Sotherly Hotels Inc. Reports Financial Results for the Third Quarter Ended September 30, 2020
Sotherly Hotels Inc. (NASDAQ: SOHO) reported significant financial challenges in its Q3 2020 results, driven largely by the impact of COVID-19. Total revenue dropped 66.1% year-over-year to $14.4 million, with a net loss attributable to common stockholders of $12.3 million. Hotel EBITDA decreased approximately 113% to $(1.2) million. RevPAR fell 63.3% to $36.68 due to decreased occupancy and average daily rates. The Company suspended its quarterly cash dividend to preserve liquidity, with available cash on hand amounting to $23.2 million as of September 30, 2020.
- Incremental improvements in demand observed, primarily in the transient leisure segment.
- Reduction in principal and interest payments achieved through forbearance agreements with lenders.
- Total revenue decreased by 66.1% from the previous year.
- Net loss attributable to common stockholders was $12.3 million.
- Suspension of quarterly cash dividend to preserve liquidity.
WILLIAMSBURG, Va., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ: SOHO), (“Sotherly” or the “Company”), a self-managed and self-administered lodging real estate investment trust (a “REIT”), today reported its consolidated results for the third quarter ended September 30, 2020. The Company’s results include the following*:
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||
| ($ in thousands except per share data) | ($ in thousands except per share data) | ||||||||||||||
| Total Revenue | $ | 14,414 | $ | 42,552 | $ | 56,917 | $ | 141,483 | |||||||
| Net loss attributable to common stockholders | (12,260 | ) | (107 | ) | (43,708 | ) | (2,492 | ) | |||||||
| EBITDA | (2,021 | ) | 10,974 | (7,052 | ) | 34,143 | |||||||||
| Hotel EBITDA | (1,154 | ) | 8,904 | (1,303 | ) | 37,658 | |||||||||
| FFO attributable to common stockholders and unitholders | (8,162 | ) | 4,719 | (32,261 | ) | 13,010 | |||||||||
| Adjusted FFO attributable to common stockholders and unitholders | (8,560 | ) | 4,258 | (25,483 | ) | 16,213 | |||||||||
| Net loss per common share | $ | (0.86 | ) | $ | (0.01 | ) | $ | (3.06 | ) | $ | (0.18 | ) | |||
| FFO per common share and unit | $ | (0.53 | ) | $ | 0.31 | $ | (2.08 | ) | $ | 0.84 | |||||
| Adjusted FFO per common share and unit | $ | (0.55 | ) | $ | 0.28 | $ | (1.64 | ) | $ | 1.05 | |||||
(*) Earnings before interest, taxes, depreciation and amortization (“EBITDA”), hotel EBITDA, funds from operations (“FFO”) available to common stockholders and unitholders, adjusted FFO available 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.
COVID-19 UPDATE
The impact of the COVID-19 pandemic on the hospitality industry has been significant, with demand for hotel rooms in all of the markets the Company operates significantly reduced and occupancy rates reaching historic lows. We continued to experience a substantial decline in our revenues, profitability, and cash flows from operations during the third quarter of 2020. While the extent and duration of the negative effects resulting from COVID-19 on the Company’s business are highly uncertain and difficult to predict, we expect materially adverse effects on our operations and financial results to continue until travel and business restrictions are eased, travel orders are lifted, consumer confidence is restored, and an economic recovery takes hold. The COVID-19 pandemic has also significantly increased economic uncertainty and has led to disruption and volatility in the global capital markets, which has limited our access to capital and could increase our cost of capital. We continue to follow the procedures and strategies that we introduced at the outset of the pandemic, including enhanced cleaning protocols as well as several cost reduction initiatives.
ESTIMATED MONTHLY CASH USE
The Company estimates the average monthly cash use across its portfolio for the fourth quarter to be approximately
- Average hotel-level monthly cash use of approximately
$0 t o$0.45 million ; - Corporate-level monthly G&A cash use of
$0.45 t o$0.5 million ; and - Corporate finance-related monthly cash use of
$1.3 million , which includes principal and interest payments on the Company’s outstanding mortgage debt.
