Sotherly Hotels Inc. Reports Financial Results for the

WILLIAMSBURG, Va., Aug. 11, 2022 (GLOBE NEWSWIRE) — Sotherly Hotels Inc. (NASDAQ: SOHO), (“Sotherly” or the “Company”), a self-managed and self-administered lodging actual property funding belief (a “REIT”), at present reported its consolidated outcomes for the second quarter ended June 30, 2022. The Company’s outcomes embody the following*:

(*)           Earnings earlier than curiosity, taxes, depreciation and amortization (“EBITDA”), resort EBITDA, funds from operations (“FFO”) accessible to widespread stockholders and unitholders, adjusted FFO accessible to widespread stockholders and unitholders, FFO per widespread share and unit and adjusted FFO per widespread share and unit are non-GAAP monetary measures. See additional dialogue of those non-GAAP measures, together with definitions associated thereto, and reconciliations to web revenue (loss) later on this press launch. The Company is the sole normal companion of Sotherly Hotels LP, a Delaware restricted partnership (the “Operating Partnership”), and all references on this launch to the “Company”, “Sotherly”, “we”, “us” and “our” seek advice from Sotherly Hotels Inc., its Operating Partnership and its subsidiaries and predecessors, until the context in any other case requires or it’s in any other case indicated.

HIGHLIGHTS

• RevPAR. Room income per accessible room (“RevPAR”) for the Company’s composite portfolio, which incorporates the rooms collaborating in our rental applications at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, elevated to $128.63 for the three months ended June 30, 2022, from $94.93 in the comparable interval in 2021 and was 0.5% above RevPAR of $128.05 for the comparable interval in 2019. Changes in RevPAR have been pushed by a rise in the common every day price (“ADR”) to $189.24 for the three months ended June 30, 2022, from $161.00 for the comparable interval in 2021 and by a rise in occupancy to 68.0% from 59.0% in the comparable 2021 interval. However, whereas ADR for the three months ended June 30, 2022, was 12.7% increased than ADR for the comparable interval in 2019, occupancy for the three months ended June 30, 2022, was nonetheless 8.3% beneath the 76.3% occupancy achieved throughout the comparable 2019 interval.
• Revenue. Total income elevated to roughly $47.2 million for the three months ended June 30, 2022 from roughly $34.4 million throughout the comparable interval in 2021. Total income for the three months ended June 30, 2022 was 8.5% beneath complete income of roughly $51.5 million throughout the comparable 2019 interval.
• Common Dividends. As accredited by its Board of Directors, the Company has suspended its common quarterly money dividend as a way to protect liquidity. Accordingly, the Company didn’t pay a dividend on its widespread inventory and customary items for the quarter ended June 30, 2022. The Board of Directors will proceed to watch the scenario and assess future quarterly widespread dividend declarations. Per the phrases of the Company’s most popular inventory, the Company can not make any widespread dividend funds until full cumulative distributions have been declared and paid for previous distribution durations for every collection of most popular inventory.
• Hotel EBITDA. The Company elevated manufacturing of Hotel EBITDA to roughly $14.8 million for the three months ended June 30, 2022, from roughly $9.7 million throughout the comparable interval in 2021. Hotel EBITDA for the three months ended June 30, 2022, was roughly $0.8 million beneath the Hotel EBITDA generated in the comparable 2019 interval. For the six-month interval ending June 30, 2022, Hotel EBITDA elevated 78.5% or roughly $10.9 million over the six months ended June 30, 2021. However, Hotel EBITDA for the six months ended June 30, 2022, was nonetheless roughly $4.0 million beneath the roughly $28.8 million Hotel EBITDA produced throughout the comparable 2019 interval.
• Adjusted FFO attributable to widespread stockholders and unitholders. For the three-month interval ending June 30, 2022, adjusted FFO attributable to widespread stockholders and unitholders elevated 444.4%, or roughly $5.1 million, over the three months ended June 30, 2021, from roughly $1.1 million to roughly $6.2 million. For the six-month interval ending June 30, 2022, adjusted FFO accessible to widespread stockholders and unitholders elevated 310.8% or roughly $11.0 million over the six months ended June 30, 2021.

