1 million, or 5.0%, to approximately $21.8 million compared to food and beverage expenses of approximately $20.7 million for the nine months ended September 30, 2018. The net increase in food and beverage expenses for the nine months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated properties in Wilmington, North Carolina, Hollywood, Florida and Savannah, Georgia of approximately $0.5 million. Additionally, there was a significant increase in food and beverage expense in the nine-month period at our properties in Houston, Texas and Arlington, Virginia of approximately $0.7 million.  These increases were offset by a net decrease of approximately $0.1 million at our remaining properties.

Expenses from other operating departments increased approximately $0.1 million, or 2.8%, to approximately $5.0 million for the nine months ended September 30, 2019 compared to expenses from other operating departments of approximately $4.9 million for the nine months ended September 30, 2018.  The increase in expense from other operating departments for the nine months ended September 30, 2019 resulted mainly from an aggregate increase at our fully renovated properties in Wilmington, North Carolina, Savannah, Georgia and Hollywood, Florida of approximately $0.2 million and by a net decrease of approximately $0.1 million at our remaining properties.

Indirect expenses at our wholly-owned properties for the nine months ended September 30, 2019 increased approximately $3.9 million, or 7.9%, to approximately $52.8 million compared to indirect expenses of approximately $48.9 million for the nine months ended September 30, 2018.  The increase in indirect expenses for the nine months ended September 30, 2019 resulted mainly from the acquisition of our Hyatt Centric Arlington property, on March 1, 2018, which increased indirect costs for the nine months ended September 30, 2019 by approximately $1.5 million. Additionally, there was an aggregate increase at our fully renovated properties in Wilmington, North Carolina, Savannah, Georgia and Hollywood, Florida of approximately $1.8 million. There was also an aggregate increase in indirect expenses of approximately $0.6 million at our remaining properties.

Depreciation and Amortization.  Depreciation and amortization expense for the nine months ended September 30, 2019 increased approximately $0.3 million, or 2.1%, to approximately $16.1 million compared to depreciation and amortization of approximately $15.8 million for the nine months ended September 30, 2018.  The increase in depreciation resulted mainly from the acquisition of our Hyatt Centric Arlington property, on March 1, 2018, which increased depreciation and amortization for the nine months ended September 30, 2019 by approximately $0.5 million.  There were aggregate decreases to our properties in Wilmington, North Carolina, Savannah, Georgia, Hollywood, Florida and Tampa, Florida due to their renovations and disposals with a net decrease of approximately $0.5 million.  There was also an aggregate increase in depreciation and amortization of approximately $0.3 million at our remaining properties.

Corporate General and Administrative.  Corporate general and administrative expenses for the nine months ended September 30, 2019 increased approximately $0.4 million, or 9.7%, to approximately $5.0 million compared to corporate general and administrative expenses of approximately $4.6 million for the nine months ended September 30, 2018.  The increase in corporate general and administrative expenses was mainly due to increased salaries, travel, legal and professional fees of approximately $0.5 million and a decrease in audit and accounting fees of approximately $0.1 million.

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Interest Expense.  Interest expense for the nine months ended September 30, 2019 increased approximately $0.5million, or 3.7%, to approximately $15.1 million compared to interest expense of approximately $14.6 million for the nine months ended September 30, 2018.  The increase in interest expense for the nine months ended September 30, 2019, was substantially related to the refinanced mortgages on our properties in Raleigh, North Carolina, Philadelphia, Pennsylvania, Tampa, Florida and Arlington, Virginiaand deferred financing costs associated with those mortgages, which accounted for an increase of approximately $1.1million compared to the nine-month period ending September 30, 2018. In addition, there was an approximate $0.6 milliondecrease in interest expense from the payoff of the 7.25% unsecured notes.

Interest Income.  Interest income for the nine months ended September 30, 2019 increased approximately $0.1 million or 51.1%, to approximately $0.3 million, compared to interest income of approximately $0.2 million, for the nine months ended September 30, 2018.   The increase is due to higher interest rates on the interest-bearing cash and cash equivalents held during the nine-month period ending September 30, 2019 compared to the nine-month period ending September 30, 2018.

Unrealized Gain (Loss) on Hedging Activities.  As of September 30, 2019, the fair market value of our interest rate caps is $4,421 and the fair market value of our interest rate SWAP liability is approximately $2.4 million.  The unrealized loss on hedging activities during the nine months ended September 30, 2019, was approximately $1.6 million and during the nine months ended September 30, 2018, the unrealized gain on hedging activities was approximately $0.1 million.

Gain on Involuntary Conversion of Assets.  Gain on involuntary conversion of assets for the nine months ended September 30, 2019 decreased approximately $0.6 million to approximately $0.3 million compared to gain on involuntary conversion of assets of approximately $0.9 million for the nine months ended September 30, 2018.  During March 2019, we received an involuntary conversion reimbursement for flooding damage to our Wilmington property of approximately $0.2 million. During September 2019, we had mechanical failure and flooding damage from failure of the sewer system resulting in damage to the boiler at The DeSoto property with a one-time involuntary conversion in the amount of approximately $0.1 million.

Loss on Early Debt Extinguishment.  The 7.25% Notes were redeemed on May 20, 2019 at 101% of face value.  A redemption premium of $0.25 million and the unamortized deferred financing costs related to the 7.25% Notes comprise loss on early debt extinguishment in the current period of approximate $1.2 million. During the nine months ended September 30, 2018, we refinanced the mortgage loans we had on the DoubleTree by Hilton Raleigh Brownstone University, the DoubleTree by Hilton Philadelphia Airport and the Hyatt Centric Arlington with an approximate aggregate loss on early debt extinguishment of approximately $0.8 million.

Gain on Exercise of Development Right.  On September 26, 2019, we received title to a commercial condominium unit of the Hyde Beach House, consisting of a 3,000 square foot ballroom and adjacent pre-function space.  The unit will be available for use as an additional ballroom and function space for our adjacent hotel, the DoubleTree Resort by Hilton Hollywood Beach.  Conveyance of the ballroom condominium unit was required pursuant to an existing obligation on the part of the owner of the property as a condition to the development of the Hyde Beach House.  Accompanying the title to the ballroom condominium unit are dedicated rights to 200 parking spaces within the six-story parking structure adjacent to the ballroom.  The estimated fair value of the condominium unit and parking right is approximately $3.9 million.

Income Taxes.  We had an income tax provision of approximately $0.4 million for the nine months ended September 30, 2019 compared to an income tax provision of approximately $0.9 million for the nine months ended September 30, 2018.  The income tax benefit is primarily derived from the operations of our TRS Lessees.  Our TRS Lessees realized operating income for each of the nine months ended September 30, 2019 and 2018.

Net Income.  We realized a net income for the nine months ended September 30, 2019 of approximately $2.8 million compared to a net income of approximately $2.2 million for the nine months ended September 30, 2018, because of the operating results discussed above.

Non-GAAP Financial Measures

We consider FFO, Adjusted FFO and Hotel EBITDA, all of which are non-GAAP financial measures, to be key supplemental measures of our performance and could be considered along with, not alternatives to, net income (loss) as a measure of our performance.  These measures do not represent cash generated from operating activities determined by GAAP or amounts available for our 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 and Adjusted 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

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with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after 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.

We consider 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.

We further adjust FFO 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 derivative, loan impairment losses, losses on early extinguishment of debt, 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, operating asset depreciation and amortization,  change in control gains or losses 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.

The following is a reconciliation of net income (loss) to FFO and Adjusted FFO for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net loss available to common stockholders	$	(106,827	)	$	(3,065,883	)	$	(2,492,298	)	$	(1,951,816	)
Add: Net loss attributable to noncontrolling interest		(13,337	)		(385,616	)		(311,642	)		(245,298	)
Depreciation and amortization - real estate		4,965,299			4,450,181			16,073,505			15,545,088
Gain on involuntary conversion of assets		(130,569	)		—			(291,902	)		(898,565	)
(Gain) loss on disposal of assets		4,918			(7,555	)		32,088			(3,816	)
FFO available to common stockholders and unitholders	$	4,719,484		$	991,127		$	13,009,751		$	12,445,593
(Increase) decrease in deferred income taxes		(702,775	)		(771,190	)		452,169			750,739
Amortization		14,869			96,862			43,773			238,086
Loss on early extinguishment of debt		—			753,133			1,152,356			753,133
Unrealized (gain) loss on hedging activities		226,491			(123,443	)		1,554,924			(141,970	)
Adjusted FFO available to common stockholders and unitholders	$	4,258,069		$	946,489		$	16,212,973		$	14,045,581
Weighted average number of shares outstanding, basic		13,636,706			13,513,996			13,624,760			13,491,807
Weighted average number of non-controlling units		1,778,140			1,778,140			1,778,140			1,778,140
Weighted average number of shares and units outstanding, basic		15,414,846			15,292,136			15,402,900			15,269,947
FFO per common share and unit	$	0.31		$	0.06		$	0.84		$	0.82
Adjusted FFO per common share and unit	$	0.28		$	0.06		$	1.05		$	0.92

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Hotel EBITDA.  We define Hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax provision or benefit, (4) equity in the income or loss of equity investees, (5) unrealized gains and losses on derivative instruments not included in other comprehensive income, (6) gains and losses on disposal of assets, (7) realized gains and losses on investments, (8) impairment of long-lived assets or investments, (9) loss on early debt extinguishment, (10) gains or losses on change in control, (11) gain on exercise of development right, (12) corporate general and administrative expense, (13) depreciation and amortization, (14) gains and losses on involuntary conversions of assets, (15) distributions to preferred stockholders and (16) other operating revenue 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.

Our calculation of Hotel EBITDA may be different from similar measures calculated by other REITs.

The following is a reconciliation of net income (loss) to Hotel EBITDA for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net loss available to common stockholders	$	(106,827	)	$	(3,065,883	)	$	(2,492,298	)	$	(1,951,816	)
Add: Net loss attributable to noncontrolling interest		(13,337	)		(385,616	)		(311,642	)		(245,298	)
Interest expense		4,722,456			5,306,641			15,115,690			14,571,142
Interest income		(102,768	)		(88,484	)		(357,576	)		(236,693	)
Income tax provision (benefit)		(694,190	)		(746,924	)		439,323			882,045
Depreciation and amortization		4,980,168			4,547,043			16,117,278			15,783,174
Distributions to preferred stockholders		2,188,910			1,469,719			5,631,799			4,359,407
EBITDA		10,974,412			7,036,496			34,142,574			33,161,961
(Gain) loss on disposal of assets		4,918			(7,555	)		32,088			(3,816	)
Loss on early extinguishment of debt		—			753,133			1,152,356			753,133
Gain on exercise of development right		(3,940,000	)		—			(3,940,000	)		—
Gain on involuntary conversion of assets		(130,569	)		—			(291,902	)		(898,565	)
Subtotal		6,908,761			7,782,074			31,095,116			33,012,713
Corporate general and administrative		1,768,912			1,516,408			5,008,290			4,566,258
Unrealized (gain) loss on hedging activities		226,491			(123,443	)		1,554,924			(141,970	)
Hotel EBITDA	$	8,904,164		$	9,175,039		$	37,658,330		$	37,437,001

Sources and Uses of Cash

Operating Activities.  Our principal source of cash to meet our operating requirements, including distributions to unitholders of the Operating Partnership and stockholders of our preferred and common stock, as well as debt service (excluding debt maturities), is through the operations of our hotels.  Cash flow provided by operating activities for the nine months ended September 30, 2019was approximately $21.9 million.  We had a net decrease in cash provided by operating activities for the nine months ended September 30, 2019of approximately $0.1 million, compared to the nine months ended September 30, 2018.  We expect that cash on hand and the net cash provided by operations will be adequate to fund our continuing operations, monthly and quarterly scheduled payments of principal and interest (excluding any balloon payments due upon maturity of a debt) and the payment of dividends (distributions) to the Company’s stockholders (and unitholders of the Operating Partnership) in accordance with federal income tax laws which require us to make annual distributions, as “qualifying distributions,” to the Company’s stockholders of at least 90% of its REIT taxable income (determined without regard to the dividends-paid deduction and by excluding its net capital gains, and reduced by certain non-cash items).

Investing Activities.  During the nine months ended September 30, 2019, we acquired a commercial condominium unit of the Hyde Beach House for fair value transfer of approximately $6.3 million, including inventory and equipment, used approximately $10.8 million on capital expenditures, of which, approximately $5.8 million related to the routine replacement of furniture, fixtures and equipment, approximately $5.0 million related mainly to renovation of our hotels in Arlington, Virginia, Hollywood and Tampa, Florida.  The Operating Partnership received a payment on its loan to the Company in the amount of approximately $0.2 million. We also received approximately $0.3 million in proceeds from insurance for damage to our hotels.

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Financing Activities. During the nine months ended September 30, 2019, we received approximately $28.4 million for the issuance of Series D Preferred Shares and Units and approximately $4.9 million for the issuance of Series C Preferred Shares and Units, we redeemed the 7.25% Notes for $25.3 million, we paid dividend and distribution payments of approximately $10.9million for the Company and approximately $11.2million for the Operating Partnership, made payments on financing costs of approximately $0.1million and made payments on mortgages of approximately $4.6million.

Capital Expenditures

We anticipate that our need for recurring capital expenditures for the replacement and refurbishment of furniture, fixtures and equipment over the next 12 to 24 months will be at historical norms for our properties and the industry.  Historically, we have aimed to maintain overall capital expenditures, except for those required by our franchisors as a condition to a franchise license or license renewal, at 4.0% of gross revenue.  

We expect capital expenditures for the recurring replacement or refurbishment of furniture, fixtures and equipment at our properties will be funded by our replacement reserve accounts, other than costs that we incur to make capital improvements required by our franchisors.  Reserve accounts are escrowed accounts with funds deposited monthly and reserved for capital improvements or expenditures with respect to all of our hotels.  We currently deposit an amount equal to 4.0% of gross revenue for The DeSoto, the Hotel Ballast, the DoubleTree by Hilton Raleigh Brownstone-University, The Whitehall, the DoubleTree by Hilton Jacksonville Riverfront, the DoubleTree Resort by Hilton Hollywood Beach and the Georgian Terrace, as well as 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport and Hyatt Centric Arlington on a monthly basis.

Liquidity and Capital Resources

As of September 30, 2019, we had total cash of approximately $35.3 million, of which approximately $30.1 million was in cash and cash equivalents and approximately $5.2 million was restricted for real estate taxes, insurance, capital improvement and certain other expenses, or otherwise restricted.  We expect that our cash on hand combined with our cash flow from the operations of our hotels should be adequate to fund continuing operations, recurring capital expenditures for the refurbishment and replacement of furniture, fixtures and equipment, and monthly and quarterly scheduled payments of principal and interest (excluding any balloon payments due upon maturity of the indentures or mortgage debt).

We intend to continue to invest in hotel properties as suitable opportunities arise. The success of our acquisition strategy depends, in part, on our ability to access additional capital through other sources. There can be no assurance that we will continue to make investments in properties that meet our investment criteria. Additionally, we may choose to dispose of certain hotels as a means to provide liquidity.

We expect to meet our liquidity requirements for hotel property acquisitions, property redevelopment, investments in new joint ventures, the retirement of maturing mortgage debt, and other debt maturities, through net proceeds from additional issuances of common shares, additional issuances of preferred shares, issuances of units of limited partnership interest in our Operating Partnership, secured and unsecured borrowings, the selective disposition of non-core assets, and cash on hand.  From time to time and subject to market conditions, we may also seek to refinance mortgage debt prior to maturity where appropriate.  We remain committed to a flexible capital structure and strive to maintain prudent debt leverage.

Other than monthly mortgage loan principal payments, we do not have any upcoming mortgage debt obligations maturing in 2019 or 2020.  We have approximately $8.2 million in mortgage loan principal obligations maturing in 2021, which relates to the mortgage on the DoubleTree by Hilton Laurel, accounting for reductions for future monthly principal payments.

Financial Covenants

Mortgage Loans

Our mortgage loan agreements contain various financial covenants.  Failure to comply with these financial covenants could result from, among other things, changes in the local competitive environment, general economic conditions and disruption caused by renovation activity or major weather disturbances.

If we violate the financial covenants contained in these agreements, we may attempt to negotiate waivers of the violations or amend the terms of the applicable mortgage loan agreement with the lender; however, we can make no assurance that we would be successful in any such negotiation or that, if successful in obtaining waivers or amendments, such waivers or amendments would be on attractive terms.  Some mortgage loan agreements provide alternate cure provisions which may allow us to otherwise comply with the financial covenants by obtaining an appraisal of the hotel, prepaying a portion of the outstanding indebtedness or by providing cash collateral until such time as the financial covenants are met by the collateralized property without consideration of the cash collateral.  Alternate cure provisions which include prepaying a portion of the outstanding indebtedness or providing cash collateral may have a material impact on our liquidity.

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If we are unable to negotiate a waiver or amendment or satisfy alternate cure provisions, if any, or unable to meet any alternate cure requirements and a default were to occur, we would possibly have to refinance the debt through additional debt financing, private or public offerings of debt securities, or additional equity financing.

Under the terms of our non-recourse secured mortgage loan agreements, failure to comply with the financial covenants in the loan agreement triggers cash flows from the property to be directed to the lender, which may limit our overall liquidity as that cash flow would not be available to us.

As of September 30, 2019, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, as amended or modified, with the exception of the mortgage on the Hotel Alba, for which we failed to meet the quarterly Debt Service Coverage Ratio (“DSCR”) requirement. The loan agreement contains a balancing provision that allows us to pay down the principal balance of the loan or provide cash collateral.  Should we be unable to obtain a waiver, we believe cash collateral of approximately $2.9 million will be required until the quarterly DSCR requirement is met.

Dividend Policy

We intend to continue to declare quarterly distributions to our stockholders.  The amount of future common stock (and Operating Partnership unit) distributions will be based upon quarterly operating results, general economic conditions, requirements for capital improvements, the availability of debt and equity capital, the Internal Revenue Code’s annual distribution requirements and other factors, which the Company’s board of directors deems relevant.  The amount, timing and frequency of distributions will be authorized by the Company’s board of directors and declared by us based upon a variety of factors deemed relevant by our directors, and no assurance can be given that our distribution policy will not change in the future.

In January 2019, we authorized a quarterly dividend (distribution) of $0.125 per common share (and unit).

In April 2019, we increased the quarterly dividend (distribution) to $0.13 per common share (and unit).

In July 2019, we authorized a quarterly dividend (distribution) of $0.13 per common share (and unit).

In October 2019, we authorized a quarterly dividend (distribution) of $0.13 per common share (and unit).

Off-Balance Sheet Arrangements

None.

Inflation

We generate revenues primarily from lease payments from our TRS Lessees and net income from the operations of our TRS Lessees. Therefore, we rely primarily on the performance of the individual properties and the ability of the management company to increase revenues and to keep pace with inflation.  Operators of hotels, in general, possess the ability to adjust room rates daily to keep pace with inflation.  However, competitive pressures at some or all of our hotels may limit the ability of the management company to raise room rates.

Our expenses, including hotel operating expenses, administrative expenses, real estate taxes and property and casualty insurance are subject to inflation. These expenses are expected to grow with the general rate of inflation, except for energy, liability insurance, property and casualty insurance, property tax rates, employee benefits, and some wages, which are expected to increase at rates higher than inflation.

Geographic Concentration and Seasonality

Our hotels are located in Florida, Georgia, Indiana, Maryland, North Carolina, Pennsylvania, Texas and Virginia.  As a result, we are particularly susceptible to adverse market conditions in these geographic areas, including industry downturns, relocation of businesses and any oversupply of hotel rooms or a reduction in lodging demand.  Adverse economic developments in the markets in which we have a concentration of hotels, or in any of the other markets in which we operate, or any increase in hotel supply or decrease in lodging demand resulting from the local, regional or national business climate, could materially and adversely affect us.

The operations of our hotel properties have historically been seasonal.  The months of April and May are traditionally strong, as is October.  The periods from mid-November through mid-February are traditionally slow with the exception of hotels located in certain markets, namely Florida and Texas, which typically experience significant room demand during this period.

47

Critical Accounting Policies

The critical accounting policies are described below.  We consider these policies critical because they involve difficult management judgments and assumptions, are subject to material change from external factors or are pervasive and are significant to fully understand and evaluate our reported financial results.

Investment in Hotel Properties. Hotel properties are stated at cost, net of any impairment charges, and are depreciated using the straight-line method over an estimated useful life of 7-39 years for buildings and improvements and 3-10 years for furniture and equipment.  In accordance with generally accepted accounting principles, the controlling interests in hotels comprising our accounting predecessor, MHI Hotels Services Group, and noncontrolling interests held by the controlling holders of our accounting predecessor in hotels, which were acquired from third parties, contributed to us in connection with the Company’s initial public offering, are recorded at historical cost basis.  Noncontrolling interests in those entities that comprise our accounting predecessor and the interests in hotels, other than those held by the controlling members of our accounting predecessor, acquired from third parties are recorded at fair value at the time of acquisition.

We review our hotel properties for impairment whenever events or changes in circumstances indicate the carrying value of the hotel properties may not be recoverable.  Events or circumstances that may cause us to perform our review include, but are not limited to, adverse permanent changes in the demand for lodging at our properties due to declining national or local economic conditions and/or new hotel construction in markets where our hotels are located.  When such conditions exist, management performs a recoverability analysis to determine if the estimated undiscounted future cash flows from operating activities and the estimated proceeds from the ultimate disposition of a hotel property exceed its carrying value.  If the estimated undiscounted future cash flows are found to be less than the carrying amount of the hotel property, an adjustment to reduce the carrying value to the related hotel property’s estimated fair market value would be recorded and an impairment loss is recognized.

There were no charges for impairment of hotel properties recorded for the nine months ended September 30, 2019.

In performing the recoverability analysis, we project future operating cash flows based upon significant assumptions regarding growth rates, occupancy, room rates, economic trends, property-specific operating costs and future capital expenditures required to maintain the hotel in its current operating condition.  We also project cash flows from the eventual disposition of the hotel based upon various factors including property-specific capitalization rates, ratio of selling price to gross hotel revenues and the selling price per room.

Revenue Recognition.  Hotel revenues, including room, food, beverage and other hotel revenues, are recognized as the related services are delivered. We generally consider accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If we determine that amounts are uncollectible, which would generally be the result of a customer’s bankruptcy or other economic downturn, such amounts will be charged against operations when that determination is made.  Revenues are reported net of occupancy and other taxes collected from customers and remitted to governmental authorities. Receivables for amounts earned under various contracts are subject to audit.

Income Taxes. We record a valuation allowance to reduce deferred tax assets to an amount that we believe is more likely than not to be realized. Because of expected future taxable income of our TRS Lessee, we have not recorded a valuation allowance to reduce our net deferred tax asset as of September 30, 2019 and December 31, 2018, respectively. We regularly evaluate the likelihood that our TRS Lessee will be able to realize its deferred tax assets and the continuing need for a valuation allowance.  At each of September 30, 2019 and December 31, 2018, we determined, based on all available positive and negative evidence, that it is more-likely-than-not that future taxable income will be available during the carryforward periods to absorb all of the consolidated federal and state net operating loss carryforward.  A number of factors played a critical role in this determination, including:

• a demonstrated track record of past profitability and utilization of past NOL carryforwards,

• reasonable forecasts of future taxable income, and

• anticipated changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership. 

Should unanticipated adverse financial trends occur, or other negative evidence develop, a valuation allowance may be necessary in the future against some or all of our deferred tax assets.

Recent Accounting Pronouncements

For a summary of recently adopted and newly issued accounting pronouncements, please refer to the New Accounting Pronouncements section of Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements.

48

Forward Looking Statements

Information included and incorporated by reference in this Form 10-Q may contain 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.  All statements regarding our expected financial position, business and financing plans are forward-looking statements. Factors which could have a material adverse effect on our operations and future 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 adverse weather conditions, including hurricanes;

• the availability and terms of financing and capital and the general volatility of the securities markets;

• the Company’s intent to repurchase shares from time to time;

• risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements and, if necessary, to refinance or seek an extension of the maturity of such indebtedness or modify such debt agreements;

• 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 REITs;

• the Company’s ability to maintain its qualification as a REIT; and

• our ability to maintain adequate insurance coverage.

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 and subsequent reports filed with the Securities and Exchange Commission.

These risks and uncertainties should be considered in evaluating any forward-looking statement contained in this report or incorporated by reference herein.  All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document.  All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section.  We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report, except as required by law.  In addition, our past results are not necessarily indicative of our future results.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The effects of potential changes in interest rates are discussed below.  Our market risk discussion includes “forward-looking statements” and represents an estimate of possible changes in fair value or future earnings that could occur assuming hypothetical future movements in interest rates.  These disclosures are not precise indicators of expected future losses, but only indicators of reasonably possible losses.  As a result, actual future results may differ materially from those presented.  The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.

49

To meet in part our long-term liquidity requirements, we will borrow funds at a combination of fixed and variable rates.  Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs.  From time to time we may enter into interest rate hedge contracts such as collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments.  We do not intend to hold or issue derivative contracts for trading or speculative purposes.

As of September 30, 2019, we had approximately $312.1 million of fixed-rate debt, including the mortgage on our Philadelphia, Pennsylvania hotel, which is fixed by an interest rate swap to 5.237% and approximately $50.9 million of variable-rate debt.  The weighted-average interest rate on the fixed-rate debt was 4.78%.  A change in market interest rates on the fixed portion of our debt would impact the fair value of the debt but have no impact on interest incurred or cash flows.  Our variable-rate debt is exposed to changes in interest rates, specifically the changes in 1-month LIBOR.  Assuming that the aggregate amount outstanding on the mortgages on the Hotel Alba, DoubleTree by Hilton Raleigh Brownstone-University and The Whitehall remains at approximately $50.9 million, the balance at September 30, 2019, the impact on our annual interest incurred and cash flows of a one percent increase in 1-month LIBOR would be approximately $0.5 million.

As of December 31, 2018, we had approximately $341.3 million of fixed-rate debt, including the mortgage on our Philadelphia, Pennsylvania hotel, which is fixed by an interest rate swap to 5.237% and approximately $51.3 million of variable-rate debt.  The weighted-average interest rate on the fixed-rate debt was 4.96%.  A change in market interest rates on the fixed portion of our debt would impact the fair value of the debt but have no impact on interest incurred or cash flows.  Our variable-rate debt is exposed to changes in interest rates, specifically the changes in 1-month LIBOR.  Assuming that the aggregate amount outstanding on the mortgages on the Hotel Alba, DoubleTree by Hilton Raleigh Brownstone and the mortgage on The Whitehall remained at approximately $51.3 million, the balance at December 31, 2018, the impact on our annual interest incurred and cash flows of a one percent increase in 1-month LIBOR would be approximately $0.5 million.

Item 4.Controls and Procedures

Sotherly Hotels Inc.

Disclosure Controls and Procedures

The Company’s management, under the supervision and participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act), as of September 30, 2019. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2019, its disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed in its reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions, and (ii) information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within Sotherly Hotels Inc. have been detected.

Changes in Internal Control over Financial Reporting

There was no change in Sotherly Hotels Inc.’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during Sotherly Hotels Inc.’s last fiscal quarter that materially affected, or is reasonably likely to materially affect, Sotherly Hotels Inc.’s internal control over financial reporting.