HIGHLIGHTS
- RevPAR. Room revenue per available room (“RevPAR”) for the Company’s composite portfolio, which includes the Hyatt Centric Arlington and the rooms participating in our rental programs at the Hyde Resort & Residences and the Hyde Beach House Resort and Residences, during the three-month period ending September 30, 2020, decreased
63.3% over the three months ended September 30, 2019, to$36.68 reflecting a59.8% decrease in occupancy and a8.9% decrease in average daily rate (“ADR”). For the nine-month period ending September 30, 2020, RevPAR decreased60.4% over the nine months ended September 30, 2019, to$46.20 driven by a57.6% decrease in occupancy and a6.5% decrease in ADR. - Revenue. For the three-month period ending September 30, 2020, total revenue decreased
66.1% over the three-month period ending September 30, 2019. For the nine-month period ending September 30, 2020, total revenue decreased59.8% or by approximately$84.6 million to approximately$56.9 million , as compared to approximately$141.5 million for the nine-month period ending September 30, 2019. - Common Dividends. As approved by its Board of Directors, the Company has suspended its regular quarterly cash dividend in order to preserve liquidity. Accordingly, the Company did not pay a dividend on its common stock and common units for the quarter ended September 30, 2020. The Board of Directors will continue to monitor the situation and assess future quarterly common dividend declarations. Per the terms of the Company’s preferred stock, the Company cannot make any common dividend payments unless full cumulative distributions have been declared and paid for past distribution periods for each series of preferred stock.
- Hotel EBITDA. The Company generated hotel EBITDA of approximately
$(1.2) million during the three-month period ending September 30, 2020. Hotel EBITDA decreased113.0% , or approximately ($10.1) million , over the three months ended September 30, 2019. For the nine-month period ending September 30, 2020, hotel EBITDA decreased103.5% , or approximately$(39.0) million , over the nine months ended September 30, 2019. - Adjusted FFO attributable to common stockholders and unitholders. For the three-month period ending September 30, 2020, adjusted FFO attributable to common stockholders and unitholders decreased
301.0% , or approximately$(12.8) million , over the three months ended September 30, 2019. For the nine-month period ending September 30, 2020, adjusted FFO attributable to common stockholders and unitholders decreased257.2% or approximately$(41.7) million over the nine months ended September 30, 2019.
Dave Folsom, President and Chief Executive Officer, of Sotherly Hotels Inc., commented, “The efforts of the hotel associates and executive team at our management company, Our Town Hospitality, as well as the efforts of the Sotherly team, have been commendable during the pandemic. Since the historically low RevPAR levels witnessed in April, we have experienced incremental improvements in demand driven primarily by the transient leisure segment. We are also seeing an initial, albeit small, return of business and group bookings. We continue to seek capital to enhance the Company’s liquidity position and continue to work constructively with our lenders toward forbearance terms on our secured mortgage debt.”
Balance Sheet/Liquidity
As of September 30, 2020, the Company had approximately
Other Developments
We have entered into various forbearance and loan modification agreements with our lenders for the mortgage loans secured by our hotels located in Laurel, MD, Savannah, GA, Wilmington, NC, Philadelphia, PA, Houston, TX, Jacksonville, FL, Jeffersonville, IN, Raleigh, NC, Tampa, FL, Arlington, VA, and Atlanta, GA. These agreements generally allow us to defer payments of principal and interest for periods that began in April 2020 and that extend through to various dates ending between September 2020 and April 2021. We are currently in negotiations with the lender for the mortgage loan secured by the DoubleTree Resort by Hilton Hollywood Beach, in which we are in default, and may seek additional concessions from our lenders as existing payment extensions and deferrals expire, to the extent warranted by market conditions and the financial performance of our hotels. There can be no assurance that we will be able to reach agreement with all of our lenders or that additional concessions, if needed, can be negotiated on terms that are acceptable.
On October 14, 2020 we entered into a hotel management agreement, effective as of November 15, 2020, with Our Town Hospitality, LLC (“Our Town”) for the management of the Hyatt Centric Arlington. On November 15, 2020, we expect management of the Hyatt Centric Arlington to transition from Highgate Hotels, L.P. to Our Town. Following the transition, Our Town will manage each of the Company’s twelve wholly-owned hotels, as well as our two condominium hotel rental programs.
2020 Outlook
On March 9, 2020, the Company withdrew its previously announced guidance for 2020. Due to the uncertainties related to the COVID-19 pandemic and its impact on travel, the Company is unable to provide guidance for 2020.
