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Section 1: 8-K (8-K)

soho-8k_20180508.htm

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2018

 

SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

(Exact name of Registrant as Specified in Its Charter)

 

 

Maryland (Sotherly Hotels Inc.)

Delaware (Sotherly Hotels LP)

001-32379 (Sotherly Hotels Inc.)

001-36091 (Sotherly Hotels LP)

20-1531029 (Sotherly Hotels Inc.)

20-1965427 (Sotherly Hotels LP)

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

410 W. Francis Street

Williamsburg, Virginia

 

23185

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (757) 229-5648

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Sotherly Hotels Inc.    Sotherly Hotels LP    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Sotherly Hotels Inc.    Sotherly Hotels LP    

 

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On May 8, 2018, Sotherly Hotels Inc., a Maryland corporation (the “Company”) and the sole general partner of Sotherly Hotels LP, a Delaware limited partnership, issued a press release (the “Press Release”) announcing the results of operations and financial condition of the Company for the quarter ended March 31, 2018.  A copy of the Press Release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

The Press Release contains “non-GAAP financial measures” as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  In the Press Release, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States.

In accordance with General Instruction B.2 and B.6 of Form 8-K, the information included in this Item 2.02 (including Exhibit 99.1 hereto), shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

Number

 

Description

99.1

 

Press Release of Sotherly Hotels Inc. dated May 8, 2018, reporting financial results for the quarter ended March 31, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

 

Date:  May 8, 2018

 

SOTHERLY HOTELS INC.

 

 

 

 

 

 

By:

/s/ Anthony E. Domalski

 

 

 

Anthony E. Domalski

 

 

 

Chief Financial Officer

 

 

 

SOTHERLY HOTELS LP

 

 

 

 

 

 

 

by its General Partner,

 

 

 

SOTHERLY HOTELS INC.

 

 

 

 

 

 

By:

/s/ Anthony E. Domalski

 

 

 

Anthony E. Domalski

 

 

 

Chief Financial Officer

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

soho-ex991_6.htm

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

TUESDAY, MAY 8, 2018

 

SOTHERLY HOTELS INC. REPORTS FINANCIAL RESULTS

FOR THE QUARTER ENDED MARCH 31, 2018

Williamsburg, Virginia – May 8, 2018 – 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, 2018. The Company’s results include the following*:

 

 

Three Months Ended

 

 

March 31, 2018

 

 

March 31, 2017

 

 

($ in thousands except per share data)

 

Total Revenue

$

41,736

 

 

$

38,695

 

Net (loss) income available to common stockholders

 

(238

)

 

 

1,851

 

 

 

 

 

 

 

 

 

EBITDA

 

10,345

 

 

 

9,751

 

Hotel EBITDA

 

11,879

 

 

 

11,479

 

 

 

 

 

 

 

 

 

FFO

 

4,499

 

 

 

5,000

 

Adjusted FFO available to common stockholders

 

4,746

 

 

 

5,134

 

 

 

 

 

 

 

 

 

Net (loss) income per share available to common stockholders

$

(0.02

)

 

$

0.13

 

FFO per share and unit

$

0.29

 

 

$

0.32

 

Adjusted FFO available to common holders per share and unit

$

0.31

 

 

$

0.32

 

 

(*)  Earnings before interest, taxes, depreciation and amortization (“EBITDA”), hotel EBITDA, funds from operations (“FFO”), adjusted FFO, FFO per share and unit and adjusted FFO per 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 where otherwise indicated.

HIGHLIGHTS:

 

Revenue and RevPAR.  For the three-month period ending March 31, 2018, Total Revenue increased 7.9% over the three-month period ending March 31, 2017.  Room revenue per available room (“RevPAR”) for the Company’s composite portfolio, which includes the performance of the rooms participating in our rental program at the Hyde Resort & Residences, during the three-month period ending March 31, 2018, increased 6.6% over the three months ended March 31, 2017, to $112.03 reflecting a 4.6% decrease in occupancy and an 11.8% increase in average daily rate (“ADR”).

 

Common Dividends. As previously reported on May 1, 2018, the Company announced its quarterly dividend (distribution) on its common stock (and units) of $0.12 per share (and unit) to stockholders (and unitholders) of record as of June 15, 2018.