Sotherly Hotels LP

Disclosure Controls and Procedures

The Operating Partnership’s management, under the supervision and participation of the Chief Executive Officer and Chief Financial Officer of Sotherly Hotels Inc., as general partner, has evaluated the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act), as of September 30, 2019. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2019, the disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed in the reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions, and (ii) information is accumulated and communicated

50

to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of Sotherly Hotels Inc., as general partner, does not expect that the disclosure controls and procedures or the internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within Sotherly Hotels LP have been detected.

Changes in Internal Control over Financial Reporting

There was no change in Sotherly Hotels LP’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during Sotherly Hotels LP’s last fiscal quarter that materially affected, or is reasonably likely to materially affect, Sotherly Hotels LP’s internal control over financial reporting.

51

PART II

Item 1. Legal Proceedings

We are not involved in any legal proceedings other than routine legal proceedings occurring in the ordinary course of business. We believe that these routine legal proceedings, in the aggregate, are not material to our financial condition and results of operations.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our annual report on Form 10-K for the year ended December 31, 2018 and our quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2019 and June 30, 2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

From time to time, the Operating Partnership issues limited partnership units to the Company, as required by the Partnership Agreement, to mirror the capital structure of the Company to reflect additional issuances by the Company and to preserve equitable ownership ratios.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

52

Item 6. Exhibits

The following exhibits are filed as part of this Form 10-Q:

Exhibit
Number	Description of Exhibit
10.17	Master Agreement by and among Sotherly Hotels Inc., Sotherly Hotels LP, MHI Hospitality TRS, LLC, Newport Hospitality Group, Inc. and Our Town Hospitality LLC (incorporated by reference to the document previously filed as Exhibit 10.17 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 9, 2019).
10.20	Second Addendum to Commercial Unit Purchase Agreement between SOHO ICW Resort Owner LLC and 4000 South Ocean Property Owner, LLLP, dated as of September 26, 2019 (incorporated by reference to the document previously filed as Exhibit 10.20 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 30, 2019).
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company.
31.3	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.
31.4	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company.
32.3	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.
32.4	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

53

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SOTHERLY HOTELS INC.
Date: November 12, 2019	By:	/s/ Andrew M. Sims
		Andrew M. Sims
		Chief Executive Officer
	By:	/s/ Anthony E. Domalski
		Anthony E. Domalski
		Chief Financial Officer

54

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SOTHERLY HOTELS LP
	By:	SOTHERLY HOTELS INC.
		Its General Partner
Date: November 12, 2019	By:	/s/ Andrew M. Sims
		Andrew M. Sims
		Chief Executive Officer
	By:	/s/ Anthony E. Domalski
		Anthony E. Domalski
		Chief Financial Officer

55

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF EXECUTIVE OFFICER

I, Andrew M. Sims, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2019
	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF FINANCIAL OFFICER

I, Anthony E. Domalski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2019
	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer

EX-31.3

EXHIBIT 31.3

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF EXECUTIVE OFFICER

I, Andrew M. Sims, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2019
	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer
		Sotherly Hotels, Inc., sole general partner of Sotherly Hotels LP

EX-31.4

EXHIBIT 31.4

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF FINANCIAL OFFICER

I, Anthony E. Domalski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2019
	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer
		Sotherly Hotels, Inc., sole general partner of Sotherly Hotels LP

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels Inc. (the “Corporation”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew M. Sims, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: November 12, 2019
	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels Inc. (the “Corporation”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony E. Domalski, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: November 12, 2019
	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer

EX-32.3

EXHIBIT 32.3

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels LP (the “Operating Partnership”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew M. Sims, Chief Executive Officer of the Sotherly Hotels Inc., sole general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.

Date: November 12, 2019
	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer
		Sotherly Hotels Inc., sole general partner of Sotherly Hotels LP

EX-32.4

EXHIBIT 32.4

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels LP (the “Operating Partnership”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony E. Domalski, Chief Financial Officer of Sotherly Hotels Inc., sole general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.

Date: November 12, 2019
	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer
		Sotherly Hotels, Inc., sole general partner of Sotherly Hotels LP

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Acquisition of Hotel Properties - Additional Information (Detail) - USD ($) $ in Millions				7 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 26, 2019	Mar. 01, 2018	Sep. 30, 2018	Sep. 30, 2019
Hyatt Centric Arlington [Member]
Business Acquisition [Line Items]
Fair value of consideration			$ 79.7
Initial purchase price			$ 81.0
Total revenue from acquisitions				$ 13.4	$ 16.3
Net income (loss) from acquisitions				$ 1.6	$ 0.1
Commercial Condominium Unit of Hyde Resort & Residences [Member]
Business Acquisition [Line Items]
Fair value of consideration		$ 6.3
Total revenue from acquisitions	$ 1.0
Net income (loss) from acquisitions	$ 0.3

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Debt - Additional Information (Detail) - USD ($) $ in Millions			9 Months Ended
	May 20, 2019	Feb. 12, 2018	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Mortgage loan outstanding balance			$ 360.5	$ 364.8
Cash collateral for mortgage loan			$ 2.9
7.25% Senior Unsecured Notes due 2021 [Member]
Debt Instrument [Line Items]
Interest rate on loan	7.25%	7.25%
Borrowed amount		$ 25.0
Debt instrument maturity date			Feb. 15, 2021
Debt instrument redeemed date	May 20, 2019		May 20, 2019
Notes face value		101.00%

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Commitments and Contingencies - Additional Information (Detail)					1 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) Hotel	Sep. 26, 2019 USD ($) RenewalPeriod	Sep. 06, 2019 Hotel	Mar. 01, 2018 USD ($) RenewalPeriod	Dec. 31, 2019 USD ($) ft²	May 31, 2014	Sep. 30, 2019 USD ($) Hotel	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) ft² Hotel	Sep. 30, 2018 USD ($)	Dec. 29, 2016 USD ($)
Operating Leased Assets [Line Items]
Number of hotels under franchise license | Hotel									9
Maximum amount allocated to purchase common stock under ESOP											$ 5,000,000
Hotel Ballast [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Restricted cash reserve									Amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties
The DeSoto [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Restricted cash reserve									Amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties
DoubleTree by Hilton Brownstone-University [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Restricted cash reserve									Amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties
Double Tree by Hilton Jacksonville Riverside [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Restricted cash reserve									Amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties
DoubleTree Resort by Hilton Hollywood Beach [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Restricted cash reserve									Amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties
Whitehall [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Georgian Terrace [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Restricted cash reserve									Amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties
Double Tree By Hilton Philadelphia Airport [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Minimum [Member]
Operating Leased Assets [Line Items]
Franchise fees of room revenues									3.00%
Additional fees of room revenues									2.50%
Franchise agreement expiry date									2021-11
Maximum [Member]
Operating Leased Assets [Line Items]
Franchise fees of room revenues									5.00%
Additional fees of room revenues									6.00%
Franchise agreement expiry date									2038-03
Maximum [Member] | ESOP [Member]
Operating Leased Assets [Line Items]
Borrowed amount											$ 5,000,000
Highgate Hotels L.P [Member]
Operating Leased Assets [Line Items]
Initial terms of master management agreements									3 years
Master management agreement expiration date									Mar. 01, 2021
Chesapeake Hospitality [Member]
Operating Leased Assets [Line Items]
Intial term of agreement									5 years
Number of wholly-owned hotels operated under master management agreement | Hotel	11						11		11
Expiry date of master management agreement									between January 1, 2020 and December 31, 2020, and may be extended for up to two additional periods of five years each subject to the approval of both parties.
Master Agreement | Newport Hospitality Group, Inc., and Our Town Hospitality LLC [Member]
Operating Leased Assets [Line Items]
Number of hotels | Hotel			10
Agreement commencement date			Sep. 06, 2019
Agreement termination date			Jan. 01, 2020
Hyatt Centric Arlington [Member]
Operating Leased Assets [Line Items]
Monthly contribution of room revenues									4.00%
Hyatt Centric Arlington [Member] | Franchise Agreement with Affiliate of Hyatt Hotels Corporation Operating as Hyatt Centric Arlington [Member]
Operating Leased Assets [Line Items]
Rent expense							$ 141,587	$ 136,813	$ 474,945	$ 392,042
Rental payments per year in base rent under ground lease				$ 50,000
Ground lease percentage rent on gross rooms revenues in excess of thresholds				3.50%
Initial term of ground lease expires year				2025
Number of additional renewal periods extended under ground lease | RenewalPeriod				5
Duration period under ground lease for each renewal periods extended				10 years
Hyde Beach House [Member] | Management Agreement for Parking Garage and Poolside [Member]
Operating Leased Assets [Line Items]
Rent expense	$ 0
Lessee, operating lease, option to extend		The initial term of the parking garage and cabana lease expires in 2034 and may be extended for four additional renewal periods of 5 years each
Lessee, operating lease, existence of option to extend [true false]		true
Annual payment		$ 270,100
Intial term of agreement		20 years
Lessee, operating lease expiration year		2034
Number of additional renewal periods | RenewalPeriod		4
Additional renewal of agreement		5 years
Williamsburg Virginia [Member]
Operating Leased Assets [Line Items]
Area of commercial space leased | ft²									5,216
Rent expense							26,984	23,775	$ 80,952	68,874
Commencement date of agreement									Sep. 01, 2009
Lease renewable expiration date									Dec. 31, 2019
Williamsburg Virginia [Member] | Scenario Forecast [Member]
Operating Leased Assets [Line Items]
Area of commercial space leased | ft²					8,500
Rent expense					$ 218,875
Operating lease term of contract					10 years
Lease rent increase each successive period percentage					3.00%
Tenant improvement allowance					$ 200,000
The DeSoto Hotel Property [Member]
Operating Leased Assets [Line Items]
Area of commercial space leased | ft²									2,086
Operating lease, expiring date									Oct. 31, 2006
Duration period under renewal option second									5 years
Expiration date one under renewal option second									Oct. 31, 2011
Expiration date two under renewal option second									Oct. 31, 2016
Expiration date three under renewal option second									Oct. 31, 2021
Rent expense							18,246	18,246	$ 54,738	54,738
Hotel Alba [Member]
Operating Leased Assets [Line Items]
Operating lease, expiring date									Jul. 31, 2024
Rent expense							$ 412	$ 651	$ 1,713	$ 1,952
Lease agreement									5 years
Commencement date of agreement									Jul. 31, 2009
Lessee, operating lease, option to extend						In May 2014, we extended the agreement for an additional five years. The agreement expires in July 2024.
Lessee, operating lease, existence of option to extend [true false]						true
Annual payment									$ 2,432
Additional renewal of agreement	5 years					5 years	5 years		5 years
Furniture, Fixtures and Equipment [Member]
Operating Leased Assets [Line Items]
Financing arrangement expiration date									2019-07
Financing arrangement expiration date									2025-06
Six Year Operating Lease Property [Member] | The DeSoto Hotel Property [Member]
Operating Leased Assets [Line Items]
Duration of operating lease term									6 years
Ninety Nine Year Operating Lease Property [Member] | The DeSoto Hotel Property [Member]
Operating Leased Assets [Line Items]
Duration of operating lease term									99 years
Operating lease, expiring date									Jul. 31, 2086
Rental income recognized during period									$ 0
Original lump sum rent payment received									$ 990

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Loss Per Share and Per Unit - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 shares
ESOP [Member]
Earnings Per Share [Line Items]
Number of ESOP units	0

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Consolidated Balance Sheets - USD ($)	Sep. 30, 2019	Dec. 31, 2018
ASSETS
Investment in hotel properties, net	$ 446,839,580	$ 435,725,814
Cash and cash equivalents	30,059,697	33,792,773
Restricted cash	5,192,730	4,075,508
Accounts receivable, net	6,298,119	6,766,696
Accounts receivable - affiliate	86,663	262,572
Prepaid expenses, inventory and other assets	5,494,165	5,262,884
Favorable lease assets, net		2,465,421
Deferred income taxes	4,679,010	5,131,179
TOTAL ASSETS	498,649,964	493,482,847
LIABILITIES
Mortgage loans, net	360,549,890	364,828,845
Unsecured notes, net		23,894,658
Accounts payable and accrued liabilities	24,308,930	16,268,096
Advance deposits	2,397,095	2,815,283
Dividends and distributions payable	4,210,494	3,409,593
TOTAL LIABILITIES	391,466,409	411,216,475
Commitments and contingencies (See Note 6)
Sotherly Hotels Inc. stockholders’ equity
Common stock, par value $0.01, 49,000,000 shares authorized, 14,222,378 shares and 14,209,378 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively.	142,223	142,093
Additional paid-in capital	180,415,231	147,085,112
Unearned ESOP shares	(4,175,564)	(4,379,742)
Distributions in excess of retained earnings	(68,687,461)	(61,052,418)
Total Sotherly Hotels Inc. stockholders’ equity	107,738,075	81,824,666
Noncontrolling interest	(554,520)	441,706
TOTAL EQUITY	107,183,555	82,266,372
TOTAL LIABILITIES AND EQUITY	498,649,964	493,482,847
Sotherly Hotels LP [Member]
ASSETS
Investment in hotel properties, net	446,839,580	435,725,814
Cash and cash equivalents	30,059,697	33,792,773
Restricted cash	5,192,730	4,075,508
Accounts receivable, net	6,298,119	6,766,696
Accounts receivable - affiliate	86,663	262,572
Loan receivable - affiliate	4,270,679	4,446,410
Prepaid expenses, inventory and other assets	5,494,165	5,262,884
Favorable lease assets, net		2,465,421
Deferred income taxes	4,679,010	5,131,179
TOTAL ASSETS	502,920,643	497,929,257
LIABILITIES
Mortgage loans, net	360,549,890	364,828,845
Unsecured notes, net		23,894,658
Accounts payable and accrued liabilities	24,308,930	16,268,100
Advance deposits	2,397,095	2,815,283
Dividends and distributions payable	4,268,977	3,466,136
TOTAL LIABILITIES	391,524,892	411,273,022
Commitments and contingencies (See Note 6)
PARTNERS’ CAPITAL
General Partner: 160,006 units and 159,876 units issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	375,888	452,165
Limited Partners: 15,840,512 units and 15,827,642 units issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	8,521,077	16,943,816
TOTAL PARTNERS’ CAPITAL	111,395,751	86,656,235
Sotherly Hotels Inc. stockholders’ equity
TOTAL LIABILITIES AND EQUITY	502,920,643	497,929,257
Sotherly Hotels LP [Member] | 8% Series B Cumulative Redeemable Perpetual Preferred Units [Member]
PARTNERS’ CAPITAL
Preferred units, 11,000,000 units authorized;	37,766,531	37,766,531
Sotherly Hotels LP [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member]
PARTNERS’ CAPITAL
Preferred units, 11,000,000 units authorized;	36,354,736	31,493,723
Sotherly Hotels LP [Member] | 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
PARTNERS’ CAPITAL
Preferred units, 11,000,000 units authorized;	28,377,519
8.0% Series B Cumulative Redeemable Perpetual Preferred Stock [Member]
Sotherly Hotels Inc. stockholders’ equity
Preferred stock, $0.01 par value, 11,000,000 shares authorized;	16,100	16,100
7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member]
Sotherly Hotels Inc. stockholders’ equity
Preferred stock, $0.01 par value, 11,000,000 shares authorized;	15,546	$ 13,521
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Sotherly Hotels Inc. stockholders’ equity
Preferred stock, $0.01 par value, 11,000,000 shares authorized;	$ 12,000

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Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018
Common stock dividends and distributions declared	$ 0.13	$ 0.13	$ 0.125	$ 0.125	$ 0.12	$ 0.115
Series B Preferred Stock [Member]
Preferred stock dividends declared	0.50	0.50	0.50	0.50	0.50	0.50
Series C Preferred Stock [Member]
Preferred stock dividends declared	0.492188	0.492188	$ 0.492188	$ 0.492188	$ 0.492188	$ 0.492188
Series D Preferred Stock [Member]
Preferred stock dividends declared	$ 0.515625	$ 0.41823

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Schedule of Minimum Future Lease Payments

A schedule of minimum future lease payments for the following three and twelve-month periods is as follows:

For the remaining three months ending December 31, 2019	$	112,769
December 31, 2020		423,331
December 31, 2021		412,099
December 31, 2022		400,100
December 31, 2023		363,529
December 31, 2024 and thereafter		2,898,146
Total	$	4,609,974

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Schedule of Recurring Assets and Liabilities Measured at Fair Value

The following table represents our assets and liabilities measured at fair value and the basis for that measurement (our interest rate caps and interest rate swap are the only assets or liabilities measured at fair value on a recurring basis, there is one asset added during the three month period ending September 30, 2019 in the amount of $3,940,000 which is non-recurring, and there were no non-recurring liabilities for fair value measurements as of September 30, 2019 and December 31, 2018, respectively):

	Level 1			Level 2			Level 3
December 31, 2018
Interest Rate Caps (1)	$	—		$	94,697		$	—
Interest Rate Swap (2)	$	—		$	(984,677	)	$	—
Mortgage loans (3)	$	—		$	(357,279,949	)	$	—
Unsecured notes (4)	$	(25,390,000	)	$	—		$	—
September 30, 2019
Interest Rate Cap (1)	$	—		$	4,421		$	—
Interest Rate Swap (2)	$	—		$	(2,443,591	)	$	—
Development of ballroom and parking spaces	$	—		$	3,940,000		$	—
Mortgage loans (3)	$	—		$	(365,393,515	)	$	—

(1) Interest rate cap, which cap the 1-month LIBOR rate between 2.5% and 3.25%.

(2) Interest rate swap, which takes the Loan Rate and swaps it for a fixed interest rate of 5.237%; notional amounts of the swap approximate the declining balance of the loan.

(3) Mortgage loans are reflected at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

(4) Unsecured notes are recorded at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of December 31, 2018.

Schedule of Minimum Future Lease Payments Receivable

A schedule of minimum future lease payments receivable for the remaining three and twelve-month periods is as follows:

For the remaining three months ending December 31, 2019	$	486,304
December 31, 2020		1,452,866
December 31, 2021		1,395,363
December 31, 2022		1,221,343
December 31, 2023		612,940
December 31, 2024 and thereafter		3,158,088
Total	$	8,326,904

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The components of the income tax (benefit) provision for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Current:
Federal	$	(33,254	)	$	—		$	(125,587	)	$	—
State		41,839			24,266			112,741			131,306
		8,585			24,266			(12,846	)		131,306
Deferred:
Federal		(569,928	)		(612,703	)		356,590			591,917
State		(132,847	)		(158,487	)		95,579			158,822
		(702,775	)		(771,190	)		452,169			750,739
	$	(694,190	)	$	(746,924	)	$	439,323		$	882,045

A reconciliation of the statutory federal income tax provision to the Company’s income tax provision is as follows:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Statutory federal income tax provision	$	290,535		$	(573,028	)	$	687,986		$	639,311
Effect of non-taxable REIT loss		(893,717	)		(39,675	)		(456,983	)		(47,394	)
State income tax provision		(91,008	)		(134,221	)		208,320			290,128
	$	(694,190	)	$	(746,924	)	$	439,323		$	882,045

As of September 30, 2019 and December 31, 2018, we had a net deferred tax asset of approximately $4.7 million and $5.1 million, respectively, of which, approximately $4.1 million and $4.4 million, respectively, are due to accumulated net operating losses of our TRS Lessee. These loss carryforwards will begin to expire in 2028 if not utilized by such time.  As of September 30, 2019 and December 31, 2018, the remainder of the deferred tax asset is attributable to year-to-year timing differences of approximately $0.6 million and $0.7 million, respectively, for accrued, but not deductible, employee performance awards, vacation and sick pay, bad debt allowance and depreciation. 

We record a valuation allowance to reduce deferred tax assets to an amount that we believe is more likely than not to be realized. Because of expected future taxable income of our TRS Lessee, we have not recorded a valuation allowance to reduce our net deferred tax asset as of September 30, 2019 and December 31, 2018, respectively. We regularly evaluate the likelihood that our TRS Lessee will be able to realize its deferred tax assets and the continuing need for a valuation allowance.  At September 30, 2019 and December 31, 2018, we determined, based on all available positive and negative evidence, that it is more-likely-than-not that future taxable income will be available during the carryforward periods to absorb all of the consolidated federal and state net operating loss carryforward of our TRS Lessee.  A number of factors played a critical role in this determination, including:

• a demonstrated track record of past profitability and utilization of past NOL carryforwards,

• reasonable forecasts of future taxable income, and

• changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership. 

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Common Stock and Units

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Common Stock and Units

8. Common Stock and Units

Common Stock – As of September 30, 2019, the Company was authorized to issue up to 49,000,000 shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders.  Holders of the Company’s common stock are entitled to receive distributions when authorized by the Company’s board of directors out of assets legally available for the payment of distributions.

On December 2, 2016, the Company’s board of directors authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock, par value $0.01 per share, at prevailing prices on the open market or in privately negotiated transactions, at the discretion of management.  The Company has and expects to continue to use available working capital to fund purchases under the stock repurchase program and intends to complete the repurchase program prior to December 31, 2019, unless extended by the board of directors.  Through December 31, 2018 the Company repurchased 882,820 shares of common stock for approximately $5.9 million and the repurchased shares have been returned to the status of authorized but unissued shares of common stock.  The Company did not repurchase any shares under the stock repurchase program during the nine months ended September 30, 2019.  

During 2017, the ESOP purchased 682,500 shares of the Company’s common stock for approximately $4.9 million.  There have been no more purchases of shares of common stock made by the ESOP in 2018 or 2019.

The following is a schedule of issuances, since January 1, 2018, of the Company’s common stock and related units of the Operating Partnership:

On January 1, 2018, the Company was issued 25,000 units in the Operating Partnership and awarded 25,000 shares of restricted stock to one of its employees.

On February 5, 2018, the Company was issued 17,250 units in the Operating Partnership and awarded 15,000 shares of restricted stock and 2,250 shares of unrestricted stock to its independent directors.

On August 31, 2018, we entered into a Sales Agency Agreement, with Sandler O’Neill, under which the Company may sell from time to time through Sandler O’Neill, as sales agent, shares of the Company’s common stock, par value $0.01 per share, having an aggregate gross sales price of up to $5,000,000.  Through December 31, 2018, the Company sold 88,297 shares of common stock, for net proceeds of approximately $0.6 million and none have been sold during the nine months ended September 30, 2019.

On February 11, 2019, the Company was issued 12,750 units in the Operating Partnership and awarded shares of restricted stock to its independent directors.

On February 22, 2019, the Company was issued 250 units in the Operating Partnership and awarded shares of restricted stock to an independent director.

As of September 30, 2019 and December 31, 2018, the Company had 14,222,378 and 14, 209,378 shares of common stock outstanding, respectively.

Operating Partnership Units – Holders of Operating Partnership units, other than the Company as general partner, have certain redemption rights, which enable them to cause the Operating Partnership to redeem their units in exchange for shares of the Company’s common stock on a one-for-one basis or, at the option of the Company, cash per unit equal to the average of the market price of the Company’s common stock for the 10 trading days immediately preceding the notice date of such redemption. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the limited partners or the stockholders of the Company.

Since January 1, 2018, there have been no issuances or redemptions, of units in the Operating Partnership other than the issuances of units in the Operating Partnership to the Company described above.

As of September 30, 2019 and December 31, 2018, the total number of Operating Partnership units outstanding was 16,000,518 and 15,987,518, respectively.

As of September 30, 2019 and December 31, 2018, the total number of outstanding Operating Partnership units not owned by the Company was 1,778,140 and 1,778,140, respectively, with a fair market value of approximately $11.9 million and $10.0 million, respectively, based on the price per share of the common stock on such respective dates.

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Investment in Hotel Properties, Net

9 Months Ended

Sep. 30, 2019

Real Estate [Abstract]

Investment in Hotel Properties, Net

4. Investment in Hotel Properties, Net

Investment in hotel properties, net as of September 30, 2019 and December 31, 2018 consisted of the following:

	September 30, 2019			December 31, 2018
	(unaudited)
Land and land improvements	$	66,055,121		$	64,409,730
Buildings and improvements		437,705,155			424,657,327
Right of use assets		6,576,971			—
Furniture, fixtures and equipment		56,809,756			57,830,987
		567,147,003			546,898,044
Less: accumulated depreciation and impairment		(120,307,423	)		(111,172,230	)
Investment in Hotel Properties, Net	$	446,839,580		$	435,725,814

On January 1, 2019, we adopted ASU 842, Leases and applied it prospectively. At adoption, we also elected the practical expedients which permitted us to not reassess our prior conclusions about lease identification, classification, and initial direct costs. Consequently, on January 1, 2019, we recognized right-of-use assets and related liabilities related to our acquired operating ground lease, equipment, parking, office space and land leases, all of which are operating leases. Since most of our leases do not provide an implicit rate, we used incremental borrowing rates, which averaged to 8.0%. All of these leases have terms ranging from less than one year to 50 years and we included the exercise of options to extend when it is reasonably certain we will exercise such option. See Note 6 for additional information about the acquired operating ground lease, parking, office space and land leases. The right-of-use assets and liabilities are amortized to rent expense and depreciation and amortization expense over the term of the underlying lease agreements. As of September 30, 2019, our right-of-use assets, net of approximately $6.6 million, are included in the investment in hotel properties, net or prepaid expenses, inventory and other assets and our related lease liabilities of approximately $4.4 million are presented in accounts payable and accrued expenses in our consolidated balance sheets. The adoption of this standard had minimal impact on our statements of operations.

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Preferred Stock and Units (Tables)

9 Months Ended

Sep. 30, 2019

Preferred Stock And Units [Abstract]

Schedule of Series of Cumulative Redeemable Perpetual Preferred Stock

The following table sets forth our Cumulative Redeemable Perpetual Preferred Stock by series:

	Per				Number of Shares				Quarterly
	Annum			Liquidation	Issued and Outstanding as of				Distributions
Preferred Stock - Series	Rate			Preference	September 30, 2019		December 31, 2018		Per Share
Series B Preferred Stock		8.000	%	$25.00		1,610,000		1,610,000	$	0.500000
Series C Preferred Stock		7.875	%	$25.00		1,554,610		1,352,141	$	0.492188
Series D Preferred Stock		8.250	%	$25.00		1,200,000		-	$	0.515625	(1)

(1) The initial quarterly distribution for the Series D Preferred Stock paid on July 15, 2019 was pro-rated per the terms of the security in the amount of $0.41823 per share.

Schedule of Series of Cumulative Redeemable Perpetual Preferred Units

The following table sets forth our Cumulative Redeemable Perpetual Preferred Units by series:

	Per				Number of Units				Quarterly
	Annum			Liquidation	Issued and Outstanding as of				Distributions
Preferred Units - Series	Rate			Preference	September 30, 2019		December 31, 2018		Per Unit
Series B Preferred Units		8.000	%	$25.00		1,610,000		1,610,000	$	0.500000
Series C Preferred Units		7.875	%	$25.00		1,554,610		1,352,141	$	0.492188
Series D Preferred Units		8.250	%	$25.00		1,200,000		-	$	0.515625	(1)

(1) The initial quarterly distribution for the Series D Preferred Units paid on July 15, 2019 was pro-rated per the terms of the security in the amount of $0.41823 per unit.