Earnings Call/Webcast
The Company will conduct its third quarter 2020 conference call for investors and other interested parties at 10:00 a.m. Eastern Time on Monday, November 9, 2020. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 888-339-0107 (United States) or 855-669-9657 (Canada) or +1 412-902-4188 (International). 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 November 9 through November 9, 2021. To access the rebroadcast, dial 877-344-7529 and enter conference number 10148828. A replay of the call also will be available on the Internet at www.sotherlyhotels.com until November 9, 2021.
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, Hyatt Hotels Corporation, and Marriott International, Inc. 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
Vice President – Operations & Investor Relations
Sotherly Hotels Inc.
306 South Henry Street, Suite 100
Williamsburg, Virginia 23185
757.229.5648
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. All statements regarding our expected financial position, business and financing plans are forward-looking statements.
Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking statements is the potential increased adverse effect of COVID-19 on the Company’s business, financial performance and condition, operating results and cash flows, the real estate market and the hospitality industry specifically, and the global economy and financial markets. The significance, extent and duration of the impacts caused by the COVID-19 outbreak on the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, including the scope, severity and duration of the pandemic, the extent and effectiveness of the actions mandated and taken to contain the pandemic or mitigate its impact, the Company’s ability to negotiate forbearance and/or modifications agreements with its lenders on acceptable terms, or at all, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Such additional factors include, but are not limited to, the ability of the Company to effectively acquire and dispose of properties; the ability of the Company to implement its operating strategy; changes in general political, economic and competitive conditions and specific market conditions; reduced business and leisure travel due to travel-related health concerns, including the widespread outbreak of COVID-19 or any other infectious or contagious diseases in the U.S. or abroad; adverse changes in the real estate and real estate capital markets; financing risks; litigation risks; regulatory proceedings or inquiries; and changes in laws or regulations or interpretations of current laws and regulations that impact the Company’s business, assets or classification as a REIT. 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 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; the adverse effect of the novel coronavirus on the U.S., regional and global economies, travel, the hospitality industry, and the financial condition and results of operation of the Company; risks associated with civil unrest or disorder that could adversely impact demand for hotel rooms in our markets or result in damage to our hotels; 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; 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; 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, 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
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Investment in hotel properties, net | $ | 432,180,657 | $ | 443,267,448 | ||||
| Cash and cash equivalents | 15,484,560 | 23,738,066 | ||||||
| Restricted cash | 7,697,508 | 4,246,170 | ||||||
| Accounts receivable, net | 1,437,230 | 4,812,479 | ||||||
| Accounts receivable - affiliate | 148,320 | 101,771 | ||||||
| Prepaid expenses, inventory and other assets | 9,260,763 | 5,648,772 | ||||||
| Deferred income taxes | — | 5,412,084 | ||||||
| TOTAL ASSETS | $ | 466,209,038 | $ | 487,226,790 | ||||
| LIABILITIES | ||||||||
| Mortgage loans, net | $ | 357,002,952 | $ | 358,633,884 | ||||
| Unsecured notes, net | 10,719,100 | - | ||||||
| Accounts payable and accrued liabilities | 36,115,988 | 20,189,903 | ||||||
| Advance deposits | 1,361,525 | 2,785,338 | ||||||
| Dividends and distributions payable | 4,277,070 | 4,210,494 | ||||||
| TOTAL LIABILITIES | $ | 409,476,635 | $ | 385,819,619 | ||||
| Commitments and contingencies | — | — | ||||||
| EQUITY | ||||||||
| Sotherly Hotels Inc. stockholders’ equity | ||||||||
| Preferred stock, | ||||||||
liquidation preference and outstanding at September 30, 2020 and December 31, 2019, respectively. | 16,100 | 16,100 | ||||||
