WILLIAMSBURG, Va., March 02, 2023 (GLOBE NEWSWIRE) — Sotherly Hotels Inc. (NASDAQ: SOHO), a self-managed and self-administered lodging real estate investment trust, today reported its consolidated results for the fourth quarter and year ended December 31, 2022. The Company’s results include the following*:
| Three Months Ended | Year Ended | ||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2019 | December 31, 2022 | December 31, 2021 | December 31, 2019 | ||||||||||||||||||
| ($ in thousands except per share data) | ($ in thousands except per share data) | ||||||||||||||||||||||
| Total revenue | $ | 41,342 | $ | 35,076 | $ | 44,305 | $ | 166,077 | $ | 127,588 | $ | 185,788 | |||||||||||
| Net income (loss) attributable to common stockholders | 3,092 | (17,209 | ) | (3,419 | ) | 24,967 | (33,402 | ) | (5,911 | ) | |||||||||||||
| EBITDA | 14,982 | 5,871 | 7,836 | 43,298 | 25,980 | 42,011 | |||||||||||||||||
| Hotel EBITDA | 11,893 | 8,102 | 9,280 | 46,463 | 30,895 | 46,938 | |||||||||||||||||
| FFO attributable to common stockholders and unitholders | 7,800 | (1,571 | ) | 1,754 | 13,738 | (4,789 | ) | 14,763 | |||||||||||||||
| Adjusted FFO attributable to common stockholders and unitholders | 7,991 | (1,334 | ) | 1,026 | 17,820 | (4,890 | ) | 17,549 | |||||||||||||||
| Net income (loss) per common share | $ | 0.17 | $ | (1.06 | ) | $ | (0.25 | ) | $ | 1.40 | $ | (2.15 | ) | $ | (0.43 | ) | |||||||
| FFO per common share and unit | $ | 0.40 | $ | (0.09 | ) | $ | 0.11 | $ | 0.73 | $ | (0.29 | ) | $ | 0.96 | |||||||||
| Adjusted FFO per common share and unit | $ | 0.41 | $ | (0.08 | ) | $ | 0.07 | $ | 0.95 | $ | (0.29 | ) | $ | 1.14 | |||||||||
(*) Earnings before interest, taxes, depreciation and amortization (“EBITDA”), hotel EBITDA, funds from operations (“FFO”) attributable to common stockholders and unitholders, adjusted FFO attributable to common stockholders and unitholders, FFO per common share and unit and adjusted FFO per common share and unit are non-GAAP financial measures. See further discussion of these non-GAAP measures, including definitions related thereto, and reconciliations to net income (loss) later in this press release. The Company is the sole general partner of Sotherly Hotels LP, a Delaware limited partnership (the “Operating Partnership”), and all references in this release to the “Company”, “Sotherly”, “we”, “us” and “our” refer to Sotherly Hotels Inc., its Operating Partnership and its subsidiaries and predecessors, unless the context otherwise requires or it is otherwise indicated.
HIGHLIGHTS
- RevPAR. Room revenue per available room (“RevPAR”) for the Company’s composite portfolio, which includes the rooms participating in our rental programs at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, increased to $101.73, for the three months ended December 31, 2022, from $85.80 in the comparable period in 2021 and was 0.5% below RevPAR of $102.27 for the comparable period in 2019. Changes in RevPAR were driven by an increase in the average daily rate (“ADR”) to $180.05 for the three months ended December 31, 2022, from $162.00 for the comparable period in 2021 and by an increase in occupancy to 56.5% from 53.0% in the comparable 2021 period. However, while ADR for the three months ended December 31, 2022, was 15.7% higher than ADR for the comparable period in 2019, occupancy for the three months ended December 31, 2022, was still 9.2% below the 65.7% occupancy achieved during the comparable 2019 period.
- Revenue. Total revenue increased to approximately $41.3 million for the three months ended December 31, 2022 from approximately $35.1 million during the comparable period in 2021. Total revenue for the three months ended December 31, 2022 was 6.7% below total revenue of approximately $44.3 million during the comparable 2019 period. Total revenue increased to approximately $166.1 million for the year ended December 31, 2022 from approximately $127.6 million during the comparable period in 2021. Total revenue for the year ended December 31, 2022 was 10.6% below total revenue of approximately $185.8 million during the comparable 2019 period.
- Net income (loss) attributable to common stockholders. For the three-month period ending December 31, 2022, net income attributable to common stockholders increased 118.0%, or approximately $20.3 million, over the three months ended December 31, 2021, from a loss of approximately $17.2 million to income of approximately $3.1 million. For the twelve-month period ending December 31, 2022, net income attributable to common stockholders increased 174.7% or approximately $58.4 million over the twelve months ended December 31, 2021.
- Hotel EBITDA. The Company increased production of hotel EBITDA to approximately $11.9 million for the three months ended December 31, 2022, from approximately $8.1 million during the comparable period in 2021. Hotel EBITDA for the three months ended December 31, 2022, was approximately $2.6 million above the hotel EBITDA generated in the comparable 2019 period. For the twelve-month period ending December 31, 2022, hotel EBITDA increased 50.4% or approximately $15.6 million over the twelve months ended December 31, 2021. Hotel EBITDA for the twelve months ended December 31, 2022, was approximately $0.5 million below the approximately $46.9 million hotel EBITDA produced during the comparable 2019 period.