 

Hotel EBITDA. The Company generated hotel EBITDA of approximately $11.9 million during the three-month period ending March 31, 2018, an increase of 3.5%, or approximately $0.4 million, from the three months ended March 31, 2017.  

 

EBITDA. The Company generated EBITDA of approximately $10.3 million during the three-month period ending March 31, 2018, an increase of 6.1% or approximately $0.6 million compared to the three months ended March 31, 2017.

 

Adjusted FFO. For the three-month period ending March 31, 2018, Adjusted FFO decreased 7.5% or approximately $0.4 million from the three months ended March 31, 2017.


Andrew M. Sims, Chairman and Chief Executive Officer of Sotherly Hotels Inc., commented, “The first quarter of 2018 started out slow, with January showing weakness, followed by a steady increase in business volume during February and March.  With Easter week occurring in the first quarter this year, some revenue migrated to the second quarter.  We believe the first half of 2018 will be strong in terms of performance for the Company.  The acquisition of the Hyatt Centric Arlington is a nice addition to the Company’s upper upscale portfolio.

Balance Sheet/Liquidity

At March 31, 2018, the Company had approximately $35.6 million of available cash and cash equivalents, of which approximately $4.9 million was reserved for real estate taxes, insurance, capital improvements and certain other expenses or otherwise restricted. The Company had approximately $380.7 million in outstanding debt at a weighted average interest rate of approximately 4.94%.

On February 1, 2018, the Company drew down the final $5.0 million of loan proceeds available on the Hilton Wilmington Riverside mortgage loan after completing a significant portion of the renovation of the hotel and meeting certain other requirements under the loan documents.

On February 12, 2018, the Company and the Operating Partnership closed on a sale and issuance by the Operating Partnership of an aggregate $25.0 million of the 7.25% senior unsecured notes of the Operating Partnership, unconditionally guaranteed by the Company (the “7.25% Notes”), for net proceeds after estimated expenses of approximately $23.3 million.  The Operating Partnership used the net proceeds from this offering, together with existing cash on hand and $57.0 million of first and second lien asset-level mortgage indebtedness, to finance the acquisition of the Hyatt Centric Arlington hotel located in Arlington, Virginia (the “Arlington Hotel”) and for working capital.

On February 26, 2018, we entered into a First Amendment to the Loan Agreement, Amended and Restated Promissory Note, and other related documents with International Bank of Commerce to amend the terms of the mortgage loan on The Whitehall hotel located in Houston, TX.  Pursuant to the amended loan documents, the maturity date is extended until February 26, 2023, the loan amortizes on a 25-year schedule with payments of principal and interest beginning immediately, and the loan has an initial principal balance of $15.0 million, with no additional principal available.

On April 5, 2018, the Company drew down an additional $3.30 million of loan proceeds available on the Crowne Plaza Tampa Westshore mortgage loan.

Portfolio Update

On March 1, 2018, we acquired the Arlington Hotel from RP/HH Rosslyn Hotel Owner, LP for an aggregate purchase price of approximately $79.7 million.  Concurrent with the closing, we entered into an agreement with Highgate Hotels L.P. to manage the Arlington Hotel.  The management agreement has an initial term of three years commencing on March 1, 2018.   In connection with the acquisition, we entered into a loan agreement, a first and second promissory note (“Note A” and “Note B”, respectively), and other loan documents, including a guarantee by the Operating Partnership, to secure an aggregate $57.0 million mortgage (the “Mortgage Loan”) on the Arlington Hotel with Fifth Third Bank.  Pursuant to the Mortgage Loan documents, Note A is in the amount of $50.0 million; has a term of 3 years, with two 1-year extension options, each of which is subject to certain criteria and bears a floating interest rate of one-month LIBOR plus 3.00%.  Pursuant to the Mortgage Loan documents, Note B is in the amount of $7.0 million; has a term of 1-year, with two 1-year extension options, each of which is subject to certain criteria; bears a floating interest rate of three-month LIBOR plus 5.00%; and requires monthly principal payments of $100,000 during the initial 1-year term, $150,000 during the first 1-year extended term, and $250,000 during the second 1-year extended term, with interest payments due monthly on the outstanding principal amount during all three terms.

