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 fourth quarter and year ended December
31, 2019. The Company’s results include the following*:
|
Three Months
Ended |
|
|
Year
Ended |
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
($ in thousands
except per share data) |
|
|
($ in thousands
except per share data) |
|
Total Revenue |
$ |
44,305 |
|
|
$ |
43,466 |
|
|
$ |
185,788 |
|
|
$ |
178,173 |
|
Net (loss) income available to common
stockholders |
|
(3,600 |
) |
|
|
(3,768 |
) |
|
|
(6,093 |
) |
|
|
(5,720 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
7,745 |
|
|
|
7,185 |
|
|
|
41,887 |
|
|
|
40,347 |
|
Hotel EBITDA |
|
9,280 |
|
|
|
10,247 |
|
|
|
46,938 |
|
|
|
47,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO available to common stockholders and unitholders |
|
1,754 |
|
|
|
1,260 |
|
|
|
14,763 |
|
|
|
13,706 |
|
Adjusted FFO available to common stockholders and
unitholders |
|
951 |
|
|
|
1,877 |
|
|
|
17,164 |
|
|
|
15,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share |
$ |
(0.27 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.42 |
) |
FFO per common share and unit |
$ |
0.11 |
|
|
$ |
0.08 |
|
|
$ |
0.96 |
|
|
$ |
0.90 |
|
Adjusted FFO per common share and unit |
$ |
0.06 |
|
|
$ |
0.12 |
|
|
$ |
1.11 |
|
|
$ |
1.04 |
|
(*) Earnings before interest, taxes, depreciation
and amortization (“EBITDA”), hotel EBITDA, funds from operations
(“FFO”) available to common stockholders and unitholders, adjusted
FFO available to common stockholders and unitholders, FFO per
common share and unit and adjusted FFO per common share and unit
are non-GAAP financial measures. See further discussion of these
non-GAAP measures, including definitions related thereto, and
reconciliations to net income (loss) later in this press release.
The Company is the sole general partner of Sotherly Hotels LP, a
Delaware limited partnership (the “Operating Partnership”), and all
references in this release to the “Company”, “Sotherly”, “we”, “us”
and “our” refer to Sotherly Hotels Inc., its Operating Partnership
and its subsidiaries and predecessors, unless the context otherwise
requires or it is otherwise indicated.
HIGHLIGHTS:
- RevPAR. Room revenue per available room
(“RevPAR”) for the Company’s composite portfolio, which includes
the Hyatt Centric Arlington and the rooms participating in our
rental programs at the Hyde Resort & Residences and the Hyde
Beach House Resort and Residences, during the three-month period
ending December 31, 2019, increased 2.2% over the three months
ended December 31, 2018, to $102.27 reflecting a 1.6% increase in
occupancy and a 0.6% increase in average daily rate (“ADR”). For
the twelve-month period ending December 31, 2019, RevPAR increased
3.4% over the twelve months ended December 31, 2018, to $112.94
driven by a 1.4% increase in occupancy and a 2.0% increase in
ADR.
- Revenue. For the three-month period
ending December 31, 2019, total revenue increased 1.9% over the
three-month period ending December 31, 2018. For the
twelve-month period ending December 31, 2019, total revenue
increased 4.3% or by approximately $7.6 million to approximately
$185.8 million, as compared to approximately $178.2 million for the
twelve-month period ending December 31, 2018.
- Common Dividends. On January 28, 2020, the
Company announced a quarterly dividend (distribution) on its common
stock (and units) of $0.13 per share (and unit) to stockholders
(and unitholders) of record as of March 13, 2020, payable on April
9, 2020.
- Hotel EBITDA. The Company generated hotel
EBITDA of approximately $9.3 million during the three-month period
ending December 31, 2019. Hotel EBITDA decreased 9.4%, or
approximately $1.0 million, over the three months ended December
31, 2018. For the twelve-month period ending December 31,
2019, hotel EBITDA decreased 1.6%, or approximately $0.7 million,
over the twelve months ended December 31, 2018. As discussed
below, included in Hotel EBITDA is a charge associated with the
termination of ten hotel management contracts with MHI Hotels
Services, which does business as Chesapeake Hospitality.
- Adjusted FFO available to common stockholders and
unitholders. For the three-month period ending December
31, 2019, adjusted FFO available to common stockholders and
unitholders decreased 49.4% from the three months ended December
31, 2018. For the twelve-month period ending December 31,
2019, adjusted FFO available to common stockholders and unitholders
increased 7.8% or approximately $1.2 million over the twelve months
ended December 31, 2018.
Andrew M. Sims, Chairman of the board of directors of Sotherly
Hotels Inc., commented, “The fourth quarter of 2019 was one of the
most active and memorable quarters in the company’s long
history. We executed on our plan to replace our management
partner for the core portfolio with Our Town Hospitality. We
also completed a Succession Plan that saw the promotion of Dave
Folsom to Chief Executive Officer and included two additional
in-house promotions to our senior management team. We believe
this team is well-positioned to lead the Company moving
forward. We opened and commenced our rental program at the
new Hyde Beach House Resort & Residences, a condominium hotel
located in Hollywood, Florida, and we took possession of a new
ballroom and structured parking at our DoubleTree Resort in
Hollywood. The completion of the renovations at our newly
converted Hotel Alba Tampa represents the culmination of five years
of significant capital improvements across our portfolio. We
believe all these events bode well for the future success of the
company.”