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Loss Per Share and Per Unit (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income Per Share

The computation of basic and diluted net loss per share is presented below.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Numerator
Net loss available to common stockholders for basic and diluted computation	$	(106,827	)	$	(3,065,883	)	$	(2,492,298	)	$	(1,951,816	)
Denominator
Weighted average number of common shares outstanding		14,222,378			14,154,414			14,220,416			14,141,273
Weighted average number of Unearned ESOP Shares		(585,672	)		(640,418	)		(595,656	)		(649,466	)
Total weighted average number of common shares outstanding for basic computation		13,636,706			13,513,996			13,624,760			13,491,807
Basic net loss per share	$	(0.01	)	$	(0.23	)	$	(0.18	)	$	(0.14	)

Computation of Basic and Diluted Net Income Per Unit

The computation of basic and diluted net loss per unit is presented below.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Numerator
Net loss available to general and limited partnership unitholders for basic computation	$	(120,164	)	$	(3,451,499	)	$	(2,803,940	)	$	(2,197,114	)
Denominator
Weighted average number of general and limited partnership units outstanding		16,000,518			15,915,706			15,998,556			15,902,565
Basic and diluted net loss per general and limited partnership unit	$	(0.01	)	$	(0.22	)	$	(0.18	)	$	(0.14	)

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Summary of Significant Accounting Policies - Schedule of Recurring Assets and Liabilities Measured at Fair Value (Parenthetical) (Detail)	Sep. 30, 2019	Dec. 31, 2018
Derivatives Fair Value [Line Items]
Loan rate swapped for fixed interest rate	5.237%
1-Month LIBOR | Minimum [Member]
Derivatives Fair Value [Line Items]
Interest rate cap for loan	2.50%	2.50%
1-Month LIBOR | Maximum [Member]
Derivatives Fair Value [Line Items]
Interest rate cap for loan	3.25%	3.25%

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Indirect Hotel Operating Expenses - Summary of Indirect Hotel Operating Expenses (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	$ 17,194,148	$ 16,027,496	$ 52,757,527	$ 48,901,037
Sales and Marketing [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	4,164,001	4,015,942	12,848,029	12,046,880
General and Administrative [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	3,698,817	3,540,054	11,511,241	10,880,130
Repairs and Maintenance [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	2,013,706	1,887,113	5,997,166	5,655,711
Utilities [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	1,750,826	1,749,562	4,761,352	4,735,195
Property Taxes [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	1,751,234	950,148	5,212,700	4,113,025
Management Fees, Including Incentive [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	1,053,456	1,066,120	3,792,643	3,570,974
Franchise Fees [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	1,095,564	1,059,522	3,597,319	3,244,833
Insurance [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	823,420	746,175	2,497,230	2,114,351
Information and Telecommunications [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	612,988	515,225	1,855,903	1,317,290
Other [Member]
Component Of Operating Cost And Expense [Line Items]
Total indirect hotel operating expenses	$ 230,136	$ 497,635	$ 683,944	$ 1,222,648

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Common Stock and Units - Additional Information (Detail)						2 Months Ended	3 Months Ended			4 Months Ended	9 Months Ended		12 Months Ended		21 Months Ended
	Feb. 22, 2019 shares	Feb. 11, 2019 shares	Feb. 05, 2018 shares	Jan. 01, 2018 shares	Dec. 02, 2016 USD ($) $ / shares	Feb. 28, 2017 USD ($) shares	Mar. 31, 2019 shares	Sep. 30, 2018 shares	Mar. 31, 2018 shares	Dec. 31, 2018 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) shares	Sep. 30, 2019 USD ($) $ / shares shares	Aug. 31, 2018 USD ($) $ / shares
Class of Stock [Line Items]
Common stock, shares authorized										49,000,000	49,000,000		49,000,000		49,000,000
Common stock, par value | $ / shares					$ 0.01					$ 0.01	$ 0.01		$ 0.01		$ 0.01
Voting right											Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders.
Repurchased common stock, value | $													$ 5,900,000
Number of common stock shares repurchased											0		882,820
Number of common stock, shares purchased						682,500					0		0	682,500
Purchased common stock, value | $						$ 4,900,000								$ 4,900,000
Proceeds from sale of common stock, net | $												$ 577,661
Common stock, shares outstanding										14,209,378	14,222,378		14,209,378		14,222,378
Common stock exchange ratio											1				1
Redemption of units in operating partnership															0
Operating Partnership common units not owned										1,778,140	1,778,140		1,778,140		1,778,140
Sales Agency Agreement [Member] | Sandler O’Neill [Member]
Class of Stock [Line Items]
Common stock, par value | $ / shares																$ 0.01
Proceeds from sale of common stock, net | $										$ 600,000
Common Stock [Member]
Class of Stock [Line Items]
Restricted shares issued							13,000		40,000
Stock issued during period								88,297
Common Stock [Member] | Sales Agency Agreement [Member] | Sandler O’Neill [Member]
Class of Stock [Line Items]
Common stock, par value | $ / shares																$ 0.01
Aggregate gross sale price of common stock | $																$ 5,000,000
Stock issued during period										88,297	0
Sotherly Hotels LP [Member]
Class of Stock [Line Items]
Operating Partnership common units outstanding										15,987,518	16,000,518		15,987,518		16,000,518
Fair market value | $										$ 10,000,000	$ 11,900,000		$ 10,000,000		$ 11,900,000
Sotherly Hotels LP [Member] | Common Stock [Member]
Class of Stock [Line Items]
Number of issued unit in Operating Partnership	250	12,750	17,250	25,000
Restricted shares issued			15,000	25,000
Non-restricted shares issued			2,250
Maximum [Member]
Class of Stock [Line Items]
Repurchased common stock, value | $					$ 10,000,000

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Preferred Stock and Units - Schedule of Series of Cumulative Redeemable Perpetual Preferred Stock (Detail) - $ / shares		3 Months Ended	9 Months Ended	12 Months Ended
	Jul. 15, 2019	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018	May 31, 2019
Class Of Stock [Line Items]
Preferred Stock, Liquidation Preference		$ 25.00	$ 25.00	$ 25.00
8.0% Series B Cumulative Redeemable Perpetual Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, Per Annum Rate		8.00%	8.00%	8.00%
Preferred Stock, Liquidation Preference		$ 25	$ 25	$ 25
Preferred Stock, Number of Shares Issued		1,610,000	1,610,000	1,610,000
Preferred Stock, Number of Shares Outstanding		1,610,000	1,610,000	1,610,000
Preferred Stock, Quarterly Distributions Per Share		$ 0.500000
7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, Per Annum Rate		7.875%	7.875%	7.875%
Preferred Stock, Liquidation Preference		$ 25	$ 25	$ 25
Preferred Stock, Number of Shares Issued		1,554,610	1,554,610	1,352,141
Preferred Stock, Number of Shares Outstanding		1,554,610	1,554,610	1,352,141
Preferred Stock, Quarterly Distributions Per Share		$ 0.492188
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, Per Annum Rate		8.25%	8.25%	8.25%
Preferred Stock, Liquidation Preference		$ 25	$ 25	$ 25
Preferred Stock, Number of Shares Issued		1,200,000	1,200,000	0	1,200,000
Preferred Stock, Number of Shares Outstanding		1,200,000	1,200,000	0
Preferred Stock, Quarterly Distributions Per Share	$ 0.41823	$ 0.515625

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Preferred Stock and Units

9 Months Ended

Sep. 30, 2019

Preferred Stock And Units [Abstract]

Preferred Stock and Units

7. Preferred Stock and Units

Preferred Stock - The Company is authorized to issue up to 11,000,000 shares of preferred stock.  The following table sets forth our Cumulative Redeemable Perpetual Preferred Stock by series:

	Per				Number of Shares				Quarterly
	Annum			Liquidation	Issued and Outstanding as of				Distributions
Preferred Stock - Series	Rate			Preference	September 30, 2019		December 31, 2018		Per Share
Series B Preferred Stock		8.000	%	$25.00		1,610,000		1,610,000	$	0.500000
Series C Preferred Stock		7.875	%	$25.00		1,554,610		1,352,141	$	0.492188
Series D Preferred Stock		8.250	%	$25.00		1,200,000		-	$	0.515625	(1)

(1) The initial quarterly distribution for the Series D Preferred Stock paid on July 15, 2019 was pro-rated per the terms of the security in the amount of $0.41823 per share.

The Company pays cumulative cash distributions on the preferred stock at rates in the above table per annum of the $25.00 liquidation preference per share.  Holders of the Company’s preferred stock are entitled to receive distributions when authorized by the Company’s board of directors out of assets legally available for the payment of distributions.  The preferred stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of the Company or its affiliates.

On August 31, 2018, we entered into a Sales Agency Agreement, with Sandler O’Neill, under which the Company may sell from time to time through Sandler O’Neill, as sales agent, up to 400,000 shares of the Company’s 7.875% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share.  Through the period ended December 31, 2018, the Company sold 52,141 shares of Series C Preferred Stock, for net proceeds of approximately $1.0 million.  For the three and nine months ended September 30, 2019, the Company issued and sold 202,469 shares of Series C Preferred Stock, for net proceeds after all estimated expenses of approximately $4.9 million, pursuant to the Sales Agency Agreement.  The Company contributed the net proceeds from the offering to its Operating Partnership for an equivalent number of Series C Preferred Units.

In April and May 2019, the Company issued 1,200,000 shares of Series D Preferred Stock, for net proceeds after all estimated expenses of approximately $28.4 million.  The Company contributed the net proceeds from the offering to its Operating Partnership for an equivalent number of Series D Preferred Units.

Preferred Units - The Company is the holder of the Operating Partnership’s preferred partnership units and is entitled to receive distributions when authorized by the general partner of the Operating Partnership out of assets legally available for the payment of distributions.  The following table sets forth our Cumulative Redeemable Perpetual Preferred Units by series:

	Per				Number of Units				Quarterly
	Annum			Liquidation	Issued and Outstanding as of				Distributions
Preferred Units - Series	Rate			Preference	September 30, 2019		December 31, 2018		Per Unit
Series B Preferred Units		8.000	%	$25.00		1,610,000		1,610,000	$	0.500000
Series C Preferred Units		7.875	%	$25.00		1,554,610		1,352,141	$	0.492188
Series D Preferred Units		8.250	%	$25.00		1,200,000		-	$	0.515625	(1)

(1) The initial quarterly distribution for the Series D Preferred Units paid on July 15, 2019 was pro-rated per the terms of the security in the amount of $0.41823 per unit.

The Company pays cumulative cash distributions on the preferred units at rates in the above table per annum of the $25.00 liquidation preference per unit.  Holders of the Operating Partnership’s preferred units are entitled to receive distributions when authorized by the Operating Partnership’s general partner out of assets legally available for the payment of distributions.  The preferred units are not redeemable by the holders, has no maturity date and is not convertible into any other security of the Operating Partnership or its affiliates.

Through the period ended December 2018, the Operating Partnership issued a total of 52,141 units of 7.875% Series C Preferred Units, for net proceeds after all estimated expenses of approximately $1.0 million.  The Operating Partnership used the net proceeds for working capital.

In April and May 2019, the Operating Partnership issued 1,200,000 units of 8.25% Series D Preferred Units, for net proceeds after all estimated expenses of approximately $28.4 million.  The Operating Partnership used the net proceeds to redeem in full the Operating Partnership’s 7.25% Senior Unsecured Notes due 2021 and for working capital.

For the three and nine months ending September 2019, the Operating Partnership issued 202,469 units of 7.875% Series C Preferred Units, for net proceeds after all estimated expenses of approximately $4.9 million.  The Operating Partnership used the net proceeds to acquire a commercial condominium unit of the Hyde Beach House condominium hotel and for working capital.

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Acquisition of Hotel Properties

9 Months Ended

Sep. 30, 2019

Business Combinations And Or Asset Acquisitions [Abstract]

Acquisition of Hotel Properties

3. Acquisition of Hotel Properties

Hyatt Centric Arlington.  On March 1, 2018, we acquired the Hyatt Centric Arlington hotel, for a total fair value of consideration transferred including inventory and other assets of approximately $79.7 million (after amendment of the initial purchase price of $81.0 million). We considered this acquisition to be an asset acquisition as opposed to a business combination, applying the screen test, as discussed in the Accounting Standards Update 2017-01 – Business Combinations – Clarifying the Definition of a Business (Topic 805).

The results of operations of the hotel are included in our consolidated financial statements from the date of acquisition. The total revenue and net income related to the Hyatt Centric Arlington acquisition for the period March 1, 2018 to September 30, 2018 were approximately $13.4 million and $1.6 million, respectively. The total revenue and net income related to the Hyatt Centric Arlington acquisition for the period January 1, 2019 to September 30, 2019 were approximately $16.3 million and $0.1 million, respectively.

Hyde Beach House Resort & Residences. On September 26, 2019, we acquired a commercial condominium unit of the Hyde Beach House condominium hotel, for a total fair value of consideration transferred including inventory and other assets of approximately $6.3 million.

The results of operations of the hotel commercial condominium unit are included in our consolidated financial statements from the date of the acquisition. The total revenue and net loss related to the acquisition for the period September 26, 2019 to September 30, 2019 are approximately $1.0 million and $0.3, respectively. There is no pro forma financial information, since this is a new operation without prior historical information.

The allocation of the respective purchase price is based on fair value as follows:

	Hyatt Centric Arlington			Hyde Beach House
Land and land improvements	$	190,916		$	500
Buildings and improvements		70,369,046			5,564,219
Furniture, fixtures and equipment		6,229,888			347,621
Favorable lease and other intangible assets		3,054,812			—
Investment in hotel properties		79,844,662			5,912,340
Accrued liabilities and other costs		(111,946	)		—
Prepaid expenses, inventory and other    assets		—			434,038
Net cash	$	79,732,716		$	6,346,378

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Summary of Significant Accounting Policies - Schedule of Minimum Future Lease Payments Receivable (Detail)	Sep. 30, 2019 USD ($)
Leases [Abstract]
For the remaining three months ending December 31, 2019	$ 486,304
December 31, 2020	1,452,866
December 31, 2021	1,395,363
December 31, 2022	1,221,343
December 31, 2023	612,940
December 31, 2024 and thereafter	3,158,088
Total	$ 8,326,904

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Retirement Plans (Tables)

9 Months Ended

Sep. 30, 2019

Compensation And Retirement Disclosure [Abstract]

Summary of Shares Allocations are Accounted For Fair Value on The Date of Allocations

The share allocations are accounted for at fair value on the date of allocation as follows:

	September 30, 2019				December 31, 2018
	Number of Shares		Fair Value		Number of Shares		Fair Value
Allocated shares		66,308	$	443,601		33,832	$	189,798
Committed to be released shares		28,586		191,242		35,474		199,007
Total Allocated and Committed-to-be-Released		94,894	$	634,843		69,306	$	388,805
Unallocated shares		584,594		3,910,932		613,194		3,440,020
Total ESOP Shares		679,488	$	4,545,775		682,500	$	3,828,825

XML

Organization and Description of Business - Additional Information (Detail)																9 Months Ended
	Sep. 26, 2019 USD ($) ft² Hotel ParkingSpaces	Sep. 06, 2019 Hotel	May 20, 2019 USD ($)	May 01, 2019 USD ($) shares	Apr. 26, 2019 USD ($)	Apr. 18, 2019 USD ($) shares	Sep. 18, 2018 USD ($)	Aug. 31, 2018 USD ($) $ / shares shares	Jul. 31, 2018 USD ($)	Jul. 27, 2018 USD ($)	Jul. 02, 2018 USD ($)	Mar. 01, 2018 USD ($) Room RenewalPeriod	Feb. 26, 2018	Feb. 12, 2018 USD ($)	Feb. 01, 2018 USD ($)	Sep. 30, 2019 USD ($) Hotel Room $ / shares shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 $ / shares shares	Jul. 30, 2018 USD ($)	Dec. 02, 2016 $ / shares
Organization Consolidation and Presentation of Financial Statements [Line Items]
Date of incorporation																Aug. 20, 2004
Investment in number of hotels | Hotel																12
Rooms in hotel | Room																3,156
Date of commencement of business																Dec. 21, 2004
Number of hotels acquired before commencement of business | Hotel																6
Proceeds from sale and issuance of unsecured notes																	$ 25,000,000
Loan rate swapped for fixed interest rate																5.237%
Common stock, par value | $ / shares																$ 0.01		$ 0.01		$ 0.01
Preferred stock, shares authorized | shares																11,000,000		11,000,000
Proceeds from sale of preferred stock, net																$ 33,238,532	$ 1,188,066
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Preferred stock, dividend rate percentage						8.25%
Preferred stock, shares issued | shares				120,000		1,080,000
Gross proceeds before underwriting discounts and commissions and expenses				$ 3,000,000		$ 27,000,000
Proceeds from sale of preferred stock, net						$ 28,400,000
7.25% Senior Unsecured Notes due 2021 [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Interest rate						7.25%
Sandler O’Neill [Member] | Sales Agency Agreement [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Common stock, par value | $ / shares								$ 0.01
Sandler O’Neill [Member] | Sales Agency Agreement [Member] | Common Stock [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Common stock, par value | $ / shares								$ 0.01
Aggregate gross sale price of common stock								$ 5,000,000
Sandler O’Neill [Member] | Sales Agency Agreement [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Preferred stock, dividend rate percentage								7.875%
Preferred stock, par value | $ / shares								$ 0.01
Sandler O’Neill [Member] | Sales Agency Agreement [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member] | Maximum [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Preferred stock, shares authorized | shares								400,000
Fifth Third Bank [Member] | Crowne Plaza Hampton Marina [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Mortgage loans					$ 18,200,000
Amortization Period					25 years
Extended maturity period					two additional periods of one year each
Debt instrument maturity date					Jun. 30, 2022
Period subject to certain terms and conditions					2 years
LIBOR [Member] | Maximum [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Interest rate cap for loan																3.25%		3.25%
LIBOR [Member] | Minimum [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Interest rate cap for loan																2.50%		2.50%
LIBOR [Member] | Fifth Third Bank [Member] | Crowne Plaza Hampton Marina [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Floating rate of interest rate					3.00%											3.75%
Floating interest rate period					1 month											1 month
Master Agreement | Newport Hospitality Group, Inc., and Our Town Hospitality LLC [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Agreement commencement date		Sep. 06, 2019
Number of hotels | Hotel		10
Agreement termination date		Jan. 01, 2020
7.25% Senior Unsecured Notes due 2021 [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Proceeds from sale and issuance of unsecured notes														$ 25,000,000
Interest rate			7.25%											7.25%
Proceeds from unsecured notes net of estimated expenses														$ 23,300,000
Debt instrument maturity date																Feb. 15, 2021
Debt instrument redeemed date			May 20, 2019													May 20, 2019
Debt instrument redeemed, principal amount			$ 25,000,000
Percentage of redemption price equal to principal amount			101.00%
Hotel Ballast [Member] | Mortgage Loans [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Additional proceeds on mortgage loan															$ 5,000,000
The Whitehall [Member] | Mortgage Loans [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Amortization Period													25 years			25 years
Extended maturity date													Feb. 26, 2023
Floating rate of interest rate																3.50%
Debt instrument maturity date																Feb. 26, 2023
Floating interest rate period																1 month
Double Tree by Hilton Jacksonville Riverfront [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Aggregate purchase price											$ 3,500,000
Double Tree by Hilton Jacksonville Riverfront [Member] | Mortgage Loans [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Amortization Period																30 years
Debt instrument maturity date																Jul. 11, 2024
Doubletree By Hilton Raleigh Brownstone - University [Member] | MetLife Commercial Mortgage Originator, LLC [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Mortgage loans										$ 18,300,000
Debt instrument maturity term										4 years
Extended maturity period										1-year
Mortgage loan additional earn-out provision										$ 5,200,000
Derivative maturity limit										Aug. 01, 2022
Notional amount										$ 23,500,000
Debt instrument prepayment lockout period										12 months
Debt instrument prepayment penalty description										The mortgage requires monthly interest-only payments and, following a 12-month lockout, can be prepaid with a penalty during its second year and without penalty thereafter
Doubletree By Hilton Raleigh Brownstone - University [Member] | LIBOR [Member] | MetLife Commercial Mortgage Originator, LLC [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Floating rate of interest rate										4.00%
Interest rate cap for loan										3.25%
Doubletree By Hilton Raleigh Brownstone - University [Member] | Mortgage Loans [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Debt instrument maturity term																4 years
Extended maturity period																P1Y
Floating rate of interest rate																4.00%
Derivative maturity limit																Aug. 01, 2022
Notional amount																$ 23,500,000
Debt instrument prepayment lockout period																12 months
Debt instrument maturity date																Jul. 27, 2022
Debt instrument prepayment penalty period																2 years
Floating interest rate period																1 month
Doubletree By Hilton Raleigh Brownstone - University [Member] | Mortgage Loans [Member] | LIBOR [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Interest rate cap for loan																3.25%
Double Tree By Hilton Philadelphia Airport [Member] | Toronto Dominion Bank
Organization Consolidation and Presentation of Financial Statements [Line Items]
Mortgage loans									$ 42,200,000										$ 30,000,000
Amortization Period									30 years
Swap agreement term									5 years
Debt instrument maturity date									Jul. 31, 2023
Loan rate swapped for fixed interest rate									5.237%
Debt instrument, description									Pursuant to the amended loan documents: (i) the principal balance of the loan was increased from approximately $30.0 million to $42.2 million; (ii) the loan’s maturity date was extended to July 31, 2023; (iii) the loan bears a floating interest rate equal to the 1-month LIBOR rate plus 2.27% (the “Loan Rate”); (iv) the loan amortizes on a 30-year schedule with payments of principal and interest beginning immediately; (v) the loan can be prepaid without penalty; and (vi) the loan will no longer be fully guaranteed by the Operating Partnership, but the Operating Partnership has guaranteed certain standard “bad boy” carveouts. Pursuant to the swap agreement: (i) the Loan Rate has been swapped for a fixed interest rate of 5.237%; notional amounts of the swap approximate the declining balance of the loan; and (iii) we are responsible for any potential termination fees associated with early termination of the swap agreement.
Double Tree By Hilton Philadelphia Airport [Member] | LIBOR [Member] | Toronto Dominion Bank
Organization Consolidation and Presentation of Financial Statements [Line Items]
Floating rate of interest rate									2.27%
Double Tree By Hilton Philadelphia Airport [Member] | Mortgage Loans [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Amortization Period																30 years
Floating rate of interest rate																2.27%
Debt instrument maturity date																Jul. 31, 2023
Floating interest rate period																1 month
DoubleTree Resort by Hilton Hollywood Beach [Member] | Mortgage Loans [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Amortization Period																30 years
Debt instrument maturity date																Oct. 01, 2025
Operating Partnership [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Percentage of operating partnership owned																88.90%
Condominium Hotels [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Investment in number of hotels | Hotel																2
Hyatt Centric Arlington [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Rooms in hotel | Room												318
Mortgage loans														$ 57,000,000
Hotel property aggregate purchase price												$ 79,700,000
Hyatt Centric Arlington [Member] | MetLife Real Estate Lending LLC [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Interest rate							5.25%
Mortgage loans							$ 50,000,000
Amortization Period							30 years
Intial term of agreement							10 years
Debt instrument prepayment lockout period							5 years
Debt instrument prepayment penalty description							prepaid with penalty in years 6-10 and without penalty during the final 4 months of the term.
Debt instrument prepayment without penalty period during final term							4 months
Hyatt Centric Arlington [Member] | MetLife Real Estate Lending LLC [Member] | Maximum [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Debt instrument prepayment penalty period							10 years
Hyatt Centric Arlington [Member] | MetLife Real Estate Lending LLC [Member] | Minimum [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Debt instrument prepayment penalty period							6 years
Hyatt Centric Arlington [Member] | Management Agreement with Highgate Hotels L.P. [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Intial term of agreement												3 years
Agreement commencement date												Mar. 01, 2018
Base management fee of gross revenues												2.50%
Incentive management fee equal to increase in gross operating profit percentage												10.00%
Maximum incentive management fee of gross revenues												0.50%
Hyatt Centric Arlington [Member] | Franchise Agreement with Affiliate of Hyatt Hotels Corporation Operating as Hyatt Centric Arlington [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Rental payments per year in base rent under ground lease												$ 50,000
Ground lease percentage rent on gross rooms revenues in excess of thresholds												3.50%
Initial term of ground lease expires year												2025
Number of additional renewal periods extended under ground lease | RenewalPeriod												5
Duration period under ground lease for each renewal periods extended												10 years
Hyatt Centric Arlington [Member] | 7.25% Senior Unsecured Notes due 2021 [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Interest rate												7.25%
Hyatt Centric Arlington [Member] | First Promissory Note ("Note A") [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Mortgage loans												$ 50,000,000
Debt instrument maturity term												3 years
Extended maturity period												two 1-year
Monthly principal payments												$ 78,650
Hyatt Centric Arlington [Member] | First Promissory Note ("Note A") [Member] | LIBOR [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Floating rate of interest rate												3.00%
Hyatt Centric Arlington [Member] | Second Promissory Note ("Note B") [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Mortgage loans												$ 7,000,000
Debt instrument maturity term												1 year
Extended maturity period												two 1-year
Hyatt Centric Arlington [Member] | Second Promissory Note ("Note B") [Member] | Initial 1-Year Term [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Monthly principal payments												$ 100,000
Hyatt Centric Arlington [Member] | Second Promissory Note ("Note B") [Member] | First 1-Year Extended Term [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Monthly principal payments												150,000
Hyatt Centric Arlington [Member] | Second Promissory Note ("Note B") [Member] | Second 1-Year Extended Term [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Monthly principal payments												$ 250,000
Hyatt Centric Arlington [Member] | Second Promissory Note ("Note B") [Member] | LIBOR [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Floating rate of interest rate												5.00%
Hyde Beach House [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Number of hotels acquired before commencement of business | Hotel	2
Hotel property aggregate purchase price	$ 5,400,000
Number of newly constructed unit | Hotel	342
Additional consideration	$ 700,000
Pre-opening services fee	$ 1,000,000
Hyde Beach House [Member] | Management Agreement for Parking Garage and Poolside [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Intial term of agreement	20 years
Hyde Beach House [Member] | Management Agreement Relating to the Operation and Management [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Intial term of agreement	20 years
Hyde Beach House [Member] | DoubleTree Resort by Hilton Hollywood Beach [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Area of real estate property | ft²	3,000
Number of dedicated parking spaces | ParkingSpaces	200

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Preferred Stock and Units - Schedule of Series of Cumulative Redeemable Perpetual Preferred Units (Parenthetical) (Detail)	Jul. 15, 2019 $ / shares
8.25% Series D Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred Units [Line Items]
Preferred Units, Quarterly Distributions Per Unit	$ 0.41823

