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Section 1: 10-Q (10-Q)

soho-10q_20190331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

 

SOTHERLY HOTELS INC.

(Exact name of registrant as specified in its charter)

 

 

MARYLAND

001-32379

20-1531029

(State or Other Jurisdiction of

Incorporation or Organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

SOTHERLY HOTELS LP

(Exact name of registrant as specified in its charter)

 

 

DELAWARE

001-36091

20-1965427

(State or Other Jurisdiction of

Incorporation or Organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

410 West Francis Street

Williamsburg, Virginia 23185

(757) 229-5648

(Address and Telephone Number of Principal Executive Offices)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Sotherly Hotels Inc.    Yes      No       Sotherly Hotels LP    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

Sotherly Hotels Inc.    Yes      No       Sotherly Hotels LP    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act. (Check one):

Sotherly Hotels Inc.

 

Large Accelerated Filer

 

 

Accelerated Filer

 

 

 

 

 

 

Non-accelerated Filer

 

 

Smaller Reporting Company

 

 

 

 

 

 

Emerging Growth Company

 

 

 

 

Sotherly Hotels LP

 

Large Accelerated Filer

 

 

Accelerated Filer

 

 

 

 

 

 

Non-accelerated Filer

 

 

Smaller Reporting Company

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

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.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    

Sotherly Hotels Inc.    Yes      No   Sotherly Hotels LP    Yes      No  

 

As of May 3, 2019, there were 14,222,378 shares of Sotherly Hotels Inc.’s common stock issued and outstanding.  

 


Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

SOHO

The NASDAQ Stock Market LLC

8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value

SOHOB

The NASDAQ Stock Market LLC

7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value

SOHOO

The NASDAQ Stock Market LLC

8.25% Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value

SOHON

The NASDAQ Stock Market LLC

7.25% Senior Unsecured Notes due 2021

SOHOK

The NASDAQ Stock Market LLC

 

 

 


EXPLANATORY NOTE

We refer to Sotherly Hotels Inc. as the “Company,” Sotherly Hotels LP as the “Operating Partnership,” the Company’s common stock as “common stock,” the Company’s preferred stock as “preferred stock,” and the Operating Partnership’s preferred interest as the “preferred interest.”  References to “we” and “our” mean the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

The Company conducts virtually all of its activities through the Operating Partnership and is its sole general partner. The partnership agreement provides that the Operating Partnership will assume and pay when due, or reimburse the Company for payment of, all costs and expenses relating to the ownership and operations of, or for the benefit of, the Operating Partnership. The partnership agreement further provides that all expenses of the Company are deemed to be incurred for the benefit of the Operating Partnership.

This report combines the Quarterly Reports on Form 10-Q for the period ended March 31, 2019 of the Company and the Operating Partnership. We believe combining the quarterly reports into this single report results in the following benefits:

 

combined reports better reflect how management and investors view the business as a single operating unit;

 

combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

 

combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

 

combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

 

Consolidated Financial Statements;

 

the following Notes to Consolidated Financial Statements:

 

Note 7 – Preferred Stock and Units;

 

Note 8 – Common Stock and Units;

 

Note 13 – Income Per Share and Per Unit; and

 

Note 14 – Subsequent Events;

 

Item 4 - Controls and Procedures; and

 

Item 6 - Certifications of CEO and CFO Pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.

 

 

3


SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

INDEX

 

 

 

 

 

Page

 

 

 

 

 

PART I

Item 1.

 

Consolidated Financial Statements

 

5

 

 

Sotherly Hotels Inc.

 

5

 

 

Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018

 

5

 

 

Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2019 and 2018

 

6

 

 

Consolidated Statements of Changes in Equity (unaudited) for the Three Months Ended March 31, 2019 and 2018

 

7

 

 

Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2019 and 2018

 

8

 

 

Sotherly Hotels LP

 

9

 

 

Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018

 

9

 

 

Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2019 and 2018

 

10

 

 

Consolidated Statements of Changes in Partners’ Capital (unaudited) for the Three Months Ended March 31, 2019 and 2018

 

11

 

 

Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2019 and 2018

 

12

 

 

Notes to Consolidated Financial Statements

 

13

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

31

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

42

Item 4

 

Controls and Procedures

 

43

 

 

 

 

 

PART II

Item 1.

