Sotherly Hotels Inc. Reports Financial Results for the First Quarter Ended March 31, 2024
Sotherly Hotels Inc. (NASDAQ: SOHO) reported financial results for Q1 2024, showing a 7.0% increase in total revenue, exceeding previous year's results. RevPAR increased by 3.8%, driven by occupancy growth. Net loss to common stockholders rose slightly. Hotel EBITDA improved by over 2%. Adjusted FFO saw a significant 11.2% increase. The company declared quarterly dividends for its preferred shares. Executed a mortgage refinancing in Q1. Balance sheet indicates $39.6 million in cash and cash equivalents. Various loan amendments were made for financial flexibility. 2024 outlook projects steady financial measures within a range. Earnings call scheduled for May 9, 2024.
Total revenue increased by 7.0% in Q1 2024, showing strong growth over the previous year.
RevPAR for the composite portfolio rose by 3.8%, supported by a 4.5% increase in occupancy.
Hotel EBITDA improved to approximately $12.4 million, reflecting positive operational performance.
Adjusted FFO saw a significant 11.2% increase from Q1 2023 to Q1 2024, reaching approximately $5.2 million.
Company declared quarterly dividends for preferred shares, demonstrating commitment to shareholders.
Net loss attributable to common stockholders showed a slight increase from approximately $0.6 million to $0.7 million in Q1 2024.
Despite revenue growth, there was a net loss to common stockholders, indicating potential financial challenges.
Various loan amendments were made to address debt obligations, suggesting possible liquidity concerns.
Insights
Reviewing Sotherly Hotels Inc.'s first quarter financial results reveals moderate progress in certain metrics such as a 7.0% increase in total revenue and an 8.0% increase in EBITDA. However, it is noteworthy to consider the mixed signals reflected in the numbers. The subtle uptick in net loss from
Furthermore, in the context of operational efficiency, the slight increase in Hotel EBITDA is promising, pointing towards better management of direct hotel operating costs. This is coupled with an 11.2% rise in Adjusted FFO, indicating a healthier cash flow position for the common stockholders and unitholders, which is a critical factor for dividend sustainability and potential reinvestment strategies.
The debt refinancing activities highlight the company's proactive approach to managing its balance sheet, despite a challenging mortgage market. The interest rate on the new mortgage for Hotel Alba is notably higher at 8.49%, which may increase interest expenses going forward but also provide immediate liquidity via
An investor should continue to monitor the interplay between the company's operational performance and its debt management practices, as well as the forecasted year-end financials which project a net loss but also an increased FFO and Adjusted FFO. The raised RevPAR shows an industry-healthy occupancy rate which could potentially counterbalance the dip in ADR.
From a retail investor's perspective, the established dividends for the preferred stocks indicate a commitment to returning value to shareholders, which may be seen as a positive signal for the company’s financial health and outlook.
The reported increase in RevPAR by 3.8% is a important metric in the hospitality industry as it combines occupancy and ADR to provide a comprehensive snapshot of a hotel's operational performance. Sotherly's occupancy rate increase is a robust indicator of growing guest traffic, which is essential for revenue generation. However, the decrease in ADR by 3.3% suggests a potential pricing strategy adjustment or market pressure to attract more guests. This can also reflect a strategic decision to prioritize occupancy over rate to drive ancillary revenues or loyalty program engagement.
The strong booking pace for group business, up 6.9%, aligns with industry recovery trends where group and corporate travel are bouncing back post-pandemic. It's an encouraging sign of sustainable revenue streams. This combined with the stated resilience in leisure travel presents a positive outlook for demand, important for the company's mid-term trajectory.
However, the company's future performance will need to be gauged against potential external pressures such as economic headwinds that could affect travel patterns. The investor should weigh the implications of this balanced against the company's strategic initiatives like refinancing, which can impact financial leverage and interest cost.