Balance Sheet/Liquidity
At December 31, 2019, the Company had approximately $28.0
million of available cash and cash equivalents, of which
approximately $4.2 million was reserved for real estate taxes,
insurance, capital improvements and certain other expenses or
otherwise restricted. The Company had principal balances of
approximately $361.0 million in outstanding debt at a weighted
average interest rate of approximately 4.89%.
Other Developments
On December 13, 2019, we entered into a series of agreements
with Our Town Hospitality LLC, a Virginia limited liability company
("Our Town") relating to the retention of Our Town as the manager
of ten of our hotels. Our Town began managing these
hotels on January 1, 2020. Please reference our Current
Report on Form 8-K filed with the Securities and Exchange
Commission on December 16, 2019 for additional details.
On January 1, 2020, ten of our hotel management agreements with
Chesapeake Hospitality expired. In connection with the
termination of those ten agreements, we are required to pay
Chesapeake a termination fee of approximately $0.3 million.
The termination fee must be paid by March 30, 2020.
On February 14, 2020, we entered into a hotel purchase and sale
agreement to sell the Sheraton Louisville Riverside hotel located
in Jeffersonville, Indiana (the “Hotel”) to 808 Indiana LLC for a
purchase price of $13.5 million. Certain representations
and warranties of the Seller under the purchase and sale agreement
are unconditionally guaranteed by the Operating Partnership up to a
maximum of $750,000. The Company intends to use proceeds
from the sale of the Hotel to repay the existing mortgage on the
Hotel and for general corporate purposes. The closing of the
sale is subject to various customary closing conditions, including
the satisfactory completion of a diligence review of the Hotel, the
accuracy of representations and warranties through closing,
conditions related to the operation and maintenance of the Hotel,
and conditions related to franchise approval.
2020 Outlook
Set forth below is the Company’s guidance for 2020. The
guidance is predicated on estimates of occupancy and ADR that are
consistent with the most recent 2020 calendar year forecasts by
Smith Travel Research 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 2020, in thousands of
dollars, except per share and RevPAR data:
|
2020 Guidance |
|
|
Low Range |
|
|
High Range |
|
|
|
|
Total revenue |
$ |
184,107 |
|
|
$ |
188,211 |
|
Net income |
|
3,049 |
|
|
|
3,905 |
|
Net loss available to common stockholders and unitholders |
|
(5,781 |
) |
|
|
(4,925 |
) |
|
|
|
|
|
|
|
|
EBITDA |
|
42,224 |
|
|
|
43,170 |
|
Hotel EBITDA |
|
49,074 |
|
|
|
50,170 |
|
|
|
|
|
|
|
|
|
FFO available to common stockholders and unitholders |
|
15,219 |
|
|
|
16,075 |
|
Adjusted FFO available to common stockholders and
unitholders |
|
15,444 |
|
|
|
16,375 |
|
|
|
|
|
|
|
|
|
Net loss per share available to common
stockholders |
$ |
(0.38 |
) |
|
$ |
(0.32 |
) |
FFO per common share and unit |
$ |
0.98 |
|
|
$ |
1.03 |
|
Adjusted FFO per common share and unit |
$ |
1.00 |
|
|
$ |
1.06 |
|
Rev PAR |
$ |
111.46 |
|
|
$ |
113.95 |
|
Hotel EBITDA margin |
|
26.7 |
% |
|
|
26.7 |
% |
Earnings Call/Webcast
The Company will conduct its fourth quarter 2019 conference call
for investors and other interested parties at 10:00 a.m. Eastern
Time on Thursday, February 27, 2020. The conference call will be
accessible by telephone and through the Internet. Interested
individuals are invited to listen to the call by telephone at
888-339-0107 (United States) or 855-669-9657 (Canada) or +1
412-902-4188 (International). To participate on the webcast, log on
to www.sotherlyhotels.com at least 15 minutes before the call
to download the necessary software. For those unable to listen to
the call live, a taped rebroadcast will be available beginning one
hour after completion of the live call on February 27 through
February 27, 2021. To access the rebroadcast, dial 877-344-7529 and
enter conference number 10138174. A replay of the call also
will be available on the Internet at
www.sotherlyhotels.com until February 27, 2021.
About Sotherly Hotels Inc.
Sotherly Hotels Inc. is a self-managed and self-administered
lodging REIT focused on the acquisition, renovation, upbranding and
repositioning of upscale to upper-upscale full-service hotels in
the Southern United States. Currently, the Company’s portfolio
consists of investments in twelve hotel properties, comprising
3,156 rooms, as well as interests in two condominium hotels and
their associated rental programs. The Company owns hotels that
operate under the Hilton Worldwide, Hyatt Hotels Corporation, and
Marriott International, Inc. brands, as well as independent hotels.
Sotherly Hotels Inc. was organized in 2004 and is headquartered in
Williamsburg, Virginia. For more information, please visit
www.sotherlyhotels.com.