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Preferred Stock and Units - Additional Information (Detail) - USD ($)		2 Months Ended	3 Months Ended	9 Months Ended		12 Months Ended
	Aug. 31, 2018	May 31, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	May 20, 2019	Feb. 12, 2018
Preferred Units [Line Items]
Preferred stock, shares authorized			11,000,000	11,000,000		11,000,000
Preferred stock, liquidation preference per share			$ 25.00	$ 25.00		$ 25.00
Proceeds from sale of preferred stock, net				$ 33,238,532	$ 1,188,066
7.25% Senior Unsecured Notes due 2021 [Member]
Preferred Units [Line Items]
Interest rate on loan							7.25%	7.25%
Sotherly Hotels LP [Member]
Preferred Units [Line Items]
Preferred stock, liquidation preference per share			$ 25.00	$ 25.00		$ 25.00
Sotherly Hotels LP [Member] | 7.25% Senior Unsecured Notes due 2021 [Member]
Preferred Units [Line Items]
Interest rate on loan		7.25%
Sotherly Hotels LP [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred Units [Line Items]
Operating partnership preferred partnership units issued total			202,469	202,469		52,141
Preferred units, dividend rate percentage			7.875%	7.875%		7.875%
Proceeds from sale of preferred units, net			$ 4,900,000	$ 4,900,000		$ 1,000,000
Sotherly Hotels LP [Member] | 8.25% Series D Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred Units [Line Items]
Operating partnership preferred partnership units issued total		1,200,000
Preferred units, dividend rate percentage		8.25%	8.25%	8.25%		8.25%
Proceeds from sale of preferred units, net		$ 28,400,000
7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member]
Preferred Units [Line Items]
Preferred stock, shares authorized			11,000,000	11,000,000		11,000,000
Preferred stock, liquidation preference per share			$ 25	$ 25		$ 25
Preferred stock, par value			$ 0.01	$ 0.01		$ 0.01
Preferred stock, dividend rate percentage			7.875%	7.875%		7.875%
Preferred stock, shares issued			1,554,610	1,554,610		1,352,141
7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member] | Sales Agency Agreement [Member] | Sandler O’Neill [Member]
Preferred Units [Line Items]
Preferred stock, par value	$ 0.01
Preferred stock, dividend rate percentage	787.50%
Preferred stock, shares issued			202,469	202,469
Proceeds from sale of preferred stock, net			$ 4,900,000	$ 4,900,000		$ 1,000,000
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Preferred Units [Line Items]
Preferred stock, shares authorized			11,000,000	11,000,000		11,000,000
Preferred stock, liquidation preference per share			$ 25	$ 25		$ 25
Preferred stock, par value			$ 0.01	$ 0.01		$ 0.01
Preferred stock, dividend rate percentage			8.25%	8.25%		8.25%
Preferred stock, shares issued		1,200,000	1,200,000	1,200,000		0
Proceeds from sale of preferred stock, net		$ 28,400,000
Maximum [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member] | Sales Agency Agreement [Member] | Sandler O’Neill [Member]
Preferred Units [Line Items]
Shares available for sale through sales agent	400,000

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Retirement Plans - Summary of Shares Allocations are Accounted For Fair Value on The Date of Allocations (Detail) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Compensation And Retirement Disclosure [Abstract]
Number of ESOP shares allocated	66,308	33,832
Number of ESOP shares committed to be released	28,586	35,474
Total number of ESOP allocated and committed-to-be-released	94,894	69,306
Number of non committed, unearned ESOP shares	584,594	613,194
Total number of ESOP shares	679,488	682,500
Fair value of ESOP allocated shares	$ 443,601	$ 189,798
Fair value of ESOP Committed-to-be released shares	191,242	199,007
Total fair value of ESOP allocated and committed-to-be-released	634,843	388,805
Fair value of ESOP unallocated shares	3,910,932	3,440,020
Total fair value of ESOP shares	$ 4,545,775	$ 3,828,825

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Commitments and Contingencies - Schedule of Minimum Future Lease Payments (Detail)	Sep. 30, 2019 USD ($)
Finance Lease Liabilities Payments Due [Abstract]
For the remaining three months ending December 31, 2019	$ 112,769
December 31, 2020	423,331
December 31, 2021	412,099
December 31, 2022	400,100
December 31, 2023	363,529
December 31, 2024 and thereafter	2,898,146
Total	$ 4,609,974

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Acquisition of Hotel Properties - Allocation of Purchase Price Based on Fair Value (Detail) - USD ($)			9 Months Ended
	Sep. 26, 2019	Mar. 01, 2018	Sep. 30, 2019	Sep. 30, 2018
Business Acquisition [Line Items]
Net cash			$ 6,346,378	$ 79,732,716
Hyatt Centric Arlington [Member]
Business Acquisition [Line Items]
Land and land improvements		$ 190,916
Buildings and improvements		70,369,046
Furniture, fixtures and equipment		6,229,888
Favorable lease and other intangible assets		3,054,812
Investment in hotel properties		79,844,662
Accrued liabilities and other costs		(111,946)
Net cash		$ 79,732,716
Commercial Condominium Unit of Hyde Resort & Residences [Member]
Business Acquisition [Line Items]
Land and land improvements	$ 500
Buildings and improvements	5,564,219
Furniture, fixtures and equipment	347,621
Investment in hotel properties	5,912,340
Prepaid expenses, inventory and other assets	434,038
Net cash	$ 6,346,378

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Debt - Schedule of Mortgage Debt Obligations on Hotels (Detail) - USD ($)		9 Months Ended
	Feb. 26, 2018	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Mortgage loans		$ 363,030,889	$ 367,613,880
Deferred financing costs, net		(2,628,780)	(2,951,327)
Unamortized premium on loan		147,781	166,292
Total Mortgage Loans, Net		360,549,890	364,828,845
The DeSoto [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 33,256,944	33,824,350
Prepayment Penalties		Yes
Maturity Date		Jul. 01, 2026
Amortization Provisions, Term		25 years
Interest rate applicable to the mortgage loan		4.25%
Double Tree by Hilton Jacksonville Riverfront [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 34,366,547	34,773,546
Prepayment Penalties		Yes
Maturity Date		Jul. 11, 2024
Amortization Provisions, Term		30 years
Interest rate applicable to the mortgage loan		4.88%
Double Tree by Hilton Laurel [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 8,614,350	8,845,299
Prepayment Penalties		Yes
Maturity Date		Aug. 05, 2021
Amortization Provisions, Term		25 years
Interest rate applicable to the mortgage loan		5.25%
Double Tree By Hilton Philadelphia Airport [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 41,580,419	42,026,986
Prepayment Penalties		None
Maturity Date		Jul. 31, 2023
Amortization Provisions, Term		30 years
Interest rate applicable to the mortgage loan		2.27%
Doubletree By Hilton Raleigh Brownstone - University [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 18,300,000	18,300,000
Prepayment Penalties		Yes
Maturity Date		Jul. 27, 2022
Interest rate applicable to the mortgage loan		4.00%
DoubleTree Resort by Hilton Hollywood Beach [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 56,396,039	57,064,824
Prepayment Penalties		n/a
Maturity Date		Oct. 01, 2025
Amortization Provisions, Term		30 years
Interest rate applicable to the mortgage loan		4.913%
Georgian Terrace [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 43,627,014	44,202,968
Prepayment Penalties		n/a
Maturity Date		Jun. 01, 2025
Amortization Provisions, Term		30 years
Interest rate applicable to the mortgage loan		4.42%
Hotel Alba Tampa, Tapestry Collection by Hilton [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 18,107,352	18,307,000
Prepayment Penalties		None
Maturity Date		Jun. 30, 2022
Interest rate applicable to the mortgage loan		3.75%
Hotel Ballast Wilmington,Tapestry Collection by Hilton [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 33,683,726	34,236,104
Prepayment Penalties		Yes
Maturity Date		Jan. 01, 2027
Amortization Provisions, Term		25 years
Interest rate applicable to the mortgage loan		4.25%
Hyatt Centric Arlington [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 49,355,146	49,885,045
Prepayment Penalties		Yes
Maturity Date		Sep. 18, 2028
Amortization Provisions, Term		30 years
Interest rate applicable to the mortgage loan		5.25%
Sheraton Louisville Riverside [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 11,215,621	11,414,300
Prepayment Penalties		Yes
Maturity Date		Dec. 01, 2026
Amortization Provisions, Term		25 years
Interest rate applicable to the mortgage loan		4.27%
The Whitehall [Member] | Mortgage Loans [Member]
Debt Instrument [Line Items]
Mortgage loans		$ 14,527,731	$ 14,733,458
Prepayment Penalties		Yes
Maturity Date		Feb. 26, 2023
Amortization Provisions, Term	25 years	25 years
Interest rate applicable to the mortgage loan		3.50%

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Subsequent Events - Additional Information (Detail) - $ / shares				3 Months Ended
	Oct. 28, 2019	Oct. 15, 2019	Oct. 11, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018
Subsequent Event [Line Items]
Dividend distributed				$ 0.13	$ 0.13	$ 0.125	$ 0.125	$ 0.12	$ 0.115
Subsequent Event [Member]
Subsequent Event [Line Items]
Dividend paid			$ 0.13
Dividend record date	Dec. 13, 2019		Sep. 13, 2019
Dividend distributed	$ 0.13
Dividend payment date	Jan. 10, 2020
Subsequent Event [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member]
Subsequent Event [Line Items]
Dividend record date	Dec. 31, 2019	Oct. 01, 2019
Dividend paid		$ 0.4921875
Dividend payment date	Jan. 15, 2020
Preferred stock dividends declared	$ 0.4921875
Subsequent Event [Member] | 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Subsequent Event [Line Items]
Dividend record date	Dec. 31, 2019	Oct. 01, 2019
Dividend paid		$ 0.515625
Dividend payment date	Jan. 15, 2020
Preferred stock dividends declared	$ 0.515625
Subsequent Event [Member] | 8% Series B Cumulative Redeemable Perpetual Preferred Stock [Member]
Subsequent Event [Line Items]
Dividend record date	Dec. 31, 2019	Oct. 01, 2019
Dividend paid		$ 0.50
Dividend payment date	Jan. 15, 2020
Preferred stock dividends declared	$ 0.50

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Income Taxes - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Income Taxes [Line Items]
Deferred tax asset	$ 4,679,010	$ 5,131,179
Accumulated net operating losses	$ 4,100,000	4,400,000
Loss carryforwards, expired	2028
Deferred tax asset nondeductible accrued expenses	$ 600,000	700,000
TRS Lessee [Member]
Income Taxes [Line Items]
Accumulated net operating losses	$ 4,100,000	$ 4,400,000

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Consolidated Balance Sheets (Parenthetical) - $ / shares	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Preferred stock, shares authorized	11,000,000	11,000,000	11,000,000
Preferred stock, liquidation preference per share	$ 25.00	$ 25.00	$ 25.00
Common stock, par value	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	49,000,000	49,000,000	49,000,000
Common stock, shares issued	14,222,378	14,222,378	14,209,378
Common stock, shares outstanding	14,222,378	14,222,378	14,209,378
Sotherly Hotels LP [Member]
Preferred stock, liquidation preference per share	$ 25.00	$ 25.00	$ 25.00
General Partner, units issued	160,006	160,006	159,876
General Partner, units outstanding	160,006	160,006	159,876
Limited Partner, units issued	15,840,512	15,840,512	15,827,642
Limited Partner, units outstanding	15,840,512	15,840,512	15,827,642
Sotherly Hotels LP [Member] | 8% Series B Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred units, authorized	11,000,000	11,000,000	11,000,000
Preferred units, dividend rate percentage	8.00%	8.00%	8.00%
Preferred units, liquidation preference per units	$ 25	$ 25	$ 25
Preferred units, issued	1,610,000	1,610,000	1,610,000
Preferred units, outstanding	1,610,000	1,610,000	1,610,000
Sotherly Hotels LP [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred units, authorized	11,000,000	11,000,000	11,000,000
Preferred units, dividend rate percentage	7.875%	7.875%	7.875%
Preferred units, liquidation preference per units	$ 25	$ 25	$ 25
Preferred units, issued	1,554,610	1,554,610	1,352,141
Preferred units, outstanding	1,554,610	1,554,610	1,352,141
Sotherly Hotels LP [Member] | 8.25% Series D Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred units, authorized	11,000,000	11,000,000	11,000,000
Preferred units, dividend rate percentage	8.25%	8.25%	8.25%
Preferred units, liquidation preference per units	$ 25	$ 25	$ 25
Preferred units, issued	1,200,000	1,200,000	0
Preferred units, outstanding	1,200,000	1,200,000	0
8.0% Series B Cumulative Redeemable Perpetual Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized	11,000,000	11,000,000	11,000,000
Preferred stock, dividend rate percentage	8.00%	8.00%	8.00%
Preferred stock, liquidation preference per share	$ 25	$ 25	$ 25
Preferred stock, shares issued	1,610,000	1,610,000	1,610,000
Preferred stock, shares outstanding	1,610,000	1,610,000	1,610,000
7.875% Series C Cumulative Redeemable Perpetual Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized	11,000,000	11,000,000	11,000,000
Preferred stock, dividend rate percentage	7.875%	7.875%	7.875%
Preferred stock, liquidation preference per share	$ 25	$ 25	$ 25
Preferred stock, shares issued	1,554,610	1,554,610	1,352,141
Preferred stock, shares outstanding	1,554,610	1,554,610	1,352,141
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized	11,000,000	11,000,000	11,000,000
Preferred stock, dividend rate percentage	8.25%	8.25%	8.25%
Preferred stock, liquidation preference per share	$ 25	$ 25	$ 25
Preferred stock, shares issued	1,200,000	1,200,000	0
Preferred stock, shares outstanding	1,200,000	1,200,000	0

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Consolidated Statements of Cash Flows - USD ($)	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Cash flows from operating activities:
Net income	$ 2,068,746	$ (390,205)	$ (1,981,780)	$ 1,176,488	$ 2,827,859	$ 2,162,293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,980,168		4,547,043		16,117,278	15,783,174
Amortization of deferred financing costs					650,638	598,142
Amortization of mortgage premium					(18,511)	(18,511)
Gain on exercise of development right	(3,940,000)				(3,940,000)
Gain on involuntary conversion of assets	(130,569)		0		(291,902)	(898,565)
Unrealized loss (gain) on hedging activities	226,491		(123,443)		1,554,924	(141,970)
Loss (gain) on disposal of assets					32,088	(3,816)
Loss on early extinguishment of debt			753,133		1,152,356	753,133
ESOP and share / unit - based compensation					309,920	313,540
Changes in assets and liabilities:
Accounts receivable					468,577	(1,942,179)
Prepaid expenses, inventory and other assets					(1,395,457)	1,045,824
Deferred income taxes					452,169	750,739
Accounts payable and other accrued liabilities					4,211,459	3,006,385
Advance deposits					(418,188)	566,621
Accounts receivable - affiliate					175,909	(8,959)
Net cash provided by operating activities					21,889,119	21,965,851
Cash flows from investing activities:
Acquisitions of hotel properties					(6,346,378)	(79,732,716)
Improvements and additions to hotel properties					(10,846,325)	(18,497,781)
Proceeds from involuntary conversion					291,902	898,565
Proceeds from the disposal of assets					4,934	7,555
Net cash used in investing activities					(16,895,867)	(97,324,377)
Cash flows from financing activities:
Proceeds of mortgage debt						145,795,332
Proceeds of unsecured debt						25,000,000
Proceeds from issuance of common stock, net						577,661
Proceeds from issuance of preferred stock, net					33,238,532	1,188,066
Redemption of unsecured notes					(25,250,000)
Payments on mortgage loans					(4,582,990)	(75,346,629)
Payments of deferred financing costs					(106,950)	(3,669,192)
Dividends on common stock and distributions paid					(5,994,302)	(5,318,695)
Preferred dividends paid					(4,913,396)	(4,256,328)
Net cash (used in) provided by financing activities					(7,609,106)	83,970,215
Net (decrease) increase in cash, cash equivalents and restricted cash					(2,615,854)	8,611,689
Cash, cash equivalents and restricted cash at the beginning of the period		37,868,281		33,429,042	37,868,281	33,429,042	$ 33,429,042
Cash, cash equivalents and restricted cash at the end of the period	35,252,427		42,040,731		35,252,427	42,040,731	37,868,281
Supplemental disclosures:
Cash paid during the period for interest					13,995,139	12,859,556
Cash paid (received) during the period for income taxes					(46,695)	278,720
Non-cash investing and financing activities:
Deficiency of fair value of interest rate swap to cost						294,176
Change in amount of improvements to hotel property in accounts payable and accrued liabilities					335,331	251,195
Exercise of development right					3,940,000
Sotherly Hotels LP [Member]
Cash flows from operating activities:
Net income	2,068,746	(390,205)	(1,981,780)	1,176,488	2,827,859	2,162,293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,980,168		4,547,043		16,117,278	15,783,174
Amortization of deferred financing costs					650,638	598,142
Amortization of mortgage premium					(18,511)	(18,511)
Gain on exercise of development right	(3,940,000)				(3,940,000)
Gain on involuntary conversion of assets	(130,569)				(291,902)	(898,565)
Unrealized loss (gain) on hedging activities	226,491		(123,443)		1,554,924	(141,970)
Loss (gain) on disposal of assets					32,088	(3,816)
Loss on early extinguishment of debt			753,133		1,152,356	753,133
ESOP and share / unit - based compensation					467,924	335,531
Changes in assets and liabilities:
Accounts receivable					468,577	(1,942,179)
Prepaid expenses, inventory and other assets					(1,395,457)	1,045,824
Deferred income taxes					452,169	750,739
Accounts payable and other accrued liabilities					4,211,459	3,006,385
Advance deposits					(418,188)	566,621
Accounts receivable - affiliate					175,909	(8,959)
Net cash provided by operating activities					22,047,123	21,987,842
Cash flows from investing activities:
Acquisitions of hotel properties					(6,346,378)	(79,732,716)
Improvements and additions to hotel properties					(10,846,325)	(18,497,781)
ESOP loan payments received					175,731	148,016
Proceeds from involuntary conversion					291,902	898,565
Proceeds from the disposal of assets					4,934	7,555
Net cash used in investing activities					(16,720,136)	(97,176,361)
Cash flows from financing activities:
Proceeds of mortgage debt						145,795,332
Proceeds of unsecured debt						25,000,000
Proceeds from issuance of general and limited partnership units, net						577,661
Proceeds from issuance of preferred partnership units, net					33,238,532	1,188,066
Redemption of unsecured notes					(25,250,000)
Payments on mortgage loans					(4,582,990)	(75,346,629)
Payments of deferred financing costs					(106,950)	(3,669,192)
Distributions on general and limited partnership interests					(6,328,037)	(5,488,702)
Distributions on preferred partnership interests					(4,913,396)	(4,256,328)
Net cash (used in) provided by financing activities					(7,942,841)	83,800,208
Net (decrease) increase in cash, cash equivalents and restricted cash					(2,615,854)	8,611,689
Cash, cash equivalents and restricted cash at the beginning of the period		$ 37,868,281		$ 33,429,042	37,868,281	33,429,042	33,429,042
Cash, cash equivalents and restricted cash at the end of the period	$ 35,252,427		$ 42,040,731		35,252,427	42,040,731	$ 37,868,281
Supplemental disclosures:
Cash paid during the period for interest					13,993,340	12,859,556
Cash paid (received) during the period for income taxes					(46,695)	278,720
Non-cash investing and financing activities:
Deficiency of fair value of interest rate swap to cost						294,176
Change in amount of improvements to hotel property in accounts payable and accrued liabilities					335,331	$ 251,195
Exercise of development right					$ 3,940,000

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation – The consolidated financial statements of the Company presented herein include all of the accounts of Sotherly Hotels Inc., the Operating Partnership, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The consolidated financial statements of the Operating Partnership presented herein include all of the accounts of Sotherly Hotels LP, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. Additionally, all administrative expenses of the Company and those expenditures made by the Company on behalf of the Operating Partnership are reflected as the administrative expenses, expenditures and obligations thereto of the Operating Partnership, pursuant to the terms of the Partnership Agreement.

Investment in Hotel Properties

Investment in Hotel Properties – Investments in hotel properties include investments in operating properties which are recorded at fair value on acquisition date and allocated to land, property and equipment and identifiable intangible assets. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is included in the statements of operations. Expenditures which constitute additions or improvements that extend the life of the property, are capitalized.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 7 to 39 years for buildings and building improvements and 5 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets.

We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse permanent changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceeds its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property’s estimated fair market value would be recorded and an impairment loss recognized.

Cash and Cash Equivalents

Cash and Cash Equivalents – We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

Concentration of Credit Risk – We hold cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) protection limits of $250,000. Our exposure to credit loss in the event of the failure of these institutions is represented by the difference between the FDIC protection limit and the total amounts on deposit. Management monitors, on a regular basis, the financial condition of the financial institutions along with the balances there on deposit to minimize our potential risk.

Restricted Cash

Restricted Cash – Restricted cash includes real estate tax escrows, insurance escrows and reserves for replacements of furniture, fixtures and equipment pursuant to certain requirements in our various mortgage agreements.

Accounts Receivable

Accounts Receivable – Accounts receivable consists primarily of hotel guest and banqueting receivables. Ongoing evaluations of collectability are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible.  

Inventories

Inventories – Inventories, consisting primarily of food and beverages, are stated at the lower of cost or net realizable value, with cost determined on a method that approximates first-in, first-out basis.

Franchise License Fees

Franchise License Fees – Fees expended to obtain or renew a franchise license are amortized over the life of the license or renewal. The unamortized franchise fees as of September 30, 2019 and December 31, 2018 were $428,223 and $471,996, respectively. Amortization expense for the three-month periods ended September 30, 2019 and 2018, totaled $14,869 and $14,868, respectively, and for the nine-month periods ended September 30, 2019 and 2018, totaled $43,773 and $45,204, respectively.

Right-of-Use Assets and Lease Obligations

Right-of-Use Assets and Lease Obligations – In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively.

A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.  In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new lease standard. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, to give companies another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of implementing the new standard. The transition option allows companies to not apply the new lease standard in the comparative periods they present in their financial statements in the year of adoption.

We adopted this standard on January 1, 2019. We elected the practical expedients allowed under the guidance and retained the original lease classification and historical accounting for initial direct costs for leases existing prior to the adoption date. We also elected not to restate prior periods for the impact of the adoption of the new standard. The adoption of this standard has resulted in the recognition of right-of-use assets and related liabilities to account for our future obligations under the acquired operating ground lease, equipment, office space, parking and land leases for which we are the lessee. See Notes 4 and 6 to the accompanying financial statements for additional disclosures on the adoption of this standard.  As of September 30, 2019, we had right of use assets, net of approximately $6.6 million, and lease obligations of approximately $4.4 million.  The right-of-use assets are included in investments in hotel properties, net or in prepaid expenses, inventory and other assets and the lease obligations are included in accounts payable and accrued liabilities on the consolidated balance sheets.

Deferred Financing and Offering Costs

Deferred Financing and Offering Costs – Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt and are reflected in mortgage loans, net and unsecured notes, net on the consolidated balance sheets. Deferred offering costs are recorded at cost and consist of offering fees and other costs incurred in advance of issuing equity and are reflected in prepaid expenses, inventory and other assets on the consolidated balance sheets. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statements of operations.  

Deferred offering costs are netted against our equity offerings when the offering is complete, whereby the costs are offset against the equity funds raised in the future and included in additional paid-in capital on the consolidated balance sheets, or if the offering expires and the offering costs exceed the funds raised in the offering then the excess will be included in corporate general and administrative expenses in the consolidated statements of operations.

Derivative Instruments

Derivative Instruments – Our derivative instruments are reflected as assets or liabilities on the consolidated balance sheets and measured at fair value. Derivative instruments used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as an interest rate risk, are considered fair value hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For a derivative instrument designated as a cash flow hedge, the change in fair value each period is reported in accumulated other comprehensive income in stockholders’ equity and partners’ capital to the extent the hedge is effective. For a derivative instrument designated as a fair value hedge, the change in fair value each period is reported in earnings along with the change in fair value of the hedged item attributable to the risk being hedged. For a derivative instrument that does not qualify for hedge accounting or is not designated as a hedge, the change in fair value each period is reported in earnings.

We use derivative instruments to add stability to interest expense and to manage our exposure to interest-rate movements. To accomplish this objective, we currently use interest rate caps and an interest rate swap which act as cash flow hedges and are not designated as hedges.  We value our interest-rate caps and interest rate swap at fair value, which we define as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We also have used derivative instruments in the Company’s stock to obtain more favorable terms on our financing. We do not enter into contracts to purchase or sell derivative instruments for speculative trading purposes.

Fair Value Measurements

Fair Value Measurements –

We classify the inputs used to measure fair value into the following hierarchy:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 Unobservable inputs for the asset or liability.

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table represents our assets and liabilities measured at fair value and the basis for that measurement (our interest rate caps and interest rate swap are the only assets or liabilities measured at fair value on a recurring basis, there is one asset added during the three month period ending September 30, 2019 in the amount of $3,940,000 which is non-recurring, and there were no non-recurring liabilities for fair value measurements as of September 30, 2019 and December 31, 2018, respectively):

	Level 1			Level 2			Level 3
December 31, 2018
Interest Rate Caps (1)	$	—		$	94,697		$	—
Interest Rate Swap (2)	$	—		$	(984,677	)	$	—
Mortgage loans (3)	$	—		$	(357,279,949	)	$	—
Unsecured notes (4)	$	(25,390,000	)	$	—		$	—
September 30, 2019
Interest Rate Cap (1)	$	—		$	4,421		$	—
Interest Rate Swap (2)	$	—		$	(2,443,591	)	$	—
Development of ballroom and parking spaces	$	—		$	3,940,000		$	—
Mortgage loans (3)	$	—		$	(365,393,515	)	$	—

(1) Interest rate cap, which cap the 1-month LIBOR rate between 2.5% and 3.25%.

(2) Interest rate swap, which takes the Loan Rate and swaps it for a fixed interest rate of 5.237%; notional amounts of the swap approximate the declining balance of the loan.

(3) Mortgage loans are reflected at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

(4) Unsecured notes are recorded at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of December 31, 2018.

Noncontrolling Interest in Operating Partnership

Noncontrolling Interest in Operating Partnership – Certain hotel properties were acquired, in part, by the Operating Partnership through the issuance of limited partnership units of the Operating Partnership. The noncontrolling interest in the Operating Partnership is: (i) increased or decreased by the limited partners’ pro-rata share of the Operating Partnership’s net income or net loss, respectively; (ii) decreased by distributions; (iii) decreased by redemption of partnership units for the Company’s common stock; and (iv) adjusted to equal the net equity of the Operating Partnership multiplied by the limited partners’ ownership percentage immediately after each issuance of units of the Operating Partnership and/or the Company’s common stock through an adjustment to additional paid-in capital. Net income or net loss is allocated to the noncontrolling interest in the Operating Partnership based on the weighted average percentage ownership throughout the period.

Revenue Recognition

Revenue Recognition – Revenue consists of amounts derived from hotel operations, including the sales of rooms, food and beverage, and other ancillary services. Room revenue is recognized over a customer's hotel stay. Revenue from food and beverage and other ancillary services is generated when a customer chooses to purchase goods or services separately from a hotel room and revenue is recognized on these distinct goods and services at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and the Company assesses whether it is the principal or agent in these arrangements. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. If the Company is the principal, the Company recognizes revenue based upon the gross sales price. Some contracts for rooms or food and beverage services require an upfront deposit which is recorded as advanced deposits (or contract liabilities) and recognized once the performance obligations are satisfied and shown on our consolidated balance sheets.

Certain of the Company's hotels have retail spaces, restaurants or other spaces which the Company leases to third parties. Lease revenue is recognized on a straight-line basis over the life of the lease and included in other operating revenues in the Company's consolidated statements of operations.

The Company collects sales, use, occupancy and similar taxes at its hotels which are presented on a net basis on the consolidated statements of operations. Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. The Company maintains an allowance for doubtful accounts sufficient to cover estimated potential credit losses.

Lease Revenue

Lease Revenue – Several of our properties generate revenue from leasing commercial space adjacent to the hotel, the restaurant space within the hotel, apartment units and space on the roofs of our hotels for antennas and satellite dishes.  We account for the lease income as revenue from other operating departments within the consolidated statements of operations pursuant to the terms of each lease.  Lease revenue was approximately $0.4 million and $0.3 million, for the three months ended September 30, 2019 and 2018, respectively, and approximately $1.2 million and $1.2 million for the nine months ended September 30, 2019 and 2018, respectively.