WILLIAMSBURG, Va., May 09, 2024 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ: SOHO), (“Sotherly” or the “Company”), a self-managed and self-administered lodging real estate investment trust (a “REIT”), today reported its consolidated results for the first quarter ended March 31, 2024. The Company’s results include the following*:
| Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | ||||||
| ($ in thousands except per share data) | |||||||
| Total revenue | $ | 46,548 | $ | 43,491 | |||
| Net loss attributable to common stockholders | (659 | ) | (582 | ) | |||
| EBITDA | 10,785 | 9,948 | |||||
| Hotel EBITDA | 12,360 | 12,079 | |||||
| FFO attributable to common stockholders and unitholders | 3,961 | 3,941 | |||||
| Adjusted FFO attributable to common stockholders and unitholders | 5,178 | 4,658 | |||||
| Net loss per common share - diluted | $ | (0.03 | ) | $ | (0.03 | ) | |
| FFO per common share and unit | $ | 0.20 | $ | 0.20 | |||
| Adjusted FFO per common share and unit | $ | 0.26 | $ | 0.24 | |||
(*) Earnings before interest, taxes, depreciation and amortization (“EBITDA”), hotel EBITDA, funds from operations (“FFO”) attributable to common stockholders and unitholders, adjusted FFO attributable to common stockholders and unitholders, FFO per common share and unit and adjusted FFO per common share and unit are non-GAAP financial measures. See further discussion of these non-GAAP measures, including definitions related thereto, and reconciliations to net income (loss) later in this press release. The Company is the sole general partner of Sotherly Hotels LP, a Delaware limited partnership (the “Operating Partnership”), and all references in this release to the “Company”, “Sotherly”, “we”, “us” and “our” refer to Sotherly Hotels Inc., its Operating Partnership and its subsidiaries and predecessors, unless the context otherwise requires or it is otherwise indicated.
HIGHLIGHTS
- RevPAR. Room revenue per available room (“RevPAR”) for the Company’s composite portfolio, which includes the rooms participating in our rental programs at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, increased
3.8% to$123.59 , for the three months ended March 31, 2024, from$119.06 in the comparable period in 2023. Changes in RevPAR were driven by a4.5% increase in occupancy to64.9% from60.4% in the comparable 2023 period, and a3.3% decrease in the average daily rate (“ADR”) to$190.50 for the three months ended March 31, 2024, from$197.07 for the comparable period in 2023. - Revenue. Total revenue was approximately
$46.5 million and$43.5 million , for the three month periods ended March 31, 2024 and 2023, respectively. - Net loss attributable to common stockholders. For the three-month period ending March 31, 2024, net loss attributable to common stockholders increased approximately
$0.1 million , compared to the three months ended March 31, 2023, from a loss of approximately$0.6 million to a loss of approximately$0.7 million . - Hotel EBITDA. Hotel EBITDA increased to approximately
$12.4 million for the three months ended March 31, 2024, from approximately$12.1 million for the comparable period in 2023. - Adjusted FFO attributable to common stockholders and unitholders. For the three-month period ending March 31, 2024, adjusted FFO attributable to common stockholders and unitholders increased
11.2% , or approximately$0.5 million , over the three months ended March 31, 2023, from approximately$4.7 million to approximately$5.2 million . - Preferred Dividends. On January 29, 2024 the Company announced a quarterly cash dividend of
$0.50 per share of beneficial interest of the Company’s8.0% Series B Cumulative Redeemable Perpetual Preferred Stock; a quarterly cash dividend of$0.49 2188 per share of beneficial interest of the Company’s7.875% Series C Cumulative Redeemable Perpetual Preferred Stock; and a quarterly cash dividend of$0.51 5625 per share of beneficial interest of the Company’s8.25% Series D Cumulative Redeemable Perpetual Preferred Stock. Each of the Series B, Series C and Series D preferred dividends will be paid on March 15, 2024 to shareholders of record as of February 29, 2024.