Contact at the Company:
Mack SimsVice President – Operations & Investor
RelationsSotherly Hotels Inc.306 South Henry Street, Suite
100Williamsburg, Virginia 23185757.229.5648
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
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Investment in hotel properties, net |
|
$ |
443,267,448 |
|
|
$ |
435,725,814 |
|
Cash and cash equivalents |
|
|
23,738,066 |
|
|
|
33,792,773 |
|
Restricted cash |
|
|
4,246,170 |
|
|
|
4,075,508 |
|
Accounts receivable, net |
|
|
4,812,479 |
|
|
|
6,766,696 |
|
Accounts receivable - affiliate |
|
|
101,771 |
|
|
|
262,572 |
|
Prepaid expenses, inventory and other assets |
|
|
5,648,772 |
|
|
|
5,262,884 |
|
Favorable lease assets, net |
|
|
— |
|
|
|
2,465,421 |
|
Deferred income taxes |
|
|
5,412,084 |
|
|
|
5,131,179 |
|
TOTAL
ASSETS |
|
$ |
487,226,790 |
|
|
$ |
493,482,847 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
Mortgage loans, net |
|
$ |
358,633,884 |
|
|
$ |
364,828,845 |
|
Unsecured notes, net |
|
|
— |
|
|
|
23,894,658 |
|
Accounts payable and accrued liabilities |
|
|
20,189,903 |
|
|
|
16,268,096 |
|
Advance deposits |
|
|
2,785,338 |
|
|
|
2,815,283 |
|
Dividends and distributions payable |
|
|
4,210,494 |
|
|
|
3,409,593 |
|
TOTAL
LIABILITIES |
|
$ |
385,819,619 |
|
|
$ |
411,216,475 |
|
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
each issued and outstanding at December 31, 2019 and 2018,
respectively. |
|
|
16,100 |
|
|
|
16,100 |
|
7.875% Series C cumulative redeemable perpetual preferred
stock, liquidation preference $25 per share, 1,554,610 and
1,352,141 shares issued and outstanding at December 31, 2019
and 2018, respectively. |
|
|
15,546 |
|
|
|
13,521 |
|
8.25% Series D cumulative redeemable perpetual preferred
stock, liquidation preference $25 per share, 1,200,000 shares
and none, issued and outstanding at December 31, 2019 and
2018, respectively. |
|
|
12,000 |
|
|
|
— |
|
Common stock, par value $0.01, 69,000,000 shares authorized,
14,272,378 shares and 14,209,378 shares issued and
outstanding at December 31, 2019 and 2018, respectively. |
|
|
142,723 |
|
|
|
142,093 |
|
Additional paid-in capital |
|
|
180,515,861 |
|
|
|
147,085,112 |
|
Unearned ESOP shares |
|
|
(4,105,637 |
) |
|
|
(4,379,742 |
) |
Distributions in excess of retained earnings |
|
|
(74,172,159 |
) |
|
|
(61,052,418 |
) |
Total Sotherly Hotels Inc. stockholders’ equity |
|
|
102,424,434 |
|
|
|
81,824,666 |
|
Noncontrolling interest |
|
|
(1,017,263 |
) |
|
|
441,706 |
|
TOTAL
EQUITY |
|
|
101,407,171 |
|
|
|
82,266,372 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
487,226,790 |
|
|
$ |
493,482,847 |
|
SOTHERLY HOTELS
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
$ |
29,501,291 |
|
|
$ |
28,751,075 |
|
|
$ |
128,062,932 |
|
|
$ |
120,993,460 |
|
Food and beverage department |
|
|
10,682,535 |
|
|
|
10,284,968 |
|
|
|
40,267,240 |
|
|
|
38,134,813 |
|
Other operating departments |
|
|
4,121,127 |
|
|
|
4,429,933 |
|
|
|
17,457,961 |
|
|
|
19,044,848 |
|
Total revenue |
|
|
44,304,953 |
|
|
|
43,465,976 |
|
|
|
185,788,133 |
|
|
|
178,173,121 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
|
7,877,548 |
|
|
|
7,583,927 |
|
|
|
32,142,171 |
|
|
|
30,334,309 |
|
Food and beverage department |
|
|
7,560,029 |
|
|
|
7,341,457 |
|
|
|
29,355,080 |
|
|
|
28,090,145 |
|
Other operating departments |
|
|
1,949,674 |
|
|
|
1,549,465 |
|
|
|
6,957,325 |
|
|
|
6,419,502 |
|
Indirect |
|
|
17,638,106 |
|
|
|
16,744,463 |
|
|
|
70,395,633 |
|
|
|
65,645,500 |
|
Total hotel operating expenses |
|
|
35,025,357 |
|
|
|
33,219,312 |
|
|
|
138,850,209 |
|
|
|
130,489,456 |
|
Depreciation and
amortization |
|
|
5,520,038 |
|
|
|
5,101,469 |
|
|
|
21,637,316 |
|
|
|
20,884,643 |
|
Loss on disposal of
assets |
|
|
91,650 |
|
|
|
515,565 |
|
|
|
123,739 |
|
|
|
511,749 |
|
Corporate general and
administrative |
|
|
1,822,063 |
|
|
|
1,614,705 |
|
|
|
6,830,354 |
|
|
|
6,180,962 |
|
Total hotel operating expenses |
|
|
42,459,108 |
|
|
|
40,451,051 |
|
|
|
167,441,618 |
|
|
|
158,066,810 |
|
NET OPERATING
INCOME |
|
|
1,845,845 |
|