liquidation preference and outstanding at September 30, 2020 and December 31, 2019, respectively. | 15,546 | 15,546 | ||||||
liquidation preference and outstanding at September 30, 2020 and December 31, 2019, respectively. | 12,000 | 12,000 | ||||||
| Common stock, par value shares issued and outstanding at September 30, 2020 and 14,272,378 shares issued and outstanding at December 31, 2019. | 148,812 | 142,723 | ||||||
| Additional paid-in capital | 180,134,597 | 180,515,861 | ||||||
| Unearned ESOP shares | (3,917,594 | ) | (4,105,637 | ) | ||||
| Distributions in excess of retained earnings | (115,173,422 | ) | (73,990,690 | ) | ||||
| Total Sotherly Hotels Inc. stockholders’ equity | 61,236,039 | 102,605,903 | ||||||
| Noncontrolling interest | (4,503,636 | ) | (1,198,732 | ) | ||||
| TOTAL EQUITY | 56,732,403 | 101,407,171 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 466,209,038 | $ | 487,226,790 | ||||
SOTHERLY HOTELS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| REVENUE | ||||||||||||||||
| Rooms department | $ | 10,327,164 | $ | 29,253,447 | $ | 38,957,907 | $ | 98,561,643 | ||||||||
| Food and beverage department | 1,166,014 | 8,997,948 | 9,465,179 | 29,584,705 | ||||||||||||
| Other operating departments | 2,921,300 | 4,300,780 | 8,493,762 | 13,336,834 | ||||||||||||
| Total revenue | 14,414,478 | 42,552,175 | 56,916,848 | 141,483,182 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Hotel operating expenses | ||||||||||||||||
| Rooms department | 3,199,346 | 8,064,771 | 12,033,911 | 24,264,623 | ||||||||||||
| Food and beverage department | 799,028 | 7,036,887 | 7,531,235 | 21,795,051 | ||||||||||||
| Other operating departments | 1,071,077 | 1,352,205 | 4,044,313 | 5,007,651 | ||||||||||||
| Indirect | 10,498,795 | 17,194,148 | 34,610,401 | 52,757,527 | ||||||||||||
| Total hotel operating expenses | 15,568,246 | 33,648,011 | 58,219,860 | 103,824,852 | ||||||||||||
| Depreciation and amortization | 4,959,750 | 4,980,168 | 14,935,733 | 16,117,278 | ||||||||||||
| Loss on disposal of assets | 137,014 | 4,918 | 136,563 | 32,088 | ||||||||||||
| Corporate general and administrative | 1,159,207 | 1,768,912 | 4,267,141 | 5,008,290 | ||||||||||||
| Total hotel operating expenses | 21,824,217 | 40,402,009 | 77,559,297 | 124,982,508 | ||||||||||||
| NET OPERATING (LOSS) INCOME | (7,409,739 | ) | 2,150,166 | (20,642,449 | ) | 16,500,674 | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (4,237,866 | ) | (4,722,456 | ) | (13,519,502 | ) | (15,115,690 | ) | ||||||||
| Interest income | 46,116 | 102,768 | 178,483 | 357,576 | ||||||||||||
| Loss on early extinguishment of debt | — | — | — | (1,152,356 | ) | |||||||||||
| Unrealized gain (loss) on hedging activities | 415,467 | (226,491 | ) | (1,385,041 | ) | (1,554,924 | ) | |||||||||
| Gain on exercise of development right | — | 3,940,000 | — | 3,940,000 | ||||||||||||
| Gain on involuntary conversion of assets | 13,518 | 130,569 | 40,125 | 291,902 | ||||||||||||
| Net (loss) income before income taxes | (11,172,504 | ) | 1,374,556 | (35,328,384 | ) | 3,267,182 | ||||||||||
| Income tax (provision) benefit | 133,233 | 694,190 | (5,344,164 | ) | (439,323 | ) | ||||||||||
| Net (loss) income | (11,039,271 | ) | 2,068,746 | (40,672,548 | ) | 2,827,859 | ||||||||||
| Less: Net loss attributable to noncontrolling interest | 968,273 | 13,337 | 3,531,056 | 311,642 | ||||||||||||
| Net (loss) income attributable to the Company | (10,070,998 | ) | 2,082,083 | (37,141,492 | ) | 3,139,501 | ||||||||||
| Declared and undeclared distributions to preferred stockholders | (2,188,910 | ) | (2,188,910 | ) | (6,566,731 | ) | (5,631,799 | ) | ||||||||
| Net loss attributable to common stockholders | $ | (12,259,908 | ) | $ | (106,827 | ) | $ | (43,708,223 | ) | $ | (2,492,298 | ) | ||||
| Net loss per share attributable to common stockholders | ||||||||||||||||
| Basic | $ | (0.86 | ) | $ | (0.01 | ) | $ | (3.06 | ) | $ | (0.18 | ) | ||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic | 14,331,647 | 13,636,706 | 14,293,799 | 13,624,760 | ||||||||||||
SOTHERLY HOTELS INC.
KEY OPERATING METRICS
(unaudited)
The following tables illustrate the key operating metrics for the three and nine months ended September 30, 2020 and 2019, respectively, for the Company’s twelve 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 twelve wholly-owned properties and the participating condominium hotel rooms at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences during the three and nine months ended September 30, 2020 and the corresponding periods in 2019.