Dave Folsom, President and Chief Executive Officer of Sotherly Hotels Inc., commented, "We were pleased with our first quarter results. Total revenues exceeded prior year by
Balance Sheet/Liquidity
As of March 31, 2024, the Company had approximately
Other Events
On February 7, 2024, affiliates of the Company entered into loan documents to refinance its loan in the principal amount of
On April 29, 2024, the Company entered into a loan amendment to amend the existing mortgage on the DoubleTree by Hilton Philadelphia Airport hotel with the existing lender, TD Bank, N.A. Pursuant to the amended loan documents, the mortgage loan: (i) has a principal balance of approximately
2024 Outlook
Set forth below is the Company's previously issued guidance for 2024. The table below reflects the Company’s projections, within a range, of various financial measures for 2024, in thousands of dollars, except per share and RevPAR data:
| 2024 Guidance | |||||||
| Low Range | High Range | ||||||
| Total revenue | $ | 178,952 | $ | 182,567 | |||
| Net income | 1,598 | 2,593 | |||||
| Net loss available to common stockholders and unitholders | (6,377 | ) | (5,382 | ) | |||
| EBITDA | 39,858 | 40,853 | |||||
| Hotel EBITDA | 46,103 | 46,898 | |||||
| FFO available to common stockholders and unitholders | 12,373 | 13,368 | |||||
| Adjusted FFO available to common stockholders and unitholders | 12,778 | 13,773 | |||||
| Net loss per share available to common stockholders | $ | (0.32 | ) | $ | (0.27 | ) | |
| FFO per common share and unit | $ | 0.62 | $ | 0.67 | |||
| Adjusted FFO per common share and unit | $ | 0.64 | $ | 0.69 | |||
| Rev PAR | $ | 117.16 | $ | 119.52 | |||
| Hotel EBITDA margin | 25.8 | % | 25.7 | % | |||
Earnings Call/Webcast
The Company will conduct its first quarter 2024 conference call for investors and other interested parties at 10:00 a.m. Eastern Time on Thursday, May 9, 2024. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 833-470-1428 (United States) and enter access code 218035. To participate on the webcast, log on to www.sotherlyhotels.com at least 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning one hour after completion of the live call on May 9, 2024 through May 23, 2024. To access the rebroadcast, dial 866-813-9403 and enter access code 940385.
About Sotherly Hotels Inc.
Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. Sotherly may also opportunistically acquire hotels throughout the United States. Currently, the Company’s portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. The Company owns hotels that operate under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information, please visit www.sotherlyhotels.com.
Forward-Looking Statements
This news release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our current strategies, expectations, and future plans are generally identified by our use of words, such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions, whether in the negative or affirmative, but the absence of these words does not necessarily mean that a statement is not forward-looking. We also sometimes refer to our booking pace. Booking pace is an industry term that we define as the estimated value of committed future bookings at a given point in time. Booking pace can be further separated into various segments, including group booking pace or business travel booking pace. All statements regarding our expected financial position, booking pace, business and financing plans are forward-looking statements.
Factors which could have a material adverse effect on the Company’s future operations, results, performance and prospects, include, but are not limited to: national and local economic and business conditions that affect occupancy rates and revenues at our hotels and the demand for hotel products and services; risks associated with the hotel industry, including competition and new supply of hotel rooms, increases in wages, energy costs and other operating costs; risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements, including our recently negotiated forbearance agreements and loan modifications and, as necessary, to refinance or seek an extension of the maturity of such indebtedness or further modification of such debt agreements; risks associated with adverse weather conditions, including hurricanes; impacts on the travel industry from pandemic diseases, including COVID-19; the availability and terms of financing and capital and the general volatility of the securities markets; management and performance of our hotels; risks associated with maintaining our system of internal controls; risks associated with the conflicts of interest of the Company’s officers and directors; risks associated with redevelopment and repositioning projects, including delays and cost overruns; supply and demand for hotel rooms in our current and proposed market areas; risks associated with our ability to maintain our franchise agreements with our third party franchisors; our ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations; our ability to successfully expand into new markets; legislative/regulatory changes, including changes to laws governing taxation of real estate investment trusts (“REITs”); the Company’s ability to maintain its qualification as a REIT; and our ability to maintain adequate insurance coverage. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or the objectives and plans of the Company will be achieved.
Additional factors that could cause actual results to vary from our forward-looking statements are set forth under the section titled “Risk Factors” in our Annual Report on Form 10-K, in this report and subsequent reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to and does not intend to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Although the Company believes its current expectations to be based upon reasonable assumptions, it can give no assurance that its expectations will be attained or that actual results will not differ materially.