|
|
3,014,925 |
|
|
|
18,346,515 |
|
|
|
20,106,311 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(4,652,502 |
) |
|
|
(5,382,604 |
) |
|
|
(19,768,193 |
) |
|
|
(19,953,746 |
) |
Interest income |
|
|
86,883 |
|
|
|
116,258 |
|
|
|
444,459 |
|
|
|
352,951 |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(1,152,356 |
) |
|
|
(753,133 |
) |
Unrealized (loss) gain on hedging activities |
|
|
377,053 |
|
|
|
(950,928 |
) |
|
|
(1,177,871 |
) |
|
|
(808,958 |
) |
Gain on exercise of development right |
|
|
— |
|
|
|
— |
|
|
|
3,940,000 |
|
|
|
— |
|
Gain on involuntary conversion of assets |
|
|
1,630 |
|
|
|
19,202 |
|
|
|
293,534 |
|
|
|
917,767 |
|
Net income (loss) before
income taxes |
|
|
(2,341,091 |
) |
|
|
(3,183,147 |
) |
|
|
926,088 |
|
|
|
(138,808 |
) |
Income tax benefit (provision) |
|
|
688,803 |
|
|
|
412,696 |
|
|
|
249,480 |
|
|
|
(469,349 |
) |
Net income (loss) |
|
|
(1,652,288 |
) |
|
|
(2,770,451 |
) |
|
|
1,175,568 |
|
|
|
(608,157 |
) |
Less: Net loss attributable to noncontrolling interest |
|
|
240,766 |
|
|
|
472,794 |
|
|
|
552,407 |
|
|
|
718,093 |
|
Net (loss) income
attributable to the Company |
|
|
(1,411,522 |
) |
|
|
(2,297,657 |
) |
|
|
1,727,975 |
|
|
|
109,936 |
|
Distributions to preferred stockholders |
|
|
(2,188,897 |
) |
|
|
(1,470,507 |
) |
|
|
(7,820,695 |
) |
|
|
(5,829,914 |
) |
Net loss available to
common stockholders |
|
$ |
(3,600,419 |
) |
|
$ |
(3,768,164 |
) |
|
$ |
(6,092,720 |
) |
|
$ |
(5,719,978 |
) |
Net loss per share
available to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.27 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.42 |
) |
Weighted average number
of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
13,695,964 |
|
|
|
13,594,651 |
|
|
|
13,642,573 |
|
|
|
13,517,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.KEY
OPERATING METRICS(unaudited)
The following tables illustrate the key operating metrics for
the three and twelve months ended December 31, 2019 and 2018,
respectively, for the Company’s twelve wholly-owned properties
(“actual” portfolio metrics), as well as the eleven wholly-owned
properties in the portfolio that were under the Company’s control
during the three and twelve months ended December 31, 2019 and the
corresponding periods in 2018 (“same-store” portfolio metrics).
Accordingly, the actual data does not include the participating
condominium hotel rooms at the Hyde Resort & Residences or the
Hyde Beach House Resort & Residences, and the same-store data
does not include the performance of the Hyatt Centric Arlington
which we acquired in March 2018 or the participating condominium
hotel rooms at the Hyde Resort & Residences or the Hyde Beach
House Resort & Residences. The composite portfolio
metrics represent the Company’s twelve wholly-owned properties and
the participating condominium hotel rooms at the Hyde Resort &
Residences and the Hyde Beach House Resort & Residences during
the three and twelve months ended December 31, 2019 and the
corresponding period in 2018.
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
Actual Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
67.5 |
% |
|
|
66.3 |
% |
|
|
71.3 |
% |
|
|
70.3 |
% |
ADR |
|
$ |
150.50 |
|
|
$ |
149.38 |
|
|
$ |
155.92 |
|
|
$ |
151.93 |
|
RevPAR |
|
$ |
101.61 |
|
|
$ |
99.02 |
|
|
$ |
111.17 |
|
|
$ |
106.77 |
|
Same-Store Portfolio
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
66.7 |
% |
|
|
65.3 |
% |
|
|
70.4 |
% |
|
|
69.0 |
% |
ADR |
|
$ |
147.20 |
|
|
$ |
146.69 |
|
|
$ |
151.87 |
|
|
$ |
148.57 |
|
RevPAR |
|
$ |
98.17 |
|
|
$ |
95.84 |
|
|
$ |
106.96 |
|
|
$ |
102.52 |
|
Composite Portfolio
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
65.7 |
% |
|
|
64.7 |
% |
|
|
70.1 |
% |
|
|
69.1 |
% |
ADR |
|
$ |
155.57 |
|
|
$ |
154.60 |
|
|
$ |
161.17 |
|
|
$ |
158.02 |
|
RevPAR |
|
$ |
102.27 |
|
|
$ |
100.10 |
|
|
$ |
112.94 |
|
|
$ |
109.20 |
|
SOTHERLY HOTELS
INC.SUPPLEMENTAL
DATA(unaudited)
The following tables illustrate the key operating metrics for
the three and twelve months ended December 31, 2019, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2019 |
