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 third quarter ended September 30,
2020. The Company’s results include the following*:
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
September 30,2020 |
|
|
September 30,2019 |
|
|
September 30,2020 |
|
|
September 30,2019 |
|
|
|
|
|
|
|
|
($ in thousands except per share data) |
|
|
($ in thousands except per share data) |
|
Total Revenue |
$ |
14,414 |
|
|
$ |
42,552 |
|
|
$ |
56,917 |
|
|
$ |
141,483 |
|
Net loss
attributable to common stockholders |
|
(12,260 |
) |
|
|
(107 |
) |
|
|
(43,708 |
) |
|
|
(2,492 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
(2,021 |
) |
|
|
10,974 |
|
|
|
(7,052 |
) |
|
|
34,143 |
|
Hotel EBITDA |
|
(1,154 |
) |
|
|
8,904 |
|
|
|
(1,303 |
) |
|
|
37,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO attributable to common
stockholders and unitholders |
|
(8,162 |
) |
|
|
4,719 |
|
|
|
(32,261 |
) |
|
|
13,010 |
|
Adjusted FFO attributable to
common stockholders and unitholders |
|
(8,560 |
) |
|
|
4,258 |
|
|
|
(25,483 |
) |
|
|
16,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share |
$ |
(0.86 |
) |
|
$ |
(0.01 |
) |
|
$ |
(3.06 |
) |
|
$ |
(0.18 |
) |
FFO per common share and
unit |
$ |
(0.53 |
) |
|
$ |
0.31 |
|
|
$ |
(2.08 |
) |
|
$ |
0.84 |
|
Adjusted FFO per common share
and unit |
$ |
(0.55 |
) |
|
$ |
0.28 |
|
|
$ |
(1.64 |
) |
|
$ |
1.05 |
|
(*) 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.
COVID-19 UPDATE
The impact of the COVID-19 pandemic on the hospitality industry
has been significant, with demand for hotel rooms in all of the
markets the Company operates significantly reduced and occupancy
rates reaching historic lows. We continued to experience a
substantial decline in our revenues, profitability, and cash flows
from operations during the third quarter of 2020. While the extent
and duration of the negative effects resulting from COVID-19 on the
Company’s business are highly uncertain and difficult to predict,
we expect materially adverse effects on our operations and
financial results to continue until travel and business
restrictions are eased, travel orders are lifted, consumer
confidence is restored, and an economic recovery takes hold. The
COVID-19 pandemic has also significantly increased economic
uncertainty and has led to disruption and volatility in the global
capital markets, which has limited our access to capital and could
increase our cost of capital. We continue to follow the procedures
and strategies that we introduced at the outset of the pandemic,
including enhanced cleaning protocols as well as several cost
reduction initiatives.
ESTIMATED MONTHLY CASH USE
The Company estimates the average monthly cash use across its
portfolio for the fourth quarter to be approximately $2.0 million
(excluding capital investments) based on the following
assumptions:
- Average hotel-level monthly cash use
of approximately $0 to $0.45 million;
- Corporate-level monthly G&A cash
use of $0.45 to $0.5 million; and
- Corporate finance-related monthly cash
use of $1.3 million, which includes principal and interest payments
on the Company’s outstanding mortgage debt.
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
September 30, 2020, decreased 63.3% over the three months ended
September 30, 2019, to $36.68 reflecting a 59.8% decrease in
occupancy and a 8.9% decrease in average daily rate (“ADR”). For
the nine-month period ending September 30, 2020, RevPAR decreased
60.4% over the nine months ended September 30, 2019, to $46.20
driven by a 57.6% decrease in occupancy and a 6.5% decrease in
ADR.
-
Revenue. For the three-month period ending
September 30, 2020, total revenue decreased 66.1% over the
three-month period ending September 30, 2019. For the nine-month
period ending September 30, 2020, total revenue decreased 59.8% or
by approximately $84.6 million to approximately $56.9 million, as
compared to approximately $141.5 million for the nine-month period
ending September 30, 2019.
- 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
September 30, 2020. 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.
- Hotel
EBITDA. The Company generated hotel EBITDA of
approximately $(1.2) million during the three-month period ending
September 30, 2020. Hotel EBITDA decreased 113.0%, or approximately
($10.1) million, over the three months ended September 30,
2019. For the nine-month period ending September 30, 2020,
hotel EBITDA decreased 103.5%, or approximately $(39.0) million,
over the nine months ended September 30, 2019.
- Adjusted FFO
attributable to common stockholders and
unitholders. For the three-month period ending September
30, 2020, adjusted FFO attributable to common stockholders and
unitholders decreased 301.0%, or approximately $(12.8) million,
over the three months ended September 30, 2019. For the nine-month
period ending September 30, 2020, adjusted FFO attributable to
common stockholders and unitholders decreased 257.2% or
approximately $(41.7) million over the nine months ended September
30, 2019.