Financial Tables Follow…
| SOTHERLY HOTELS INC. CONSOLIDATED BALANCE SHEETS | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Investment in hotel properties, net | $ | 352,455,889 | $ | 354,919,106 | ||||
| Cash and cash equivalents | 29,285,600 | 17,101,993 | ||||||
| Restricted cash | 10,341,209 | 9,134,347 | ||||||
| Accounts receivable, net | 6,968,335 | 5,945,724 | ||||||
| Prepaid expenses, inventory and other assets | 5,637,355 | 6,342,310 | ||||||
| TOTAL ASSETS | $ | 404,688,388 | $ | 393,443,480 | ||||
| LIABILITIES | ||||||||
| Mortgage loans, net | $ | 325,106,994 | $ | 315,989,194 | ||||
| Unsecured notes | 1,347,998 | 1,536,809 | ||||||
| Accounts payable and accrued liabilities | 25,782,354 | 23,315,677 | ||||||
| Advance deposits | 2,879,763 | 2,614,981 | ||||||
| Dividends and distributions payable | 2,088,160 | 2,088,160 | ||||||
| TOTAL LIABILITIES | $ | 357,205,269 | $ | 345,544,821 | ||||
| Commitments and contingencies | — | — | ||||||
| EQUITY | ||||||||
| Sotherly Hotels Inc. stockholders’ equity | ||||||||
| Preferred stock, | ||||||||
| 14,641 | 14,641 | |||||||
| 13,461 | 13,461 | |||||||
| 11,631 | 11,631 | |||||||
| Common stock, par value | 198,492 | 196,968 | ||||||
| Additional paid-in capital | 176,000,351 | 175,779,222 | ||||||
| Unearned ESOP shares | (1,731,209 | ) | (1,764,507 | ) | ||||
| Distributions in excess of retained earnings | (125,680,386 | ) | (125,021,013 | ) | ||||
| Total Sotherly Hotels Inc. stockholders’ equity | 48,826,981 | 49,230,403 | ||||||
| Noncontrolling interest | (1,343,862 | ) | (1,331,744 | ) | ||||
| TOTAL EQUITY | 47,483,119 | 47,898,659 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 404,688,388 | $ | 393,443,480 | ||||
| SOTHERLY HOTELS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||
| Three Months Ended | Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| (unaudited) | (unaudited) | |||||||
| REVENUE | ||||||||
| Rooms department | $ | 29,739,657 | $ | 28,401,688 | ||||
| Food and beverage department | 9,752,449 | 8,748,726 | ||||||
| Other operating departments | 7,056,326 | 6,340,863 | ||||||
| Total revenue | 46,548,432 | 43,491,277 | ||||||
| EXPENSES | ||||||||
| Hotel operating expenses | ||||||||
| Rooms department | 6,552,184 | 6,413,094 | ||||||
| Food and beverage department | 6,464,855 | 5,935,560 | ||||||
| Other operating departments | 2,686,142 | 2,315,848 | ||||||
| Indirect | 18,484,896 | 16,747,577 | ||||||
| Total hotel operating expenses | 34,188,077 | 31,412,079 | ||||||
| Depreciation and amortization | 4,769,717 | 4,578,311 | ||||||
| Corporate general and administrative | 1,916,526 | 1,980,765 | ||||||
| Total hotel operating expenses | 40,874,320 | 37,971,155 | ||||||
| NET OPERATING INCOME | 5,674,112 | 5,520,122 | ||||||
| Other income (expense) | ||||||||
| Interest expense | (4,888,806 | ) | (4,113,597 | ) | ||||
| Interest income | 214,772 | 146,665 | ||||||
| Other income | 124,877 | — | ||||||
| Loss on early extinguishment of debt | (241,878 | ) | — | |||||
| Realized gain and unrealized (loss) on hedging activities | 335,446 | (442,464 | ) | |||||
| PPP debt forgiveness | — | 275,494 | ||||||
| Gain on involuntary conversion of assets | 122,391 | 16,476 | ||||||
| Net income before income taxes | 1,340,914 | 1,402,696 | ||||||
| Income tax provision | (18,093 | ) | (15,182 | ) | ||||
| Net income | 1,322,821 | 1,387,514 | ||||||
| Add: Net loss attributable to noncontrolling interest | 12,118 | 24,960 | ||||||
| Net income attributable to the Company | 1,334,939 | 1,412,474 | ||||||
| Undeclared distributions to preferred stockholders | (1,994,312 | ) | (1,994,312 | ) | ||||
| Net loss attributable to common stockholders | $ | (659,373 | ) | $ | (581,838 | ) | ||
| Net loss per share attributable to common stockholders: | ||||||||
| Basic | $ | (0.03 | ) | $ | (0.03 | ) | ||
| Diluted | $ | (0.03 | ) | $ | (0.03 | ) | ||
| Weighted average number of common shares outstanding | ||||||||
| Basic | 19,359,151 | 18,635,004 | ||||||
| Diluted | 19,359,151 | 18,635,004 | ||||||
SOTHERLY HOTELS INC.