A schedule of minimum future lease payments receivable for the remaining three and twelve-month periods is as follows:

For the remaining three months ending December 31, 2019	$	486,304
December 31, 2020		1,452,866
December 31, 2021		1,395,363
December 31, 2022		1,221,343
December 31, 2023		612,940
December 31, 2024 and thereafter		3,158,088
Total	$	8,326,904

Variable Interest Entities

Variable Interest Entities – The Operating Partnership is a variable interest entity. The Company’s only significant asset is its investment in the Operating Partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership and its subsidiaries. All of the Company’s debt is an obligation of the Operating Partnership and its subsidiaries.

Income Taxes

Income Taxes – The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. MHI TRS, our wholly owned taxable REIT subsidiary which leases our hotels from subsidiaries of the Operating Partnership, is subject to federal and state income taxes.

We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  As of September 30, 2019 and December 31, 2018, deferred tax assets totaled approximately $4.7 million and $5.1 million, respectively, of which approximately $4.1 million and $4.4 million relate to net operating losses of our TRS Lessee.  A valuation allowance is required for deferred tax assets if, based on all available evidence, it is “more-likely-than-not” that all or a portion of the deferred tax asset will or will not be realized due to the inability to generate sufficient taxable income in certain financial statement periods.  The “more-likely-than-not” analysis means the likelihood of realization is greater than 50%, that we will or will not be able to fully utilize the deferred tax assets against future taxable income. The net amount of deferred tax assets that are recorded on the financial statements must reflect the tax benefits that are expected to be realized using these criteria.  We perform this analysis by evaluating future hotel revenues and expenses accounting for certain non-recurring costs and expenses during the current and prior two fiscal years as well as anticipated changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership. We have determined that it is more-likely-than-not that we will be able to fully utilize our deferred tax assets for future tax consequences, therefore no valuation allowance is required.  

As of September 30, 2019 and December 31, 2018, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of September 30, 2019, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2015 through 2017. In addition, as of September 30, 2019, the tax years that remain subject to examination, because of NOL carryforwards, by the major tax jurisdictions to which MHI TRS is subject include the years 2009 and 2014 through 2018.

The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership’s taxable income.

Stock-Based Compensation

Stock-based Compensation – The Company’s 2013 Long-Term Incentive Plan (the “2013 Plan”), which the Company’s stockholders approved in April 2013, permit the grant of stock options, restricted stock, unrestricted stock and performance share compensation awards to its employees and directors for up to 350,000 and 750,000 shares of common stock, respectively. The Company believes that such awards better align the interests of its employees with those of its stockholders.

Under the 2013 Plan, the Company has made stock awards totaling 176,350 shares, including 143,350 non-restricted shares and 33,000 restricted shares issued to certain executives and employees and to its independent directors.  All awards have vested except for 20,000 shares issued to one employee, which will vest over 4 years, and 13,000 shares issued to the Company’s independent directors in February 2019, which will vest by December 31, 2019.  

Under the 2013 Plan, the Company may issue a variety of performance-based stock awards, including nonqualified stock options. The value of the awards is charged to compensation expense on a straight-line basis over the vesting or service period based on the value of the award as determined by the Company’s stock price on the date of grant or issuance.  As of September 30, 2019, no performance-based stock awards have been granted. Total compensation cost recognized under the 2013 Plan for the three months ended September 30, 2019 and 2018 was each $8,025 and for the nine months ended September 30, 2019 and 2018 was $116,408 and $127,402, respectively.

Additionally, the Company sponsors and maintains an Employee Stock Ownership Plan (“ESOP”) and related trust for the benefit of its eligible employees. We reflect unearned ESOP shares as a reduction of stockholders’ equity.  Dividends on unearned ESOP shares, when paid, are considered compensation expense. The Company recognizes compensation expense equal to the fair value of the Company’s ESOP shares during the periods in which they are committed to be released.  For the three months ended September 30, 2019 and 2018, the ESOP compensation cost was $60,259 and $64,294, respectively and for the nine months ended September 30 2019 and 2018, the ESOP compensation cost was $193,513 and $186,137, respectively. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the differential is recognized as additional paid in capital.  Because the ESOP is internally leveraged through a loan from the Company to the ESOP, the loan receivable by the Company from the ESOP is not reported as an asset nor is the debt of the ESOP shown as a liability in the consolidated financial statements.

Advertising

Advertising – Advertising costs were $132,227 and $88,154 for the three months ended September 30, 2019 and 2018, respectively and were $319,947 and $334,271 for the nine months ended September 30, 2019 and 2018, respectively.  Advertising costs are expensed as incurred.

Involuntary Conversion of Assets

Involuntary Conversion of Assets – We record gains or losses on involuntary conversions of assets due to recovered insurance proceeds to the extent the undepreciated cost of a nonmonetary asset differs from the amount of monetary proceeds received. During the three-month periods ending September 30, 2019 and 2018, we recognized approximately $0.1 million and $0, respectively and during the nine-month periods ending September 30, 2019 and 2018, we recognized approximately $0.3 million and $0.9 million, respectively, in gain on involuntary conversion of assets, which is reflected in the consolidated statements of operations.

Comprehensive Income

Comprehensive Income – Comprehensive income as defined, includes all changes in equity during a period from non-owner sources. We do not have any items of comprehensive income other than net income.

Segment Information

Segment Information – We have determined that our business is conducted in one reportable segment: hotel ownership.

Use of Estimates

Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

New Accounting Pronouncements – In July 2018, FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, The FASB decided to provide another transition method and practical expedients in addition to the existing transition method (a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements) by allowing entities to initially apply the new leases standard at the adoption date (such as January 1, 2019, for calendar year-end public business entities) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  We adopted the practical expedients allowed under the guidance and retained the original lease classification and historical accounting for initial direct costs for leases existing prior to the adoption date on January 1, 2019. We also elected not to restate prior periods for the impact of the adoption of the new standard and instead recognized a cumulative-effect adjustment to beginning retained earnings as of the adoption date. These standards resulted in the recognition of right-to-use assets and related liabilities to account for our future obligations under the ground lease arrangements for which we are the lessee. The right of use assets and corresponding liabilities were recorded in the amount of approximately $6.3 million and $3.8 million, respectively as of January 1, 2019.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current GAAP and disclosing key information about leasing arrangements. The amendments in this ASU were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early application of this ASU was permitted for all entities. We created an inventory of our leases and have recorded current ground lease, office lease, other right-of-use assets and lease liabilities.  The standard required a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. This standard has been updated as noted above in ASU No. 2018-11. We adopted this ASU as of January 1, 2019. The adoption of this ASU did not have a material impact on our consolidated balance sheets, statements of operations or cash flows.

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Indirect Hotel Operating Expenses

9 Months Ended

Sep. 30, 2019

Other Income And Expenses [Abstract]

Indirect Hotel Operating Expenses

11. Indirect Hotel Operating Expenses

Indirect hotel operating expenses consists of the following expenses incurred by the hotels:

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Sales and marketing		4,164,001	$	4,015,942	$	12,848,029	$	12,046,880
General and administrative		3,698,817		3,540,054		11,511,241		10,880,130
Repairs and maintenance		2,013,706		1,887,113		5,997,166		5,655,711
Utilities		1,750,826		1,749,562		4,761,352		4,735,195
Property taxes		1,751,234		950,148		5,212,700		4,113,025
Management fees, including incentive		1,053,456		1,066,120		3,792,643		3,570,974
Franchise fees		1,095,564		1,059,522		3,597,319		3,244,833
Insurance		823,420		746,175		2,497,230		2,114,351
Information and telecommunications		612,988		515,225		1,855,903		1,317,290
Other		230,136		497,635		683,944		1,222,648
Total indirect hotel operating expenses	$	17,194,148	$	16,027,496	$	52,757,527	$	48,901,037

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Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Mortgage Debt Obligations on Hotels

The following table sets forth our mortgage debt obligations on our hotels.

	Balance Outstanding as of
	September 30,			December 31,			Prepayment	Maturity	Amortization	Interest
Property	2019			2018			Penalties	Date	Provisions	Rate
	(unaudited)
The DeSoto (1)	$	33,256,944		$	33,824,350		Yes	7/1/2026	25 years	4.25%
DoubleTree by Hilton Jacksonville    Riverfront (2)		34,366,547			34,773,546		Yes	7/11/2024	30 years	4.88%
DoubleTree by Hilton Laurel (3)		8,614,350			8,845,299		Yes	8/5/2021	25 years	5.25%
DoubleTree by Hilton Philadelphia Airport (4)		41,580,419			42,026,986		None	7/31/2023	30 years	LIBOR plus 2.27 %
DoubleTree by Hilton Raleigh-    Brownstone University (5)		18,300,000			18,300,000		Yes	7/27/2022	(5)	LIBOR plus 4.00 %
DoubleTree Resort by Hilton Hollywood    Beach (6)		56,396,039			57,064,824		n/a	10/1/2025	30 years	4.913%
Georgian Terrace (7)		43,627,014			44,202,968		n/a	6/1/2025	30 years	4.42%
Hotel Alba Tampa, Tapestry Collection by Hilton  (8)		18,107,352			18,307,000		None	6/30/2022	(8)	LIBOR plus 3.75 %
Hotel Ballast Wilmington, Tapestry Collection by Hilton(9)		33,683,726			34,236,104		Yes	1/1/2027	25 years	4.25%
Hyatt Centric Arlington (10)	$	49,355,146			49,885,045		Yes	9/18/2028	30 years	5.25%
Sheraton Louisville Riverside (11)		11,215,621			11,414,300		Yes	12/1/2026	25 years	4.27%
The Whitehall (12)		14,527,731			14,733,458		Yes	2/26/2023	25 years	LIBOR plus 3.50 %
Total Mortgage Principal Balance	$	363,030,889		$	367,613,880
Deferred financing costs, net		(2,628,780	)		(2,951,327	)
Unamortized premium on loan		147,781			166,292
Total Mortgage Loans, Net	$	360,549,890		$	364,828,845

(1)	The note amortizes on a 25-year schedule after an initial 1-year interest-only period (which expired in August 2017), and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(2)	The note is subject to a pre-payment penalty until March 2024. Prepayment can be made without penalty thereafter.
(3)	The note is subject to a pre-payment penalty until April 2021. Prepayment can be made without penalty thereafter.
(4)	The note bears a floating interest rate of 1-month LIBOR plus 2.27%, but we entered into a swap agreement to fix the rate at 5.237%.  Under the swap agreement, notional amounts approximate the declining balance of the loan and we are responsible for any potential termination fees associated with early termination of the swap agreement.
(5)	The note provides initial proceeds of $18.3 million, with an additional $5.2 million available upon the satisfaction of certain conditions; has an initial term of 4 years with a 1-year extension; bears a floating interest rate of 1-month LIBOR plus 4.00%; requires interest only monthly payments; and following a 12-month lockout, can be prepaid with penalty in year 2 and without penalty thereafter.  We entered into an interest-rate cap agreement to limit our exposure through August 1, 2022 to increases in LIBOR exceeding 3.25% on a notional amount of $23,500,000.
(6)	With limited exception, the note may not be prepaid until June 2025.
(7)	With limited exception, the note may not be prepaid until February 2025.
(8)	The note bears a floating interest rate of 1-month LIBOR plus 3.75% subject to a floor rate of 3.75%; with monthly principal payments of $26,812; the note provides that the mortgage can be extended for two additional periods of one year each, subject to certain conditions.
(9)	The note amortizes on a 25-year schedule after an initial 1-year interest-only period, and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(10)	Following a 5-year lockout, the note can be prepaid with penalty in years 6-10 and without penalty during the final 4 months of the term.
(11)	The note bears a fixed interest rate of 4.27% for the first 5 years of the loan, with an option for the lender to reset the interest rate after 5 years.
(12)	The note bears a floating interest rate of 1-month LIBOR plus 3.5%, subject to a floor rate of 4.0%, and is subject to prepayment penalties on a declining scale with a 3.0% penalty on or before the first anniversary date, a 2.0% penalty during the second anniversary year and a 1.0% penalty after the third anniversary date.

Schedule of Future Mortgage Debt Maturities

Total future mortgage debt maturities for the remaining three and twelve month periods, without respect to any extension of loan maturity, were as follows:

For the remaining three months ending December 31, 2019	$	1,611,840
December 31, 2020		6,611,161
December 31, 2021		14,815,761
December 31, 2022		42,273,913
December 31, 2023		59,921,466
December 31, 2024 and thereafter		237,796,748
Total future maturities	$	363,030,889

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Components of Income Tax (Benefit) Provision

The components of the income tax (benefit) provision for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Current:
Federal	$	(33,254	)	$	—		$	(125,587	)	$	—
State		41,839			24,266			112,741			131,306
		8,585			24,266			(12,846	)		131,306
Deferred:
Federal		(569,928	)		(612,703	)		356,590			591,917
State		(132,847	)		(158,487	)		95,579			158,822
		(702,775	)		(771,190	)		452,169			750,739
	$	(694,190	)	$	(746,924	)	$	439,323		$	882,045

Reconciliation of Statutory Federal Income Tax Provision

A reconciliation of the statutory federal income tax provision to the Company’s income tax provision is as follows:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Statutory federal income tax provision	$	290,535		$	(573,028	)	$	687,986		$	639,311
Effect of non-taxable REIT loss		(893,717	)		(39,675	)		(456,983	)		(47,394	)
State income tax provision		(91,008	)		(134,221	)		208,320			290,128
	$	(694,190	)	$	(746,924	)	$	439,323		$	882,045

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Summary of Significant Accounting Policies - Schedule of Recurring Assets and Liabilities Measured at Fair Value (Detail) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Level 1 [Member] | Unsecured Notes [Member]
Derivatives Fair Value [Line Items]
Debt instruments measured at fair value		$ (25,390,000)
Level 2 [Member]
Derivatives Fair Value [Line Items]
Development of ballroom and parking spaces	$ 3,940,000
Level 2 [Member] | Interest Rate Caps [Member]
Derivatives Fair Value [Line Items]
Interest rate cap	4,421	94,697
Level 2 [Member] | Interest Rate Swap [Member]
Derivatives Fair Value [Line Items]
Interest rate cap	(2,443,591)	(984,677)
Level 2 [Member] | Mortgage Loans [Member]
Derivatives Fair Value [Line Items]
Debt instruments measured at fair value	$ (365,393,515)	$ (357,279,949)

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Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

9. Related Party Transactions

Chesapeake Hospitality. Chesapeake Hospitality is owned and controlled by individuals including Andrew M. Sims, our chairman and chief executive officer, and Kim E. Sims and Christopher L. Sims, each a former director of Sotherly and immediate family member of our chairman and chief executive officer.  As of September 30, 2019, Andrew M. Sims, Kim E. Sims and Christopher L. Sims, beneficially owned, directly or indirectly, approximately 19.3375%, 20.0%, and 20.0%, respectively, of the total outstanding ownership interests of Chesapeake Hospitality.  Kim E. Sims and Christopher L. Sims are currently officers and employees of Chesapeake Hospitality. The following is a summary of the transactions between Chesapeake Hospitality and us:

Accounts Receivable – At September 30, 2019 and December 31, 2018, we were due $96,599 and $91,987, respectively, from Chesapeake Hospitality.

Management Agreements – As of September 30, 2019, all of our wholly-owned hotels (with the exception of the Hyatt Centric Arlington hotel) and the Hyde Resort & Residences operated under various management agreements with Chesapeake Hospitality.  On December 15, 2014, we entered into a master agreement and a series of individual hotel management agreements that became effective on January 1, 2015. The master agreement has a five-year term but may be extended for such additional periods as long as an individual management agreement remains in effect. The base management fee for the Whitehall and the Georgian Terrace remained at 2.00% through 2015, increased to 2.25% in 2016 and increased to 2.50% thereafter. The base management fees for the remaining properties in the current portfolio was 2.65% through 2017 and decreased to 2.50% thereafter. For new individual hotel management agreements, Chesapeake Hospitality 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.

Each management agreement sets an incentive management fee equal to 10.0% of the amount by which gross operating profit, as defined in the management agreement, for a given year exceeds the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any such year shall not exceed 0.25% of the gross revenues of the hotel included in such calculation.

Base management and administrative fees earned by Chesapeake Hospitality for our properties was approximately $1.1 million and $1.0 million for the three months ended September 30, 2019 and 2018, respectively and approximately $3.6 million and $3.2 million for the nine months ended September 30, 2019 and 2018, respectively.  In addition, estimated incentive management fees each of approximately $0.1 million were accrued for the nine months ended September 30, 2019 and 2018, respectively.  On July 15, 2019 we notified Chesapeake Hospitality of our intent not to renew or extend the management agreements for ten of our wholly-owned hotels when they expire on January 1, 2020.

Employee Medical Benefits – We purchase employee medical benefits through Maryland Hospitality, Inc. (d/b/a MHI Health), an affiliate of Chesapeake Hospitality for those employees that are employed by Chesapeake Hospitality that work exclusively for our hotel properties. Gross premiums for employee medical benefits paid by the Company (before offset of employee co-payments) were each approximately $1.4 million for the three months ended September 30, 2019 and 2018, respectively and were approximately $4.2 million and $4.3 million for the nine months ended September 30, 2019 and 2018, respectively.

Workers’ Compensation Insurance – Pursuant to our management agreements with Chesapeake Hospitality, we pay the premiums for workers’ compensation insurance under a self-insured policy owned by Chesapeake Hospitality or its affiliates, and which covers those employees of Chesapeake Hospitality that work exclusively for the properties managed by Chesapeake Hospitality. For the three months ended September 30, 2019 and 2018, we paid approximately $0.2 million and $0.3 million, respectively, and for the nine months ended September 30, 2019 and 2018, we paid approximately $0.8 million and $0.8 million, respectively, in premiums for the portion of the plan covering those employees that work exclusively for our properties under our management agreements with Chesapeake Hospitality.

Loan Receivable – Affiliate. As of September 30, 2019 and December 31, 2018, approximately $4.3 million and $4.4 million, respectively, was due to the Operating Partnership for advances to the Company under a loan agreement dated December 29, 2016.  The Company used the proceeds to make advances to the ESOP to purchase shares of the Company’s common stock.

Others. We employ Ashley S. Kirkland, the daughter of our Chief Executive Officer as a legal analyst and Robert E. Kirkland IV, her husband, as our compliance officer.  We also employ Andrew M. Sims Jr., the son of our Chief Executive Officer, as a manager. Total compensation, including salary and benefits, for the three months ended September 30, 2019 and 2018 totaled $103,585 and $95,568, respectively and for the nine months ended September 30, 2019 and 2018 totaled $309,875 and $290,144, respectively, for all three individuals.  

During the three-month period ending September 30, 2019 and 2018, the Company reimbursed $26,157  and $27,491, respectively, and during the nine-month period ending September 30, 2019 and 2018, the Company reimbursed $113,415  and $87,847, respectivelyto a partnership controlled by the Chief Executive Officer for business-related air travel pursuant to the Company’s travel reimbursement policy.

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Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

5. Debt

Mortgage Loans, Net. As of September 30, 2019 and December 31, 2018, we had approximately $360.5 million and approximately $364.8 million of outstanding mortgage debt, respectively. The following table sets forth our mortgage debt obligations on our hotels.

	Balance Outstanding as of
	September 30,			December 31,			Prepayment	Maturity	Amortization	Interest
Property	2019			2018			Penalties	Date	Provisions	Rate
	(unaudited)
The DeSoto (1)	$	33,256,944		$	33,824,350		Yes	7/1/2026	25 years	4.25%
DoubleTree by Hilton Jacksonville    Riverfront (2)		34,366,547			34,773,546		Yes	7/11/2024	30 years	4.88%
DoubleTree by Hilton Laurel (3)		8,614,350			8,845,299		Yes	8/5/2021	25 years	5.25%
DoubleTree by Hilton Philadelphia Airport (4)		41,580,419			42,026,986		None	7/31/2023	30 years	LIBOR plus 2.27 %
DoubleTree by Hilton Raleigh-    Brownstone University (5)		18,300,000			18,300,000		Yes	7/27/2022	(5)	LIBOR plus 4.00 %
DoubleTree Resort by Hilton Hollywood    Beach (6)		56,396,039			57,064,824		n/a	10/1/2025	30 years	4.913%
Georgian Terrace (7)		43,627,014			44,202,968		n/a	6/1/2025	30 years	4.42%
Hotel Alba Tampa, Tapestry Collection by Hilton  (8)		18,107,352			18,307,000		None	6/30/2022	(8)	LIBOR plus 3.75 %
Hotel Ballast Wilmington, Tapestry Collection by Hilton(9)		33,683,726			34,236,104		Yes	1/1/2027	25 years	4.25%
Hyatt Centric Arlington (10)	$	49,355,146			49,885,045		Yes	9/18/2028	30 years	5.25%
Sheraton Louisville Riverside (11)		11,215,621			11,414,300		Yes	12/1/2026	25 years	4.27%
The Whitehall (12)		14,527,731			14,733,458		Yes	2/26/2023	25 years	LIBOR plus 3.50 %
Total Mortgage Principal Balance	$	363,030,889		$	367,613,880
Deferred financing costs, net		(2,628,780	)		(2,951,327	)
Unamortized premium on loan		147,781			166,292
Total Mortgage Loans, Net	$	360,549,890		$	364,828,845

(1)	The note amortizes on a 25-year schedule after an initial 1-year interest-only period (which expired in August 2017), and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(2)	The note is subject to a pre-payment penalty until March 2024. Prepayment can be made without penalty thereafter.
(3)	The note is subject to a pre-payment penalty until April 2021. Prepayment can be made without penalty thereafter.
(4)	The note bears a floating interest rate of 1-month LIBOR plus 2.27%, but we entered into a swap agreement to fix the rate at 5.237%.  Under the swap agreement, notional amounts approximate the declining balance of the loan and we are responsible for any potential termination fees associated with early termination of the swap agreement.
(5)	The note provides initial proceeds of $18.3 million, with an additional $5.2 million available upon the satisfaction of certain conditions; has an initial term of 4 years with a 1-year extension; bears a floating interest rate of 1-month LIBOR plus 4.00%; requires interest only monthly payments; and following a 12-month lockout, can be prepaid with penalty in year 2 and without penalty thereafter.  We entered into an interest-rate cap agreement to limit our exposure through August 1, 2022 to increases in LIBOR exceeding 3.25% on a notional amount of $23,500,000.
(6)	With limited exception, the note may not be prepaid until June 2025.
(7)	With limited exception, the note may not be prepaid until February 2025.
(8)	The note bears a floating interest rate of 1-month LIBOR plus 3.75% subject to a floor rate of 3.75%; with monthly principal payments of $26,812; the note provides that the mortgage can be extended for two additional periods of one year each, subject to certain conditions.
(9)	The note amortizes on a 25-year schedule after an initial 1-year interest-only period, and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(10)	Following a 5-year lockout, the note can be prepaid with penalty in years 6-10 and without penalty during the final 4 months of the term.
(11)	The note bears a fixed interest rate of 4.27% for the first 5 years of the loan, with an option for the lender to reset the interest rate after 5 years.
(12)	The note bears a floating interest rate of 1-month LIBOR plus 3.5%, subject to a floor rate of 4.0%, and is subject to prepayment penalties on a declining scale with a 3.0% penalty on or before the first anniversary date, a 2.0% penalty during the second anniversary year and a 1.0% penalty after the third anniversary date.

As of September 30, 2019, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, as amended or modified, with the exception of the mortgage on the Hotel Alba, for which we failed to meet the quarterly Debt Service Coverage Ratio (“DSCR”) requirement. The loan agreement contains a balancing provision that allows us to pay down the principal balance of the loan or provide cash collateral.  Should we be unable to obtain a waiver, we believe cash collateral of approximately $2.9 million will be required until the quarterly DSCR requirement is met.

Total future mortgage debt maturities for the remaining three and twelve month periods, without respect to any extension of loan maturity, were as follows:

For the remaining three months ending December 31, 2019	$	1,611,840
December 31, 2020		6,611,161
December 31, 2021		14,815,761
December 31, 2022		42,273,913
December 31, 2023		59,921,466
December 31, 2024 and thereafter		237,796,748
Total future maturities	$	363,030,889

7.25% Unsecured Notes. On February 12, 2018, the Operating Partnership issued its 7.25% Notes in the aggregate amount of $25.0 million, unconditionally guaranteed by the Company. The indenture requires quarterly payments of interest and was to mature on February 15, 2021. The 7.25% Notes were redeemed on May 20, 2019 at 101% of face value.

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Organization and Description of Business

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Organization and Description of Business

1. Organization and Description of Business

Sotherly Hotels Inc. (the “Company”) is a self-managed and self-administered lodging real estate investment trust (“REIT”) that was incorporated in Maryland on August 20, 2004 to own full-service, primarily upscale and upper-upscale hotels located in primary and secondary markets in the mid-Atlantic and southern United States.  Currently, the Company is focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the southern United States.  The Company’s portfolio consists of investments in twelve hotel properties comprising 3,156 rooms, as well as interests in two condominium hotels and their associated rental programs.   The Company owns hotels that operate under the Hilton Worldwide, Marriott International, Inc., and Hyatt Hotels Corporation brands, as well as independent hotels.

The Company commenced operations on December 21, 2004 when it completed its initial public offering and thereafter consummated the acquisition of six hotel properties (the “Initial Properties”). Substantially all of the Company’s assets are held by, and all of its operations are conducted through, Sotherly Hotels LP (the “Operating Partnership”), which at September 30, 2019, was approximately 88.9% owned by the Company.  Pursuant to the terms of the Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of the Operating Partnership, the Company, as general partner, is not entitled to compensation for its services to the Operating Partnership.  The Company, as general partner, conducts substantially all of its operations through the Operating Partnership and the Company’s administrative expenses are the obligations of the Operating Partnership.  Additionally, the Company is entitled to reimbursement for any expenditure incurred by it on the Operating Partnership’s behalf.

For the Company to qualify as a REIT, it cannot operate hotels. Therefore, the Operating Partnership, through its subsidiaries, leases the hotels to direct and indirect subsidiaries of MHI Hospitality TRS Holding, Inc. (collectively, “MHI TRS”), which is a wholly-owned subsidiary of the Operating Partnership. MHI TRS then engages eligible independent hotel management companies, including MHI Hotels Services, LLC, which does business as Chesapeake Hospitality (“Chesapeake Hospitality”) and Highgate Hotels, L.P. (“Highgate Hotels”), to operate the hotels under management contracts. MHI TRS is treated as a taxable REIT subsidiary for federal income tax purposes.

All references in this report to “we”, “us” and “our” refer to the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

Significant transactions occurring during the current and prior fiscal year include the following:

On February 1, 2018, we received proceeds of $5.0 million on the Hotel Ballast mortgage loan after meeting certain requirements, per the mortgage documents.

On February 12, 2018, the Company and the Operating Partnership closed on a sale and issuance by the Operating Partnership of an aggregate $25.0 million of the 7.25% senior unsecured notes due 2021 (the “7.25% Notes”), unconditionally guaranteed by the Company, for net proceeds after all estimated expenses of approximately $23.3 million.  The Operating Partnership used the net proceeds from this offering, together with existing cash on hand and $57.0 million of asset-level mortgage indebtedness, to finance the acquisition of the Hyatt Centric Arlington and for working capital.

On February 26, 2018, we entered into a First Amendment to Loan Agreement, Amended and Restated Promissory Note, and other related documents with International Bank of Commerce to amend the terms of the mortgage loan on The Whitehall hotel located in Houston, TX.  Pursuant to the amended loan documents, payments of principal and interest on a 25-year amortization schedule have begun and the maturity date was extended until February 26, 2023.