|
|
Q4 2018 |
|
|
Q4 2017 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah, Georgia |
|
62.9 |
% |
|
|
56.5 |
% |
|
|
61.6 |
% |
|
|
65.4 |
% |
|
|
61.6 |
% |
|
|
66.6 |
% |
DoubleTree by Hilton Jacksonville RiverfrontJacksonville,
Florida |
|
75.4 |
% |
|
|
78.2 |
% |
|
|
78.0 |
% |
|
|
78.5 |
% |
|
|
81.6 |
% |
|
|
79.9 |
% |
DoubleTree by Hilton LaurelLaurel, Maryland |
|
65.2 |
% |
|
|
66.4 |
% |
|
|
57.8 |
% |
|
|
69.9 |
% |
|
|
66.8 |
% |
|
|
64.9 |
% |
DoubleTree by Hilton Philadelphia AirportPhiladelphia,
Pennsylvania |
|
73.9 |
% |
|
|
74.0 |
% |
|
|
72.2 |
% |
|
|
76.6 |
% |
|
|
78.2 |
% |
|
|
75.5 |
% |
DoubleTree by Hilton Raleigh Brownstone – UniversityRaleigh,
North Carolina |
|
72.5 |
% |
|
|
71.0 |
% |
|
|
69.9 |
% |
|
|
76.3 |
% |
|
|
74.8 |
% |
|
|
74.2 |
% |
DoubleTree Resort by Hilton Hollywood BeachHollywood,
Florida |
|
69.5 |
% |
|
|
62.6 |
% |
|
|
61.0 |
% |
|
|
70.5 |
% |
|
|
69.2 |
% |
|
|
72.1 |
% |
Georgian TerraceAtlanta, Georgia |
|
67.5 |
% |
|
|
63.9 |
% |
|
|
67.0 |
% |
|
|
70.0 |
% |
|
|
67.9 |
% |
|
|
70.6 |
% |
Hotel Alba Tampa, Tapestry Collection by HiltonTampa,
Florida |
|
61.8 |
% |
|
|
64.7 |
% |
|
|
78.7 |
% |
|
|
66.2 |
% |
|
|
71.9 |
% |
|
|
79.1 |
% |
Hotel Ballast Wilmington, Tapestry Collection by
HiltonWilmington, North Carolina |
|
60.3 |
% |
|
|
64.2 |
% |
|
|
61.8 |
% |
|
|
68.5 |
% |
|
|
63.9 |
% |
|
|
68.3 |
% |
Hyatt Centric Arlington (1)Arlington, Virginia |
|
74.8 |
% |
|
|
74.8 |
% |
|
|
76.0 |
% |
|
|
79.1 |
% |
|
|
83.8 |
% |
|
|
84.0 |
% |
Sheraton Louisville RiversideJeffersonville, Indiana |
|
65.0 |
% |
|
|
58.5 |
% |
|
|
48.6 |
% |
|
|
67.9 |
% |
|
|
60.6 |
% |
|
|
63.8 |
% |
The WhitehallHouston, Texas |
|
56.0 |
% |
|
|
54.6 |
% |
|
|
41.2 |
% |
|
|
62.2 |
% |
|
|
57.5 |
% |
|
|
58.1 |
% |
Hyde Resort & Residences (2)Hollywood Beach, Florida |
|
44.6 |
% |
|
|
39.3 |
% |
|
|
38.4 |
% |
|
|
50.5 |
% |
|
|
49.8 |
% |
|
|
37.9 |
% |
Hyde Beach House Resort & Residences (2)Hollywood Beach,
Florida |
|
15.0 |
% |
|
- |
|
|
- |
|
|
|
15.0 |
% |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
All properties weighted
average (1) |
|
65.7 |
% |
|
|
64.7 |
% |
|
|
58.4 |
% |
|
|
70.1 |
% |
|
|
69.1 |
% |
|
|
68.8 |
% |
(1 |
) |
Includes operating results under
previous ownership. Results for periods prior to the
Company’s ownership were provided by prior owners of the hotel and
have not been audited or confirmed by the Company. |
(2 |
) |
Reflects only those condominium
units participating in our rental program for the period those
units participated in our rental program. |
|
|
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2019 |
|
|
Q4 2018 |
|
|
Q4 2017 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah, Georgia |
$ |
169.52 |
|
|
$ |
173.37 |
|
|
$ |
157.93 |
|
|
$ |
174.75 |
|
|
$ |
177.19 |
|
|
$ |
159.50 |
|
DoubleTree by Hilton Jacksonville RiverfrontJacksonville,
Florida |
$ |
137.96 |
|
|
$ |
134.76 |
|
|
$ |
140.34 |
|
|
$ |
139.53 |
|
|
$ |
139.84 |
|
|
$ |
132.19 |
|
DoubleTree by Hilton LaurelLaurel, Maryland |
$ |
103.73 |
|
|
$ |
104.12 |
|
|
$ |
104.74 |
|
|
$ |
107.34 |
|
|
$ |
107.98 |
|
|
$ |
107.77 |
|
DoubleTree by Hilton Philadelphia AirportPhiladelphia,
Pennsylvania |
$ |
145.10 |
|
|
$ |
139.61 |
|
|
$ |
138.64 |
|
|
$ |
143.95 |
|
|
$ |
139.25 |
|
|
$ |
135.54 |
|
DoubleTree by Hilton Raleigh Brownstone – UniversityRaleigh,
North Carolina |
$ |
140.45 |
|
|
$ |
134.17 |
|
|
$ |
131.29 |
|
|
$ |
139.73 |
|
|
$ |
134.26 |
|
|
$ |
133.24 |
|
DoubleTree Resort by Hilton Hollywood BeachHollywood,
Florida |
$ |
159.34 |
|
|
$ |
168.37 |
|
|
$ |
167.71 |
|
|
$ |
173.25 |
|
|
$ |
175.18 |
|
|
$ |
170.76 |
|
Georgian TerraceAtlanta, Georgia |
$ |
193.56 |
|
|
$ |
193.65 |
|
|
$ |
186.21 |
|
|
$ |
204.60 |
|
|
$ |
186.28 |
|
|
$ |
175.06 |
|
Hotel Alba Tampa, Tapestry Collection by HiltonTampa,
Florida |
$ |
124.16 |
|
|
$ |
116.92 |
|
|
$ |
116.39 |
|
|
$ |
129.91 |
|
|
$ |
124.72 |
|
|
$ |
119.85 |
|
Hotel Ballast Wilmington, Tapestry Collection by
HiltonWilmington, North Carolina |
$ |
157.48 |
