Sotherly Hotels Inc. Announces Refinancing and Renovation Plans for Philadelphia Hotel

Rhea-AI Summary

Sotherly Hotels Inc. announced refinancing and renovation plans for the DoubleTree by Hilton Philadelphia Airport. The mortgage loan terms were amended with TD Bank, reducing the loan by $3.0 million to $35.9 million. The loan matures in April 2026 with an interest rate based on SOFR plus 3.5%. The company also signed a new 10-year franchise agreement with Hilton Worldwide and will undergo an $11.5 million renovation scheduled for completion by April 2026.

Positive

• Reduction of mortgage loan by $3.0 million to $35.9 million.

• New 10-year franchise agreement with Hilton Worldwide.

• Renovation plans for the property with a cost of approximately $11.5 million.

• Strong positioning with a well-known brand like Hilton for future success.

Negative

• Carries a floating interest rate based on SOFR plus 3.5%.

• Renovation cost of $11.5 million may impact short-term cash flow.

WILLIAMSBURG, Va., May 03, 2024 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ: SOHO) (the “Company”) today announced that the Company has executed an extension which includes amended mortgage loan terms on its first mortgage with TD Bank, collateralized by the DoubleTree by Hilton Philadelphia Airport in Philadelphia, PA. The interest-only loan, which has been reduced by $3.0 million to $35.9 million, matures in April 2026 and carries a floating interest rate based on SOFR plus 3.5%. As part of the transaction, the Borrower purchased an Interest Rate Cap capping SOFR at 3.0%. The Company also announced that it has entered into a new 10-year franchise agreement with Hilton Worldwide to relicense the hotel under the DoubleTree by Hilton flag. As part of the new agreement with Hilton, the Company will undertake a renovation of the property, with a cost of approximately $11.5 million and an estimated completion date of April 2026. Renovation plans for the property to include upgrades to guestrooms, public spaces, food and beverage spaces, and building exterior.

“We are pleased with the completion of the restructuring of the mortgage loan for this hotel with its current lender,” commented Dave Folsom, Chief Executive Officer of the Company. “Given the current lending environment and challenges faced in the Philadelphia market following the pandemic, we view the loan terms as a positive outcome for the Company. By simultaneously entering into a new 10-year franchise agreement with Hilton, we believe we are aligning ourselves with a strong brand and are positioning the hotel for success for the foreseeable future.”

About Sotherly Hotels Inc.

Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. Sotherly may also opportunistically acquire hotels throughout the United States. Currently, the Company’s portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. The Company owns hotels that operate under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information, please visit www.sotherlyhotels.com.

FAQ

What did Sotherly Hotels Inc. announce regarding the DoubleTree by Hilton Philadelphia Airport?

Sotherly Hotels Inc. announced refinancing and renovation plans for the hotel, including an extension of the mortgage loan terms and a new 10-year franchise agreement with Hilton Worldwide.

What is the reduced amount of the mortgage loan for the DoubleTree by Hilton Philadelphia Airport?

The mortgage loan was reduced by $3.0 million to $35.9 million.

What is the completion date for the renovation of the property?

The estimated completion date for the renovation is April 2026.

Who is the Chief Executive Officer of Sotherly Hotels Inc.?

Dave Folsom is the Chief Executive Officer of Sotherly Hotels Inc.