Dave Folsom, President and Chief Executive Officer, of Sotherly
Hotels Inc., commented, “The efforts of the hotel associates and
executive team at our management company, Our Town Hospitality, as
well as the efforts of the Sotherly team, have been commendable
during the pandemic. Since the historically low RevPAR levels
witnessed in April, we have experienced incremental improvements in
demand driven primarily by the transient leisure segment. We are
also seeing an initial, albeit small, return of business and group
bookings. We continue to seek capital to enhance the Company’s
liquidity position and continue to work constructively with our
lenders toward forbearance terms on our secured mortgage debt.”
Balance Sheet/Liquidity
As of September 30, 2020, the Company had approximately $23.2
million of available cash and cash equivalents, of which
approximately $7.7 million was reserved for real estate taxes,
insurance, capital improvements and certain other expenses or
otherwise restricted. The Company had principal balances of
approximately $367.7 million in outstanding debt, net, including
mortgage and unsecured principal balances, at a weighted average
interest rate of approximately 4.59%.
Other Developments
We have entered into various forbearance and loan modification
agreements with our lenders for the mortgage loans secured by our
hotels located in Laurel, MD, Savannah, GA, Wilmington, NC,
Philadelphia, PA, Houston, TX, Jacksonville, FL, Jeffersonville,
IN, Raleigh, NC, Tampa, FL, Arlington, VA, and Atlanta, GA. These
agreements generally allow us to defer payments of principal and
interest for periods that began in April 2020 and that extend
through to various dates ending between September 2020 and April
2021. We are currently in negotiations with the lender for the
mortgage loan secured by the DoubleTree Resort by Hilton Hollywood
Beach, in which we are in default, and may seek additional
concessions from our lenders as existing payment extensions and
deferrals expire, to the extent warranted by market conditions and
the financial performance of our hotels. There can be no assurance
that we will be able to reach agreement with all of our lenders or
that additional concessions, if needed, can be negotiated on terms
that are acceptable.
On October 14, 2020 we entered into a hotel management
agreement, effective as of November 15, 2020, with Our Town
Hospitality, LLC (“Our Town”) for the management of the Hyatt
Centric Arlington. On November 15, 2020, we expect management of
the Hyatt Centric Arlington to transition from Highgate Hotels,
L.P. to Our Town. Following the transition, Our Town
will manage each of the Company’s twelve wholly-owned hotels, as
well as our two condominium hotel rental programs.
2020
Outlook
On March 9, 2020, the Company withdrew its previously announced
guidance for 2020. Due to the uncertainties related to the COVID-19
pandemic and its impact on travel, the Company is unable to provide
guidance for 2020.
Earnings Call/Webcast
The Company will conduct its third quarter 2020 conference call
for investors and other interested parties at 10:00 a.m. Eastern
Time on Monday, November 9, 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 November 9 through November 9,
2021. To access the rebroadcast, dial 877-344-7529 and enter
conference number 10148828. A replay of the call also will be
available on the Internet at www.sotherlyhotels.com until November
9, 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, and as such may involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements, which are
based on certain assumptions and describe our current strategies,
expectations, and future plans are generally identified by our use
of words, such as “intend,” “plan,” “may,” “should,” “will,”
“project,” “estimate,” “anticipate,” “believe,” “expect,”
“continue,” “potential,” “opportunity,” and similar expressions,
whether in the negative or affirmative, but the absence of these
words does not necessarily mean that a statement is not
forward-looking. All statements regarding our expected financial
position, business and financing plans are forward-looking
statements.
Currently, one of the most significant factors that could cause
actual outcomes to differ materially from the Company’s
forward-looking statements is the potential increased adverse
effect of COVID-19 on the Company’s business, financial performance
and condition, operating results and cash flows, the real estate
market and the hospitality industry specifically, and the global
economy and financial markets. The significance, extent and
duration of the impacts caused by the COVID-19 outbreak on the
Company will depend on future developments, which are highly
uncertain and cannot be predicted with confidence at this time,
including the scope, severity and duration of the pandemic, the
extent and effectiveness of the actions mandated and taken to
contain the pandemic or mitigate its impact, the Company’s ability
to negotiate forbearance and/or modifications agreements with its
lenders on acceptable terms, or at all, and the direct and indirect
economic effects of the pandemic and containment measures, among
others. Moreover, investors are cautioned to interpret many of the
risks identified under the section titled “Risk Factors” in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 as being heightened as a result of the ongoing
and numerous adverse impacts of COVID-19. Such additional factors
include, but are not limited to, the ability of the Company to
effectively acquire and dispose of properties; the ability of the
Company to implement its operating strategy; changes in general
political, economic and competitive conditions and specific market
conditions; reduced business and leisure travel due to
travel-related health concerns, including the widespread outbreak
of COVID-19 or any other infectious or contagious diseases in the
U.S. or abroad; adverse changes in the real estate and real estate
capital markets; financing risks; litigation risks; regulatory
proceedings or inquiries; and changes in laws or regulations or
interpretations of current laws and regulations that impact the
Company’s business, assets or classification as a REIT. Although
the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of
the assumptions could be inaccurate, and therefore there can be no
assurance that such statements included in this report will prove
to be accurate. In light of the significant uncertainties inherent
in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the
Company or any other person that the results or conditions
described in such statements or the objectives and plans of the
Company will be achieved. Additional factors which could have a
material adverse effect on our operations and future prospects
include, but are not limited to: national and local economic and
business conditions that affect occupancy rates and revenues at our
hotels and the demand for hotel products and services; the adverse
effect of the novel coronavirus on the U.S., regional and global
economies, travel, the hospitality industry, and the financial
condition and results of operation of the Company; risks associated
with civil unrest or disorder that could adversely impact demand
for hotel rooms in our markets or result in damage to our hotels;
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; risks associated with the level of our indebtedness and
our ability to meet covenants in our 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 our 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 our current and
proposed market areas; risks associated with our ability to
maintain our franchise agreements with our third party franchisors;
and our ability to maintain adequate insurance coverage.