On March 1, 2018, we acquired the 318-room Hyatt Centric Arlington located in Arlington, Virginia at an aggregate purchase price of approximately $79.7 million, including seller credits (the “Arlington Acquisition”).  Concurrently with the closing, we entered into a franchise agreement with an affiliate of Hyatt Hotels Corporation for the hotel to continue operating as the Hyatt Centric Arlington, and a management agreement with Highgate Hotels for the management of the hotel.  The management agreement: (i) has an initial term of three years commencing March 1, 2018; (ii) provides for a base management fee equal to 2.50% of gross revenues; and (iii)provides for an incentive management fee equal to 10% of the amount by which gross operating profit, as defined in the management agreement, for a given year exceeds the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any year shall not exceed 0.5% of the gross revenues of the hotel.  The Hyatt Centric Arlington is subject to a long-term ground lease agreement that covers all of the land underlying the hotel.  The ground lease requires usto make rental payments of $50,000 per year in base rent and percentage rent equal to 3.5% of gross rooms revenues in excess of certain thresholds, as defined in the agreements.  The initial term of the ground lease expires in 2025 and may be extended by us for five additional renewal periods of 10 years each.

On March 1, 2018, we entered into a loan agreement, a first and second promissory note (“Note A” and “Note B”, respectively), and other loan documents, including a guarantee by the Operating Partnership, to secure an aggregate $57.0 million mortgage (the “Mortgage Loan”) on the Hyatt Centric Arlington with Fifth Third Bank.  Pursuant to the Mortgage Loan documents, Note A had an original principal balance in the amount of $50.0 million; had a term of 3 years, with two 1-year extension options, each of which was subject to certain criteria; bore a floating interest rate of one-month LIBOR plus 3.00%, payable monthly; and required monthly principal payments of $78,650.  Pursuant to the Mortgage Loan documents, Note B had an original principal balance in the amount of $7.0 million; had a term of 1-year, with two 1-year extension options, each of which was subject to certain criteria; bore a floating interest rate of three-month LIBOR plus 5.00%, payable monthly; and required monthly principal payments of $100,000 during the initial 1-year term, $150,000 during the first 1-year extended term, and $250,000 during the second 1-year extended term, with interest payments due monthly on the outstanding principal amount during all three terms.  The full amount of the loan proceeds, together with proceeds of the 7.25% Notes offering and cash on hand, were used to finance the Arlington Acquisition.

On July 2, 2018, we purchased a portion of the parking lot, previously leased, adjacent to the DoubleTree by Hilton Raleigh Brownstone-University for an aggregate purchase price of $3.5 million.  

On July 27, 2018, we entered into a loan agreement and other documents, including a promissory note, to secure a mortgage on the DoubleTree by Hilton Raleigh Brownstone-University with MetLife Commercial Mortgage Originator, LLC. The mortgage has an initial principal balance of $18.3 million, with an additional $5.2 million available upon the satisfaction of certain conditions. The mortgage has an initial term of 4 years with a 1-year extension and bears a floating rate of interest equal to the 1-month LIBOR rate plus 4.00%. The mortgage requires monthly interest-only payments and, following a 12-month lockout, can be prepaid with a penalty during its second year and without penalty thereafter. We entered into an interest-rate cap agreement to limit our exposure through August 1, 2022 to increases in LIBOR exceeding 3.25% on a notional amount of $23,500,000. We used a portion of the proceeds to repay the existing first mortgage on the DoubleTree by Hilton Raleigh Brownstone-University and to pay closing costs, and intend to use the balance of the proceeds for general corporate purposes.

On July 31, 2018, we entered into a second amendment to the loan and security agreement; an amended, restated and consolidated mortgage loan note; and other related documents with our existing lender, TD Bank, N.A., to amend the terms of our mortgage loan on the DoubleTree by Hilton Philadelphia Airport.  Concurrent with the loan modification, we also entered into a 5-year swap agreement with The Toronto-Dominion Bank.  Pursuant to the amended loan documents: (i) the principal balance of the loan was increased from approximately $30.0 million to $42.2 million; (ii) the loan’s maturity date was extended to July 31, 2023; (iii) the loan bears a floating interest rate equal to the 1-month LIBOR rate plus 2.27% (the “Loan Rate”); (iv) the loan amortizes on a 30-year schedule with payments of principal and interest beginning immediately; (v) the loan can be prepaid without penalty; and (vi) the loan will no longer be fully guaranteed by the Operating Partnership, but the Operating Partnership has guaranteed certain standard “bad boy” carveouts.  Pursuant to the swap agreement: (i) the Loan Rate has been swapped for a fixed interest rate of 5.237%; notional amounts of the swap approximate the declining balance of the loan; and (iii) we are responsible for any potential termination fees associated with early termination of the swap agreement.  We used a portion of the proceeds to repay in full the existing Note B to the mortgage loan on our Hyatt Centric Arlington and to pay closing costs associated with the amendment and will use the balance of the proceeds for general corporate purposes.

On August 31, 2018, we entered into a Sales Agency Agreement, with Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”), under which the Company may sell from time to time through Sandler O’Neill, as sales agent, shares of the Company’s common stock, par value $0.01 per share, having an aggregate gross sales price of up to $5,000,000 and up to 400,000 shares of the Company’s 7.875% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share.

On September 18, 2018, we entered into a loan agreement and other documents, including a promissory note, to secure a mortgage on the Hyatt Centric Arlington with MetLife Real Estate Lending LLC.  Pursuant to the loan documents, the Mortgage Loan has an initial principal balance of $50.0 million; has a term of 10 years; bears a fixed interest rate of 5.25%; amortizes on a 30-year schedule; and following a 5-year lockout, can be prepaid with penalty in years 6-10 and without penalty during the final 4 months of the term.  The Company used the proceeds to repay the existing first mortgage on the Hyatt Centric Arlington, to pay closing costs, and for general corporate purposes.

On April 18, 2019, the Company closed a sale and issuance of 1,080,000 shares of its 8.25% Series D cumulative redeemable perpetual preferred stock (the “Series D Preferred Stock”), for gross proceeds of $27.0 million before underwriting discounts and commissions and expenses payable by the Company.  On May 1, 2019, the Company closed a sale and issuance of an additional 120,000 shares of its Series D Preferred Stock, for gross proceeds of $3.0 million before underwriting discounts and commissions and expenses payable by the Company, in connection with the partial exercise of the underwriters’ option to purchase additional shares of the Series D Preferred Stock.  Total net proceeds after all estimated expenses were approximately $28.4 million, which the Company contributed to its Operating Partnership for an equivalent number of Series D preferred units.  We used the net proceeds to redeem in full the Operating Partnership’s 7.25% Notes and for working capital.

On April 24, 2019, the Hyde Resort & Residences condominium association, 4111 South Ocean Drive Condominium Association, Inc., unilaterally terminated both (i) the existing Lease Agreement for the 400-space parking garage and meeting rooms associated with the condominium hotel and (ii) the Association Management Agreement relating to the operation and management of the hotel condominium association.  We continue to operate our rental program at the Hyde Resort & Residences.

On April 26, 2019, we entered into amended loan documents to modify the existing mortgage loan on the Hotel Alba (f/k/a Crowne Plaza Tampa Westshore) with the existing lender, Fifth Third Bank.  Pursuant to the modification, the mortgage loan principal balance remained at approximately $18.2 million; the maturity date was extended to June 30, 2022, and may be extended for two additional periods of one year each, subject to certain conditions; the mortgage loan continues to bear a floating interest rate of 1-month LIBOR plus 3.75% subject to a floor rate of 3.75%, with a new provision to reduce the floating interest rate to 1-month LIBOR plus 3.00% upon the successful achievement of certain performance hurdles; the mortgage loan amortizes on a 25-year schedule; and the mortgage loan continues to be guaranteed by Sotherly Hotels LP.

On May 20, 2019, the Operating Partnership redeemed the entire $25.0 million aggregate principal amount of its 7.25% Notes, at a redemption price equal to 101% of the principal amount of the 7.25% Notes, plus any accrued and unpaid interest to, but not including, the redemption date.

On September 6, 2019, we entered into a master agreement with Newport Hospitality Group, Inc., a Virginia corporation, and Our Town Hospitality LLC, a Virginia limited liability company relating to the management of ten of our hotels.  The master agreement is designed to address the scheduled termination on January 1, 2020 of certain individual hotel management agreements by and between us and Chesapeake Hospitality.  On July 15, 2019 we notified Chesapeake Hospitality of our intent not to renew or extend the expiring hotel management agreements.  The new master agreement establishes terms for new hotel management agreements governing the management of our hotels.  Chesapeake Hospitality has committed to providing assistance in transitioning the hotels to a new manager.

On September 26, 2019, we closed on the purchase of a commercial condominium unit of the Hyde Beach House Resort & Residences, a newly constructed 342-unit condominium hotel located in Hollywood, Florida (“Hyde Beach House”), from 4000 South Ocean Property Owner, LLLP.  In connection with the closing, we (i) acquired commercial unit 2 of the Hyde Beach House, along with rights to certain limited common elements appurtenant to the commercial unit, for an adjusted purchase price of approximately $5.4 million; (ii) purchased inventories and equipment for additional consideration in the amount of approximately $0.7 million; (iii) entered into a Second Addendum to the purchase agreement; (iv) entered into a 20-year parking and cabana management agreement for the parking garage and poolside cabanas associated with the Hyde Beach House; (v) entered into a 20-year management agreement relating to the operation and management of the Hyde Beach House condominium association; and (vi) received a pre-opening services fee of $1.0 million.  We began operating a condominium unit rental program for residential units in the facility in November 2019.  Also, in connection with the closing, our DoubleTree Resort by Hilton Hollywood Beach acquired a commercial condominium unit consisting of a 3,000 square foot ballroom and adjacent pre-function space, as well as 200 dedicated parking spaces within the parking garage adjacent to the hotel.

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Related Party Transactions - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) Hotel	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Related Party Transaction [Line Items]
Accounts receivable - affiliate	$ 86,663		$ 86,663		$ 262,572
ESOP [Member]
Related Party Transaction [Line Items]
Loan receivable outstanding	$ 4,300,000		$ 4,300,000		4,400,000
Andrew M. Sims [Member] | Chesapeake Hospitality [Member]
Related Party Transaction [Line Items]
Percentage of total outstanding ownership interests	19.3375%		19.3375%
Kim E. Sims [Member] | Chesapeake Hospitality [Member]
Related Party Transaction [Line Items]
Percentage of total outstanding ownership interests	20.00%		20.00%
Christopher L. Sims [Member] | Chesapeake Hospitality [Member]
Related Party Transaction [Line Items]
Percentage of total outstanding ownership interests	20.00%		20.00%
Chesapeake Hospitality [Member]
Related Party Transaction [Line Items]
Accounts receivable - affiliate	$ 96,599		$ 96,599		$ 91,987
Agreement term			5 years
Incentive management fee equal to increase in gross operating profit percentage	10.00%		10.00%
Maximum incentive management fee of gross revenues	0.25%		0.25%
Base management and administrative fees earned by related party	$ 1,100,000	$ 1,000,000	$ 3,600,000	$ 3,200,000
Incentive management fees earned by related party			100,000	100,000
Number of wholly owned hotels not renewing management agreement | Hotel	10
Employee medical benefits paid	$ 1,400,000	1,400,000	4,200,000	4,300,000
Workers' compensation insurance premium paid	$ 200,000	300,000	$ 800,000	800,000
Chesapeake Hospitality [Member] | Fiscal Year 2017 [Member]
Related Party Transaction [Line Items]
Percentage of management fee due	2.65%		2.65%
Chesapeake Hospitality [Member] | Fiscal Year 2017 and Thereafter [Member]
Related Party Transaction [Line Items]
Percentage of management fee due	2.50%		2.50%
Chesapeake Hospitality [Member] | Individual Hotel Management Agreements [Member]
Related Party Transaction [Line Items]
Management fee of gross revenues for first full fiscal year	2.00%		2.00%
Management fee of gross revenues for second full fiscal year	2.25%		2.25%
Management fee of gross revenues for every year thereafter	2.50%		2.50%
Chesapeake Hospitality [Member] | Whitehall and Georgian Terrace Hotel [Member] | Fiscal Year 2015 [Member]
Related Party Transaction [Line Items]
Percentage of management fee due	2.00%		2.00%
Chesapeake Hospitality [Member] | Whitehall and Georgian Terrace Hotel [Member] | Fiscal Year 2016 [Member]
Related Party Transaction [Line Items]
Percentage of management fee due	2.25%		2.25%
Chesapeake Hospitality [Member] | Whitehall and Georgian Terrace Hotel [Member] | Fiscal Year Thereafter [Member]
Related Party Transaction [Line Items]
Percentage of management fee due	2.50%		2.50%
Immediate Family Members of Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Total compensation for related parties	$ 103,585	95,568	$ 309,875	290,144
Partnership controlled by Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Business-related air travel expense reimbursed to partnership	$ 26,157	$ 27,491	$ 113,415	$ 87,847

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Preferred Stock and Units - Schedule of Series of Cumulative Redeemable Perpetual Preferred Stock (Parenthetical) (Detail) - $ / shares		3 Months Ended
	Jul. 15, 2019	Sep. 30, 2019
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, Quarterly Distributions Per Share	$ 0.41823	$ 0.515625

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Loss Per Share and Per Unit - Computation of Basic and Diluted Net Income Per Share (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Numerator
Net loss available to common stockholders for basic and diluted computation	$ (106,827)	$ (3,065,883)	$ (2,492,298)	$ (1,951,816)
Denominator
Weighted average number of common shares outstanding	14,222,378	14,154,414	14,220,416	14,141,273
Weighted average number of Unearned ESOP Shares	(585,672)	(640,418)	(595,656)	(649,466)
Total weighted average number of common shares outstanding for basic computation	13,636,706	13,513,996	13,624,760	13,491,807
Basic net loss per share	$ (0.01)	$ (0.23)	$ (0.18)	$ (0.14)

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Income Taxes - Components of Income Tax (Benefit) Provision (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Current:
Federal	$ (33,254)		$ (125,587)
State	41,839	$ 24,266	112,741	$ 131,306
Total	8,585	24,266	(12,846)	131,306
Deferred:
Federal	(569,928)	(612,703)	356,590	591,917
State	(132,847)	(158,487)	95,579	158,822
Total	(702,775)	(771,190)	452,169	750,739
Income tax (benefit) provision	$ (694,190)	$ (746,924)	$ 439,323	$ 882,045

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Investment in Hotel Properties, Net - Additional Information (Detail) - ASU 2016-02 [Member] $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Lessee Lease Description [Line Items]
Operating lease incremental borrowing rates	8.00%
Operating lease existence of option to extend	true
Operating Lease, right of use assets, net	$ 6.6
Operating lease liability	$ 4.4
Operating lease description	on January 1, 2019, we recognized right-of-use assets and related liabilities related to our acquired operating ground lease, equipment, parking, office space and land leases, all of which are operating leases.
Minimum [Member]
Lessee Lease Description [Line Items]
Operating lease term of contract	1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Operating lease term of contract	50 years

XML

Debt - Schedule of Future Mortgage Debt Maturities (Detail) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
For the remaining three months ending December 31, 2019	$ 1,611,840
December 31, 2020	6,611,161
December 31, 2021	14,815,761
December 31, 2022	42,273,913
December 31, 2023	59,921,466
December 31, 2024 and thereafter	237,796,748
Total future maturities	$ 363,030,889	$ 367,613,880

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Acquisition of Hotel Properties (Tables)

9 Months Ended

Sep. 30, 2019

Business Combinations And Or Asset Acquisitions [Abstract]

Allocation of Purchase Price Based on Fair Values

The allocation of the respective purchase price is based on fair value as follows:

	Hyatt Centric Arlington			Hyde Beach House
Land and land improvements	$	190,916		$	500
Buildings and improvements		70,369,046			5,564,219
Furniture, fixtures and equipment		6,229,888			347,621
Favorable lease and other intangible assets		3,054,812			—
Investment in hotel properties		79,844,662			5,912,340
Accrued liabilities and other costs		(111,946	)		—
Prepaid expenses, inventory and other    assets		—			434,038
Net cash	$	79,732,716		$	6,346,378

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Loss Per Share and Per Unit

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Loss Per Share and Per Unit

13. Loss Per Share and Per Unit

Loss per Share. The limited partners’ outstanding limited partnership units in the Operating Partnership (which may be redeemed for common stock upon notice from the limited partner and following our election to redeem the units for stock rather than cash) have been excluded from the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners’ share of loss would also be added back to net loss. The shares of the Series B Preferred Stock and Series C Preferred Stock and Series D Preferred Stock are not convertible into or exchangeable for any other property or securities of the Company, except upon the occurrence of a change of control and have been excluded from the diluted earnings per share calculation as there would be no impact on the current controlling stockholders. The non-committed, unearned ESOP shares are treated as reducing the number of issued and outstanding common shares and similarly reducing the weighted averagenumber of common shares outstanding.  The allocated and committed to be released shares have been included in the weighted average diluted earnings per share calculation, and the amount of compensation for allocated shares is reflected in net loss. There are no ESOP units, therefore there is no dilution on the calculation of earnings per unit. The computation of basic and diluted net loss per share is presented below.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Numerator
Net loss available to common stockholders for basic and diluted computation	$	(106,827	)	$	(3,065,883	)	$	(2,492,298	)	$	(1,951,816	)
Denominator
Weighted average number of common shares outstanding		14,222,378			14,154,414			14,220,416			14,141,273
Weighted average number of Unearned ESOP Shares		(585,672	)		(640,418	)		(595,656	)		(649,466	)
Total weighted average number of common shares outstanding for basic computation		13,636,706			13,513,996			13,624,760			13,491,807
Basic net loss per share	$	(0.01	)	$	(0.23	)	$	(0.18	)	$	(0.14	)

Income Per Unit – The computation of basic and diluted net loss per unit is presented below.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Numerator
Net loss available to general and limited partnership unitholders for basic computation	$	(120,164	)	$	(3,451,499	)	$	(2,803,940	)	$	(2,197,114	)
Denominator
Weighted average number of general and limited partnership units outstanding		16,000,518			15,915,706			15,998,556			15,902,565
Basic and diluted net loss per general and limited partnership unit	$	(0.01	)	$	(0.22	)	$	(0.18	)	$	(0.14	)

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 01, 2019
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Document Quarterly Report	true
Entity Registrant Name	SOTHERLY HOTELS INC.
Entity Central Index Key	0001301236
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Incorporation, State or Country Code	MD
Entity File Number	001-32379
Entity Tax Identification Number	20-1531029
Entity Address, Address Line One	410 West Francis Street
Entity Address, City or Town	Williamsburg
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23185
City Area Code	757
Local Phone Number	229-5648
Document Transition Report	false
Entity Common Stock, Shares Outstanding		14,272,378
Common Stock [Member]
Document Information [Line Items]
Title of each class	Common Stock, $0.01 par value
Trading Symbol	SOHO
Name of each exchange on which registered	NASDAQ
8.0% Series B Cumulative Redeemable Perpetual Preferred Stock [Member]
Document Information [Line Items]
Title of each class	8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value
Trading Symbol	SOHOB
Name of each exchange on which registered	NASDAQ
7.875% Series B Cumulative Redeemable Perpetual Preferred Stock [Member]
Document Information [Line Items]
Title of each class	7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value
Trading Symbol	SOHOO
Name of each exchange on which registered	NASDAQ
8.25% Series D Cumulative Redeemable Perpetual Preferred Stock [Member]
Document Information [Line Items]
Title of each class	8.25% Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value
Trading Symbol	SOHON
Name of each exchange on which registered	NASDAQ
Sotherly Hotels LP [Member]
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Document Quarterly Report	true
Entity Registrant Name	SOTHERLY HOTELS LP
Entity Central Index Key	0001301236
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Incorporation, State or Country Code	DE
Entity File Number	001-36091
Entity Tax Identification Number	20-1965427
Entity Address, Address Line One	410 West Francis Street
Entity Address, City or Town	Williamsburg
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23185
City Area Code	757
Local Phone Number	229-5648
Document Transition Report	false

XML

Consolidated Statements of Changes in Equity - USD ($)	Total	Series B Preferred Stock [Member]	Series C Preferred Stock [Member]	Series D Preferred Stock [Member]	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Unearned ESOP Shares [Member]	Distributions in Excess of Retained Earnings [Member]	Distributions in Excess of Retained Earnings [Member] Series B Preferred Stock [Member]	Distributions in Excess of Retained Earnings [Member] Series C Preferred Stock [Member]	Distributions in Excess of Retained Earnings [Member] Series D Preferred Stock [Member]	Noncontrolling Interest [Member]
Balances, beginning at Dec. 31, 2017	$ 94,175,030				$ 29,100	$ 140,788	$ 146,249,339	$ (4,633,112)	$ (48,765,860)				$ 1,154,775
Balances, shares, beginning at Dec. 31, 2017					2,910,000	14,078,831
Net income (loss)	1,176,488								1,206,501				(30,013)
Issuance of unrestricted common stock awards	13,477					$ 23	13,454
Issuance of unrestricted common stock awards, shares						2,250
Issuance of restricted common stock awards	89,850					$ 400	89,450
Issuance of restricted common stock awards, shares						40,000
Amortization of ESOP shares	60,170							60,170
Amortization of restricted stock award	8,025						8,025
Preferred stock dividends declared:
Preferred stock dividends		$ (805,000)	$ (639,844)							$ (805,000)	$ (639,844)
Common stockholders' dividends and distributions declared	(1,758,350)								(1,553,864)				(204,486)
Balances, ending at Mar. 31, 2018	92,319,846				$ 29,100	$ 141,211	146,360,268	(4,572,942)	(50,558,067)				920,276
Balances, shares, ending at Mar. 31, 2018					2,910,000	14,121,081
Balances, beginning at Dec. 31, 2017	94,175,030				$ 29,100	$ 140,788	146,249,339	(4,633,112)	(48,765,860)				1,154,775
Balances, shares, beginning at Dec. 31, 2017					2,910,000	14,078,831
Net income (loss)	2,162,293
Balances, ending at Sep. 30, 2018	88,502,813				$ 29,605	$ 142,093	148,140,659	(4,446,975)	(55,631,915)				269,346
Balances, shares, ending at Sep. 30, 2018					2,960,541	14,209,378
Balances, beginning at Mar. 31, 2018	92,319,846				$ 29,100	$ 141,211	146,360,268	(4,572,942)	(50,558,067)				920,276
Balances, shares, beginning at Mar. 31, 2018					2,910,000	14,121,081
Net income (loss)	2,967,589								2,797,258				170,331
Amortization of ESOP shares	61,673							61,673
Amortization of restricted stock award	8,025						8,025
Preferred stock dividends declared:
Preferred stock dividends		(805,000)	(639,844)							(805,000)	(639,844)
Common stockholders' dividends and distributions declared	(1,819,270)								(1,605,893)				(213,377)
Balances, ending at Jun. 30, 2018	92,093,019				$ 29,100	$ 141,211	146,368,293	(4,511,269)	(50,811,546)				877,230
Balances, shares, ending at Jun. 30, 2018					2,910,000	14,121,081
Net income (loss)	(1,981,780)								(1,596,164)				(385,616)
Issuance of preferred stock	1,188,066				$ 505		1,187,561
Issuance of preferred stock, shares					50,541
Issuance of common stock	577,662					$ 882	576,780
Issuance of common stock, shares						88,297
Amortization of ESOP shares	64,294							64,294
Amortization of restricted stock award	8,025						8,025
Preferred stock dividends declared:
Preferred stock dividends		(805,000)	(664,719)							(805,000)	(664,719)
Common stockholders' dividends and distributions declared	(1,976,754)								(1,754,486)				(222,268)
Balances, ending at Sep. 30, 2018	88,502,813				$ 29,605	$ 142,093	148,140,659	(4,446,975)	(55,631,915)				269,346
Balances, shares, ending at Sep. 30, 2018					2,960,541	14,209,378
Balances, beginning at Dec. 31, 2018	82,266,372				$ 29,621	$ 142,093	147,085,112	(4,379,742)	(61,052,418)				441,706
Balances, shares, beginning at Dec. 31, 2018					2,962,141	14,209,378
Net income (loss)	(390,205)								(183,256)				(206,949)
Issuance of restricted common stock awards	92,333					$ 130	92,203
Issuance of restricted common stock awards, shares						13,000
Amortization of ESOP shares	66,093						(1,141)	67,234
Amortization of restricted stock award	8,025						8,025
Preferred stock dividends declared:
Preferred stock dividends		(805,000)	(665,507)							(805,000)	(665,507)
Common stockholders' dividends and distributions declared	(1,922,174)								(1,699,906)				(222,268)
Balances, ending at Mar. 31, 2019	78,649,937				$ 29,621	$ 142,223	147,184,199	(4,312,508)	(64,406,087)				12,489
Balances, shares, ending at Mar. 31, 2019					2,962,141	14,222,378
Balances, beginning at Dec. 31, 2018	82,266,372				$ 29,621	$ 142,093	147,085,112	(4,379,742)	(61,052,418)				441,706
Balances, shares, beginning at Dec. 31, 2018					2,962,141	14,209,378
Net income (loss)	2,827,859
Balances, ending at Sep. 30, 2019	107,183,555				$ 43,646	$ 142,223	180,415,231	(4,175,564)	(68,687,461)				(554,520)
Balances, shares, ending at Sep. 30, 2019					4,364,610	14,222,378
Balances, beginning at Mar. 31, 2019	78,649,937				$ 29,621	$ 142,223	147,184,199	(4,312,508)	(64,406,087)				12,489
Balances, shares, beginning at Mar. 31, 2019					2,962,141	14,222,378
Net income (loss)	1,149,317								1,240,673				(91,356)
Issuance of preferred stock	28,377,519				$ 12,000		28,365,519
Issuance of preferred stock, shares					1,200,000
Amortization of ESOP shares	67,160							67,160
Amortization of restricted stock award	8,025						8,025
Preferred stock dividends declared:
Preferred stock dividends		(805,000)	(665,507)	$ (501,876)						(805,000)	(665,507)	$ (501,876)
Common stockholders' dividends and distributions declared	(1,913,519)								(1,682,361)				(231,158)
Balances, ending at Jun. 30, 2019	104,366,056				$ 41,621	$ 142,223	175,557,743	(4,245,348)	(66,820,158)				(310,025)
Balances, shares, ending at Jun. 30, 2019					4,162,141	14,222,378
Net income (loss)	2,068,746								2,082,083				(13,337)
Issuance of preferred stock	4,861,013				$ 2,025		4,858,988
Issuance of preferred stock, shares					202,469
Amortization of ESOP shares	60,259						(9,525)	69,784
Amortization of restricted stock award	8,025						8,025
Preferred stock dividends declared:
Preferred stock dividends		$ (805,000)	$ (765,160)	$ (618,750)						$ (805,000)	$ (765,160)	$ (618,750)
Common stockholders' dividends and distributions declared	(1,991,634)								(1,760,476)				(231,158)
Balances, ending at Sep. 30, 2019	$ 107,183,555				$ 43,646	$ 142,223	$ 180,415,231	$ (4,175,564)	$ (68,687,461)				$ (554,520)
Balances, shares, ending at Sep. 30, 2019					4,364,610	14,222,378