On April 2, 2018, the Company’s hotel in Wilmington, North Carolina was converted to the Hotel Ballast, a member of the Tapestry Collection by Hilton, following the completion of a $10.0 million renovation of the guest rooms and public space, which included the addition of two new food and beverage outlets the Board & Barrel Coastal Kitchen and the Buffalo Bayou.

At the Company’s hotel in Tampa, Florida, renovations are underway for an estimated $11.0 million renovation project in anticipation of a planned conversion in March 2019 from the Crowne Plaza Tampa Westshore to Hotel Alba, which we expect to become a member of the Tapestry Collection by Hilton.  As of March 31, 2018, we incurred costs totaling approximately $1.3 million toward this renovation.

2018 Outlook

As previously disclosed, set forth below is the Company’s guidance for 2018, which accounts for the impact of renovations at the Company’s hotels in Wilmington and Tampa, the issuance of the 7.25% Notes, and the acquisition of the Arlington Hotel.  The guidance is predicated on estimates of occupancy and ADR that are consistent with the most recent 2018 calendar year forecasts by STR for the market segments in which the Company operates.


The table below reflects the Company’s projections, within a range, of various financial measures for 2018, in thousands of dollars, except per share and RevPAR data:

 

 

2018 Guidance

 

 

Low Range

 

 

High Range

 

 

 

 

Total revenue

$

167,750

 

 

$

169,095

 

Net loss

 

(2,804

)

 

 

(2,352

)

 

 

 

 

 

 

 

 

EBITDA

 

40,997

 

 

 

41,481

 

Hotel EBITDA

 

46,997

 

 

 

47,581

 

 

 

 

 

 

 

 

 

FFO

 

15,843

 

 

 

16,352

 

Adjusted FFO available to common stockholders

 

15,873

 

 

 

16,493

 

 

 

 

 

 

 

 

 

Net loss per share available to common stockholders

$

(0.21

)

 

$

(0.17

)

FFO per share and unit

$

1.04

 

 

$

1.07

 

Adjusted FFO available to common holders per share and unit

$

1.04

 

 

$

1.08

 

Rev PAR

$

106.23

 

 

$

107.09

 

Hotel EBITDA margin

 

31.4

 

%

 

31.6%

 

 

 



Earnings Call/Webcast

The Company will conduct its first quarter 2018 conference call for investors and other interested parties at 10:00 a.m. Eastern Time on Tuesday, May 8, 2018. 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 May 8, 2018 through May 7, 2019. To access the rebroadcast, dial 877-344-7529 and enter conference number 10118957.  A replay of the call also will be available on the Internet at www.sotherlyhotels.com until May 7, 2019.

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, and an interest in the Hyde Resort & Residences, a luxury condo hotel. Most of the Company’s properties operate under the Hilton Worldwide, InterContinental Hotels Group and Marriott International, Inc. brands. 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:

Scott Kucinski

Vice President – Operations & Investor Relations

Sotherly Hotels Inc.

410 West Francis Street

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. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable, these statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict and many of which are beyond the Company’s control. Therefore, actual outcomes and results may differ materially from what is expressed, forecasted or implied in such forward-looking statements. Factors which could have a material adverse effect on the Company’s future results, performance and achievements, include, but are not limited to: national and local economic and business conditions that affect occupancy rates and revenues at the Company’s 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 adverse weather conditions, including hurricanes; the availability and terms of financing and capital and the general volatility of the securities markets; the Company’s intent to repurchase shares from time to time; risks associated with the level of the Company’s indebtedness and its ability to meet covenants in its 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 the Company’s 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 the Company’s current and proposed market areas; risks associated with our ability to maintain our franchise agreements with our third party franchisors; the Company’s ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations; the Company’s ability to successfully expand into new markets; legislative/regulatory changes, including changes to laws governing taxation of REITs; the Company’s ability to maintain its qualification as a REIT; and the Company’s ability to maintain adequate insurance coverage. These risks and uncertainties are described in greater detail under “Risk Factors” in the Company’s Annual Report on Form 10-K 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, 2018

 

 

December 31, 2017

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Investment in hotel properties, net

 

$

438,649,721

 

 

$

357,799,512

 