Additional factors that could cause actual results to vary from
our forward-looking statements are set forth under the section
titled “Risk Factors” in our Annual Report on Form 10-K, in this
report 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
|
|
September 30,2020 |
|
|
December 31,2019 |
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Investment in hotel properties, net |
|
$ |
432,180,657 |
|
|
$ |
443,267,448 |
|
Cash and cash equivalents |
|
|
15,484,560 |
|
|
|
23,738,066 |
|
Restricted cash |
|
|
7,697,508 |
|
|
|
4,246,170 |
|
Accounts receivable, net |
|
|
1,437,230 |
|
|
|
4,812,479 |
|
Accounts receivable - affiliate |
|
|
148,320 |
|
|
|
101,771 |
|
Prepaid expenses, inventory and other assets |
|
|
9,260,763 |
|
|
|
5,648,772 |
|
Deferred income taxes |
|
|
— |
|
|
|
5,412,084 |
|
TOTAL
ASSETS |
|
$ |
466,209,038 |
|
|
$ |
487,226,790 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
Mortgage loans, net |
|
$ |
357,002,952 |
|
|
$ |
358,633,884 |
|
Unsecured notes, net |
|
|
10,719,100 |
|
|
|
- |
|
Accounts payable and accrued liabilities |
|
|
36,115,988 |
|
|
|
20,189,903 |
|
Advance deposits |
|
|
1,361,525 |
|
|
|
2,785,338 |
|
Dividends and distributions payable |
|
|
4,277,070 |
|
|
|
4,210,494 |
|
TOTAL
LIABILITIES |
|
$ |
409,476,635 |
|
|
$ |
385,819,619 |
|
Commitments and contingencies |
|
|
— |
|
|
|
— |
|
EQUITY |
|
|
|
|
|
|
|
|
Sotherly Hotels Inc. stockholders’ equity |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 11,000,000 shares
authorized: |
|
|
|
|
|
|
|
|
8.0% Series B cumulative redeemable perpetual preferred stock,
liquidation preference $25 per share, 1,610,000 shares issued and
outstanding at September 30, 2020 and December 31, 2019,
respectively. |
|
|
16,100 |
|
|
|
16,100 |
|
7.875% Series C cumulative redeemable perpetual preferred stock,
liquidation preference $25 per share, 1,554,610 shares issued and
outstanding at September 30, 2020 and December 31, 2019,
respectively. |
|
|
15,546 |
|
|
|
15,546 |
|
8.25% Series D cumulative redeemable perpetual preferred stock,
liquidation preference $25 per share, 1,200,000 shares issued and
outstanding at September 30, 2020 and December 31, 2019,
respectively. |
|
|
12,000 |
|
|
|
12,000 |
|
Common stock, par value $0.01, 69,000,000 shares authorized,
14,881,267 shares issued and outstanding at September 30, 2020 and
14,272,378 shares issued and outstanding at December 31, 2019. |
|
|
148,812 |
|
|
|
142,723 |
|
Additional paid-in capital |
|
|
180,134,597 |
|
|
|
180,515,861 |
|
Unearned ESOP shares |
|
|
(3,917,594 |
) |
|
|
(4,105,637 |
) |
Distributions in excess of retained earnings |
|
|
(115,173,422 |
) |
|
|
(73,990,690 |
) |
Total Sotherly Hotels Inc. stockholders’ equity |
|
|
61,236,039 |
|
|
|
102,605,903 |
|
Noncontrolling interest |
|
|
(4,503,636 |
) |
|
|
(1,198,732 |
) |
TOTAL
EQUITY |
|
|
56,732,403 |
|
|
|
101,407,171 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
466,209,038 |
|
|
$ |
487,226,790 |
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
$ |
10,327,164 |
|
|
$ |
29,253,447 |
|
|
$ |
38,957,907 |
|
|
$ |
98,561,643 |
|
Food and beverage department |
|
|
1,166,014 |
|
|
|
8,997,948 |
|
|
|
9,465,179 |
|
|
|
29,584,705 |
|
Other operating departments |
|
|
2,921,300 |
|
|
|
4,300,780 |
|
|
|
8,493,762 |
|
|
|
13,336,834 |
|
Total revenue |
|
|
14,414,478 |
|
|
|
42,552,175 |
|
|
|
56,916,848 |
