Sotherly Hotels Inc. Completes Refinance of Tampa, FL Hotel; Proceeds Used to Pay Off Corporate Debt

Rhea-AI Summary

Sotherly Hotels Inc. (NASDAQ: SOHO) has modified its existing mortgage loan with Fifth Third Bank for Hotel Alba in Tampa, Florida. The loan modification entails an increased principal balance of $25 million, a three-year term extension, and a 1% decrease in the floating interest rate to SOFR plus 2.75%. The proceeds will help repay a secured note with Kemmons Wilson, which will reduce Sotherly's debt obligations by over $50 million in 2022. This change aims to stabilize the company's financial health and facilitate the payment of preferred dividends, while focusing on long-term shareholder growth.

Positive

• Loan modification reduced interest rate by 1.0% to SOFR plus 2.75%.
• Reduced debt obligations by over $50 million during the first half of 2022.
• Elimination of costly corporate debt improves balance sheet health and cash flow.

Negative

• None.

WILLIAMSBURG, Va., June 29, 2022 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ: SOHO) (the “Company”) announced that the Company has modified its existing mortgage loan with Fifth Third Bank secured by the Hotel Alba hotel in Tampa, Florida. The loan modification increased the principal balance to $25.0 million, extended the term by three years with two 1-year extension options, decreased the floating interest rate by 1.0% to SOFR plus 2.75%, and reduced the corporate guaranty. Proceeds from the loan, combined with existing corporate cash, were used to repay of the remainder of the Kemmons Wilson secured note. Including the payoff of the Kemmons Wilson secured note, the Company has reduced the debt obligations from its balance sheet by over $50.0 million during the first half of 2022.

“We are thrilled with the completion of this loan modification for Hotel Alba, which allowed us to realize significant value created through the successful execution of our repositioning strategy of this asset over the past three years. Further, it provided the necessary cash to fully payoff the remaining balance of the secured note with Kemmons Wilson, which was taken out of necessity during the height of the pandemic,” noted Dave Folsom, Chief Executive Officer of Sotherly. “The payoff of this loan allows us to restructure our balance sheet by eliminating costly corporate debt that included high-interest current payments, onerous loan covenants, and a significant interest reserve. This event not only marks a major step forward in stabilizing the overall health of the Company, but also facilitates a clearer path toward paying off our preferred dividend obligations and allows us to concentrate on our core business strategies focused on long-term growth and returns for shareholders.”

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 is the significance of the recent loan modification by Sotherly Hotels Inc. (SOHO)?

The loan modification reduced the debt's interest rate, extended the term, and enabled Sotherly to repay a significant secured note, enhancing financial stability.

How much debt has Sotherly Hotels Inc. (SOHO) reduced in 2022?

Sotherly Hotels Inc. has reduced its debt obligations by over $50 million during the first half of 2022.

What are the new terms of the loan for Hotel Alba after modification?

The new terms include a principal balance of $25 million, a three-year term extension, and a floating interest rate of SOFR plus 2.75%.

How does the loan modification impact Sotherly Hotels Inc.'s (SOHO) operations?

The modification allows Sotherly to eliminate costly corporate debt, which stabilizes the company’s health and facilitates future growth.