Cash and cash equivalents

 

 

30,673,556

 

 

 

29,777,845

 

Restricted cash

 

 

4,901,392

 

 

 

3,651,197

 

Accounts receivable, net

 

 

9,424,697

 

 

 

5,587,077

 

Accounts receivable - affiliate

 

 

307,351

 

 

 

394,026

 

Prepaid expenses, inventory and other assets

 

 

6,207,626

 

 

 

7,292,565

 

Deferred income taxes

 

 

5,190,855

 

 

 

5,451,118

 

TOTAL ASSETS

 

$

495,355,198

 

 

$

409,953,340

 

LIABILITIES

 

 

 

 

 

 

 

 

Mortgage loans, net

 

$

357,170,859

 

 

$

297,318,816

 

Unsecured notes, net

 

 

23,530,323

 

 

 

-

 

Accounts payable and accrued liabilities

 

 

16,534,533

 

 

 

13,813,623

 

Advance deposits

 

 

2,570,635

 

 

 

1,572,388

 

Dividends and distributions payable

 

 

3,229,002

 

 

 

3,073,483

 

TOTAL LIABILITIES

 

$

403,035,352

 

 

$

315,778,310

 

Commitments and contingencies

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

Sotherly Hotels Inc. stockholders’ equity

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 11,000,000 shares authorized;

 

 

 

 

 

 

 

 

8.0% Series B cumulative redeemable perpetual preferred stock,

   liquidation preference $25 per share, 1,610,000 shares issued

   and outstanding at March 31, 2018 and December 31, 2017, respectively

 

 

16,100

 

 

 

16,100

 

7.875% Series C cumulative redeemable perpetual preferred stock,

   liquidation preference $25 per share, 1,300,000 shares issued

   and outstanding at March 31, 2018 and December 31, 2017, respectively

 

 

13,000

 

 

 

13,000

 

Common stock, par value $0.01, 49,000,000 shares authorized, 14,121,081

   shares and 14,078,831 shares issued and outstanding at March 31, 2018

   and December 31, 2017, respectively

 

 

141,211

 

 

 

140,788

 

Additional paid-in capital

 

 

146,360,268

 

 

 

146,249,339

 

Unearned ESOP shares

 

 

(4,572,942

)

 

 

(4,633,112

)

Distributions in excess of retained earnings

 

 

(50,558,067

)

 

 

(48,765,860

)

Total Sotherly Hotels Inc. stockholders’ equity

 

 

91,399,570

 

 

 

93,020,255

 

Noncontrolling interest

 

 

920,276

 

 

 

1,154,775

 

TOTAL EQUITY

 

 

92,319,846

 

 

 

94,175,030

 

TOTAL LIABILITIES AND EQUITY

 

$

495,355,198

 

 

$

409,953,340

 

 

 


 

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

March 31, 2018

 

 

March 31, 2017

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

Rooms department

 

$

28,285,445

 

 

$

27,366,634

 

Food and beverage department

 

 

8,351,983

 

 

 

8,323,759

 

Other operating departments

 

 

5,098,128

 

 

 

3,004,493

 

Total revenue

 

 

41,735,556

 

 

 

38,694,886

 

EXPENSES

 

 

 

 

 

 

 

 

Hotel operating expenses

 

 

 

 

 

 

 

 

Rooms department

 

 

6,700,381

 

 

 

6,682,279

 

Food and beverage department

 

 

6,395,076

 

 

 

5,728,473

 

Other operating departments

 

 

1,528,327

 

 

 

600,020

 

Indirect

 

 

15,233,256

 

 

 

14,205,231

 

Total hotel operating expenses

 

 

29,857,040

 

 

 

27,216,003

 

Depreciation and amortization

 

 

5,634,190

 

 

 

4,061,097

 

Loss on disposal of assets

 

 

3,739

 

 

 

-

 

Corporate general and administrative

 

 

1,546,300

 

 

 

1,712,082

 

Total operating expenses

 

 

37,041,269

 

 

 

32,989,182

 

NET OPERATING INCOME

 

 

4,694,287

 

 

 

5,705,704

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(4,177,019

)

 

 

(3,813,717

)

Interest income

 

 

81,704

 

 

 

39,705

 