Dave Folsom, President and Chief Executive Officer of Sotherly Hotels Inc., commented, “We continued to witness significant recovery in demand in the second quarter and were very pleased with the resulting increases in year-over-year revenues and Hotel EBITDA. Additionally, compared to the second quarter of 2019, prior to the pandemic, our portfolio achieved 91.5% of total revenues and 94.8% of Hotel EBITDA. These are compelling results and point to not only the strength and pace of the lodging recovery, but the position and management of our assets in their respective markets. We expect this momentum to continue, as same-store composite ADR during the month of July outperformed the same period in 2019 by 11.7%, leading to a 1.4% gain in RevPAR. The quarter also saw the full repayment and extinguishment of the company’s outstanding loan with Kemmons Wilson, which was issued in June 2020 to provide liquidity as the Company experienced some of the strongest impacts of the pandemic. With the repayment of this note, we are now in a much stronger position to focus on our core business and address other aspects of our balance street, as we continue to see the ongoing recovery in the lodging markets.”

ESTIMATED CHANGE IN CASH

The Company estimates the money used throughout its portfolio for the third quarter to vary between roughly $1.70 million to $1.95 million primarily based on the following assumptions:

• Hotel-level optimistic money circulate for the quarter of roughly $10.00 million to $10.25 million;
• Corporate-level G&A money use of $1.75 million;
• Capital expenditures of roughly $2.10 million;
• Scheduled combination debt service of roughly $6.30 million for the quarter; and
• Other incremental reductions of principal and deferred curiosity of roughly $1.80 million.

Balance Sheet/Liquidity

As of June 30, 2022, the Company had roughly $31.4 million of obtainable money and money equivalents, of which roughly $7.4 million was reserved for actual property taxes, insurance, capital enhancements and sure different bills or in any other case restricted. The Company had principal balances, web of roughly $333.3 million in excellent debt, together with mortgage and unsecured principal balances, at a weighted common rate of interest of roughly 4.76%.

2022 Outlook

For the third quarter of 2022, the Company expects Composite RevPAR to be roughly 6.5% forward of the third quarter of 2019, a lot improved from the third quarter of 2021. Due to the uncertainties associated to the lodging trade and the results of the COVID-19 pandemic, the Company is foregoing full-year steering for 2022.

Portfolio and Balance Sheet Update

On June 10, 2022, Raleigh Hotel Associates, LLC, a Delaware restricted legal responsibility firm and an affiliate of the Company, accomplished the sale of the DoubleTree by Hilton Raleigh-Brownstone University resort positioned in Raleigh, North Carolina to CS Acquisition Vehicle, LLC, a Delaware restricted legal responsibility firm, for a purchase order worth of $42.0 million. The Company used roughly $18.6 million of the web money proceeds from the sale of the resort to repay the present mortgage on the property and roughly $19.8 million of the web money proceeds to repay a portion of the secured notes (the “KW Notes”) with KWHP SOHO, LLC and MIG SOHO, LLC (collectively, “KW”) as required by the phrases of the KW Notes. The Company intends to make use of the remaining web money proceeds for normal company functions. KW obtained roughly $19.8 million of the proceeds from the sale of the resort, of which roughly $13.3 million was utilized towards principal, roughly $6.3 million was utilized towards the exit charge owed below the KW Notes, and roughly $0.2 million was utilized towards accrued curiosity. Additionally, the phrases of the KW Notes allowed for the launch of a portion of the curiosity reserves in the quantity of roughly $1.6 million, of which roughly $1.1 million was utilized towards principal and roughly $0.5 million was utilized towards the exit charge.