|
|
|
141,483,182 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
|
3,199,346 |
|
|
|
8,064,771 |
|
|
|
12,033,911 |
|
|
|
24,264,623 |
|
Food and beverage department |
|
|
799,028 |
|
|
|
7,036,887 |
|
|
|
7,531,235 |
|
|
|
21,795,051 |
|
Other operating departments |
|
|
1,071,077 |
|
|
|
1,352,205 |
|
|
|
4,044,313 |
|
|
|
5,007,651 |
|
Indirect |
|
|
10,498,795 |
|
|
|
17,194,148 |
|
|
|
34,610,401 |
|
|
|
52,757,527 |
|
Total hotel operating expenses |
|
|
15,568,246 |
|
|
|
33,648,011 |
|
|
|
58,219,860 |
|
|
|
103,824,852 |
|
Depreciation and
amortization |
|
|
4,959,750 |
|
|
|
4,980,168 |
|
|
|
14,935,733 |
|
|
|
16,117,278 |
|
Loss on disposal of
assets |
|
|
137,014 |
|
|
|
4,918 |
|
|
|
136,563 |
|
|
|
32,088 |
|
Corporate general and
administrative |
|
|
1,159,207 |
|
|
|
1,768,912 |
|
|
|
4,267,141 |
|
|
|
5,008,290 |
|
Total hotel operating expenses |
|
|
21,824,217 |
|
|
|
40,402,009 |
|
|
|
77,559,297 |
|
|
|
124,982,508 |
|
NET OPERATING (LOSS)
INCOME |
|
|
(7,409,739 |
) |
|
|
2,150,166 |
|
|
|
(20,642,449 |
) |
|
|
16,500,674 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(4,237,866 |
) |
|
|
(4,722,456 |
) |
|
|
(13,519,502 |
) |
|
|
(15,115,690 |
) |
Interest income |
|
|
46,116 |
|
|
|
102,768 |
|
|
|
178,483 |
|
|
|
357,576 |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,152,356 |
) |
Unrealized gain (loss) on hedging activities |
|
|
415,467 |
|
|
|
(226,491 |
) |
|
|
(1,385,041 |
) |
|
|
(1,554,924 |
) |
Gain on exercise of development right |
|
|
— |
|
|
|
3,940,000 |
|
|
|
— |
|
|
|
3,940,000 |
|
Gain on involuntary conversion of assets |
|
|
13,518 |
|
|
|
130,569 |
|
|
|
40,125 |
|
|
|
291,902 |
|
Net (loss) income before
income taxes |
|
|
(11,172,504 |
) |
|
|
1,374,556 |
|
|
|
(35,328,384 |
) |
|
|
3,267,182 |
|
Income tax (provision) benefit |
|
|
133,233 |
|
|
|
694,190 |
|
|
|
(5,344,164 |
) |
|
|
(439,323 |
) |
Net (loss) income |
|
|
(11,039,271 |
) |
|
|
2,068,746 |
|
|
|
(40,672,548 |
) |
|
|
2,827,859 |
|
Less: Net loss attributable to noncontrolling interest |
|
|
968,273 |
|
|
|
13,337 |
|
|
|
3,531,056 |
|
|
|
311,642 |
|
Net (loss) income attributable
to the Company |
|
|
(10,070,998 |
) |
|
|
2,082,083 |
|
|
|
(37,141,492 |
) |
|
|
3,139,501 |
|
Declared and undeclared distributions to preferred
stockholders |
|
|
(2,188,910 |
) |
|
|
(2,188,910 |
) |
|
|
(6,566,731 |
) |
|
|
(5,631,799 |
) |
Net loss attributable to
common stockholders |
|
$ |
(12,259,908 |
) |
|
$ |
(106,827 |
) |
|
$ |
(43,708,223 |
) |
|
$ |
(2,492,298 |
) |
Net loss per share
attributable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.86 |
) |
|
$ |
(0.01 |
) |
|
$ |
(3.06 |
) |
|
$ |
(0.18 |
) |
Weighted average number of
common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
14,331,647 |
|
|
|
13,636,706 |
|
|
|
14,293,799 |
|
|
|
13,624,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.KEY
OPERATING METRICS(unaudited)
The following tables illustrate the key operating metrics for
the three and nine months ended September 30, 2020 and 2019,
respectively, for the Company’s twelve wholly-owned properties
(“actual” portfolio metrics), Accordingly, the actual data does not
include the participating condominium hotel rooms of the Hyde
Resort & Residences and 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 nine months
ended September 30, 2020 and the corresponding periods in 2019.