Unrealized gain (loss) on hedging activities

 

 

12,730

 

 

 

(15,945

)

Gain on sale of assets

 

 

 

 

 

100,407

 

Gain on involuntary conversion of assets

 

 

870,741

 

 

 

1,041,815

 

Net income before income taxes

 

 

1,482,443

 

 

 

3,057,969

 

Income tax provision

 

 

(305,955

)

 

 

(171,937

)

Net income

 

 

1,176,488

 

 

 

2,886,032

 

Less: Net loss (income) attributable to the noncontrolling interest

 

 

30,013

 

 

 

(229,942

)

Net income attributable to the Company

 

 

1,206,501

 

 

 

2,656,090

 

Distributions to preferred stockholders

 

 

(1,444,844

)

 

 

(805,000

)

Net (loss) income available to common stockholders

 

$

(238,343

)

 

$

1,851,090

 

Net (loss) income per share available to common stockholders

 

 

 

 

 

 

 

 

Basic & Diluted

 

$

(0.02

)

 

$

0.13

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

Basic & Diluted

 

 

13,472,221

 

 

 

14,025,489

 

 

 

 


 

SOTHERLY HOTELS INC.

KEY OPERATING METRICS

(unaudited)

The following tables illustrate the key operating metrics for the three months ended March 31, 2018 and 2017, respectively, for the Company’s wholly-owned properties (“actual” portfolio metrics), as well as the ten wholly-owned properties in the portfolio that were under the Company’s control during the three months ended March 31, 2018 and the corresponding periods in 2017 (“same-store” portfolio metrics). Accordingly, the same-store data does not reflect the performance of the Crowne Plaza Hampton Marina which was sold in February 2017, our interest in the Hyde Resort & Residences which was acquired on January 30, 2017, or the Hyatt Centric Arlington which we acquired in March 2018.  The composite portfolio metrics represent all of the Company’s wholly-owned properties and the participating condominium hotel rooms at the Hyde Resort & Residences during the three months ended March 31, 2018 and the corresponding periods in 2017.

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

March 31, 2018

 

 

March 31, 2017

 

Actual Portfolio Metrics

 

 

 

 

 

 

 

 

Occupancy %

 

 

67.6

%

 

 

70.1

%

ADR

 

$

157.80

 

 

$

149.08

 

RevPAR

 

$

106.63

 

 

$

104.52

 

Same-Store Portfolio Metrics

 

 

 

 

 

 

 

 

Occupancy %

 

 

66.8

%

 

 

69.8

%

ADR

 

$

155.53

 

 

$

150.08

 

RevPAR

 

$

103.84

 

 

$

104.80

 

Composite Portfolio Metrics

 

 

 

 

 

 

 

 

Occupancy %

 

 

66.5

%

 

 

69.8

%

ADR

 

$

168.37

 

 

$

150.65

 

RevPAR

 

$

112.03

 

 

$

105.10

 

 

 


 

SOTHERLY HOTELS INC.

SUPPLEMENTAL DATA

(unaudited)

The following tables illustrate the key operating metrics for the three months ended March 31, 2018 and 2017, respectively, for each of the Company’s wholly-owned properties during each respective reporting period, irrespective of ownership percentage during any period.

Occupancy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2018

 

 

Q1 2017

 

 

Q1 2016

 

Crowne Plaza Tampa Westshore

Tampa, Florida

 

90.6

%

 

 

85.7

%

 

 

83.7

%

The DeSoto

Savannah, Georgia

 

56.7

%

 

 

66.8

%

 

 

74.5

%

DoubleTree by Hilton Jacksonville Riverfront

Jacksonville, Florida

 

84.3

%

 

 

80.9

%

 

 

76.8

%

DoubleTree by Hilton Laurel

Laurel, Maryland

 

50.6

%

 

 

50.2

%

 

 

44.5

%

DoubleTree by Hilton Philadelphia Airport

Philadelphia, Pennsylvania

 

71.1

%

 

 

69.1

%

 

 

73.1

%

DoubleTree by Hilton Raleigh Brownstone – University

Raleigh, North Carolina

 

71.4

%

 

 

74.2

%

 

 

69.4

%

DoubleTree Resort by Hilton Hollywood Beach

Hollywood, Florida

 