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
| Actual Portfolio Metrics | ||||||||||||||||
| Occupancy % | 28.9 | % | 70.6 | % | 31.6 | % | 72.7 | % | ||||||||
| ADR | $ | 123.23 | $ | 142.75 | $ | 142.62 | $ | 157.36 | ||||||||
| RevPAR | $ | 35.57 | $ | 100.75 | $ | 45.05 | $ | 114.40 | ||||||||
| Composite Portfolio Metrics | ||||||||||||||||
| Occupancy % | 27.7 | % | 68.8 | % | 30.4 | % | 71.7 | % | ||||||||
| ADR | $ | 132.51 | $ | 145.51 | $ | 152.06 | $ | 162.69 | ||||||||
| RevPAR | $ | 36.68 | $ | 100.06 | $ | 46.20 | $ | 116.57 | ||||||||
SOTHERLY HOTELS INC.
SUPPLEMENTAL DATA
(unaudited)
The following tables illustrate the key operating metrics for the three and nine months ended September 30, 2020, 2019 and 2018, respectively, for each of the Company’s wholly-owned properties during each respective reporting period, irrespective of ownership percentage during any period.
Occupancy
| Q3 2020 | Q3 2019 | Q3 2018 | |||||||||
| YTD | YTD | YTD | |||||||||
| The DeSoto Savannah, Georgia | 29.7 | % | 60.1 | % | 58.8 | % | |||||
| 26.3 | % | 66.3 | % | 63.4 | % | ||||||
| DoubleTree by Hilton Jacksonville Riverfront Jacksonville, Florida | 28.8 | % | 72.9 | % | 79.1 | % | |||||
| 38.3 | % | 79.5 | % | 82.7 | % | ||||||
| DoubleTree by Hilton Laurel Laurel, Maryland | 31.7 | % | 72.9 | % | 70.3 | % | |||||
| 31.9 | % | 71.5 | % | 66.9 | % | ||||||
| DoubleTree by Hilton Philadelphia Airport Philadelphia, Pennsylvania | 45.1 | % | 82.1 | % | 81.3 | % | |||||
| 36.8 | % | 77.5 | % | 79.6 | % | ||||||
| DoubleTree by Hilton Raleigh Brownstone – University Raleigh, North Carolina | 17.3 | % | 79.6 | % | 74.7 | % | |||||
| 27.3 | % | 77.6 | % | 76.0 | % | ||||||
| DoubleTree Resort by Hilton Hollywood Beach Hollywood, Florida | 28.1 | % | 60.8 | % | 63.0 | % | |||||
| 32.3 | % | 70.9 | % | 71.4 | % | ||||||
| Georgian Terrace Atlanta, Georgia | 18.4 | % | 66.4 | % | 69.4 | % | |||||
| 23.5 | % | 70.8 | % | 69.3 | % | ||||||
| Hotel Alba Tampa, Tapestry Collection by Hilton Tampa, Florida | 24.8 | % | 53.0 | % | 56.1 | % | |||||
| 34.1 | % | 67.6 | % | 74.4 | % | ||||||
| Hotel Ballast Wilmington, Tapestry Collection by Hilton Wilmington, North Carolina | 45.1 | % | 73.0 | % | 69.8 | % | |||||
| 35.8 | % | 71.2 | % | 63.8 | % | ||||||
| Hyatt Centric Arlington (1) Arlington, Virginia | 22.7 | % | 83.6 | % | 86.0 | % | |||||
| 27.9 | % | 81.7 | % | 82.5 | % | ||||||
| Sheraton Louisville Riverside Jeffersonville, Indiana | 44.1 | % | 76.7 | % | 63.1 | % | |||||
| 43.8 | % | 68.9 | % | 61.2 | % | ||||||
| The Whitehall Houston, Texas | 10.9 | % | 63.9 | % | 50.2 | % | |||||
| 23.9 | % | 64.3 | % | 58.5 | % | ||||||
| Hyde Resort & Residences (2) Hollywood Beach, Florida | 19.2 | % | 35.3 | % | 48.4 | % | |||||
| 23.8 | % | 52.3 | % | 47.9 | % | ||||||
| Hyde Beach House Resort & Residences (2) Hollywood Beach, Florida | 10.4 | % | - | - | |||||||