|
|
$ |
158.77 |
|
|
$ |
143.62 |
|
|
$ |
161.50 |
|
|
$ |
153.04 |
|
|
$ |
148.69 |
|
Hyatt Centric Arlington (1)Arlington, Virginia |
$ |
176.80 |
|
|
$ |
170.31 |
|
|
$ |
173.07 |
|
|
$ |
188.15 |
|
|
$ |
181.38 |
|
|
$ |
176.31 |
|
Sheraton Louisville RiversideJeffersonville, Indiana |
$ |
106.39 |
|
|
$ |
112.16 |
|
|
$ |
138.65 |
|
|
$ |
114.92 |
|
|
$ |
122.62 |
|
|
$ |
133.86 |
|
The WhitehallHouston, Texas |
$ |
142.79 |
|
|
$ |
147.60 |
|
|
$ |
154.94 |
|
|
$ |
143.33 |
|
|
$ |
146.01 |
|
|
$ |
147.66 |
|
Hyde Resort & Residences (2)Hollywood Beach, Florida |
$ |
284.03 |
|
|
$ |
299.46 |
|
|
$ |
289.66 |
|
|
$ |
295.49 |
|
|
$ |
299.30 |
|
|
$ |
282.20 |
|
Hyde Beach House Resort & Residences (2)Hollywood Beach,
Florida |
$ |
341.58 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
341.58 |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
All properties weighted
average (1) |
$ |
155.57 |
|
|
$ |
154.60 |
|
|
$ |
153.03 |
|
|
$ |
161.17 |
|
|
$ |
158.02 |
|
|
$ |
147.77 |
|
(1 |
) |
Includes operating results under
previous ownership. Results for periods prior to the
Company’s ownership were provided by prior owners of the hotel and
have not been audited or confirmed by the Company. |
(2 |
) |
Reflects only those condominium
units participating in our rental program for the period those
units participated in our rental program. |
|
|
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2019 |
|
|
Q4 2018 |
|
|
Q4 2017 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah, Georgia |
$ |
106.56 |
|
|
$ |
97.91 |
|
|
$ |
97.22 |
|
|
$ |
114.34 |
|
|
$ |
109.21 |
|
|
$ |
106.15 |
|
DoubleTree by Hilton Jacksonville RiverfrontJacksonville,
Florida |
$ |
104.03 |
|
|
$ |
105.33 |
|
|
$ |
109.41 |
|
|
$ |
109.53 |
|
|
$ |
114.06 |
|
|
$ |
105.56 |
|
DoubleTree by Hilton LaurelLaurel, Maryland |
$ |
67.67 |
|
|
$ |
69.16 |
|
|
$ |
60.57 |
|
|
$ |
75.06 |
|
|
$ |
72.09 |
|
|
$ |
69.91 |
|
DoubleTree by Hilton Philadelphia AirportPhiladelphia,
Pennsylvania |
$ |
107.16 |
|
|
$ |
103.34 |
|
|
$ |
100.09 |
|
|
$ |
110.20 |
|
|
$ |
108.88 |
|
|
$ |
102.32 |
|
DoubleTree by Hilton Raleigh Brownstone – UniversityRaleigh,
North Carolina |
$ |
101.80 |
|
|
$ |
95.29 |
|
|
$ |
91.83 |
|
|
$ |
106.63 |
|
|
$ |
100.36 |
|
|
$ |
98.91 |
|
DoubleTree Resort by Hilton Hollywood BeachHollywood,
Florida |
$ |
110.76 |
|
|
$ |
105.47 |
|
|
$ |
102.34 |
|
|
$ |
122.22 |
|
|
$ |
121.19 |
|
|
$ |
123.12 |
|
Georgian TerraceAtlanta, Georgia |
$ |
130.56 |
|
|
$ |
123.79 |
|
|
$ |
124.75 |
|
|
$ |
143.15 |
|
|
$ |
126.56 |
|
|
$ |
123.66 |
|
Hotel Alba Tampa, Tapestry Collection by HiltonTampa,
Florida |
$ |
76.79 |
|
|
$ |
75.68 |
|
|
$ |
91.57 |
|
|
$ |
85.97 |
|
|
$ |
89.73 |
|
|
$ |
94.81 |
|
Hotel Ballast Wilmington, Tapestry Collection by
HiltonWilmington, North Carolina |
$ |
94.93 |
|
|
$ |
101.94 |
|
|
$ |
88.75 |
|
|
$ |
110.58 |
|
|
$ |
97.75 |
|
|
$ |
101.62 |
|
Hyatt Centric Arlington (1)Arlington, Virginia |
$ |
132.25 |
|
|
$ |
127.39 |
|
|
$ |
131.46 |
|
|
$ |
148.77 |
|
|
$ |
152.04 |
|
|
$ |
148.13 |
|
Sheraton Louisville RiversideJeffersonville, Indiana |
$ |
69.13 |
|
|
$ |
65.60 |
|
|
$ |
67.38 |
|
|
$ |
78.02 |
|
|
$ |
74.25 |
|
|
$ |
85.45 |
|
The WhitehallHouston, Texas |
$ |
79.96 |
|
|
$ |
80.55 |
|
|
$ |
63.90 |
|
|
$ |
89.18 |
|
|
$ |
83.95 |
|
|
$ |
85.78 |
|
Hyde Resort & Residences (2)Hollywood Beach, Florida |
$ |
126.79 |
|
|
$ |
117.83 |
|
|
$ |
111.27 |
|
|
$ |
149.36 |
|
|
$ |
149.15 |
|
|
$ |
106.84 |
|
Hyde Beach House Resort & Residences (2)Hollywood Beach,
Florida |
$ |
51.36 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
51.36 |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
All properties weighted
average (1) |
$ |
102.27 |
|
|
$ |
100.10 |
|
|
$ |
89.44 |
|
|
$ |
112.94 |
|
|
$ |
109.20 |
|
|
$ |
101.70 |
|
(1 |
) |
Includes operating results under
previous ownership. Results for periods prior to the
Company’s ownership were provided by prior owners of the hotel and
have not been audited or confirmed by the Company. |
(2 |
) |
Reflects only those condominium