KEY OPERATING METRICS
(unaudited)
The following tables illustrate the key operating metrics for the three months ended March 31, 2024 and 2023, respectively, for the Company’s wholly-owned properties (“actual” portfolio metrics), accordingly, the actual data does not include the participating condominium hotel rooms of the Hyde Resort & Residences and the Hyde Beach House Resort & Residences. The composite portfolio metrics represent the Company’s wholly-owned properties and the participating condominium hotel rooms at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, during the three months ended March 31, 2024 and the corresponding period in 2023.
| Three Months Ended | Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Actual Portfolio Metrics | ||||||||
| Occupancy % | 64.2 | % | 60.5 | % | ||||
| ADR | $ | 182.75 | $ | 187.19 | ||||
| RevPAR | $ | 117.30 | $ | 113.27 | ||||
| Composite Portfolio Metrics | ||||||||
| Occupancy % | 64.9 | % | 60.4 | % | ||||
| ADR | $ | 190.50 | $ | 197.07 | ||||
| RevPAR | $ | 123.59 | $ | 119.06 | ||||
SOTHERLY HOTELS INC.
SUPPLEMENTAL DATA
(unaudited)
The following tables illustrate the key operating metrics for the three months ended March 31, 2024, 2023, and 2022, respectively, for each of the Company’s wholly-owned properties during each respective reporting period, irrespective of ownership percentage during any period.
Occupancy
| Q1 2024 | Q1 2023 | Q1 2022 | |||||||||
| The DeSoto Savannah, Georgia | 70.9 | % | 64.4 | % | 62.0 | % | |||||
| DoubleTree by Hilton Jacksonville Riverfront Jacksonville, Florida | 70.2 | % | 71.0 | % | 64.5 | % | |||||
| DoubleTree by Hilton Laurel Laurel, Maryland | 47.2 | % | 47.2 | % | 47.8 | % | |||||
| DoubleTree by Hilton Philadelphia Airport Philadelphia, Pennsylvania | 45.2 | % | 54.5 | % | 56.0 | % | |||||
| DoubleTree Resort by Hilton Hollywood Beach Hollywood, Florida | 75.5 | % | 64.9 | % | 63.4 | % | |||||
| Georgian Terrace Atlanta, Georgia | 58.5 | % | 46.7 | % | 48.9 | % | |||||
| Hotel Alba Tampa, Tapestry Collection by Hilton Tampa, Florida | 83.8 | % | 83.4 | % | 81.1 | % | |||||
| Hotel Ballast Wilmington, Tapestry Collection by Hilton Wilmington, North Carolina | 60.2 | % | 55.8 | % | 43.1 | % | |||||
| Hyatt Centric Arlington Arlington, Virginia | 73.0 | % | 70.3 | % | 43.8 | % | |||||
| The Whitehall Houston, Texas | 59.1 | % | 48.6 | % | 36.3 | % | |||||
| Hyde Resort & Residences (1) Hollywood Beach, Florida | 78.7 | % | 60.5 | % | 62.2 | % | |||||
| Hyde Beach House Resort & Residences (1) Hollywood Beach, Florida | 82.7 | % | 56.6 | % | 51.3 | % | |||||
| All properties weighted average | 64.9 | % | 60.4 | % | 53.9 | % | |||||
| (1 | ) | Reflects only those condominium units participating in our rental program for the period. |
ADR
| Q1 2024 | Q1 2023 | Q1 2022 | |||||||||
| The DeSoto Savannah, Georgia | $ | 213.38 | $ | 211.97 | $ | 200.95 | |||||
| DoubleTree by Hilton Jacksonville Riverfront Jacksonville, Florida | $ | 148.38 | $ | 160.63 | $ | 148.26 | |||||
| DoubleTree by Hilton Laurel Laurel, Maryland | $ | 124.42 | $ | 120.26 | $ | 105.50 | |||||
| DoubleTree by Hilton Philadelphia Airport Philadelphia, Pennsylvania | $ | 123.62 | $ | 127.52 | $ | 114.79 | |||||
| DoubleTree Resort by Hilton Hollywood Beach Hollywood, Florida | $ | 230.67 | $ | 265.97 | $ | 253.85 | |||||
| Georgian Terrace Atlanta, Georgia | $ | 188.60 | $ | 206.82 | $ | 191.54 | |||||