| 9.6 | % | - | - | ||||||||
| All properties weighted average (1) | 27.7 | % | 68.8 | % | 69.6 | % | |||||
| 30.4 | % | 71.7 | % | 71.4 | % | ||||||
| (1 | ) | Includes operating results under previous ownership. Results for periods prior to the Company’s ownership were provided by prior owners of the hotel and have not been audited or confirmed by the Company. |
| (2 | ) | Reflects only those condominium units participating in our rental program for the period. |
ADR
| Q3 2020 | Q3 2019 | Q3 2018 | |||||||||
| YTD | YTD | YTD | |||||||||
| The DeSoto Savannah, Georgia | $ | 149.23 | $ | 155.52 | $ | 161.68 | |||||
| $ | 158.03 | $ | 176.43 | $ | 178.34 | ||||||
| DoubleTree by Hilton Jacksonville Riverfront Jacksonville, Florida | $ | 131.37 | $ | 133.71 | $ | 136.77 | |||||
| $ | 139.52 | $ | 140.04 | $ | 141.46 | ||||||
| DoubleTree by Hilton Laurel Laurel, Maryland | $ | 84.43 | $ | 102.79 | $ | 104.26 | |||||
| $ | 91.86 | $ | 108.45 | $ | 109.28 | ||||||
| DoubleTree by Hilton Philadelphia Airport Philadelphia, Pennsylvania | $ | 112.23 | $ | 137.37 | $ | 138.80 | |||||
| $ | 113.61 | $ | 143.58 | $ | 139.14 | ||||||
| DoubleTree by Hilton Raleigh Brownstone – University Raleigh, North Carolina | $ | 95.89 | $ | 135.64 | $ | 131.28 | |||||
| $ | 124.48 | $ | 139.50 | $ | 134.28 | ||||||
| DoubleTree Resort by Hilton Hollywood Beach Hollywood, Florida | $ | 117.90 | $ | 130.16 | $ | 131.74 | |||||
| $ | 196.03 | $ | 177.85 | $ | 177.20 | ||||||
| Georgian Terrace Atlanta, Georgia | $ | 175.53 | $ | 180.82 | $ | 183.46 | |||||
| $ | 194.42 | $ | 208.14 | $ | 183.98 | ||||||
| Hotel Alba Tampa, Tapestry Collection by Hilton Tampa, Florida | $ | 115.32 | $ | 117.74 | $ | 112.25 | |||||
| $ | 147.74 | $ | 131.68 | $ | 127.01 | ||||||
| Hotel Ballast Wilmington, Tapestry Collection by Hilton Wilmington, North Carolina | $ | 158.88 | $ | 173.57 | $ | 159.76 | |||||
| $ | 151.98 | $ | 162.65 | $ | 151.09 | ||||||
| Hyatt Centric Arlington (1) Arlington, Virginia | $ | 100.98 | $ | 163.14 | $ | 153.12 | |||||
| $ | 146.56 | $ | 188.93 | $ | 178.06 | ||||||
| Sheraton Louisville Riverside Jeffersonville, Indiana | $ | 97.04 | $ | 106.70 | $ | 113.70 | |||||
| $ | 98.70 | $ | 117.64 | $ | 125.99 | ||||||
| The Whitehall Houston, Texas | $ | 108.78 | $ | 137.58 | $ | 141.85 | |||||
| $ | 137.23 | $ | 143.49 | $ | 145.51 | ||||||
| Hyde Resort & Residences (2) Hollywood Beach, Florida | $ | 321.26 | $ | 247.31 | $ | 242.62 | |||||
| $ | 330.03 | $ | 300.07 | $ | 299.26 | ||||||
| Hyde Beach House Resort & Residences (2) Hollywood Beach, Florida | $ | 296.94 | $ | - | $ | - | |||||
| $ | 323.06 | $ | - | $ | - | ||||||
| All properties weighted average (1) | $ | 132.51 | $ | 145.51 | $ | 147.25 | |||||
| $ | 152.06 | $ | 162.69 | $ | 161.38 | ||||||