 

Legal Proceedings

 

44

Item 1A.

 

Risk Factors

 

44

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

45

Item 3.

 

Defaults Upon Senior Securities

 

45

Item 4.

 

Mine Safety Disclosures

 

45

Item 5.

 

Other Information

 

45

Item 6.

 

Exhibits

 

46

 

4


PART I

 

 

Item 1.

Consolidated Financial Statements

SOTHERLY HOTELS INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

March 31, 2019

 

 

December 31, 2018

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Investment in hotel properties, net

 

$

441,261,072

 

 

$

435,725,814

 

Cash and cash equivalents

 

 

29,004,070

 

 

 

33,792,773

 

Restricted cash

 

 

4,407,557

 

 

 

4,075,508

 

Accounts receivable, net

 

 

10,346,796

 

 

 

6,766,696

 

Accounts receivable - affiliate

 

 

237,710

 

 

 

262,572

 

Prepaid expenses, inventory and other assets

 

 

5,688,031

 

 

 

5,262,884

 

Favorable lease assets, net

 

 

 

 

 

2,465,421

 

Deferred income taxes

 

 

4,846,500

 

 

 

5,131,179

 

TOTAL ASSETS

 

$

495,791,736

 

 

$

493,482,847

 

LIABILITIES

 

 

 

 

 

 

 

 

Mortgage loans, net

 

$

363,636,230

 

 

$

364,828,845

 

Unsecured notes, net

 

 

24,025,056

 

 

 

23,894,658

 

Accounts payable and accrued liabilities

 

 

23,714,256

 

 

 

16,268,096

 

Advance deposits

 

 

2,351,972

 

 

 

2,815,283

 

Dividends and distributions payable

 

 

3,414,285

 

 

 

3,409,593

 

TOTAL LIABILITIES

 

$

417,141,799

 

 

$

411,216,475

 

Commitments and contingencies  (See Note 6)

 

 

 

 

 

 

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, 2019 and December 31, 2018, respectively

 

 

16,100

 

 

 

16,100

 

7.875% Series C cumulative redeemable perpetual preferred stock,

   liquidation preference $25 per share, 1,352,141 shares issued

   and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

13,521

 

 

 

13,521

 

Common stock, par value $0.01, 49,000,000 shares authorized, 14,222,378

   shares and 14,209,378 shares issued and outstanding at March 31, 2019

   and December 31, 2018, respectively

 

 

142,223

 

 

 

142,093

 

Additional paid-in capital

 

 

147,184,199

 

 

 

147,085,112

 

Unearned ESOP shares

 

 

(4,312,508

)

 

 

(4,379,742

)

Distributions in excess of retained earnings

 

 

(64,406,087

)

 

 

(61,052,418

)

Total Sotherly Hotels Inc. stockholders’ equity

 

 

78,637,448

 

 

 

81,824,666

 

Noncontrolling interest

 

 

12,489

 

 

 

441,706

 

TOTAL EQUITY

 

 

78,649,937

 

 

 

82,266,372

 

TOTAL LIABILITIES AND EQUITY

 

$

495,791,736

 

 

$

493,482,847

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

5


SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

March 31, 2019

 

 

March 31, 2018

 

 

 

(unaudited)

 

 

(unaudited)

 

REVENUE

 

 

 

 

 

 

 

 

Rooms department

 

$

32,951,871

 

 

$

28,285,445

 

Food and beverage department

 

 

9,723,124

 

 

 

8,351,983

 

Other operating departments

 

 

4,715,309

 

 

 

5,098,128

 

Total revenue

 

 

47,390,304

 

 

 

41,735,556

 

EXPENSES

 

 

 

 

 

 

 

 

Hotel operating expenses

 

 

 

 

 

 

 

 

Rooms department

 

 

7,781,439

 

 

 

6,700,381

 

Food and beverage department

 

 

7,136,833

 

 

 

6,395,076

 

Other operating departments

 

 

1,910,135

 

 

 

1,528,327

 

Indirect

 

 

17,389,680

 

 

 

15,233,256

 

Total hotel operating expenses

 

 

34,218,087

 

 

 

29,857,040

 

Depreciation and amortization

 

 

6,028,735

 

 

 

5,634,190

 

(Gain) loss on disposal of assets

 

 

(4,008

)

 

 

3,739

 