On June 28, 2022, associates of the Company, entered into amended mortgage paperwork to change the present mortgage mortgage (as amended, the “Mortgage Loan”) on the Hotel Alba Tampa with the present lender, Fifth Third Bank. Pursuant to the amended mortgage paperwork, the Mortgage Loan: (i) has an elevated principal steadiness of $25.0 million; (ii) contains an prolonged maturity date of June 30, 2025, which can be additional prolonged for two further durations of 1 12 months every, topic to sure situations; (iii) bears a floating rate of interest of SOFR plus 2.75%, topic to a flooring price of two.75%; (iv) amortizes on a 25-year schedule and requires funds of month-to-month curiosity plus $40,600 month-to-month amortization funds; and (v) is assured by the Operating Partnership as much as $12.5 million, with the warranty decreasing to $6.25 million upon the profitable achievement of sure efficiency milestones. On July 11, 2022, the Company additionally entered right into a swap settlement with Fifth Third Bank. Pursuant to the swap settlement: (a) the mortgage price is swapped for a set rate of interest of 5.576%; (b) notional quantities approximate the declining steadiness of the mortgage; and (c) the Company is accountable for any potential termination charges related to early termination of the swap settlement.

Pursuant to the phrases of the KW Notes, the Company was required to make use of web money proceeds obtained in reference to the refinance of the Hotel Alba Tampa, described above, to make sure funds to KW as lenders below the KW Notes. On June 29, 2022, the Company used the proceeds from the refinance of the Hotel Alba Tampa, together with roughly $0.21 million of money available in addition to the steadiness of the curiosity reserve below the KW Notes of roughly $0.5 million, to fulfill and pay in full the KW Notes. KW obtained roughly $8.27 million in satisfaction of the KW Notes, of which roughly $5.61 million was utilized towards principal, roughly $2.64 million was utilized towards the exit charge owed below the KW Notes, and roughly $0.02 million was utilized towards accrued curiosity. Concurrent with the cancellation of the KW Notes, the following agreements have been additionally terminated in accordance with their phrases: (i) Note Purchase Agreement; (ii) Pledge and Security Agreement; (iii) Board Observer Agreement; and (iv) different associated ancillary agreements.

Earnings Call/Webcast

The Company will conduct its second quarter 2022 convention name for traders and different events at 10:00 a.m. Eastern Time on Thursday, August 11, 2022. The convention name will likely be accessible by phone and thru the Internet. Interested people are invited to hearken to the name by phone at 844-200-6205 (United States) or +1 929-526-1599 (International) and enter entry code 927367. To take part on the webcast, go browsing to www.sotherlyhotels.com no less than quarter-hour earlier than the name to obtain the essential software program. For these unable to hearken to the name reside, a taped rebroadcast will likely be accessible starting one hour after completion of the reside name on August 11, 2022 by way of August 25, 2022. To entry the rebroadcast, dial 866-813-9403 or +44 204-525-0658 and enter entry code 045282.

About Sotherly Hotels Inc.

Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT centered on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service motels in the Southern United States. Sotherly can also opportunistically purchase motels all through the United States. Currently, the Company’s portfolio consists of investments in ten resort properties, comprising 2,786 rooms, in addition to pursuits in two condominium motels and their related rental applications. The Company owns motels that function below the Hilton Worldwide and Hyatt Hotels Corporation manufacturers, in addition to impartial motels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia. For extra data, please go to 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 information launch contains “forward-looking statements” inside the which means 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 could contain identified and unknown dangers, uncertainties and different components which can trigger our precise outcomes, efficiency or achievements to be materially completely different from future outcomes, efficiency or achievements expressed or implied by such forward-looking statements. Forward-looking statements, that are primarily based on sure assumptions and describe our present methods, expectations, and future plans are usually recognized by our use of phrases, corresponding to “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and comparable expressions, whether or not in the adverse or affirmative, however the absence of those phrases doesn’t essentially imply {that a} assertion isn’t forward-looking. All statements relating to our anticipated monetary place, business and financing plans are forward-looking statements.