| (1 | ) | Includes operating results under previous ownership. Results for periods prior to the Company’s ownership were provided by prior owners of the hotel and have not been audited or confirmed by the Company. |
| (2 | ) | Reflects only those condominium units participating in our rental program for the period. |
RevPAR
| Q3 2020 | Q3 2019 | Q3 2018 | |||||||||
| YTD | YTD | YTD | |||||||||
| The DeSoto Savannah, Georgia | $ | 44.34 | $ | 93.51 | $ | 95.01 | |||||
| $ | 41.53 | $ | 116.95 | $ | 113.01 | ||||||
| DoubleTree by Hilton Jacksonville Riverfront Jacksonville, Florida | $ | 37.87 | $ | 97.54 | $ | 108.12 | |||||
| $ | 53.39 | $ | 111.38 | $ | 117.01 | ||||||
| DoubleTree by Hilton Laurel Laurel, Maryland | $ | 26.78 | $ | 74.88 | $ | 73.25 | |||||
| $ | 29.27 | $ | 77.55 | $ | 73.08 | ||||||
| DoubleTree by Hilton Philadelphia Airport Philadelphia, Pennsylvania | $ | 50.67 | $ | 112.82 | $ | 112.78 | |||||
| $ | 41.85 | $ | 111.23 | $ | 110.75 | ||||||
| DoubleTree by Hilton Raleigh Brownstone – University Raleigh, North Carolina | $ | 16.59 | $ | 107.98 | $ | 98.11 | |||||
| $ | 34.01 | $ | 108.26 | $ | 102.07 | ||||||
| DoubleTree Resort by Hilton Hollywood Beach Hollywood, Florida | $ | 33.09 | $ | 79.15 | $ | 83.02 | |||||
| $ | 63.35 | $ | 126.08 | $ | 126.48 | ||||||
| Georgian Terrace Atlanta, Georgia | $ | 32.28 | $ | 120.11 | $ | 127.39 | |||||
| $ | 45.75 | $ | 147.39 | $ | 127.49 | ||||||
| Hotel Alba Tampa, Tapestry Collection by Hilton Tampa, Florida | $ | 28.64 | $ | 62.44 | $ | 62.98 | |||||
| $ | 50.43 | $ | 89.07 | $ | 94.47 | ||||||
| Hotel Ballast Wilmington, Tapestry Collection by Hilton Wilmington, North Carolina | $ | 71.67 | $ | 126.71 | $ | 111.52 | |||||
| $ | 54.48 | $ | 115.86 | $ | 96.34 | ||||||
| Hyatt Centric Arlington (1) Arlington, Virginia | $ | 22.96 | $ | 136.32 | $ | 131.66 | |||||
| $ | 40.94 | $ | 154.33 | $ | 146.94 | ||||||
| Sheraton Louisville Riverside Jeffersonville, Indiana | $ | 42.83 | $ | 81.83 | $ | 71.78 | |||||
| $ | 43.27 | $ | 81.02 | $ | 77.17 | ||||||
| The Whitehall Houston, Texas | $ | 11.87 | $ | 87.94 | $ | 71.23 | |||||
| $ | 32.75 | $ | 92.28 | $ | 85.09 | ||||||
| Hyde Resort & Residences (2) Hollywood Beach, Florida | $ | 61.74 | $ | 87.25 | $ | 117.37 | |||||
| $ | 78.70 | $ | 156.90 | $ | 143.45 | ||||||
| Hyde Beach House Resort & Residences (2) Hollywood Beach, Florida | $ | 30.75 | $ | - | $ | - | |||||
| $ | 30.85 | $ | - | $ | - | ||||||
| All properties weighted average (1) | $ | 36.68 | $ | 100.06 | $ | 102.48 | |||||
| $ | 46.20 | $ | 116.57 | $ | 115.19 | ||||||
| (1 | ) | Includes operating results under previous ownership. Results for periods prior to the Company’s ownership were provided by prior owners of the hotel and have not been audited or confirmed by the Company. |
| (2 | ) | Reflects only those condominium units participating in our rental program for the period. |
SOTHERLY HOTELS INC.