|
|
Three MonthsEnded |
|
|
Three MonthsEnded |
|
|
Nine MonthsEnded |
|
|
Nine MonthsEnded |
|
|
|
September 30,2020 |
|
|
September 30,2019 |
|
|
September 30,2020 |
|
|
September 30,2019 |
|
Actual Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
28.9 |
% |
|
|
70.6 |
% |
|
|
31.6 |
% |
|
|
72.7 |
% |
ADR |
|
$ |
123.23 |
|
|
$ |
142.75 |
|
|
$ |
142.62 |
|
|
$ |
157.36 |
|
RevPAR |
|
$ |
35.57 |
|
|
$ |
100.75 |
|
|
$ |
45.05 |
|
|
$ |
114.40 |
|
Composite Portfolio
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
27.7 |
% |
|
|
68.8 |
% |
|
|
30.4 |
% |
|
|
71.7 |
% |
ADR |
|
$ |
132.51 |
|
|
$ |
145.51 |
|
|
$ |
152.06 |
|
|
$ |
162.69 |
|
RevPAR |
|
$ |
36.68 |
|
|
$ |
100.06 |
|
|
$ |
46.20 |
|
|
$ |
116.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS
INC.SUPPLEMENTAL
DATA(unaudited)
The following tables illustrate the key operating metrics for
the three and nine months ended September 30, 2020, 2019 and 2018,
respectively, for each of the Company’s wholly-owned properties
during each respective reporting period, irrespective of ownership
percentage during any period.
Occupancy
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2020 |
|
|
Q3 2019 |
|
|
Q3 2018 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah,
Georgia |
|
29.7 |
% |
|
|
60.1 |
% |
|
|
58.8 |
% |
|
|
26.3 |
% |
|
|
66.3 |
% |
|
|
63.4 |
% |
DoubleTree by Hilton
Jacksonville RiverfrontJacksonville, Florida |
|
28.8 |
% |
|
|
72.9 |
% |
|
|
79.1 |
% |
|
|
38.3 |
% |
|
|
79.5 |
% |
|
|
82.7 |
% |
DoubleTree by Hilton
LaurelLaurel, Maryland |
|
31.7 |
% |
|
|
72.9 |
% |
|
|
70.3 |
% |
|
|
31.9 |
% |
|
|
71.5 |
% |
|
|
66.9 |
% |
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
|
45.1 |
% |
|
|
82.1 |
% |
|
|
81.3 |
% |
|
|
36.8 |
% |
|
|
77.5 |
% |
|
|
79.6 |
% |
DoubleTree by Hilton Raleigh
Brownstone – UniversityRaleigh, North Carolina |
|
17.3 |
% |
|
|
79.6 |
% |
|
|
74.7 |
% |
|
|
27.3 |
% |
|
|
77.6 |
% |
|
|
76.0 |
% |
DoubleTree Resort by Hilton
Hollywood BeachHollywood, Florida |
|
28.1 |
% |
|
|
60.8 |
% |
|
|
63.0 |
% |
|
|
32.3 |
% |
|
|
70.9 |
% |
|
|
71.4 |
% |
Georgian TerraceAtlanta,
Georgia |
|
18.4 |
% |
|
|
66.4 |
% |
|
|
69.4 |
% |
|
|
23.5 |
% |
|
|
70.8 |
% |
|
|
69.3 |
% |
Hotel Alba Tampa, Tapestry
Collection by HiltonTampa, Florida |
|
24.8 |
% |
|
|
53.0 |
% |
|
|
56.1 |
% |
|
|
34.1 |
% |
|
|
67.6 |
% |
|
|
74.4 |
% |
Hotel Ballast Wilmington,
Tapestry Collection by HiltonWilmington, North Carolina |
|
45.1 |
% |
|
|
73.0 |
% |
|
|
69.8 |
% |
|
|
35.8 |
% |
|
|
71.2 |
% |
|
|
63.8 |
% |
Hyatt Centric Arlington
(1)Arlington, Virginia |
|
22.7 |
% |
|
|
83.6 |
% |
|
|
86.0 |
% |
|
|
27.9 |
% |
|
|
81.7 |
% |
|
|
82.5 |
% |
Sheraton Louisville
RiversideJeffersonville, Indiana |
|
44.1 |
% |
|
|
76.7 |
% |
|
|
63.1 |
% |
|
|
43.8 |
% |
|
|
68.9 |
% |
|
|
61.2 |
% |
The WhitehallHouston,
Texas |
|
10.9 |
% |
|
|
63.9 |
% |
|
|
50.2 |
% |
|
|
23.9 |
% |
|
|
64.3 |
% |
|
|
58.5 |
% |
Hyde Resort & Residences
(2)Hollywood Beach, Florida |
|
19.2 |
% |
|
|
35.3 |
% |
|
|
48.4 |
% |
|
|
23.8 |
% |
|
|
52.3 |
% |
|
|
47.9 |
% |
Hyde Beach House Resort &
Residences (2)Hollywood Beach, Florida |
|
10.4 |
% |
|
- |
|
|
- |
|
|
|
9.6 |
% |
|
- |
|
|
- |
|
All properties weighted
average (1) |
|
27.7 |
% |
|
|
68.8 |
% |
|
|
69.6 |
% |
|
|
30.4 |
% |
|
|
71.7 |
% |
|
|
71.4 |
% |
(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. |
|
|
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2020 |
|
|
Q3 2019 |
|
|
Q3 2018 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah,
Georgia |
$ |
149.23 |
|
|
$ |
155.52 |
|
|
$ |
161.68 |
|
|
$ |