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Consolidated Statements of Changes in Partners' Capital (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018
Partnership units distributions per unit	$ 0.13	$ 0.13	$ 0.125	$ 0.12	$ 0.12	$ 0.115
Series B Preferred Units [Member]
Preferred units distributions per unit	0.50	0.50	0.50	0.50	0.50	0.50
Series C Preferred Units [Member]
Preferred units distributions per unit	0.492188	0.492188	$ 0.492188	$ 0.492188	$ 0.492188	$ 0.492188
Series D Preferred Units [Member]
Preferred units distributions per unit	$ 0.515625	$ 0.41823

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Loss Per Share and Per Unit - Computation of Basic and Diluted Net Income Per Unit (Detail) - Sotherly Hotels LP [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Schedule Of Computation Of Basic And Diluted Earnings Per Common Share [Line Items]
Net loss available to general and limited partnership unitholders for basic computation	$ (120,164)	$ (3,451,499)	$ (2,803,940)	$ (2,197,114)
Weighted average number of general and limited partnership units outstanding	16,000,518	15,915,706	15,998,556	15,902,565
Basic and diluted net loss per general and limited partnership unit	$ (0.01)	$ (0.22)	$ (0.18)	$ (0.14)

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Income Taxes - Reconciliation of Statutory Federal Income Tax Provision (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Statutory federal income tax provision	$ 290,535	$ (573,028)	$ 687,986	$ 639,311
Effect of non-taxable REIT loss	(893,717)	(39,675)	(456,983)	(47,394)
State income tax provision	(91,008)	(134,221)	208,320	290,128
Income tax (benefit) provision	$ (694,190)	$ (746,924)	$ 439,323	$ 882,045

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Investment in Hotel Properties, Net - Schedule of Investment in Hotel Properties, Net (Detail) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Investment in Hotel Properties, Gross	$ 567,147,003	$ 546,898,044
Less: accumulated depreciation and impairment	(120,307,423)	(111,172,230)
Investment in Hotel Properties, Net	446,839,580	435,725,814
Land and Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Investment in Hotel Properties, Gross	66,055,121	64,409,730
Buildings and Improvements [Member]
Property, Plant and Equipment [Line Items]
Investment in Hotel Properties, Gross	437,705,155	424,657,327
Right of Use Assets [Member]
Property, Plant and Equipment [Line Items]
Investment in Hotel Properties, Gross	6,576,971
Furniture, Fixtures and Equipment [Member]
Property, Plant and Equipment [Line Items]
Investment in Hotel Properties, Gross	$ 56,809,756	$ 57,830,987

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Debt - Schedule of Mortgage Debt Obligations on Hotels (Parenthetical) (Detail) - USD ($)		9 Months Ended
	Feb. 26, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Debt Instrument [Line Items]
Loan rate swapped for fixed interest rate		5.237%
Proceeds of mortgage debt			$ 145,795,332
Minimum [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Interest rate cap for loan		2.50%		2.50%
Maximum [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Interest rate cap for loan		3.25%		3.25%
Mortgage Loans [Member] | The DeSoto [Member]
Debt Instrument [Line Items]
Amortization Period		25 years
Interest-only payment period		1 year
Period before maturity in which prepayment is allowed with out penalty		120 days
Interest rate applicable to the mortgage loan		4.25%
Mortgage Loans [Member] | Double Tree by Hilton Jacksonville Riverfront [Member]
Debt Instrument [Line Items]
Amortization Period		30 years
Prepayment date before maturity in which prepayment is allowed with penalty		Mar. 31, 2024
Interest rate applicable to the mortgage loan		4.88%
Mortgage Loans [Member] | Double Tree by Hilton Laurel [Member]
Debt Instrument [Line Items]
Amortization Period		25 years
Prepayment date before maturity in which prepayment is allowed without penalty		Apr. 30, 2021
Interest rate applicable to the mortgage loan		5.25%
Mortgage Loans [Member] | Double Tree By Hilton Philadelphia Airport [Member]
Debt Instrument [Line Items]
Amortization Period		30 years
Floating interest rate period		1 month
Excess Interest rate over LIBOR on mortgage debt		2.27%
Interest rate applicable to the mortgage loan		2.27%
Mortgage Loans [Member] | Double Tree By Hilton Philadelphia Airport [Member] | Swap [Member]
Debt Instrument [Line Items]
Loan rate swapped for fixed interest rate		5.237%
Mortgage Loans [Member] | Doubletree By Hilton Raleigh Brownstone - University [Member]
Debt Instrument [Line Items]
Floating interest rate period		1 month
Excess Interest rate over LIBOR on mortgage debt		4.00%
Proceeds of mortgage debt		$ 18,300,000
Additional proceeds from mortgage loans		$ 5,200,000
Debt instrument maturity term		4 years
Extended maturity period		P1Y
Debt instrument prepayment lockout period		12 months
Debt instrument prepayment penalty period		2 years
Derivative maturity limit		Aug. 01, 2022
Notional amount		$ 23,500,000
Interest rate applicable to the mortgage loan		4.00%
Mortgage Loans [Member] | Doubletree By Hilton Raleigh Brownstone - University [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Interest rate cap for loan		3.25%
Mortgage Loans [Member] | DoubleTree Resort by Hilton Hollywood Beach [Member]
Debt Instrument [Line Items]
Amortization Period		30 years
Prepayment date before maturity		Jun. 30, 2025
Interest rate applicable to the mortgage loan		4.913%
Mortgage Loans [Member] | Georgian Terrace [Member]
Debt Instrument [Line Items]
Amortization Period		30 years
Prepayment date before maturity		Feb. 28, 2025
Interest rate applicable to the mortgage loan		4.42%
Mortgage Loans [Member] | Hotel Alba Tampa, Tapestry Collection by Hilton [Member]
Debt Instrument [Line Items]
Floating interest rate period		1 month
Excess Interest rate over LIBOR on mortgage debt		3.75%
Fixed interest rate		3.75%
Debt instrument periodic payment		$ 26,812
Interest rate applicable to the mortgage loan		3.75%
Mortgage Loans [Member] | Hotel Ballast Wilmington,Tapestry Collection by Hilton [Member]
Debt Instrument [Line Items]
Amortization Period		25 years
Interest-only payment period		1 year
Period before maturity in which prepayment is allowed with out penalty		120 days
Interest rate applicable to the mortgage loan		4.25%
Mortgage Loans [Member] | Hyatt Centric Arlington [Member]
Debt Instrument [Line Items]
Amortization Period		30 years
Debt instrument prepayment lockout period		5 years
Debt instrument prepayment without penalty period during final term		4 months
Interest rate applicable to the mortgage loan		5.25%
Mortgage Loans [Member] | Hyatt Centric Arlington [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt instrument prepayment penalty period		6 years
Mortgage Loans [Member] | Hyatt Centric Arlington [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt instrument prepayment penalty period		10 years
Mortgage Loans [Member] | Sheraton Louisville Riverside [Member]
Debt Instrument [Line Items]
Amortization Period		25 years
Interest rate applicable to the mortgage loan		4.27%
Mortgage Loans [Member] | The Whitehall [Member]
Debt Instrument [Line Items]
Amortization Period	25 years	25 years
Floating interest rate period		1 month
Excess Interest rate over LIBOR on mortgage debt		3.50%
Fixed interest rate		4.00%
Interest rate applicable to the mortgage loan		3.50%
Mortgage Loans [Member] | The Whitehall [Member] | Prepayment Penalty Before to First Anniversary [Member]
Debt Instrument [Line Items]
Prepayment penalty percentage		3.00%
Mortgage Loans [Member] | The Whitehall [Member] | Prepayment Penalty Second Anniversary [Member]
Debt Instrument [Line Items]
Prepayment penalty percentage		2.00%
Mortgage Loans [Member] | The Whitehall [Member] | Prepayment Penalty After Third Anniversary
Debt Instrument [Line Items]
Prepayment penalty percentage		1.00%

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Investment in Hotel Properties, Net (Tables)

9 Months Ended

Sep. 30, 2019

Real Estate [Abstract]

Schedule of Investment in Hotel Properties, Net

Investment in hotel properties, net as of September 30, 2019 and December 31, 2018 consisted of the following:

	September 30, 2019			December 31, 2018
	(unaudited)
Land and land improvements	$	66,055,121		$	64,409,730
Buildings and improvements		437,705,155			424,657,327
Right of use assets		6,576,971			—
Furniture, fixtures and equipment		56,809,756			57,830,987
		567,147,003			546,898,044
Less: accumulated depreciation and impairment		(120,307,423	)		(111,172,230	)
Investment in Hotel Properties, Net	$	446,839,580		$	435,725,814

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events

On October 11, 2019, we paid a quarterly dividend (distribution) of $0.13 per common share (and unit) to those stockholders (and unitholders of the Operating Partnership) of record on September 13, 2019.

On October 15, 2019, we paid a quarterly distribution of $0.50 per share (and unit) of Series B Preferred Stock (and Series B Preferred Units) to holders of the Series B Preferred Stock (and Series B Preferred Units) of record as of October 1, 2019.

On October 15, 2019, we paid a quarterly distribution of $0.4921875 per share (and unit) of Series C Preferred Stock (and Series C Preferred Units) to holders of the Series C Preferred Stock (and Series C Preferred Units) of record as of October 1, 2019.

On October 15, 2019, we paid a quarterly distribution of $0.515625 per share (and unit) of Series D Preferred Stock (and Series D Preferred Units) to holders of the Series D Preferred Stock (and Series D Preferred Units) of record as of October 1, 2019.

On October 28, 2019, we authorized payment of a quarterly dividend (distribution) of $0.13 per common share (and unit) to the stockholders (and unitholders of the Operating Partnership) of record as of December 13, 2019. The dividend (distribution) is to be paid on January 10, 2020.

On October 28, 2019, we authorized payment of a quarterly distribution of $0.50 per share (and unit) of Series B Preferred Stock (and Series B Preferred Units) to holders of the Series B Preferred Stock (and Series B Preferred Units) of record as of December 31, 2019, to be paid on January 15, 2020.

On October 28, 2019, we authorized payment of a quarterly distribution of $0.4921875 per share (and unit) of Series C Preferred Stock (and Series C Preferred Units) to holders of the Series C Preferred Stock (and Series C Preferred Units) of record as of December 31, 2019, to be paid on January 15, 2020.

On October 28, 2019, we authorized payment of a quarterly distribution of $0.515625 per share (and unit) of Series D Preferred Stock (and Series D Preferred Units) to holders of the Series D Preferred Stock (and Series D Preferred Units) of record as of December 31, 2019, to be paid on January 15, 2020.

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Consolidated Statements of Changes in Partners' Capital - USD ($)	Total	Sotherly Hotels LP [Member]	Sotherly Hotels LP [Member] General Partner [Member]	Sotherly Hotels LP [Member] Limited Partner [Member]	Sotherly Hotels LP [Member] Preferred Units [Member]	Sotherly Hotels LP [Member] Preferred Units [Member] Series B Preferred Units [Member]	Sotherly Hotels LP [Member] Preferred Units [Member] Series C Preferred Units [Member]	Sotherly Hotels LP [Member] Preferred Units [Member] Series D Preferred Units [Member]
Balances, beginning at Dec. 31, 2017		$ 98,780,455	$ 586,725	$ 29,938,539		$ 37,766,531	$ 30,488,660
Balances, units, beginning at Dec. 31, 2017			158,570	15,698,401	2,910,000
Issuance of general and limited partnership units		103,328	$ 1,034	$ 102,294
Issuance of general and limited partnership units, number of units			423	41,827
Amortization of restricted units award	$ 8,025	8,025		$ 8,025
Unit based compensation		87,267		87,267
Preferred units distributions declared:
Series preferred units						(805,000)	(639,844)
Partnership units distributions declared		(1,828,410)	$ (18,285)	(1,810,125)
Net income (loss)	1,176,488	1,176,488	11,765	(280,121)		805,000	639,844
Balances, ending at Mar. 31, 2018		96,882,309	$ 581,239	$ 28,045,879		37,766,531	30,488,660
Balances, units, ending at Mar. 31, 2018			158,993	15,740,228	2,910,000
Balances, beginning at Dec. 31, 2017		98,780,455	$ 586,725	$ 29,938,539		37,766,531	30,488,660
Balances, units, beginning at Dec. 31, 2017			158,570	15,698,401	2,910,000
Preferred units distributions declared:
Net income (loss)	2,162,293	2,162,293
Balances, ending at Sep. 30, 2018		92,952,658	$ 514,243	$ 22,995,158		37,766,531	31,676,726
Balances, units, ending at Sep. 30, 2018			159,876	15,827,642	2,960,541
Balances, beginning at Mar. 31, 2018		96,882,309	$ 581,239	$ 28,045,879		37,766,531	30,488,660
Balances, units, beginning at Mar. 31, 2018			158,993	15,740,228	2,910,000
Amortization of restricted units award	8,025	8,025		$ 8,025
Unit based compensation		93,254		93,254
Preferred units distributions declared:
Series preferred units						(805,000)	(639,844)
Partnership units distributions declared		(1,907,907)	$ (19,080)	(1,888,827)
Net income (loss)	2,967,589	2,967,589	29,676	1,493,069		805,000	639,844
Balances, ending at Jun. 30, 2018		96,598,426	$ 591,835	$ 27,751,400		37,766,531	30,488,660
Balances, units, ending at Jun. 30, 2018			158,993	15,740,228	2,910,000
Issuance of general and limited partnership units		577,657	$ 5,776	$ 571,881
Issuance of general and limited partnership units, number of units			883	87,414
Issuance of preferred partnership units		1,188,066					1,188,066
Issuance of preferred partnership units, number of units					50,541
Amortization of restricted units award	8,025	8,025		$ 8,025
Unit based compensation		27,611		27,611
Preferred units distributions declared:
Series preferred units						(805,000)	(664,719)
Partnership units distributions declared		(1,995,628)	$ (19,955)	(1,975,673)
Net income (loss)	(1,981,780)	(1,981,780)	(63,413)	(3,388,086)		805,000	664,719
Balances, ending at Sep. 30, 2018		92,952,658	$ 514,243	$ 22,995,158		37,766,531	31,676,726
Balances, units, ending at Sep. 30, 2018			159,876	15,827,642	2,960,541
Balances, beginning at Dec. 31, 2018		86,656,235	$ 452,165	$ 16,943,816		37,766,531	31,493,723
Balances, units, beginning at Dec. 31, 2018			159,876	15,827,642	2,962,141
Issuance of general and limited partnership units		92,333	$ 923	$ 91,410
Issuance of general and limited partnership units, number of units			130	12,870
Amortization of restricted units award	8,025	8,025	$ 80	$ 7,945
Unit based compensation		90,768	908	89,860
Preferred units distributions declared:
Series preferred units						(805,000)	(665,507)
Partnership units distributions declared		(2,002,877)	(17,806)	(1,985,071)
Net income (loss)	(390,205)	(390,205)	(18,607)	(1,842,105)		805,000	665,507
Balances, ending at Mar. 31, 2019		82,983,772	$ 417,663	$ 13,305,855		37,766,531	31,493,723
Balances, units, ending at Mar. 31, 2019			160,006	15,840,512	2,962,141
Balances, beginning at Dec. 31, 2018		86,656,235	$ 452,165	$ 16,943,816		37,766,531	31,493,723
Balances, units, beginning at Dec. 31, 2018			159,876	15,827,642	2,962,141
Preferred units distributions declared:
Net income (loss)	2,827,859	2,827,859
Balances, ending at Sep. 30, 2019		111,395,751	$ 375,888	$ 8,521,077		37,766,531	36,354,736	$ 28,377,519
Balances, units, ending at Sep. 30, 2019			160,006	15,840,512	4,364,610
Balances, beginning at Mar. 31, 2019		82,983,772	$ 417,663	$ 13,305,855		37,766,531	31,493,723
Balances, units, beginning at Mar. 31, 2019			160,006	15,840,512	2,962,141
Issuance of preferred partnership units		28,377,519						28,377,519
Issuance of preferred partnership units, number of units					1,200,000
Amortization of restricted units award	8,025	8,025	$ 80	$ 7,945
Unit based compensation		173,029	1,730	171,299
Preferred units distributions declared:
Series preferred units						(805,000)	(665,507)	(501,875)
Partnership units distributions declared		(2,080,066)	(16,622)	(2,063,444)
Net income (loss)	1,149,317	1,149,315	(8,231)	(814,836)		805,000	665,507	501,875
Balances, ending at Jun. 30, 2019		108,639,212	$ 394,620	$ 10,606,819		37,766,531	31,493,723	28,377,519
Balances, units, ending at Jun. 30, 2019			160,006	15,840,512	4,162,141
Issuance of preferred partnership units		4,861,013					4,861,013
Issuance of preferred partnership units, number of units					202,469
Amortization of restricted units award	8,025	8,025	$ 80	$ 7,945
Unit based compensation		87,719	877	86,842
Preferred units distributions declared:
Series preferred units						(805,000)	(765,160)	(618,750)
Partnership units distributions declared		(2,080,054)	(18,487)	(2,061,567)
Net income (loss)	$ 2,068,746	2,068,746	(1,202)	(118,962)		805,000	765,160	618,750
Balances, ending at Sep. 30, 2019		$ 111,395,751	$ 375,888	$ 8,521,077		$ 37,766,531	$ 36,354,736	$ 28,377,519
Balances, units, ending at Sep. 30, 2019			160,006	15,840,512	4,364,610

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Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
REVENUE
Total revenue	$ 42,552,175	$ 41,418,062	$ 141,483,182	$ 134,707,144
Hotel operating expenses
Total hotel operating expenses	33,648,011	32,243,023	103,824,852	97,270,143
Depreciation and amortization	4,980,168	4,547,043	16,117,278	15,783,174
Loss (gain) on disposal of assets	4,918	(7,555)	32,088	(3,816)
Corporate general and administrative	1,768,912	1,516,408	5,008,290	4,566,258
Total operating expenses	40,402,009	38,298,919	124,982,508	117,615,759
NET OPERATING INCOME	2,150,166	3,119,143	16,500,674	17,091,385
Other income (expense)
Interest expense	(4,722,456)	(5,306,641)	(15,115,690)	(14,571,142)
Interest income	102,768	88,484	357,576	236,693
Loss on early extinguishment of debt		(753,133)	(1,152,356)	(753,133)
Unrealized (loss) gain on hedging activities	(226,491)	123,443	(1,554,924)	141,970
Gain on exercise of development right	3,940,000		3,940,000
Gain on involuntary conversion of assets	130,569	0	291,902	898,565
Net income (loss) before income taxes	1,374,556	(2,728,704)	3,267,182	3,044,338
Income tax benefit (provision)	694,190	746,924	(439,323)	(882,045)
Net income (loss)	2,068,746	(1,981,780)	2,827,859	2,162,293
Less: Net loss attributable to noncontrolling interest	13,337	385,616	311,642	245,298
Net income (loss) attributable to the Company	2,082,083	(1,596,164)	3,139,501	2,407,591
Distributions to preferred stockholders	(2,188,910)	(1,469,719)	(5,631,799)	(4,359,407)
Net loss available to common stockholders	$ (106,827)	$ (3,065,883)	$ (2,492,298)	$ (1,951,816)
Net loss per share available to common stockholders/general and limited partner unit
Basic	$ (0.01)	$ (0.23)	$ (0.18)	$ (0.14)
Weighted average number of common shares/general and limited partner units outstanding
Basic	13,636,706	13,513,996	13,624,760	13,491,807
Sotherly Hotels LP [Member]
REVENUE
Total revenue	$ 42,552,175	$ 41,418,062	$ 141,483,182	$ 134,707,144
Hotel operating expenses
Total hotel operating expenses	33,648,011	32,243,023	103,824,852	97,270,143
Depreciation and amortization	4,980,168	4,547,043	16,117,278	15,783,174
Loss (gain) on disposal of assets	4,918	(7,555)	32,088	(3,816)
Corporate general and administrative	1,768,912	1,516,408	5,008,290	4,566,258
Total operating expenses	40,402,009	38,298,919	124,982,508	117,615,759
NET OPERATING INCOME	2,150,166	3,119,143	16,500,674	17,091,385
Other income (expense)
Interest expense	(4,722,456)	(5,306,641)	(15,115,690)	(14,571,142)
Interest income	102,768	88,484	357,576	236,693
Loss on early extinguishment of debt		(753,133)	(1,152,356)	(753,133)
Unrealized (loss) gain on hedging activities	(226,491)	123,443	(1,554,924)	141,970
Gain on exercise of development right	3,940,000		3,940,000
Gain on involuntary conversion of assets	130,569		291,902	898,565
Net income (loss) before income taxes	1,374,556	(2,728,704)	3,267,182	3,044,338
Income tax benefit (provision)	694,190	746,924	(439,323)	(882,045)
Net income (loss)	2,068,746	(1,981,780)	2,827,859	2,162,293
Distributions To Preferred Unit Holders	(2,188,910)	(1,469,719)	(5,631,799)	(4,359,407)
Net loss available to general and limited partnership unit holders	$ (120,164)	$ (3,451,499)	$ (2,803,940)	$ (2,197,114)
Net loss per share available to common stockholders/general and limited partner unit
Basic	$ (0.01)	$ (0.22)	$ (0.18)	$ (0.14)
Weighted average number of common shares/general and limited partner units outstanding
Basic	16,000,518	15,915,706	15,998,556	15,902,565
Rooms Department [Member]
REVENUE
Total revenue	$ 29,253,447	$ 28,626,265	$ 98,561,643	$ 92,242,385
Hotel operating expenses
Total hotel operating expenses	8,064,771	7,873,836	24,264,623	22,750,381
Rooms Department [Member] | Sotherly Hotels LP [Member]
REVENUE
Total revenue	29,253,447	28,626,265	98,561,643	92,242,385
Hotel operating expenses
Total hotel operating expenses	8,064,771	7,873,836	24,264,623	22,750,381
Food and Beverage Department [Member]
REVENUE
Total revenue	8,997,948	8,417,293	29,584,705	27,849,844
Hotel operating expenses
Total hotel operating expenses	7,036,887	6,680,563	21,795,051	20,748,688
Food and Beverage Department [Member] | Sotherly Hotels LP [Member]
REVENUE
Total revenue	8,997,948	8,417,293	29,584,705	27,849,844
Hotel operating expenses
Total hotel operating expenses	7,036,887	6,680,563	21,795,051	20,748,688
Other Operating Departments [Member]
REVENUE
Total revenue	4,300,780	4,374,504	13,336,834	14,614,915
Hotel operating expenses
Total hotel operating expenses	1,352,205	1,661,128	5,007,651	4,870,037
Other Operating Departments [Member] | Sotherly Hotels LP [Member]
REVENUE
Total revenue	4,300,780	4,374,504	13,336,834	14,614,915
Hotel operating expenses
Total hotel operating expenses	1,352,205	1,661,128	5,007,651	4,870,037
Indirect [Member]
Hotel operating expenses
Total hotel operating expenses	17,194,148	16,027,496	52,757,527	48,901,037
Indirect [Member] | Sotherly Hotels LP [Member]
Hotel operating expenses
Total hotel operating expenses	$ 17,194,148	$ 16,027,496	$ 52,757,527	$ 48,901,037

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Indirect Hotel Operating Expenses (Tables)

9 Months Ended

Sep. 30, 2019

Other Income And Expenses [Abstract]

Summary of Indirect Hotel Operating Expenses

Indirect hotel operating expenses consists of the following expenses incurred by the hotels:

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Sales and marketing		4,164,001	$	4,015,942	$	12,848,029	$	12,046,880
General and administrative		3,698,817		3,540,054		11,511,241		10,880,130
Repairs and maintenance		2,013,706		1,887,113		5,997,166		5,655,711
Utilities		1,750,826		1,749,562		4,761,352		4,735,195
Property taxes		1,751,234		950,148		5,212,700		4,113,025
Management fees, including incentive		1,053,456		1,066,120		3,792,643		3,570,974
Franchise fees		1,095,564		1,059,522		3,597,319		3,244,833
Insurance		823,420		746,175		2,497,230		2,114,351
Information and telecommunications		612,988		515,225		1,855,903		1,317,290
Other		230,136		497,635		683,944		1,222,648
Total indirect hotel operating expenses	$	17,194,148	$	16,027,496	$	52,757,527	$	48,901,037

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Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) shares	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) Segment shares	Sep. 30, 2018 USD ($)	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Federal Deposit Insurance Corporation protection limits	$ 250,000		$ 250,000
Un-amortized franchise fees	428,223		428,223			$ 471,996
Amortization expense	14,869	$ 14,868	43,773	$ 45,204
Non recurring asset	3,940,000		3,940,000
Deferred income taxes	4,679,010		4,679,010			5,131,179
Deferred tax assets related to net operating losses	4,100,000		$ 4,100,000			4,400,000
Minimum percentage of likelihood of realization of deferred tax assets			50.00%
Deferred tax assets valuation allowance	0		$ 0
Uncertain tax positions	0		0			$ 0
Compensation cost recognized			309,920	313,540
Advertising cost	132,227	88,154	319,947	334,271
Gain on involuntary conversion of assets	130,569	0	$ 291,902	898,565
Number of reportable segment | Segment			1
ESOP [Member]
Summary Of Significant Accounting Policies [Line Items]
Compensation cost recognized	60,259	64,294	$ 193,513	186,137
Director [Member]
Summary Of Significant Accounting Policies [Line Items]
Shares issued but not vested | shares			13,000
Shares award vesting date			Dec. 31, 2019
2013 Plan [Member]
Summary Of Significant Accounting Policies [Line Items]
Shares issued under plan | shares			176,350
Performance-based stock awards granted | shares			0
Compensation cost recognized	8,025	8,025	$ 116,408	127,402
2013 Plan [Member] | Director [Member]
Summary Of Significant Accounting Policies [Line Items]
Shares issued under plan | shares			33,000
2013 Plan [Member] | Executives and Employees [Member]
Summary Of Significant Accounting Policies [Line Items]
Shares issued under plan | shares			143,350
2013 Plan [Member] | One Employee [Member]
Summary Of Significant Accounting Policies [Line Items]
Stock award vesting period			4 years
Shares issued but not vested | shares			20,000
Other Operating Departments [Member]
Summary Of Significant Accounting Policies [Line Items]
Lease revenue	400,000	$ 300,000	$ 1,200,000	$ 1,200,000
ASU 2016-02 [Member]
Summary Of Significant Accounting Policies [Line Items]
Operating Lease, right of use assets, net	6,600,000		6,600,000
Operating lease obligations	$ 4,400,000		$ 4,400,000
ASU 2018-11 [Member]
Summary Of Significant Accounting Policies [Line Items]
Operating Lease, right of use assets, net					$ 6,300,000
Operating lease obligations					$ 3,800,000
Maximum [Member] | 2013 Plan [Member] | Employees [Member]
Summary Of Significant Accounting Policies [Line Items]
Restricted, unrestricted and performance stock awards permitted to grant to employees and directors | shares	350,000		350,000
Maximum [Member] | 2013 Plan [Member] | Director [Member]
Summary Of Significant Accounting Policies [Line Items]
Restricted, unrestricted and performance stock awards permitted to grant to employees and directors | shares	750,000		750,000
Buildings and Building Improvements [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of the assets			7 years
Buildings and Building Improvements [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of the assets			39 years
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of the assets			5 years
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of the assets			10 years

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

Ground, Building, Parking and Land Leases – We lease 2,086 square feet of commercial space next to The DeSoto for use as an office, retail or conference space, or for any related or ancillary purposes for the hotel and/or atrium space. In December 2007, we signed an amendment to the lease to include rights to the outdoor esplanade adjacent to the leased commercial space. The areas are leased under a six-year operating lease, which expired October 31, 2006 and has been renewed for the third of three optional five-year renewal periods expiring October 31, 2011, October 31, 2016 and October 31, 2021, respectively. Rent expense for this operating lease for each of the three and nine months ended September 30, 2019 and 2018 totaled $18,246 and $54,738, respectively.