RECONCILIATION OF NET LOSS TO
FFO, Adjusted FFO, EBITDA and Hotel EBITDA
(unaudited)
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
| Net loss attributable to common stockholders | $ | (12,259,908 | ) | $ | (106,827 | ) | $ | (43,708,223 | ) | $ | (2,492,298 | ) | ||||
| Add: Net loss attributable to noncontrolling interest | (968,273 | ) | (13,337 | ) | (3,531,056 | ) | (311,642 | ) | ||||||||
| Depreciation and amortization - real estate | 4,942,480 | 4,965,299 | 14,882,053 | 16,073,505 | ||||||||||||
| Gain on involuntary conversion of assets | (13,518 | ) | (130,569 | ) | (40,125 | ) | (291,902 | ) | ||||||||
| Loss on disposal of assets | 137,014 | 4,918 | 136,563 | 32,088 | ||||||||||||
| FFO attributable to common stockholders and unitholders | $ | (8,162,205 | ) | $ | 4,719,484 | $ | (32,260,788 | ) | $ | 13,009,751 | ||||||
| Decrease (increase) in deferred income taxes | — | (702,775 | ) | 5,412,084 | 452,169 | |||||||||||
| Amortization | 17,270 | 14,869 | 53,680 | 43,773 | ||||||||||||
| Termination fee | — | — | (72,960 | ) | — | |||||||||||
| Loss on early extinguishment of debt | — | — | — | 1,152,356 | ||||||||||||
| Unrealized (gain) loss on hedging activities | (415,467 | ) | 226,491 | 1,385,041 | 1,554,924 | |||||||||||
| Adjusted FFO attributable to common stockholders and unitholders | $ | (8,560,402 | ) | $ | 4,258,069 | $ | (25,482,943 | ) | $ | 16,212,973 | ||||||
| Weighted average number of shares outstanding, basic | 14,331,647 | 13,636,706 | 14,293,799 | 13,624,760 | ||||||||||||
| Weighted average number of non-controlling units | 1,181,501 | 1,778,140 | 1,200,660 | 1,778,140 | ||||||||||||
| Weighted average number of shares and units outstanding, basic | 15,513,148 | 15,414,846 | 15,494,459 | 15,402,900 | ||||||||||||
| FFO per common share and unit | $ | (0.53 | ) | $ | 0.31 | $ | (2.08 | ) | $ | 0.84 | ||||||
| Adjusted FFO per common share and unit | $ | (0.55 | ) | $ | 0.28 | $ | (1.64 | ) | $ | 1.05 | ||||||
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
| Net loss attributable to common stockholders | $ | (12,259,908 | ) | $ | (106,827 | ) | $ | (43,708,223 | ) | $ | (2,492,298 | ) | ||||
| Add: Net loss attributable to noncontrolling interest | (968,273 | ) | (13,337 | ) | (3,531,056 | ) | (311,642 | ) | ||||||||
| Interest expense | 4,237,866 | 4,722,456 | 13,519,502 | 15,115,690 | ||||||||||||
| Interest income | (46,116 | ) | (102,768 | ) | (178,483 | ) | (357,576 | ) | ||||||||
| Income tax benefit (provision) | (133,233 | ) | (694,190 | ) | 5,344,164 | 439,323 | ||||||||||
| Depreciation and amortization | 4,959,750 | 4,980,168 | 14,935,733 | 16,117,278 | ||||||||||||
| Distributions to preferred stockholders | 2,188,910 | 2,188,910 | 6,566,731 | 5,631,799 | ||||||||||||
| EBITDA | (2,021,004 | ) | 10,974,412 | (7,051,632 | ) | 34,142,574 | ||||||||||
| Loss on disposal of assets | 137,014 | 4,918 | 136,563 | 32,088 | ||||||||||||
| Loss on early extinguishment of debt | — | — | — | 1,152,356 | ||||||||||||
| Gain on exercise of development right | — | (3,940,000 | ) | — | (3,940,000 | ) | ||||||||||
| Gain on involuntary conversion of assets | (13,518 | ) | (130,569 | ) | (40,125 | ) | (291,902 | ) | ||||||||
| Subtotal | (1,897,508 | ) | 6,908,761 | (6,955,194 | ) | 31,095,116 | ||||||||||
| Corporate general and administrative | 1,159,207 | 1,768,912 | 4,267,141 | 5,008,290 | ||||||||||||
| Unrealized (gain) loss on hedging activities | (415,467 | ) | 226,491 | 1,385,041 | 1,554,924 | |||||||||||
| Hotel EBITDA | $ | (1,153,768 | ) | $ | 8,904,164 | $ | (1,303,012 | ) | $ | 37,658,330 | ||||||
Non-GAAP Financial Measures
The Company considers the non-GAAP financial measures of FFO (including FFO per share), Adjusted FFO, 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 Funds from Operations (“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 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.
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 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, management contract termination costs, 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.
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) 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. The Company’s calculation of hotel EBITDA may be different from similar measures calculated by other REITs.
FAQ
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