units participating in our rental program for the period those
units participated in our rental program. |
|
|
SOTHERLY HOTELS
INC.RECONCILIATION OF NET LOSS
TOFFO, Adjusted FFO, EBITDA and Hotel
EBITDA(unaudited)
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
Net loss available to
common stockholders |
|
$ |
(3,600,419 |
) |
|
$ |
(3,768,164 |
) |
|
$ |
(6,092,720 |
) |
|
$ |
(5,719,978 |
) |
Add: Net loss attributable to noncontrolling interest |
|
|
(240,766 |
) |
|
|
(472,794 |
) |
|
|
(552,407 |
) |
|
|
(718,093 |
) |
Depreciation and amortization - real estate |
|
|
5,504,805 |
|
|
|
5,004,607 |
|
|
$ |
21,578,309 |
|
|
|
20,549,695 |
|
Gain on involuntary conversion of assets |
|
|
(1,630 |
) |
|
|
(19,202 |
) |
|
|
(293,534 |
) |
|
|
(917,767 |
) |
(Gain) loss on disposal of assets |
|
|
91,650 |
|
|
|
515,565 |
|
|
$ |
123,739 |
|
|
|
511,749 |
|
FFO available to
common stockholders and unitholders |
|
$ |
1,753,640 |
|
|
$ |
1,260,012 |
|
|
$ |
14,763,387 |
|
|
$ |
13,705,606 |
|
(Increase) decrease in deferred income taxes |
|
|
(733,074 |
) |
|
|
(430,800 |
) |
|
|
(280,905 |
) |
|
|
319,939 |
|
Amortization |
|
|
15,233 |
|
|
|
96,862 |
|
|
|
59,007 |
|
|
|
334,948 |
|
Termination fee |
|
|
291,841 |
|
|
|
— |
|
|
|
291,841 |
|
|
|
— |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
1,152,356 |
|
|
|
753,133 |
|
Unrealized (gain) loss on hedging activities |
|
|
(377,053 |
) |
|
|
950,928 |
|
|
|
1,177,871 |
|
|
|
808,958 |
|
Adjusted FFO available
to common stockholders and unitholders |
|
$ |
950,587 |
|
|
$ |
1,877,002 |
|
|
$ |
17,163,557 |
|
|
$ |
15,922,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic |
|
|
13,695,964 |
|
|
|
13,594,651 |
|
|
|
13,642,573 |
|
|
|
13,517,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of non-controlling units |
|
|
1,728,140 |
|
|
|
1,778,140 |
|
|
|
1,765,537 |
|
|
|
1,778,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares and units outstanding, basic |
|
|
15,424,104 |
|
|
|
15,372,791 |
|
|
|
15,408,110 |
|
|
|
15,295,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share and unit |
|
$ |
0.11 |
|
|
$ |
0.08 |
|
|
$ |
0.96 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FFO per common share and unit |
|
$ |
0.06 |
|
|
$ |
0.12 |
|
|
$ |
1.11 |
|
|
$ |
1.04 |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
Net loss available to
common stockholders |
|
$ |
(3,600,419 |
) |
|
$ |
(3,768,164 |
) |
|
$ |
(6,092,720 |
) |
|
$ |
(5,719,978 |
) |
Add: Net loss attributable to noncontrolling interest |
|
|
(240,766 |
) |
|
|
(472,794 |
) |
|
|
(552,407 |
) |
|
|
(718,093 |
) |
Interest expense |
|
|
4,652,502 |
|
|
|
5,382,604 |
|
|
|
19,768,193 |
|
|
|
19,953,746 |
|
Interest income |
|
|
(86,883 |
) |
|
|
(116,258 |
) |
|
|
(444,459 |
) |
|
|
(352,951 |
) |
Income tax provision (benefit) |
|
|
(688,803 |
) |
|
|
(412,696 |
) |
|
|
(249,480 |
) |
|
|
469,349 |
|
Depreciation and amortization |
|
|
5,520,038 |
|
|
|
5,101,469 |
|
|
|
21,637,316 |
|
|
|
20,884,643 |
|
Distributions to preferred stockholders |
|
|
2,188,897 |
|
|
|
1,470,507 |
|
|
|
7,820,695 |
|
|
|
5,829,914 |
|
EBITDA |
|
|
7,744,566 |
|
|
|
7,184,668 |
|
|
|
41,887,138 |
|
|
|
40,346,630 |
|
(Gain) loss on disposal of assets |
|
|
91,650 |
|
|
|
515,565 |
|
|
|
123,739 |
|
|
|
511,749 |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
1,152,356 |
|
|
|
753,133 |
|
Gain on exercise of development right |
|
|
— |
|
|
|
— |
|
|
|
(3,940,000 |
) |
|
|
— |
|
Gain on involuntary conversion of assets |
|
|
(1,630 |
) |
|
|
(19,202 |
) |
|
|
(293,534 |
) |
|
|
(917,767 |
) |
Subtotal |
|
|
7,834,586 |
|
|
|
7,681,031 |
|
|
|
38,929,699 |
|
|
|
40,693,745 |
|
Corporate general and administrative |
|
|
1,822,063 |
|
|
|
1,614,705 |
|
|
|
6,830,354 |
|
|
|
6,180,962 |
|
Unrealized (gain) loss on hedging activities |
|
|
(377,053 |
) |
|
|
950,928 |
|
|
|
1,177,871 |
|
|
|
808,958 |
|
Hotel
EBITDA |
|
$ |
9,279,596 |
|
|
$ |
10,246,664 |
|
|
$ |
46,937,924 |
|
|
$ |
47,683,665 |
|
Reconciliation of Outlook of Net Income to EBITDA and Hotel
EBITDA |
|
|
|
|
|
|
|
|
|
|
2020 Guidance |
|
|
Low Range |