Corporate general and administrative

 

 

1,684,444

 

 

 

1,546,300

 

Total operating expenses

 

 

41,927,258

 

 

 

37,041,269

 

NET OPERATING INCOME

 

 

5,463,046

 

 

 

4,694,287

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(5,305,114

)

 

 

(4,177,019

)

Interest income

 

 

99,296

 

 

 

81,704

 

Unrealized (loss) gain on hedging activities

 

 

(490,611

)

 

 

12,730

 

Gain on involuntary conversion of assets

 

 

161,334

 

 

 

870,741

 

Net (loss) income before income taxes

 

 

(72,049

)

 

 

1,482,443

 

Income tax provision

 

 

(318,156

)

 

 

(305,955

)

Net (loss) income

 

 

(390,205

)

 

 

1,176,488

 

Less: Net loss attributable to noncontrolling interest

 

 

206,949

 

 

 

30,013

 

Net (loss) income attributable to the Company

 

 

(183,256

)

 

 

1,206,501

 

Distributions to preferred stockholders

 

 

(1,470,507

)

 

 

(1,444,844

)

Net loss available to common stockholders

 

$

(1,653,763

)

 

$

(238,343

)

Net loss per share available to common stockholders

 

 

 

 

 

 

 

 

Basic

 

$

(0.12

)

 

$

(0.02

)

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

13,610,750

 

 

 

13,472,444

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

6


SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Unearned

 

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid-

 

 

ESOP

 

 

in Excess of

 

 

Noncontrolling

 

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Shares

 

 

Par Value

 

 

In Capital

 

 

Shares

 

 

Retained Earnings

 

 

Interest

 

 

Total

 

Balances at December 31,

   2017

 

 

2,910,000

 

 

$

29,100

 

 

 

14,078,831

 

 

$

140,788

 

 

$

146,249,339

 

 

$

(4,633,112

)

 

$

(48,765,860

)

 

$

1,154,775

 

 

$

94,175,030

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,206,501

 

 

 

(30,013

)

 

 

1,176,488

 

Issuance of unrestricted

   common stock awards

 

 

 

 

 

 

 

 

2,250

 

 

 

23

 

 

 

13,454

 

 

 

 

 

 

 

 

 

 

 

 

13,477

 

Issuance of restricted

   common stock awards

 

 

 

 

 

 

 

 

40,000

 

 

 

400

 

 

 

89,450

 

 

 

 

 

 

 

 

 

 

 

 

89,850

 

Amortization of ESOP

   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60,170

 

 

 

 

 

 

 

 

 

60,170

 

Amortization of restricted

   stock award

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,025

 

 

 

 

 

 

 

 

 

 

 

 

8,025

 

Preferred stock dividends

   declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,444,844

)

 

 

 

 

 

(1,444,844

)

Common stockholders'

   dividends and

   distributions declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,553,864

)

 

 

(204,486

)

 

 

(1,758,350

)

Balances at March 31,

   2018 (unaudited)

 

 

2,910,000

 

 

$

29,100

 

 

 

14,121,081

 

 

$

141,211

 

 

$

146,360,268

 

 

$

(4,572,942

)

 

$

(50,558,067

)

 

$

920,276

 

 

$

92,319,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2018

 

 

2,962,141

 

 

$

29,621

 

 

 

14,209,378

 

 

$

142,093

 

 

$

147,085,112

 

 

$

(4,379,742

)

 

$

(61,052,418

)

 

$

441,706

 

 

$

82,266,372

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(183,256

)

 

 

(206,949

)

 

 

(390,205

)

Issuance of restricted

   common stock awards

 

 

 

 

 

 

 

 

13,000

 

 

 

130

 

 

 

92,203

 

 

 

 

 

 

 

 

 

 

 

 

92,333

 

Amortization of ESOP

   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,141

)

 

 

67,234

 

 

 

 

 

 

 

 

 

66,093

 

Amortization of restricted

   stock award

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,025

 

 

 

 

 

 

 

 

 

 

 

 

8,025

 

Preferred stock dividends

   declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,470,507

)

 

 

 

 

 

(1,470,507

)

Common stockholders'

   dividends and

   distributions declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,699,906

)

 

 

(222,268

)

 

 

(1,922,174

)

Balances at March 31, 2019 (unaudited)

