Sotherly Hotels Inc. Announces Senior Note Financing

Rhea-AI Summary

Sotherly Hotels Inc. (NASDAQ: SOHO) has entered into a Note Purchase Agreement to issue notes totaling $20 million, with an additional $10 million available within a year. The notes mature in three years and carry a 6.0% interest rate, with the principal repayable at 1.47 times the borrowed amount. The funds aim to improve the company's liquidity amidst pandemic challenges. CEO Dave Folsom expressed optimism about the partnership with Kemmons Wilson, highlighting the importance of this transaction for managing financial obligations and preparing for future recovery.

Positive

• Secured $20 million through aNote Purchase Agreement, with an option for an additional $10 million.
• Notes have a manageable interest rate of 6.0%, enhancing financial flexibility.
• Transaction aims to strengthen liquidity during pandemic hardships.

Negative

• None.

WILLIAMSBURG, Va., Dec. 31, 2020 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ: SOHO) (the “Company”) announced today that the Company has entered into a Note Purchase Agreement with affiliates of Kemmons Wilson Hospitality Partners LP and Machine Investment Group for the issuance of certain notes (collectively, the “Note”) in an aggregate amount of $20.0 million, with an additional $10.0 million available to draw within the next twelve months, at the Company’s option. The Note matures in 3 years and will be payable on or before the maturity date at the rate of 1.47x the principal amount borrowed during the initial 3-year term, with a 1-year extension at Company’s option. The Note also carries a 6.0% current interest rate, payable quarterly during the initial 3-year term. Piper Sandler & Co. acted as Sotherly’s financial advisor. The Company intends to use the net proceeds from the Note to enhance its liquidity position.

Dave Folsom, Chief Executive Officer of the Company, commented, “We are pleased to partner with Kemmons Wilson in this transaction, which provides liquidity to Sotherly and enables us to continue to navigate the negative impacts of the ongoing pandemic. This transaction further positions Sotherly to be able to focus on the impending recovery, manage its balance sheet obligations, and preserve its asset base.”

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. Currently, 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. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information, please visit www.sotherlyhotels.com.

Contact at the Company:        

Mack Sims        
Sotherly Hotels Inc.
306 South Henry Street, Suite 100
Williamsburg, Virginia 23185        
(757) 229-5648 

FAQ

What is the significance of the Note Purchase Agreement for SOHO?

The Note Purchase Agreement allows Sotherly Hotels to secure $20 million, enhancing liquidity during ongoing pandemic challenges.

What are the terms of the notes issued by Sotherly Hotels?

The notes have a 3-year maturity, 6.0% interest rate, and a repayment condition of 1.47 times the borrowed amount.

How will Sotherly Hotels use the funds from the Note Purchase Agreement?

The funds will be used to improve the company's liquidity position.

Who acted as the financial advisor for Sotherly Hotels in this transaction?

Piper Sandler & Co. served as the financial advisor for Sotherly Hotels.

What impact does the Note Purchase Agreement have on SOHO's stock performance?

The agreement aims to bolster liquidity, which can potentially stabilize or improve stock performance amid the pandemic.