158.03 |
|
|
$ |
176.43 |
|
|
$ |
178.34 |
|
DoubleTree by Hilton
Jacksonville RiverfrontJacksonville, Florida |
$ |
131.37 |
|
|
$ |
133.71 |
|
|
$ |
136.77 |
|
|
$ |
139.52 |
|
|
$ |
140.04 |
|
|
$ |
141.46 |
|
DoubleTree by Hilton
LaurelLaurel, Maryland |
$ |
84.43 |
|
|
$ |
102.79 |
|
|
$ |
104.26 |
|
|
$ |
91.86 |
|
|
$ |
108.45 |
|
|
$ |
109.28 |
|
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
$ |
112.23 |
|
|
$ |
137.37 |
|
|
$ |
138.80 |
|
|
$ |
113.61 |
|
|
$ |
143.58 |
|
|
$ |
139.14 |
|
DoubleTree by Hilton Raleigh
Brownstone – UniversityRaleigh, North Carolina |
$ |
95.89 |
|
|
$ |
135.64 |
|
|
$ |
131.28 |
|
|
$ |
124.48 |
|
|
$ |
139.50 |
|
|
$ |
134.28 |
|
DoubleTree Resort by Hilton
Hollywood BeachHollywood, Florida |
$ |
117.90 |
|
|
$ |
130.16 |
|
|
$ |
131.74 |
|
|
$ |
196.03 |
|
|
$ |
177.85 |
|
|
$ |
177.20 |
|
Georgian TerraceAtlanta,
Georgia |
$ |
175.53 |
|
|
$ |
180.82 |
|
|
$ |
183.46 |
|
|
$ |
194.42 |
|
|
$ |
208.14 |
|
|
$ |
183.98 |
|
Hotel Alba Tampa, Tapestry
Collection by HiltonTampa, Florida |
$ |
115.32 |
|
|
$ |
117.74 |
|
|
$ |
112.25 |
|
|
$ |
147.74 |
|
|
$ |
131.68 |
|
|
$ |
127.01 |
|
Hotel Ballast Wilmington,
Tapestry Collection by HiltonWilmington, North Carolina |
$ |
158.88 |
|
|
$ |
173.57 |
|
|
$ |
159.76 |
|
|
$ |
151.98 |
|
|
$ |
162.65 |
|
|
$ |
151.09 |
|
Hyatt Centric Arlington
(1)Arlington, Virginia |
$ |
100.98 |
|
|
$ |
163.14 |
|
|
$ |
153.12 |
|
|
$ |
146.56 |
|
|
$ |
188.93 |
|
|
$ |
178.06 |
|
Sheraton Louisville
RiversideJeffersonville, Indiana |
$ |
97.04 |
|
|
$ |
106.70 |
|
|
$ |
113.70 |
|
|
$ |
98.70 |
|
|
$ |
117.64 |
|
|
$ |
125.99 |
|
The WhitehallHouston,
Texas |
$ |
108.78 |
|
|
$ |
137.58 |
|
|
$ |
141.85 |
|
|
$ |
137.23 |
|
|
$ |
143.49 |
|
|
$ |
145.51 |
|
Hyde Resort & Residences
(2)Hollywood Beach, Florida |
$ |
321.26 |
|
|
$ |
247.31 |
|
|
$ |
242.62 |
|
|
$ |
330.03 |
|
|
$ |
300.07 |
|
|
$ |
299.26 |
|
Hyde Beach House Resort &
Residences (2)Hollywood Beach, Florida |
$ |
296.94 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
323.06 |
|
|
$ |
- |
|
|
$ |
- |
|
All properties weighted
average (1) |
$ |
132.51 |
|
|
$ |
145.51 |
|
|
$ |
147.25 |
|
|
$ |
152.06 |
|
|
$ |
162.69 |
|
|
$ |
161.38 |
|
(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. |
|
|
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2020 |
|
|
Q3 2019 |
|
|
Q3 2018 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
The DeSotoSavannah,
Georgia |
$ |
44.34 |
|
|
$ |
93.51 |
|
|
$ |
95.01 |
|
|
$ |
41.53 |
|
|
$ |
116.95 |
|
|
$ |
113.01 |
|
DoubleTree by Hilton
Jacksonville RiverfrontJacksonville, Florida |
$ |
37.87 |
|
|
$ |
97.54 |
|
|
$ |
108.12 |
|
|
$ |
53.39 |
|
|
$ |
111.38 |
|
|
$ |
117.01 |
|
DoubleTree by Hilton
LaurelLaurel, Maryland |
$ |
26.78 |
|
|
$ |
74.88 |
|
|
$ |
73.25 |
|
|
$ |
29.27 |
|
|
$ |
77.55 |
|
|
$ |
73.08 |
|
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
$ |
50.67 |
|
|
$ |
112.82 |
|
|
$ |
112.78 |
|
|
$ |
41.85 |
|
|
$ |
111.23 |
|
|
$ |
110.75 |
|
DoubleTree by Hilton Raleigh
Brownstone – UniversityRaleigh, North Carolina |
$ |
16.59 |
|
|
$ |
107.98 |
|
|
$ |
98.11 |
|
|
$ |
34.01 |
|
|
$ |
108.26 |
|
|
$ |
102.07 |
|
DoubleTree Resort by Hilton
Hollywood BeachHollywood, Florida |
$ |
33.09 |
|
|
$ |
79.15 |
|
|
$ |
83.02 |
|
|
$ |
63.35 |
|
|
$ |
126.08 |
|
|
$ |
126.48 |
|
Georgian TerraceAtlanta,
Georgia |
$ |
32.28 |
|
|
$ |
120.11 |
|
|
$ |
127.39 |
|
|
$ |
45.75 |
|
|
$ |
147.39 |
|
|
$ |
127.49 |
|
Hotel Alba Tampa, Tapestry
Collection by HiltonTampa, Florida |
$ |
28.64 |
|
|
$ |
62.44 |
|
|
$ |
62.98 |
|
|
$ |
50.43 |
|
|
$ |
89.07 |
|