77.8

%

 

 

83.0

%

 

 

88.5

%

Georgian Terrace

Atlanta, Georgia

 

63.6

%

 

 

74.6

%

 

 

70.2

%

Hotel Ballast (1)

Wilmington, North Carolina

 

51.4

%

 

 

64.1

%

 

 

58.6

%

Hyatt Centric Arlington (2)

Arlington, Virginia

 

72.2

%

 

 

80.2

%

 

 

79.1

%

Sheraton Louisville Riverside

Jeffersonville, Indiana

 

51.6

%

 

 

57.5

%

 

 

51.1

%

The Whitehall

Houston, Texas

 

57.6

%

 

 

65.5

%

 

 

64.8

%

Hyde Resort & Residences (3)

Hollywood Beach, Florida

 

52.3

%

 

 

39.3

%

 

N/A

 

All properties weighted average (2)

 

66.9

%

 

 

71.6

%

 

 

70.8

%

 

1

Property undergoing renovation during the current quarter.

2

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.

3

Reflects only the condominium units at the Hyde Resort & Residences participating in our rental program for the period those units participated in our rental program.

 


ADR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2018

 

 

Q1 2017

 

 

Q1 2016

 

Crowne Plaza Tampa Westshore

Tampa, Florida

$

140.82

 

 

$

136.95

 

 

$

130.90

 

The DeSoto

Savannah, Georgia

$

178.65

 

 

$

162.04

 

 

$

157.34

 

DoubleTree by Hilton Jacksonville Riverfront

Jacksonville, Florida

$

144.30

 

 

$

132.16

 

 

$

122.43

 

DoubleTree by Hilton Laurel

Laurel, Maryland

$

109.13

 

 

$

113.28

 

 

$

100.06

 

DoubleTree by Hilton Philadelphia Airport

Philadelphia, Pennsylvania

$

128.84

 

 

$

120.02

 

 

$

121.90

 

DoubleTree by Hilton Raleigh Brownstone – University

Raleigh, North Carolina

$

133.58

 

 

$

135.59

 

 

$

134.87

 

DoubleTree Resort by Hilton Hollywood Beach

Hollywood, Florida

$

226.52

 

 

$

216.61

 

 

$

221.48

 

Georgian Terrace

Atlanta, Georgia

$

191.17

 

 

$

171.32

 

 

$

160.52

 

Hotel Ballast (1)

Wilmington, North Carolina

$

131.36

 

 

$

126.66

 

 

$

128.12

 

Hyatt Centric Arlington (2)

Arlington, Virginia

$

166.91

 

 

$

174.40

 

 

$

153.51

 

Sheraton Louisville Riverside

Jeffersonville, Indiana

$

120.39

 

 

$

121.10

 

 

$

141.14

 

The Whitehall

Houston, Texas

$

147.11

 

 

$

161.18

 

 

$

149.40

 

Hyde Resort & Residences (3)

Hollywood Beach, Florida

$

357.72

 

 

$

397.16

 

 

N/A

 

All properties weighted average (2)

$

166.77

 

 

$

154.02

 

 

$

148.54

 

 

1

Property undergoing renovation during the current quarter.

2

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.

3

Reflects only the condominium units at the Hyde Resort & Residences participating in our rental program for the period those units participated in our rental program.

 


RevPAR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2018

 

 

Q1 2017

 

 

Q1 2016

 

Crowne Plaza Tampa Westshore

Tampa, Florida

$

127.56

 

 

$

117.43

 

 

$

109.57

 

The DeSoto

Savannah, Georgia

$

101.36

 

 

$

108.29

 

 

$

117.29

 

DoubleTree by Hilton Jacksonville Riverfront

Jacksonville, Florida

$

121.65

 

 

$

106.92

 

 

$

94.08

 

DoubleTree by Hilton Laurel

Laurel, Maryland

$

55.26

 

 

$

56.83

 

 

$

44.53

 

DoubleTree by Hilton Philadelphia Airport

Philadelphia, Pennsylvania

$

91.59

 

 

$

82.90

 

 

$

89.12

 

DoubleTree by Hilton Raleigh Brownstone – University

Raleigh, North Carolina

$

95.36

 