| Hotel Alba Tampa, Tapestry Collection by Hilton Tampa, Florida | $ | 215.30 | $ | 214.33 | $ | 187.56 | |||||
| Hotel Ballast Wilmington, Tapestry Collection by Hilton Wilmington, North Carolina | $ | 164.87 | $ | 163.84 | $ | 165.53 | |||||
| Hyatt Centric Arlington Arlington, Virginia | $ | 198.85 | $ | 193.53 | $ | 158.05 | |||||
| The Whitehall Houston, Texas | $ | 163.57 | $ | 164.55 | $ | 145.64 | |||||
| Hyde Resort & Residences (1) Hollywood Beach, Florida | $ | 368.11 | $ | 443.65 | $ | 505.41 | |||||
| Hyde Beach House Resort & Residences (1) Hollywood Beach, Florida | $ | 307.82 | $ | 368.33 | $ | 455.52 | |||||
| All properties weighted average | $ | 190.50 | $ | 197.07 | $ | 187.23 | |||||
| (1 | ) | Reflects only those condominium units participating in our rental program for the period. |
RevPAR
| Q1 2024 | Q1 2023 | Q1 2022 | |||||||||
| The DeSoto Savannah, Georgia | $ | 151.37 | $ | 136.43 | $ | 124.54 | |||||
| DoubleTree by Hilton Jacksonville Riverfront Jacksonville, Florida | $ | 104.15 | $ | 114.05 | $ | 95.60 | |||||
| DoubleTree by Hilton Laurel Laurel, Maryland | $ | 58.67 | $ | 56.71 | $ | 50.46 | |||||
| DoubleTree by Hilton Philadelphia Airport Philadelphia, Pennsylvania | $ | 55.92 | $ | 69.51 | $ | 64.31 | |||||
| DoubleTree Resort by Hilton Hollywood Beach Hollywood, Florida | $ | 174.07 | $ | 172.66 | $ | 160.95 | |||||
| Georgian Terrace Atlanta, Georgia | $ | 110.35 | $ | 96.65 | $ | 93.64 | |||||
| Hotel Alba Tampa, Tapestry Collection by Hilton Tampa, Florida | $ | 180.37 | $ | 178.83 | $ | 152.11 | |||||
| Hotel Ballast Wilmington, Tapestry Collection by Hilton Wilmington, North Carolina | $ | 99.25 | $ | 91.46 | $ | 71.35 | |||||
| Hyatt Centric Arlington Arlington, Virginia | $ | 145.21 | $ | 136.11 | $ | 69.27 | |||||
| The Whitehall Houston, Texas | $ | 96.60 | $ | 80.03 | $ | 52.88 | |||||
| Hyde Resort & Residences (1) Hollywood Beach, Florida | $ | 289.74 | $ | 268.51 | $ | 314.39 | |||||
| Hyde Beach House Resort & Residences (1) Hollywood Beach, Florida | $ | 254.59 | $ | 208.53 | $ | 233.50 | |||||
| All properties weighted average | $ | 123.59 | $ | 119.06 | $ | 100.89 | |||||
| (1 | ) | Reflects only those condominium units participating in our rental program for the period. |
| SOTHERLY HOTELS INC. RECONCILIATION OF NET INCOME (LOSS) TO FFO, Adjusted FFO, EBITDA and Hotel EBITDA (unaudited) | ||||||||
| Three Months Ended | Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Net income | $ | 1,322,821 | $ | 1,387,514 | ||||
| Depreciation and amortization - real estate | 4,754,911 | 4,564,625 | ||||||
| Gain on involuntary conversion of assets | (122,391 | ) | (16,476 | ) | ||||
| FFO | 5,955,341 | 5,935,663 | ||||||
| Distributions to preferred stockholders | (1,994,312 | ) | (1,994,312 | ) | ||||
| FFO attributable to common stockholders and unitholders | 3,961,029 | 3,941,351 | ||||||
| Amortization | 14,806 | 13,686 | ||||||
| ESOP and stock - based compensation | 255,956 | 260,463 | ||||||
| Loss on early debt extinguishment | 241,878 | — | ||||||
| Unrealized loss on hedging activities | 704,671 | 442,464 | ||||||
| Adjusted FFO attributable to common stockholders and unitholders | $ | 5,178,340 | $ | 4,657,964 | ||||
| Weighted average number of shares outstanding, basic | 19,359,151 | 18,635,004 | ||||||