|
$ |
94.47 |
|
Hotel Ballast Wilmington,
Tapestry Collection by HiltonWilmington, North Carolina |
$ |
71.67 |
|
|
$ |
126.71 |
|
|
$ |
111.52 |
|
|
$ |
54.48 |
|
|
$ |
115.86 |
|
|
$ |
96.34 |
|
Hyatt Centric Arlington
(1)Arlington, Virginia |
$ |
22.96 |
|
|
$ |
136.32 |
|
|
$ |
131.66 |
|
|
$ |
40.94 |
|
|
$ |
154.33 |
|
|
$ |
146.94 |
|
Sheraton Louisville
RiversideJeffersonville, Indiana |
$ |
42.83 |
|
|
$ |
81.83 |
|
|
$ |
71.78 |
|
|
$ |
43.27 |
|
|
$ |
81.02 |
|
|
$ |
77.17 |
|
The WhitehallHouston,
Texas |
$ |
11.87 |
|
|
$ |
87.94 |
|
|
$ |
71.23 |
|
|
$ |
32.75 |
|
|
$ |
92.28 |
|
|
$ |
85.09 |
|
Hyde Resort & Residences
(2)Hollywood Beach, Florida |
$ |
61.74 |
|
|
$ |
87.25 |
|
|
$ |
117.37 |
|
|
$ |
78.70 |
|
|
$ |
156.90 |
|
|
$ |
143.45 |
|
Hyde Beach House Resort &
Residences (2)Hollywood Beach, Florida |
$ |
30.75 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
30.85 |
|
|
$ |
- |
|
|
$ |
- |
|
All properties weighted
average (1) |
$ |
36.68 |
|
|
$ |
100.06 |
|
|
$ |
102.48 |
|
|
$ |
46.20 |
|
|
$ |
116.57 |
|
|
$ |
115.19 |
|
(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. |
|
|
SOTHERLY HOTELS
INC.RECONCILIATION OF NET
LOSS TOFFO, Adjusted FFO,
EBITDA and Hotel EBITDA(unaudited)
|
|
Three MonthsEnded |
|
|
Three MonthsEnded |
|
|
Nine MonthsEnded |
|
|
Nine MonthsEnded |
|
|
|
September 30,2020 |
|
|
September 30,2019 |
|
|
September 30,2020 |
|
|
September 30,2019 |
|
Net loss attributable to common stockholders |
|
$ |
(12,259,908 |
) |
|
$ |
(106,827 |
) |
|
$ |
(43,708,223 |
) |
|
$ |
(2,492,298 |
) |
Add: Net loss attributable to noncontrolling interest |
|
|
(968,273 |
) |
|
|
(13,337 |
) |
|
|
(3,531,056 |
) |
|
|
(311,642 |
) |
Depreciation and amortization - real estate |
|
|
4,942,480 |
|
|
|
4,965,299 |
|
|
|
14,882,053 |
|
|
|
16,073,505 |
|
Gain on involuntary conversion of assets |
|
|
(13,518 |
) |
|
|
(130,569 |
) |
|
|
(40,125 |
) |
|
|
(291,902 |
) |
Loss on disposal of assets |
|
|
137,014 |
|
|
|
4,918 |
|
|
|
136,563 |
|
|
|
32,088 |
|
FFO attributable to
common stockholders and unitholders |
|
$ |
(8,162,205 |
) |
|
$ |
4,719,484 |
|
|
$ |
(32,260,788 |
) |
|
$ |
13,009,751 |
|
Decrease (increase) in deferred income taxes |
|
|
— |
|
|
|
(702,775 |
) |
|
|
5,412,084 |
|
|
|
452,169 |
|
Amortization |
|
|
17,270 |
|
|
|
14,869 |
|
|
|
53,680 |
|
|
|
43,773 |
|
Termination fee |
|
|
— |
|
|
|
— |
|
|
|
(72,960 |
) |
|
|
— |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,152,356 |
|
Unrealized (gain) loss on hedging activities |
|
|
(415,467 |
) |
|
|
226,491 |
|
|
|
1,385,041 |
|
|
|
1,554,924 |
|
Adjusted FFO
attributable to common stockholders and unitholders |
|
$ |
(8,560,402 |
) |
|
$ |
4,258,069 |
|
|
$ |
(25,482,943 |
) |
|
$ |
16,212,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic |
|
|
14,331,647 |
|
|
|
13,636,706 |
|
|
|
14,293,799 |
|
|
|
13,624,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of non-controlling units |
|
|
1,181,501 |
|
|
|
1,778,140 |
|
|
|
1,200,660 |
|
|
|
1,778,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares and units outstanding, basic |
|
|
15,513,148 |
|
|
|
15,414,846 |
|
|
|
15,494,459 |
|
|
|
15,402,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share and unit |
|
$ |
(0.53 |
) |
|
$ |
0.31 |
|
|
$ |
(2.08 |
) |
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FFO per common share and unit |
|
$ |
(0.55 |
) |
|
$ |
0.28 |
|
|
$ |
(1.64 |
) |
|
$ |
1.05 |
|
|
|
Three MonthsEnded |
|
|
Three MonthsEnded |
|
|
Nine MonthsEnded |
|
|
Nine MonthsEnded |
|
|
|
September 30,2020 |
|
|
September 30,2019 |
|
|
September 30,2020 |