- Adjusted FFO attributable to common stockholders and unitholders. For the three-month period ending December 31, 2022, adjusted FFO attributable to common stockholders and unitholders increased 698.9%, or approximately $9.3 million, over the three months ended December 31, 2021, from approximately (1.3) million to approximately $8.0 million. For the twelve-month period ending December 31, 2022, adjusted FFO attributable to common stockholders and unitholders increased 464.4% or approximately $22.7 million over the twelve months ended December 31, 2021.
- Preferred Dividends. The Company has reinstated payment of quarterly dividends on its preferred stock. On January 24, 2023 the Company announced a quarterly cash dividend of $0.50 per share of beneficial interest of the Company’s 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock; a quarterly cash dividend of $0.4921875 per share of beneficial interest of the Company’s 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock; and a quarterly cash dividend of $0.515625 per share of beneficial interest of the Company’s 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock. Each of the Series B, Series C and Series D preferred dividends will be paid on March 15, 2023 to shareholders of record as of February 28, 2023.
- 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 December 31, 2022. 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.
Dave Folsom, President and Chief Executive Officer of Sotherly Hotels Inc., commented, “The results of Sotherly’s fourth quarter helped cap a very good year for the Company. Fourth quarter hotel EBITDA finished at $11.9 million, which was a 46.8% increase over Q4 2021 and eclipsed Q4 2019 by 28.2%. Adjusted FFO for Q4 2022 finished at $0.41 per share, compared to the prior year’s deficit of $0.08 per share. As we saw throughout 2022, ADR continued to outperform the prior year and 2019: Q4 ADR for our wholly owned hotels exceeded prior year by 15.4% and exceeded Q4 2019 by 16.5%. Occupancy increased from 54.1% in Q4 2021 to 58.0% in Q4 2022 but lagged occupancy of 67.5% in Q4 2019. Our group booking pace continues to improve. Our current pace is 46.9% ahead of the same time last year, and group ADR continues to grow. Business travel continues to layer into our revenues, especially in our urban markets. The strength of our booking pace has yet to be impacted by any material slow down or evidence of an impending recession. Further, we recently announced the resumption of dividends on our preferred stock, which demonstrates the Company’s ongoing recovery. We were very happy with 2022 results.”
Balance Sheet/Liquidity
As of December 31, 2022, the Company had approximately $27.3 million of available cash and cash equivalents, of which approximately $5.4 million was reserved for real estate taxes, insurance, capital improvements and certain other expenses or otherwise restricted. The Company had principal balances of approximately $324.4 million in outstanding debt, including mortgage and unsecured principal balances, at a weighted average interest rate of approximately 5.00%.
Other Events
On February 26, 2023, affiliates of the Company entered into amended loan documents to modify the existing mortgage loan on The Whitehall hotel located in Houston, TX with the existing lender, International Bank of Commerce. The amended loan documents extend the maturity date to February 26, 2028; maintain a floating interest rate of New York Prime Rate plus 1.25%; and subject the interest rate to a floor rate of 7.50%. The amended loan continues to be guaranteed by the Operating Partnership.
Between April 16 and May 6, 2020, the Operating Partnership and certain of its subsidiaries received proceeds of three separate PPP Loans administered by the U.S. Small Business Administration pursuant to the CARES Act totaling approximately $10.7 million. On December 9, 2022, the Company was notified it had received forgiveness for one its PPP Loans in the principal amount of approximately $4.6 million. On January 11, 2023, the Company was notified it has received forgiveness for another one of its PPP Loans in the principal amount of approximately $0.3 million.
Q1 2023 Outlook
Set forth below is the Company’s guidance for Q1 2023. The table below reflects the Company’s projections, within a range, of various financial measures for Q1 2023, in thousands of dollars, except per share and RevPAR data:
| Q1 2023 Guidance | |||||||
| Low Range | High Range | ||||||
| Total revenue | $ | 42,309 | $ | 44,349 | |||
| Net income | 1,290 | 1,865 | |||||
| Net loss available to common stockholders and unitholders | (705 | ) | (130 | ) | |||
| EBITDA | 10,026 | 10,601 | |||||
| Hotel EBITDA | 11,926 | 12,501 | |||||
| FFO available to common stockholders and unitholders | 3,890 | 4,465 | |||||
| Adjusted FFO available to common stockholders and unitholders | 4,155 | 4,730 | |||||
| Net loss per share available to common stockholders | $ | (0.04 | ) | $ | (0.01 | ) | |
| FFO per common share and unit | $ | 0.20 | $ | 0.23 | |||
| Adjusted FFO per common share and unit | $ | 0.21 | $ | 0.24 | |||
| Rev PAR | $ | 111.77 | $ | 117.16 | |||
| Hotel EBITDA margin | 28.2 | % | 28.2 | % | |||
About Sotherly Hotels Inc.
Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. Sotherly may also opportunistically acquire hotels throughout the United States. Currently, the Company’s portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. The Company owns hotels that operate under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information, please visit www.sotherlyhotels.com.