| Weighted average number of non-controlling units | 364,186 | 825,188 | ||||||
| Weighted average number of shares and units outstanding, basic | 19,723,337 | 19,460,192 | ||||||
| FFO per common share and unit | $ | 0.20 | $ | 0.20 | ||||
| Adjusted FFO per common share and unit | $ | 0.26 | $ | 0.24 | ||||
| Three Months Ended | Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Net income | $ | 1,322,821 | $ | 1,387,514 | ||||
| Interest expense | 4,888,806 | 4,113,597 | ||||||
| Interest income | (214,772 | ) | (146,665 | ) | ||||
| Income tax provision | 18,093 | 15,182 | ||||||
| Depreciation and amortization | 4,769,717 | 4,578,311 | ||||||
| EBITDA | 10,784,665 | 9,947,939 | ||||||
| PPP loan forgiveness | — | (275,494 | ) | |||||
| Other income | (124,877 | ) | — | |||||
| Loss on early debt extinguishment | 241,878 | — | ||||||
| Gain on involuntary conversion of assets | (122,391 | ) | (16,476 | ) | ||||
| Subtotal | 10,779,275 | 9,655,969 | ||||||
| Corporate general and administrative | 1,916,526 | 1,980,765 | ||||||
| Realized (gain) and unrealized loss on hedging activities | (335,446 | ) | 442,464 | |||||
| Hotel EBITDA | $ | 12,360,355 | $ | 12,079,198 | ||||
Tables below are reflected in thousands of dollars:
| Reconciliation of Outlook of Net Loss to EBITDA and Hotel EBITDA | |||||||
| 2024 Guidance | |||||||
| Low Range | High Range | ||||||
| Net income | $ | 1,598 | $ | 2,593 | |||
| Interest expense | 19,885 | 19,885 | |||||
| Interest income | (550 | ) | (550 | ) | |||
| Income tax provision | 120 | 120 | |||||
| Depreciation and amortization | 18,805 | 18,805 | |||||
| EBITDA | 39,858 | 40,853 | |||||
| Loss on early extinguishment of debt | 165 | 165 | |||||
| Other income | (445 | ) | (445 | ) | |||
| Realized and unrealized gain on hedging activities | (250 | ) | (250 | ) | |||
| Corporate general and administrative | 6,775 | 6,575 | |||||
| Hotel EBITDA | $ | 46,103 | $ | 46,898 | |||
| Reconciliation of Outlook of Net Loss to FFO and Adjusted FFO | |||||||
| 2024 Guidance | |||||||
| Low Range | High Range | ||||||
| Net income | $ | 1,598 | $ | 2,593 | |||
| Depreciation and amortization | 18,750 | 18,750 | |||||
| FFO | 20,348 | 21,343 | |||||
| Distributions to preferred stockholders | (7,975 | ) | (7,975 | ) | |||
| FFO attributable to common stockholders and unitholders | 12,373 | 13,368 | |||||
| Amortization | 55 | 55 | |||||
| Realized and unrealized gain on hedging activities | (250 | ) | (250 | ) | |||
| Loss on early extinguishment of debt | 165 | 165 | |||||
| ESOP stock based compensation | 435 | 435 | |||||
| Adjusted FFO attributable to common stockholders and unitholders | $ | 12,778 | $ | 13,773 | |||
Non-GAAP Financial Measures
The Company considers the non-GAAP financial measures of FFO (including FFO per share), Adjusted FFO (including Adjusted FFO per share), EBITDA and hotel EBITDA to be key supplemental measures of the Company’s performance and could be considered along with, not alternatives to, net income (loss) as a measure of the Company’s performance. These measures do not represent cash generated from operating activities determined by generally accepted accounting principles (“GAAP”) or amounts available for the Company’s discretionary use and should not be considered alternative measures of net income, cash flows from operations or any other operating performance measure prescribed by GAAP.