|
|
September 30,2019 |
|
Net loss attributable to common stockholders |
|
$ |
(12,259,908 |
) |
|
$ |
(106,827 |
) |
|
$ |
(43,708,223 |
) |
|
$ |
(2,492,298 |
) |
Add: Net loss attributable to noncontrolling interest |
|
|
(968,273 |
) |
|
|
(13,337 |
) |
|
|
(3,531,056 |
) |
|
|
(311,642 |
) |
Interest expense |
|
|
4,237,866 |
|
|
|
4,722,456 |
|
|
|
13,519,502 |
|
|
|
15,115,690 |
|
Interest income |
|
|
(46,116 |
) |
|
|
(102,768 |
) |
|
|
(178,483 |
) |
|
|
(357,576 |
) |
Income tax benefit (provision) |
|
|
(133,233 |
) |
|
|
(694,190 |
) |
|
|
5,344,164 |
|
|
|
439,323 |
|
Depreciation and amortization |
|
|
4,959,750 |
|
|
|
4,980,168 |
|
|
|
14,935,733 |
|
|
|
16,117,278 |
|
Distributions to preferred stockholders |
|
|
2,188,910 |
|
|
|
2,188,910 |
|
|
|
6,566,731 |
|
|
|
5,631,799 |
|
EBITDA |
|
|
(2,021,004 |
) |
|
|
10,974,412 |
|
|
|
(7,051,632 |
) |
|
|
34,142,574 |
|
Loss on disposal of assets |
|
|
137,014 |
|
|
|
4,918 |
|
|
|
136,563 |
|
|
|
32,088 |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,152,356 |
|
Gain on exercise of development right |
|
|
— |
|
|
|
(3,940,000 |
) |
|
|
— |
|
|
|
(3,940,000 |
) |
Gain on involuntary conversion of assets |
|
|
(13,518 |
) |
|
|
(130,569 |
) |
|
|
(40,125 |
) |
|
|
(291,902 |
) |
Subtotal |
|
|
(1,897,508 |
) |
|
|
6,908,761 |
|
|
|
(6,955,194 |
) |
|
|
31,095,116 |
|
Corporate general and administrative |
|
|
1,159,207 |
|
|
|
1,768,912 |
|
|
|
4,267,141 |
|
|
|
5,008,290 |
|
Unrealized (gain) loss on hedging activities |
|
|
(415,467 |
) |
|
|
226,491 |
|
|
|
1,385,041 |
|
|
|
1,554,924 |
|
Hotel
EBITDA |
|
$ |
(1,153,768 |
) |
|
$ |
8,904,164 |
|
|
$ |
(1,303,012 |
) |
|
$ |
37,658,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
The Company considers the non-GAAP financial measures of FFO
(including FFO per share), Adjusted FFO, 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 that are
not in NAREIT’s definition of FFO 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, operating asset depreciation and amortization,
change in control gains or losses, and acquisition transaction
costs. We exclude these items as we believe it allows for
meaningful comparisons between periods and among other REITs and is
more indicative than FFO of the on-going performance of our
business and assets. Our calculation of adjusted FFO may be
different from similar measures calculated by other REITs.
EBITDA
The Company believes that excluding the effect of non-operating
expenses and non-cash charges, and the portion of those items
related to unconsolidated entities, all of which are also based on
historical cost accounting and may be of limited significance in
evaluating current performance, can help eliminate the accounting
effects of depreciation and financing decisions and facilitate
comparisons of core operating profitability between periods and
between REITs, even though EBITDA also does not represent an amount
that accrued directly to shareholders.
Hotel EBITDA
The Company defines hotel EBITDA as net income or loss
excluding: (1) interest expense, (2) interest income, (3) income
tax provision or benefit, (4) equity in the income or loss of
equity investees, (5) unrealized gains and losses on derivative
instruments not included in other comprehensive income, (6) gains
and losses on disposal of assets, (7) realized gains and losses on
investments, (8) impairment of long-lived assets or investments,
(9) loss on early debt extinguishment, (10) gains or losses on
change in control, (11) 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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