Factors which might have a cloth antagonistic impact on the Company’s future operations, outcomes, efficiency and prospects, embody, however aren’t restricted to: nationwide and native financial and business situations that have an effect on occupancy charges and revenues at our motels and the demand for resort services; dangers related to the resort trade, together with competitors and new provide of resort rooms, will increase in wages, power prices and different working prices; dangers related to the stage of our indebtedness and our capability to satisfy covenants in our debt agreements, together with our not too long ago negotiated forbearance agreements and mortgage modifications and, as essential, to refinance or search an extension of the maturity of such indebtedness or additional modification of such debt agreements; dangers related to antagonistic climate situations, together with hurricanes; impacts on the journey trade from pandemic ailments, together with COVID-19; the availability and phrases of financing and capital and the normal volatility of the securities markets; administration and efficiency of our motels; dangers related to sustaining our system of inner controls; dangers related to the conflicts of curiosity of the Company’s officers and administrators; dangers related to redevelopment and repositioning initiatives, together with delays and price overruns; provide and demand for resort rooms in our present and proposed market areas; dangers related to our capability to take care of our franchise agreements with our third occasion franchisors; our capability to accumulate further properties and the threat that potential acquisitions could not carry out in accordance with expectations; our capability to efficiently broaden into new markets; legislative/regulatory modifications, together with modifications to legal guidelines governing taxation of actual property funding trusts (“REITs”); the Company’s capability to take care of its qualification as a REIT; and our capability to take care of satisfactory insurance protection. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are cheap, any of the assumptions might be inaccurate, and subsequently there may be no assurance that such statements included on this report will show to be correct. In mild of the important uncertainties inherent in the forward-looking statements included herein, the inclusion of such data shouldn’t be thought to be a illustration by the Company or some other person who the outcomes or situations described in such statements or the goals and plans of the Company will likely be achieved.

Additional components that might trigger precise outcomes to fluctuate from our forward-looking statements are set forth below the part titled “Risk Factors” in our Annual Report on Form 10-Ok, on this report and subsequent studies filed with the Securities and Exchange Commission. The Company undertakes no obligation to and doesn’t intend to publicly replace or revise any forward-looking assertion, whether or not on account of new data, future occasions or in any other case. Although the Company believes its present expectations to be primarily based upon cheap assumptions, it may give no assurance that its expectations will likely be attained or that precise outcomes won’t differ materially.

Financial Tables Follow…

SOTHERLY HOTELS INC.
CONSOLIDATED BALANCE SHEETS

SOTHERLY HOTELS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

SOTHERLY HOTELS INC.
KEY OPERATING METRICS
(unaudited)

The following tables illustrate the key working metrics for the three months ended June 30, 2022, 2021 and 2019, respectively, for the Company’s wholly-owned properties (“actual” portfolio metrics), accordingly, the precise knowledge doesn’t embody the collaborating condominium resort rooms of the Hyde Resort & Residences and the Hyde Beach House Resort & Residences. The ten wholly-owned properties in the portfolio that have been below the Company’s management throughout the three and 6 months ended June 30, 2022 and the corresponding durations in 2021 and 2019 are thought of same-store properties (“same-store” portfolio metrics). Accordingly, the same-store knowledge doesn’t mirror the performances of the Sheraton Louisville Riverside which was bought in February 2022, or the DoubleTree by Hilton Raleigh-Brownstone University which was bought in June 2022. The composite portfolio metrics characterize the Company’s wholly-owned properties and the collaborating condominium resort rooms at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, throughout the three and 6 months ended June 30, 2022 and the corresponding durations in 2021 and 2019. The same-store (composite) portfolio metrics contains all properties with the exceptions of the Sheraton Louisville Riverside, DoubleTree by Hilton Raleigh-Brownstone University and the Hyde Beach House Resort & Residences, throughout the three and 6 months ended June 30, 2022 and the corresponding durations in 2021 and 2019.

SOTHERLY HOTELS INC.
SUPPLEMENTAL DATA
(unaudited)

The following tables illustrate the key working metrics for the three and 6 months ended June 30, 2022, 2021 and 2019, respectively, for every of the Company’s wholly-owned properties throughout every respective reporting interval, no matter possession share throughout any interval.

Occupancy

ADR

RevPAR

SOTHERLY HOTELS INC.
RECONCILIATION OF NET LOSS TO
FFO, Adjusted FFO, EBITDA and Hotel EBITDA
(unaudited)

Non-GAAP Financial Measures

The Company considers the non-GAAP monetary measures of FFO (together with FFO per share), Adjusted FFO, EBITDA and resort EBITDA to be key supplemental measures of the Company’s efficiency and might be thought of together with, not alternate options to, web revenue (loss) as a measure of the Company’s efficiency. These measures don’t characterize money generated from working actions decided by usually accepted accounting rules (“GAAP”) or quantities accessible for the Company’s discretionary use and shouldn’t be thought of different measures of web revenue, money flows from operations or some other working efficiency measure prescribed by GAAP.