FFO
Industry analysts and investors use FFO as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO, as defined by NAREIT, represents net income or loss determined in accordance with GAAP, excluding extraordinary items as defined under GAAP, gains or losses from sales of previously depreciated operating real estate assets, gains or losses from involuntary conversions of assets, plus certain non-cash items such as real estate asset depreciation and amortization or impairment, and adjustment for any noncontrolling interest from unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by itself.
The Company considers FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance because we believe FFO is most directly comparable to net income (loss), which remains the primary measure of performance, because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company’s real estate between periods or as compared to different companies. Although FFO is intended to be a REIT industry standard, other companies may not calculate FFO in the same manner as we do, and investors should not assume that FFO as reported by us is comparable to FFO as reported by other REITs.
Adjusted FFO
The Company presents adjusted FFO, including adjusted FFO per share and unit, which adjusts for certain additional items that are not in NAREIT’s definition of FFO including changes in deferred income taxes, any unrealized gain (loss) on hedging instruments or warrant derivatives, loan impairment losses, losses on early extinguishment of debt, gains on extinguishment of preferred stock, aborted offering costs, loan modification fees, franchise termination costs, costs associated with the departure of executive officers, litigation settlement, over-assessed real estate taxes on appeal, management contract termination costs, operating asset depreciation and amortization, change in control gains or losses, ESOP and stock compensation expenses and acquisition transaction costs. We exclude these items as we believe it allows for meaningful comparisons between periods and among other REITs and is more indicative than FFO of the on-going performance of our business and assets. Our calculation of adjusted FFO may be different from similar measures calculated by other REITs.
EBITDA
The Company believes that excluding the effect of non-operating expenses and non-cash charges, and the portion of those items related to unconsolidated entities, all of which are also based on historical cost accounting and may be of limited significance in evaluating current performance, can help eliminate the accounting effects of depreciation and financing decisions and facilitate comparisons of core operating profitability between periods and between REITs, even though EBITDA also does not represent an amount that accrued directly to shareholders.
Hotel EBITDA
The Company defines hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax provision or benefit, (4) depreciation and amortization, (5) impairment of long-lived assets or investments, (6) gains and losses on disposal and/or sale of assets, (7) gains and losses on involuntary conversions of assets, (8) realized or unrealized gains and losses on derivative instruments not included in other comprehensive income, (9) other income at the properties (10) loss on early debt extinguishment, (11) Paycheck Protection Program (PPP) debt forgiveness, (12) gain on exercise of development right, (13) corporate general and administrative expense, and (14) other income not related to our wholly-owned portfolio. We believe this provides a more complete understanding of the operating results over which our wholly-owned hotels and its operators have direct control. We believe hotel EBITDA provides investors with supplemental information on the on-going operational performance of our hotels and the effectiveness of third-party management companies operating our business on a property-level basis. The Company’s calculation of hotel EBITDA may be different from similar measures calculated by other REITs.
FAQ
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