 

$

100.63

 

 

$

93.60

 

DoubleTree Resort by Hilton Hollywood Beach

Hollywood, Florida

$

176.17

 

 

$

179.81

 

 

$

196.11

 

Georgian Terrace

Atlanta, Georgia

$

121.49

 

 

$

127.77

 

 

$

112.74

 

Hotel Ballast (1)

Wilmington, North Carolina

$

67.48

 

 

$

81.18

 

 

$

75.13

 

Hyatt Centric Arlington (2)

Arlington, Virginia

$

120.57

 

 

$

139.78

 

 

$

121.38

 

Sheraton Louisville Riverside

Jeffersonville, Indiana

$

62.12

 

 

$

69.61

 

 

$

72.19

 

The Whitehall

Houston, Texas

$

84.74

 

 

$

105.55

 

 

$

96.86

 

Hyde Resort & Residences (3)

Hollywood Beach, Florida

$

187.03

 

 

$

155.97

 

 

N/A

 

All properties weighted average (2)

$

111.52

 

 

$

110.23

 

 

$

105.24

 

 

1

Property undergoing renovation during the current quarter.

2

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.

3

Reflects only the condominium units at the Hyde Resort & Residences participating in our rental program for the period those units participated in our rental program.

 


 

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, 2018

 

 

March 31, 2017

 

Net (loss) income available to common stockholders

 

$

(238,343

)

 

$

1,851,090

 

Add: Net (loss) income attributable to noncontrolling interest

 

 

(30,013

)

 

 

229,942

 

Depreciation and amortization

 

 

5,634,190

 

 

 

4,061,097

 

Gain on involuntary conversion of assets

 

 

(870,741

)

 

 

(1,041,815

)

Loss (gain) on disposal and/or sale of assets

 

 

3,739

 

 

 

(100,407

)

FFO

 

$

4,498,832

 

 

$

4,999,907

 

Decrease in deferred income taxes

 

 

260,262

 

 

 

118,050

 

Unrealized (gain) loss on hedging activities

 

 

(12,730

)

 

 

15,945

 

Adjusted FFO available to common stockholders

 

$

4,746,364

 

 

$

5,133,902

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic

 

 

13,472,221

 

 

 

14,025,489

 

 

 

 

 

 

 

 

 

 

Weighted average number of non-controlling units

 

 

1,778,140

 

 

 

1,778,140

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares and units outstanding, basic

 

 

15,250,361

 

 

 

15,803,629

 

 

 

 

 

 

 

 

 

 

FFO per share and unit

 

$

0.29

 

 

$

0.32

 

 

 

 

 

 

 

 

 

 

Adjusted FFO per share and unit

 

$

0.31

 

 

$

0.32

 

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

March 31, 2018

 

 

March 31, 2017

 

Net (loss) income available to common stockholders

 

$

(238,343

)

 

$

1,851,090

 

Add: Net (loss) income attributable to noncontrolling interest

 

 

(30,013

)

 

 

229,942

 

Interest expense

 

 

4,177,019

 

 

 

3,813,717

 

Interest income

 

 

(81,704

)

 

 

(39,705

)

Income tax provision

 

 

305,955

 

 

 

171,937

 

Depreciation and amortization

 

 

5,634,190

 

 

 

4,061,097

 

Loss (gain) on disposal and/or sale of assets

 

 

3,739

 

 

 

(100,407

)

Gain on involuntary conversion of assets

 

 

(870,741

)

 

 

(1,041,815

)

Distributions to preferred stockholders

 

 

1,444,844

 

 

 

805,000

 

EBITDA

 

 

10,344,946

 

 

 

9,750,856

 

Corporate general and administrative

 

 

1,546,300

 

 

 

1,712,082

 

Unrealized (gain) loss on hedging activities

 

 

(12,730

)

 

 

15,945

 

Hotel EBITDA

 

$

11,878,516

 

 

$

11,478,883

 

 


 


Non-GAAP Financial Measures

The Company considers the non-GAAP measures of FFO (including 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 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 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, 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) corporate general and administrative expense, (12) depreciation and amortization, (13) gains and losses on involuntary conversions of assets, (14) distributions to preferred stockholders and (15) 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.

 

 

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