We lease, as landlord, the entire fourteenth floor of The DeSoto hotel property to The Chatham Club, Inc. under a ninety-nine year lease expiring July 31, 2086. This lease was assumed upon the purchase of the building under the terms and conditions agreed to by the previous owner of the property. No rental income is recognized under the terms of this lease as the original lump sum rent payment of $990 was received by the previous owner and not prorated over the life of the lease.

We lease land adjacent to the Hotel Alba for use as parking under a five-year renewable agreement with the Florida Department of Transportation that commenced in July 2009.  In May 2014, we extended the agreement for an additional five years.  The agreement expires in July 2024. The agreement requires annual payments of $2,432, plus tax, and may be renewed for an additional five years. Rent expense for the three and nine months ended September 30, 2019, totaled $412 and $1,713, respectively, and for the three and nine months ended September 30, 2018, totaled $651 and $1,952, respectively.

We lease 5,216 square feet of commercial office space in Williamsburg, Virginia under an agreement, as amended, that commenced September 1, 2009 and was extended until such date as we take possession of new premises under a contingent lease with the same landlord, which is expected to occur in December 2019.  Rent expense for the three-month periods ended September 30, 2019 and 2018 totaled $26,984 and $23,775, respectively and for the nine-month periods ended September 30, 2019 and 2018, totaled $80,952 and $68,874.

We have agreed to lease approximately 8,500 square feet of commercial office space in Williamsburg, Virginia under an agreement with a ten-year term commencing upon occupancy of the premises, which is expected to occur in December 2019.  The initial annual rent under the agreement is $218,875, with the rent for each successive annual period increasing by 3.0% over the prior annual period’s rent.  The annual rent will be offset by a tenant improvement allowance of $200,000, to be applied against one-half of each monthly rent payment until such time as the tenant improvement allowance is exhausted.

We lease the land underlying all of the Hyatt Centric Arlington hotel pursuant to a ground lease.  The ground lease requires us to make rental payments of $50,000 per year in base rent and percentage rent equal to 3.5% of gross room revenue in excess of certain thresholds, as defined in the ground lease agreement.  The initial term of the ground lease expires in 2025 and may be extended for five additional renewal periods of 10 years each. Rent expense for the three months ended September 30, 2019 and 2018, was $141,587 and $136,813, respectively and for the nine months ended September 30, 2019 and 2018 was $474,945  and $392,042, respectively.

We entered into a 20-year parking and cabana management agreement for the parking garage and poolside cabanas associated with the Hyde Beach House.  The parking and cabana embedded lease requires us to make rental payments of $270,100 per year in base rent.  The initial term of the parking garage and cabana lease expires in 2034 and may be extended for four additional renewal periods of 5 years each.  There was no rent expense for the 4 days of September 2019.

We also lease certain parking space, storage facilities, furniture and equipment under financing arrangements expiring between July 2019 and June 2025.

A schedule of minimum future lease payments for the following three and twelve-month periods is as follows:

For the remaining three months ending December 31, 2019	$	112,769
December 31, 2020		423,331
December 31, 2021		412,099
December 31, 2022		400,100
December 31, 2023		363,529
December 31, 2024 and thereafter		2,898,146
Total	$	4,609,974

Employment Agreements - The Company has entered into various employment contracts with employees that could result in obligations to the Company in the event of a change in control or termination without cause.

Management Agreements – As of September 30, 2019, the Hyatt Centric Arlington hotel operated under a management agreement with Highgate Hotels L.P.  The management agreement has an initial term of three years expiring March 1, 2021.

As of September 30, 2019, the eleven remaining wholly-owned hotels and the rental program and condominium association of the Hyde Resort & Residences operated under management agreements with Chesapeake Hospitality (see Note 9).  The management agreements expire between January 1, 2020 and December 31, 2020, and may be extended for up to two additional periods of five years each subject to the approval of both parties.  Each of the individual hotel management agreements may be terminated earlier than the stated term upon the sale of the hotel covered by the respective management agreement, in which case we may incur early termination fees.

On September 6, 2019, we entered into a master agreement with Newport Hospitality Group, Inc., a Virginia corporation, and Our Town Hospitality LLC, a Virginia limited liability company relating to the management of ten of our hotels.  The master agreement is designed to address the scheduled termination on January 1, 2020 of certain individual hotel management agreements by and between us and Chesapeake Hospitality.  On July 15, 2019 we notified Chesapeake Hospitality of our intent not to renew or extend the expiring hotel management agreements.  The new master agreement establishes terms for new hotel management agreements governing the management of our hotels.  Chesapeake Hospitality has committed to providing assistance in transitioning the hotels to a new manager.

Franchise Agreements – As of September 30, 2019, nine of our hotels operated under franchise licenses from national hotel companies. Under the franchise agreements, we are required to pay a franchise fee generally between 3.0% and 5.0% of room revenues, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 2.5% and 6.0% of room revenues from the hotels. The franchise agreements expire between November 2021 and March 2038.  Each of our franchise agreements provides for early termination fees in the event the agreement is terminated before the stated term.

Restricted Cash Reserves – Each month, we are required to escrow with the lenders on the Hotel Ballast, The DeSoto, the DoubleTree by Hilton Raleigh Brownstone-University, the DoubleTree by Hilton Jacksonville Riverside, the DoubleTree Resort by Hilton Hollywood Beach, and the Georgian Terrace an amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties. We are also required by several of our lenders to establish individual property improvement funds to cover the cost of replacing capital assets at our properties. Each month, those contributions equal 4.0% of gross revenues for the Hotel Ballast, The DeSoto, the DoubleTree by Hilton Raleigh Brownstone–University, the DoubleTree by Hilton Jacksonville Riverside, the DoubleTree Resort by Hilton Hollywood Beach, The Whitehall and the Georgian Terrace and equal 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport and the Hyatt Centric Arlington.

ESOP Loan Commitment – The Company’s board of directors approved the ESOP on November 29, 2016, which was adopted by the Company in December 2016 and effective January 1, 2016.  The ESOP is a non-contributory defined contribution plan covering all employees of the Company.  The ESOP is a leveraged ESOP, meaning the contributed funds are loaned to the ESOP from the Company.  The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company’s common stock on the open market. Under the loan agreement, the aggregate principal amount outstanding at any time may not exceed $5.0 million and the ESOP may borrow additional funds up to that limit in the future, until December 29, 2036.

Litigation –We are involved in routine litigation arising out of the ordinary course of business, all of which we expect to be covered by insurance and we believe it is not reasonably possible such matters will have a material adverse impact on our financial condition or results of operations or cash flows.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation – The consolidated financial statements of the Company presented herein include all of the accounts of Sotherly Hotels Inc., the Operating Partnership, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The consolidated financial statements of the Operating Partnership presented herein include all of the accounts of Sotherly Hotels LP, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. Additionally, all administrative expenses of the Company and those expenditures made by the Company on behalf of the Operating Partnership are reflected as the administrative expenses, expenditures and obligations thereto of the Operating Partnership, pursuant to the terms of the Partnership Agreement.

Investment in Hotel Properties – Investments in hotel properties include investments in operating properties which are recorded at fair value on acquisition date and allocated to land, property and equipment and identifiable intangible assets. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is included in the statements of operations. Expenditures which constitute additions or improvements that extend the life of the property, are capitalized.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 7 to 39 years for buildings and building improvements and 5 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets.

We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse permanent changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceeds its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property’s estimated fair market value would be recorded and an impairment loss recognized.

Cash and Cash Equivalents – We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk – We hold cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) protection limits of $250,000. Our exposure to credit loss in the event of the failure of these institutions is represented by the difference between the FDIC protection limit and the total amounts on deposit. Management monitors, on a regular basis, the financial condition of the financial institutions along with the balances there on deposit to minimize our potential risk.

Restricted Cash – Restricted cash includes real estate tax escrows, insurance escrows and reserves for replacements of furniture, fixtures and equipment pursuant to certain requirements in our various mortgage agreements.

Accounts Receivable – Accounts receivable consists primarily of hotel guest and banqueting receivables. Ongoing evaluations of collectability are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible.  

Inventories – Inventories, consisting primarily of food and beverages, are stated at the lower of cost or net realizable value, with cost determined on a method that approximates first-in, first-out basis.

Franchise License Fees – Fees expended to obtain or renew a franchise license are amortized over the life of the license or renewal. The unamortized franchise fees as of September 30, 2019 and December 31, 2018 were $428,223 and $471,996, respectively. Amortization expense for the three-month periods ended September 30, 2019 and 2018, totaled $14,869 and $14,868, respectively, and for the nine-month periods ended September 30, 2019 and 2018, totaled $43,773 and $45,204, respectively.

Right-of-Use Assets and Lease Obligations – In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively.

A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.  In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new lease standard. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, to give companies another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of implementing the new standard. The transition option allows companies to not apply the new lease standard in the comparative periods they present in their financial statements in the year of adoption.

We adopted this standard on January 1, 2019. We elected the practical expedients allowed under the guidance and retained the original lease classification and historical accounting for initial direct costs for leases existing prior to the adoption date. We also elected not to restate prior periods for the impact of the adoption of the new standard. The adoption of this standard has resulted in the recognition of right-of-use assets and related liabilities to account for our future obligations under the acquired operating ground lease, equipment, office space, parking and land leases for which we are the lessee. See Notes 4 and 6 to the accompanying financial statements for additional disclosures on the adoption of this standard.  As of September 30, 2019, we had right of use assets, net of approximately $6.6 million, and lease obligations of approximately $4.4 million.  The right-of-use assets are included in investments in hotel properties, net or in prepaid expenses, inventory and other assets and the lease obligations are included in accounts payable and accrued liabilities on the consolidated balance sheets.

Deferred Financing and Offering Costs – Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt and are reflected in mortgage loans, net and unsecured notes, net on the consolidated balance sheets. Deferred offering costs are recorded at cost and consist of offering fees and other costs incurred in advance of issuing equity and are reflected in prepaid expenses, inventory and other assets on the consolidated balance sheets. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statements of operations.  

Deferred offering costs are netted against our equity offerings when the offering is complete, whereby the costs are offset against the equity funds raised in the future and included in additional paid-in capital on the consolidated balance sheets, or if the offering expires and the offering costs exceed the funds raised in the offering then the excess will be included in corporate general and administrative expenses in the consolidated statements of operations.

Derivative Instruments – Our derivative instruments are reflected as assets or liabilities on the consolidated balance sheets and measured at fair value. Derivative instruments used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as an interest rate risk, are considered fair value hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For a derivative instrument designated as a cash flow hedge, the change in fair value each period is reported in accumulated other comprehensive income in stockholders’ equity and partners’ capital to the extent the hedge is effective. For a derivative instrument designated as a fair value hedge, the change in fair value each period is reported in earnings along with the change in fair value of the hedged item attributable to the risk being hedged. For a derivative instrument that does not qualify for hedge accounting or is not designated as a hedge, the change in fair value each period is reported in earnings.

We use derivative instruments to add stability to interest expense and to manage our exposure to interest-rate movements. To accomplish this objective, we currently use interest rate caps and an interest rate swap which act as cash flow hedges and are not designated as hedges.  We value our interest-rate caps and interest rate swap at fair value, which we define as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We also have used derivative instruments in the Company’s stock to obtain more favorable terms on our financing. We do not enter into contracts to purchase or sell derivative instruments for speculative trading purposes.

Fair Value Measurements –

We classify the inputs used to measure fair value into the following hierarchy:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 Unobservable inputs for the asset or liability.

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table represents our assets and liabilities measured at fair value and the basis for that measurement (our interest rate caps and interest rate swap are the only assets or liabilities measured at fair value on a recurring basis, there is one asset added during the three month period ending September 30, 2019 in the amount of $3,940,000 which is non-recurring, and there were no non-recurring liabilities for fair value measurements as of September 30, 2019 and December 31, 2018, respectively):

	Level 1			Level 2			Level 3
December 31, 2018
Interest Rate Caps (1)	$	—		$	94,697		$	—
Interest Rate Swap (2)	$	—		$	(984,677	)	$	—
Mortgage loans (3)	$	—		$	(357,279,949	)	$	—
Unsecured notes (4)	$	(25,390,000	)	$	—		$	—
September 30, 2019
Interest Rate Cap (1)	$	—		$	4,421		$	—
Interest Rate Swap (2)	$	—		$	(2,443,591	)	$	—
Development of ballroom and parking spaces	$	—		$	3,940,000		$	—
Mortgage loans (3)	$	—		$	(365,393,515	)	$	—

(1) Interest rate cap, which cap the 1-month LIBOR rate between 2.5% and 3.25%.

(2) Interest rate swap, which takes the Loan Rate and swaps it for a fixed interest rate of 5.237%; notional amounts of the swap approximate the declining balance of the loan.

(3) Mortgage loans are reflected at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

(4) Unsecured notes are recorded at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of December 31, 2018.

Noncontrolling Interest in Operating Partnership – Certain hotel properties were acquired, in part, by the Operating Partnership through the issuance of limited partnership units of the Operating Partnership. The noncontrolling interest in the Operating Partnership is: (i) increased or decreased by the limited partners’ pro-rata share of the Operating Partnership’s net income or net loss, respectively; (ii) decreased by distributions; (iii) decreased by redemption of partnership units for the Company’s common stock; and (iv) adjusted to equal the net equity of the Operating Partnership multiplied by the limited partners’ ownership percentage immediately after each issuance of units of the Operating Partnership and/or the Company’s common stock through an adjustment to additional paid-in capital. Net income or net loss is allocated to the noncontrolling interest in the Operating Partnership based on the weighted average percentage ownership throughout the period.

Revenue Recognition – Revenue consists of amounts derived from hotel operations, including the sales of rooms, food and beverage, and other ancillary services. Room revenue is recognized over a customer's hotel stay. Revenue from food and beverage and other ancillary services is generated when a customer chooses to purchase goods or services separately from a hotel room and revenue is recognized on these distinct goods and services at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and the Company assesses whether it is the principal or agent in these arrangements. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. If the Company is the principal, the Company recognizes revenue based upon the gross sales price. Some contracts for rooms or food and beverage services require an upfront deposit which is recorded as advanced deposits (or contract liabilities) and recognized once the performance obligations are satisfied and shown on our consolidated balance sheets.

Certain of the Company's hotels have retail spaces, restaurants or other spaces which the Company leases to third parties. Lease revenue is recognized on a straight-line basis over the life of the lease and included in other operating revenues in the Company's consolidated statements of operations.

The Company collects sales, use, occupancy and similar taxes at its hotels which are presented on a net basis on the consolidated statements of operations. Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. The Company maintains an allowance for doubtful accounts sufficient to cover estimated potential credit losses.

Lease Revenue – Several of our properties generate revenue from leasing commercial space adjacent to the hotel, the restaurant space within the hotel, apartment units and space on the roofs of our hotels for antennas and satellite dishes.  We account for the lease income as revenue from other operating departments within the consolidated statements of operations pursuant to the terms of each lease.  Lease revenue was approximately $0.4 million and $0.3 million, for the three months ended September 30, 2019 and 2018, respectively, and approximately $1.2 million and $1.2 million for the nine months ended September 30, 2019 and 2018, respectively.

A schedule of minimum future lease payments receivable for the remaining three and twelve-month periods is as follows:

For the remaining three months ending December 31, 2019	$	486,304
December 31, 2020		1,452,866
December 31, 2021		1,395,363
December 31, 2022		1,221,343
December 31, 2023		612,940
December 31, 2024 and thereafter		3,158,088
Total	$	8,326,904

Variable Interest Entities – The Operating Partnership is a variable interest entity. The Company’s only significant asset is its investment in the Operating Partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership and its subsidiaries. All of the Company’s debt is an obligation of the Operating Partnership and its subsidiaries.

Income Taxes – The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. MHI TRS, our wholly owned taxable REIT subsidiary which leases our hotels from subsidiaries of the Operating Partnership, is subject to federal and state income taxes.

We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  As of September 30, 2019 and December 31, 2018, deferred tax assets totaled approximately $4.7 million and $5.1 million, respectively, of which approximately $4.1 million and $4.4 million relate to net operating losses of our TRS Lessee.  A valuation allowance is required for deferred tax assets if, based on all available evidence, it is “more-likely-than-not” that all or a portion of the deferred tax asset will or will not be realized due to the inability to generate sufficient taxable income in certain financial statement periods.  The “more-likely-than-not” analysis means the likelihood of realization is greater than 50%, that we will or will not be able to fully utilize the deferred tax assets against future taxable income. The net amount of deferred tax assets that are recorded on the financial statements must reflect the tax benefits that are expected to be realized using these criteria.  We perform this analysis by evaluating future hotel revenues and expenses accounting for certain non-recurring costs and expenses during the current and prior two fiscal years as well as anticipated changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership. We have determined that it is more-likely-than-not that we will be able to fully utilize our deferred tax assets for future tax consequences, therefore no valuation allowance is required.  

As of September 30, 2019 and December 31, 2018, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of September 30, 2019, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2015 through 2017. In addition, as of September 30, 2019, the tax years that remain subject to examination, because of NOL carryforwards, by the major tax jurisdictions to which MHI TRS is subject include the years 2009 and 2014 through 2018.

The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership’s taxable income.

Stock-based Compensation – The Company’s 2013 Long-Term Incentive Plan (the “2013 Plan”), which the Company’s stockholders approved in April 2013, permit the grant of stock options, restricted stock, unrestricted stock and performance share compensation awards to its employees and directors for up to 350,000 and 750,000 shares of common stock, respectively. The Company believes that such awards better align the interests of its employees with those of its stockholders.

Under the 2013 Plan, the Company has made stock awards totaling 176,350 shares, including 143,350 non-restricted shares and 33,000 restricted shares issued to certain executives and employees and to its independent directors.  All awards have vested except for 20,000 shares issued to one employee, which will vest over 4 years, and 13,000 shares issued to the Company’s independent directors in February 2019, which will vest by December 31, 2019.  

Under the 2013 Plan, the Company may issue a variety of performance-based stock awards, including nonqualified stock options. The value of the awards is charged to compensation expense on a straight-line basis over the vesting or service period based on the value of the award as determined by the Company’s stock price on the date of grant or issuance.  As of September 30, 2019, no performance-based stock awards have been granted. Total compensation cost recognized under the 2013 Plan for the three months ended September 30, 2019 and 2018 was each $8,025 and for the nine months ended September 30, 2019 and 2018 was $116,408 and $127,402, respectively.

Additionally, the Company sponsors and maintains an Employee Stock Ownership Plan (“ESOP”) and related trust for the benefit of its eligible employees. We reflect unearned ESOP shares as a reduction of stockholders’ equity.  Dividends on unearned ESOP shares, when paid, are considered compensation expense. The Company recognizes compensation expense equal to the fair value of the Company’s ESOP shares during the periods in which they are committed to be released.  For the three months ended September 30, 2019 and 2018, the ESOP compensation cost was $60,259 and $64,294, respectively and for the nine months ended September 30 2019 and 2018, the ESOP compensation cost was $193,513 and $186,137, respectively. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the differential is recognized as additional paid in capital.  Because the ESOP is internally leveraged through a loan from the Company to the ESOP, the loan receivable by the Company from the ESOP is not reported as an asset nor is the debt of the ESOP shown as a liability in the consolidated financial statements.

Advertising – Advertising costs were $132,227 and $88,154 for the three months ended September 30, 2019 and 2018, respectively and were $319,947 and $334,271 for the nine months ended September 30, 2019 and 2018, respectively.  Advertising costs are expensed as incurred.

Involuntary Conversion of Assets – We record gains or losses on involuntary conversions of assets due to recovered insurance proceeds to the extent the undepreciated cost of a nonmonetary asset differs from the amount of monetary proceeds received. During the three-month periods ending September 30, 2019 and 2018, we recognized approximately $0.1 million and $0, respectively and during the nine-month periods ending September 30, 2019 and 2018, we recognized approximately $0.3 million and $0.9 million, respectively, in gain on involuntary conversion of assets, which is reflected in the consolidated statements of operations.

Comprehensive Income – Comprehensive income as defined, includes all changes in equity during a period from non-owner sources. We do not have any items of comprehensive income other than net income.

Segment Information – We have determined that our business is conducted in one reportable segment: hotel ownership.

Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements – In July 2018, FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, The FASB decided to provide another transition method and practical expedients in addition to the existing transition method (a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements) by allowing entities to initially apply the new leases standard at the adoption date (such as January 1, 2019, for calendar year-end public business entities) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  We adopted the practical expedients allowed under the guidance and retained the original lease classification and historical accounting for initial direct costs for leases existing prior to the adoption date on January 1, 2019. We also elected not to restate prior periods for the impact of the adoption of the new standard and instead recognized a cumulative-effect adjustment to beginning retained earnings as of the adoption date. These standards resulted in the recognition of right-to-use assets and related liabilities to account for our future obligations under the ground lease arrangements for which we are the lessee. The right of use assets and corresponding liabilities were recorded in the amount of approximately $6.3 million and $3.8 million, respectively as of January 1, 2019.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current GAAP and disclosing key information about leasing arrangements. The amendments in this ASU were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early application of this ASU was permitted for all entities. We created an inventory of our leases and have recorded current ground lease, office lease, other right-of-use assets and lease liabilities.  The standard required a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. This standard has been updated as noted above in ASU No. 2018-11. We adopted this ASU as of January 1, 2019. The adoption of this ASU did not have a material impact on our consolidated balance sheets, statements of operations or cash flows.

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Retirement Plans

9 Months Ended

Sep. 30, 2019

Compensation And Retirement Disclosure [Abstract]

Retirement Plans

10. Retirement Plans

401(k) Plan - We maintain a 401(k) plan for qualified employees which is subject to “safe harbor” provisions and which requires that we match 100.0% of the first 3.0% of employee contributions and 50.0% of the next 2.0% of employee contributions. All employer matching funds vest immediately in accordance with the “safe harbor” provision.  Contributions to the plan totaled $12,892 and $12,568 for the three months ended September 30, 2019 and 2018, respectively and $63,453 and $61,607 for the nine months ended September 30, 2019 and 2018, respectively.

Employee Stock Ownership Plan - The Company adopted an Employee Stock Ownership Plan in December 2016, effective January 1, 2016.  The ESOP is a non-contributory defined contribution plan covering all employees of the Company. The Company sponsors and maintains the ESOP and related trust for the benefit of its eligible employees.  The ESOP is a leveraged ESOP, meaning funds are loaned to the ESOP from the Company.  The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company’s common stock on the open market, which serve as collateral for the loan.  Between January 3, 2017 and February 28, 2017, the Company’s ESOP purchased 682,500 shares of the Company’s common stock of an aggregate cost of $4.9 million.  

Shares purchased by the ESOP are held in a suspense account for allocation among participants as contributions are made to the ESOP by the Company.  The share allocations will be accounted for at fair value at the date of allocation.  As of September 30, 2019, the ESOP had purchased 682,500 shares of the Company’s common stock in the open market for approximately $4.9 million, which the ESOP borrowed from the Company pursuant to the loan agreement.  A total of 94,894 and 59,893 shares with a fair value of $634,843 and $416,088 remained allocated or committed to be released from the suspense account as of September 30, 2019 and 2018, respectively.  We recognized as compensation cost $170,700 and $173,856 during the nine months ended September 30, 2019 and 2018, respectively.  The remaining 584,594 unallocated shares have an approximate fair value of $3.9 million, as of September 30, 2019.  At September 30, 2019, the ESOP held a total of 66,308 allocated shares, 28,586 committed-to-be-released shares and 584,594 suspense shares.  Dividends on allocated and unallocated shares are used to pay down the ESOP loan from the Operating Partnership.  The share allocations are accounted for at fair value on the date of allocation as follows:

	September 30, 2019				December 31, 2018
	Number of Shares		Fair Value		Number of Shares		Fair Value
Allocated shares		66,308	$	443,601		33,832	$	189,798
Committed to be released shares		28,586		191,242		35,474		199,007
Total Allocated and Committed-to-be-Released		94,894	$	634,843		69,306	$	388,805
Unallocated shares		584,594		3,910,932		613,194		3,440,020
Total ESOP Shares		679,488	$	4,545,775		682,500	$	3,828,825

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Retirement Plans - Additional Information (Detail) - USD ($)	2 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 28, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 29, 2016
Defined Benefit Plan Disclosure [Line Items]
Employer contribution for first 3% of employee contributions				100.00%
Employer contribution for next 2% of employee contributions				50.00%
Percentage of first specified employee contributions				3.00%
Percentage of next specified employee contributions				2.00%
Contribution for retirement plan		$ 12,892	$ 12,568	$ 63,453	$ 61,607
Maximum amount allocated to purchase common stock under ESOP								$ 5,000,000
Number of common stock, shares purchased	682,500			0		0	682,500
Purchased common stock, value	$ 4,900,000						$ 4,900,000
Total number of ESOP shares				94,894	59,893
Fair value of ESOP released from suspense account and recognized compensation cost				$ 634,843	$ 416,088
Compensation cost recognized				$ 170,700	$ 173,856
Number of non committed, unearned ESOP shares		584,594		584,594		613,194
Fair value of unallocated ESOP shares		$ 3,910,932		$ 3,910,932		$ 3,440,020
Number of ESOP shares allocated		66,308		66,308		33,832
Number of ESOP shares committed to be released		28,586		28,586		35,474
ESOP [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of common stock, shares purchased				682,500
Purchased common stock, value				$ 4,900,000

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Preferred Stock and Units - Schedule of Series of Cumulative Redeemable Perpetual Preferred Units (Detail) - $ / shares		2 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Jul. 15, 2019	May 31, 2019	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
8.25% Series D Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred Units [Line Items]
Preferred Units, Quarterly Distributions Per Unit	$ 0.41823
Sotherly Hotels LP [Member] | 8% Series B Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred Units [Line Items]
Preferred Units, Per Annum Rate			8.00%	8.00%	8.00%
Preferred Units, Liquidation Preference			$ 25	$ 25	$ 25
Preferred Units, Number of Units Issued			1,610,000	1,610,000	1,610,000
Preferred Units, Number of Units Outstanding			1,610,000	1,610,000	1,610,000
Preferred Units, Quarterly Distributions Per Unit			$ 0.500000
Sotherly Hotels LP [Member] | 7.875% Series C Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred Units [Line Items]
Preferred Units, Per Annum Rate			7.875%	7.875%	7.875%
Preferred Units, Liquidation Preference			$ 25	$ 25	$ 25
Preferred Units, Number of Units Issued			1,554,610	1,554,610	1,352,141
Preferred Units, Number of Units Outstanding			1,554,610	1,554,610	1,352,141
Preferred Units, Quarterly Distributions Per Unit			$ 0.492188
Sotherly Hotels LP [Member] | 8.25% Series D Cumulative Redeemable Perpetual Preferred Units [Member]
Preferred Units [Line Items]
Preferred Units, Per Annum Rate		8.25%	8.25%	8.25%	8.25%
Preferred Units, Liquidation Preference			$ 25	$ 25	$ 25
Preferred Units, Number of Units Issued			1,200,000	1,200,000	0
Preferred Units, Number of Units Outstanding			1,200,000	1,200,000	0
Preferred Units, Quarterly Distributions Per Unit			$ 0.515625