 

 

2,962,141

 

 

$

29,621

 

 

 

14,222,378

 

 

$

142,223

 

 

$

147,184,199

 

 

$

(4,312,508

)

 

$

(64,406,087

)

 

$

12,489

 

 

$

78,649,937

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

7


SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

Three Months Ended

 

 

Three Months Ended

 

 

March 31, 2019

 

 

March 31, 2018

 

 

(unaudited)

 

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) income

$

(390,205

)

 

$

1,176,488

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

6,028,735

 

 

 

5,634,190

 

Amortization of deferred financing costs

 

276,561

 

 

 

186,694

 

Amortization of mortgage premium

 

(6,170

)

 

 

(6,170

)

Gain on involuntary conversion of assets

 

(161,334

)

 

 

(870,741

)

Unrealized loss (gain) on derivative instrument

 

490,611

 

 

 

(12,730

)

(Gain) loss on disposal of assets

 

(4,008

)

 

 

3,739

 

ESOP and stock - based compensation

 

166,451

 

 

 

171,523

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(3,580,100

)

 

 

(3,837,620

)

Prepaid expenses, inventory and other assets

 

(933,647

)

 

 

1,075,655

 

Deferred income taxes

 

284,679

 

 

 

260,262

 

Accounts payable and other accrued liabilities

 

3,817,060

 

 

 

2,441,901

 

Advance deposits

 

(463,311

)

 

 

998,247

 

Accounts receivable - affiliate

 

24,862

 

 

 

86,675

 

Net cash provided by operating activities

 

5,550,184

 

 

 

7,308,113

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Acquisitions of hotel properties

 

 

 

 

(80,479,137

)

Improvements and additions to hotel properties

 

(5,453,080

)

 

 

(5,851,104

)

Proceeds from involuntary conversion

 

161,334

 

 

 

870,741

 

Proceeds from the disposal of assets

 

4,362

 

 

 

 

Net cash used in investing activities

 

(5,287,384

)

 

 

(85,459,500

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds of mortgage debt

 

 

 

 

62,000,000

 

Proceeds of unsecured debt

 

 

 

 

25,000,000

 

Payments on mortgage loans

 

(1,332,608

)

 

 

(1,649,012

)

Payments of deferred financing costs

 

 

 

 

(2,006,021

)

Dividends and distributions paid

 

(1,916,339

)

 

 

(1,602,830

)

Preferred dividends paid

 

(1,470,507

)

 

 

(1,444,844

)

Net cash (used in) provided by financing activities

 

(4,719,454

)

 

 

80,297,293

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(4,456,654

)

 

 

2,145,906

 

Cash, cash equivalents and restricted cash at the beginning of the period

 

37,868,281

 

 

 

33,429,042

 

Cash, cash equivalents and restricted cash at the end of the period

$

33,411,627

 

 

$

35,574,948

 

Supplemental disclosures:

 

 

 

 

 

 

 

Cash paid during the period for interest

$

4,252,662

 

 

$

3,831,409

 

Cash paid during the period for income taxes

$

61,303

 

 

$

13,437

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

Change in amount of improvements to hotel property in accounts payable and accrued liabilities

$

179,050

 

 

$

94,122

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

8


SOTHERLY HOTELS LP

CONSOLIDATED BALANCE SHEETS

 

 

 

March 31, 2019

 

 

December 31, 2018

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Investment in hotel properties, net

 

$

441,261,072

 

 

$

435,725,814

 

Cash and cash equivalents

 

 

29,004,070

 

 

 

33,792,773

 

Restricted cash

 

 

4,407,557

 

 

 

4,075,508

 

Accounts receivable, net

 

 

10,346,796

 

 

 

6,766,696

 

Accounts receivable - affiliate

 

 

237,710

 

 

 

262,572

 

Loan receivable - affiliate

 

 

4,390,122

 

 

 

4,446,410

 

Prepaid expenses, inventory and other assets

 

 

5,688,031

 

 

 

5,262,884

 

Favorable lease assets, net

 

 

 

 

 

2,465,421

 

Deferred income taxes

 

 

4,846,500

 

 

 

5,131,179

 

TOTAL ASSETS

 

$

500,181,858

 

 

$

497,929,257

 

LIABILITIES

 

 

 

 

 

 

 

 