FFO

Industry analysts and traders use Funds from Operations (“FFO”), as a supplemental working efficiency measure of an fairness 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 outlined by NAREIT, represents web revenue or loss decided in accordance with GAAP, excluding extraordinary objects as outlined below GAAP and positive factors or losses from gross sales of beforehand depreciated working actual property property, positive factors or losses from involuntary conversions of property, plus sure non-cash objects corresponding to actual property asset depreciation and amortization or impairment, inventory compensation prices and after adjustment for any noncontrolling curiosity from unconsolidated partnerships and joint ventures. Historical price accounting for actual property property in accordance with GAAP implicitly assumes that the worth of actual property property diminishes predictably over time. Since actual property values as a substitute have traditionally risen or fallen with market situations, many traders and analysts have thought of the presentation of working outcomes for actual property firms that use historic price accounting to be inadequate by itself.

The Company considers FFO to be a helpful measure of adjusted web revenue (loss) for reviewing comparative working and monetary efficiency as a result of we consider FFO is most straight corresponding to web revenue (loss), which stays the major measure of efficiency, as a result of by excluding positive factors or losses associated to gross sales of beforehand depreciated working actual property property and excluding actual property asset depreciation and amortization, FFO assists in evaluating the working efficiency of an organization’s actual property between durations or as in comparison with completely different firms. Although FFO is meant to be a REIT trade commonplace, different firms could not calculate FFO in the similar method as we do, and traders mustn’t assume that FFO as reported by us is corresponding to FFO as reported by different REITs.

Adjusted FFO

The Company presents adjusted FFO, together with adjusted FFO per share and unit, which adjusts for sure further objects that aren’t in NAREIT’s definition of FFO together with modifications in deferred revenue taxes, any unrealized acquire (loss) on hedging devices or warrant spinoff, mortgage impairment losses, losses on early extinguishment of debt, positive factors on extinguishment of most popular inventory, aborted providing prices, mortgage modification charges, franchise termination prices, prices related to the departure of govt officers, litigation settlement, over-assessed actual property taxes on attraction, administration contract termination prices, working asset depreciation and amortization, change in management positive factors or losses, ESOP and inventory compensation bills and acquisition transaction prices. We exclude this stuff as we consider it permits for significant comparisons between durations and amongst different REITs and is extra indicative than FFO of the on-going efficiency of our business and property. Our calculation of adjusted FFO could also be completely different from comparable measures calculated by different REITs.

EBITDA

The Company believes that excluding the impact of non-operating bills and non-cash expenses, and the portion of these objects associated to unconsolidated entities, all of that are additionally primarily based on historic price accounting and could also be of restricted significance in evaluating present efficiency, may help remove the accounting results of depreciation and financing choices and facilitate comparisons of core working profitability between durations and between REITs, although EBITDA additionally doesn’t characterize an quantity that accrued on to shareholders.

Hotel EBITDA

The Company defines resort EBITDA as web revenue or loss excluding: (1) curiosity expense, (2) curiosity revenue, (3) revenue tax provision or profit, (4) depreciation and amortization, (5) impairment of long-lived property or investments, (6) positive factors and losses on disposal and/or sale of property, (7) positive factors and losses on involuntary conversions of property, (8) unrealized positive factors and losses on spinoff devices not included in different complete revenue, (9) loss on early debt extinguishment, (10) acquire on train of improvement proper, (11) company normal and administrative expense, and (12) different working income not associated to our wholly-owned portfolio. We consider this gives a extra full understanding of the working outcomes over which our wholly-owned motels and its operators have direct management. We consider resort EBITDA gives traders with supplemental data on the on-going operational efficiency of our motels and the effectiveness of third-party administration firms working our business on a property-level foundation. The Company’s calculation of resort EBITDA could also be completely different from comparable measures calculated by different REITs.