|
|
High Range |
|
|
|
|
|
|
|
|
|
Net income |
$ |
3,049 |
|
|
$ |
3,905 |
|
Interest expense |
|
18,325 |
|
|
|
18,325 |
|
Interest income |
|
(250 |
) |
|
|
(260 |
) |
Income tax provision |
|
100 |
|
|
|
200 |
|
Depreciation and amortization |
|
21,000 |
|
|
|
21,000 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
42,224 |
|
|
|
43,170 |
|
Loss on early extinguishment of debt |
|
150 |
|
|
|
150 |
|
(Gain) loss on disposal of assets |
|
- |
|
|
|
- |
|
Unrealized loss on hedging activities |
|
- |
|
|
|
- |
|
Gain on exercise of development right |
|
- |
|
|
|
- |
|
Gain on involuntary conversion of assets |
|
- |
|
|
|
- |
|
Corporate general and administrative |
|
6,700 |
|
|
|
6,850 |
|
|
|
|
|
|
|
|
|
Hotel EBITDA |
$ |
49,074 |
|
|
$ |
50,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Outlook of Net Income to FFO and Adjusted
FFO |
|
|
|
|
|
|
|
|
|
|
2020 Guidance |
|
|
Low Range |
|
|
High Range |
|
|
|
|
|
|
|
|
|
Net income |
$ |
3,049 |
|
|
$ |
3,905 |
|
Depreciation and amortization |
|
21,000 |
|
|
|
21,000 |
|
(Gain) loss on disposal of assets |
|
- |
|
|
|
- |
|
Gain on involuntary conversion of assets |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
FFO |
|
24,049 |
|
|
|
24,905 |
|
Distributions to preferred stockholders |
|
(8,830 |
) |
|
|
(8,830 |
) |
|
|
|
|
|
|
|
|
FFO available to common stockholders and unitholders |
|
15,219 |
|
|
|
16,075 |
|
Decrease in deferred income taxes |
|
75 |
|
|
|
150 |
|
Unrealized loss on hedging activities |
|
- |
|
|
|
- |
|
Loss on early extinguishment of debt |
|
150 |
|
|
|
150 |
|
Adjusted FFO available to common stockholders and
unitholders |
$ |
15,444 |
|
|
$ |
16,375 |
|
|
|
|
|
|
|
|
|
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,
management contract termination costs and change in control gains
or losses. We exclude these items as we believe it allows for
meaningful comparisons between periods and among other REITs and is
more indicative than FFO of the on-going performance of our
business and assets. Our calculation of adjusted FFO may be
different from similar measures calculated by other REITs.
EBITDA
The Company believes that excluding the effect of non-operating
expenses and non-cash charges, and the portion of those items
related to unconsolidated entities, all of which are also based on
historical cost accounting and may be of limited significance in
evaluating current performance, can help eliminate the accounting
effects of depreciation and financing decisions and facilitate
comparisons of core operating profitability between periods and
between REITs, even though EBITDA also does not represent an amount
that accrued directly to shareholders.
Hotel EBITDA
The Company defines hotel EBITDA as net income or loss
excluding: (1) interest expense, (2) interest income, (3) income
tax provision or benefit, (4) equity in the income or loss of
equity investees, (5) unrealized gains and losses on derivative
instruments not included in other comprehensive income, (6) gains
and losses on disposal of assets, (7) realized gains and losses on
investments, (8) impairment of long-lived assets or investments,
(9) loss on early debt extinguishment, (10) gains or losses on
change in control, (11) gain on exercise of development right, (12)
corporate general and administrative expense, (13) depreciation and
amortization, (14) gains and losses on involuntary conversions of
assets, (15) distributions to preferred stockholders and (16) other
operating revenue not related to our wholly-owned portfolio.
We believe this provides a more complete understanding of the
operating results over which our wholly-owned hotels and its
operators have direct control. We believe hotel EBITDA
provides investors with supplemental information on the on-going
operational performance of our hotels and the effectiveness of
third-party management companies operating our business on a
property-level basis. The Company’s calculation of hotel EBITDA may
be different from similar measures calculated by other
REITs.
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