Mortgage loans, net

 

$

363,636,230

 

 

$

364,828,845

 

Unsecured notes, net

 

 

24,025,056

 

 

 

23,894,658

 

Accounts payable and other accrued liabilities

 

 

23,714,256

 

 

 

16,268,100

 

Advance deposits

 

 

2,351,972

 

 

 

2,815,283

 

Dividends and distributions payable

 

 

3,470,572

 

 

 

3,466,136

 

TOTAL LIABILITIES

 

$

417,198,086

 

 

$

411,273,022

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (see Note 6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

Preferred units, $0.01 par value, 11,000,000 units authorized;

 

 

 

 

 

 

 

 

8.0% Series B cumulative redeemable perpetual preferred units, liquidation

   preference $25 per unit, 1,610,000 units issued and outstanding at March

   31, 2019 and December 31, 2018, respectively

 

 

37,766,531

 

 

 

37,766,531

 

7.875% Series C cumulative redeemable perpetual preferred units, liquidation

   preference $25 per unit, 1,352,141 units issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

31,493,723

 

 

 

31,493,723

 

General Partner: 160,006 units and 159,876 units issued and outstanding as of

March 31, 2019 and December 31, 2018, respectively

 

 

417,663

 

 

 

452,165

 

Limited Partners: 15,840,512 units and 15,827,642 units issued and outstanding as

   of March 31, 2019 and December 31, 2018, respectively

 

 

13,305,855

 

 

 

16,943,816

 

TOTAL PARTNERS’ CAPITAL

 

 

82,983,772

 

 

 

86,656,235

 

TOTAL LIABILITIES AND PARTNERS’ CAPITAL

 

$

500,181,858

 

 

$

497,929,257

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

9


SOTHERLY HOTELS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

March 31, 2019

 

 

March 31, 2018

 

 

 

(unaudited)

 

 

(unaudited)

 

REVENUE

 

 

 

 

 

 

 

 

Rooms department

 

$

32,951,871

 

 

$

28,285,445

 

Food and beverage department

 

 

9,723,124

 

 

 

8,351,983

 

Other operating departments

 

 

4,715,309

 

 

 

5,098,128

 

Total revenue

 

 

47,390,304

 

 

 

41,735,556

 

EXPENSES

 

 

 

 

 

 

 

 

Hotel operating expenses

 

 

 

 

 

 

 

 

Rooms department

 

 

7,781,439

 

 

 

6,700,381

 

Food and beverage department

 

 

7,136,833

 

 

 

6,395,076

 

Other operating departments

 

 

1,910,135

 

 

 

1,528,327

 

Indirect

 

 

17,389,680

 

 

 

15,233,256

 

Total hotel operating expenses

 

 

34,218,087

 

 

 

29,857,040

 

Depreciation and amortization

 

 

6,028,735

 

 

 

5,634,190

 

(Gain) loss on disposal of assets

 

 

(4,008

)

 

 

3,739

 

Corporate general and administrative

 

 

1,684,444

 

 

 

1,546,300

 

Total operating expenses

 

 

41,927,258

 

 

 

37,041,269

 

NET OPERATING INCOME

 

 

5,463,046

 

 

 

4,694,287

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(5,305,114

)

 

 

(4,177,019

)

Interest income

 

 

99,296

 

 

 

81,704

 

Unrealized (loss) gain on hedging activities

 

 

(490,611

)

 

 

12,730

 

Gain on involuntary conversion of assets

 

 

161,334

 

 

 

870,741

 

Net (loss) income before income taxes

 

 

(72,049

)

 

 

1,482,443

 

Income tax provision

 

 

(318,156

)

 

 

(305,955

)

Net (loss) income

 

 

(390,205

)

 

 

1,176,488

 

Distributions to preferred unit holder

 

 

(1,470,507

)

 

 

(1,444,844

)

Net loss available to operating partnership unit holders

 

$

(1,860,712

)

 

$

(268,356

)

Net loss attributable per operating partner unit

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.12

)

 

$

(0.02

)

Weighted average number of operating partner units outstanding

 

 

 

 

 

 

 

 

Basic and diluted

 

 

15,994,565

 

 

 

15,892,513

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

10


SOTHERLY HOTELS LP

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

 

 

Preferred Units

 

 

General Partner

 

 

Limited Partner