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, 2017. The Company’s results
include the following*:
|
Three Months Ended |
|
|
Year Ended |
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
($ in thousands except per share data) |
|
|
($ in thousands except per share data) |
|
Total Revenue |
$ |
38,160 |
|
|
$ |
35,935 |
|
|
$ |
154,267 |
|
|
$ |
152,846 |
|
Net loss
available to common stockholders |
|
(3,937 |
) |
|
|
(746 |
) |
|
|
(3,339 |
) |
|
|
(218 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
8,552 |
|
|
|
6,732 |
|
|
|
34,625 |
|
|
|
33,954 |
|
Hotel EBITDA |
|
10,003 |
|
|
|
8,392 |
|
|
|
40,989 |
|
|
|
40,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
|
107 |
|
|
|
2,915 |
|
|
|
12,418 |
|
|
|
15,140 |
|
Adjusted FFO available
to common stockholders |
|
3,333 |
|
|
|
2,077 |
|
|
|
15,664 |
|
|
|
15,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
available to common stockholders |
$ |
(0.29 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.01 |
) |
FFO per share and
unit |
$ |
0.01 |
|
|
$ |
0.17 |
|
|
$ |
0.80 |
|
|
$ |
0.91 |
|
Adjusted FFO available
to common holders per share and unit |
$ |
0.22 |
|
|
$ |
0.12 |
|
|
$ |
1.00 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Earnings before interest, taxes, depreciation
and amortization (“EBITDA”), hotel EBITDA, funds from operations
(“FFO”), adjusted FFO, FFO per share and unit and adjusted FFO per
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 where otherwise indicated.
HIGHLIGHTS:
- RevPAR. Room revenue per available room
(“RevPAR”) for the Company’s composite portfolio, which includes
the performance of the rooms participating in our rental program at
the Hyde Resort & Residences, during the three-month period
ending December 31, 2017, increased 7.6% over the three months
ended December 31, 2016, to $94.42 driven by a 1.2% decrease in
occupancy and an 8.9% increase in average daily rate (“ADR”).
For the twelve-month period ending December 31, 2017, RevPAR
increased 3.6% over the twelve months ended December 31, 2016, to
$101.70 driven by a 1.4% decrease in occupancy and a 5.1% increase
in ADR.
- Common Dividends. As previously reported on
January 30, 2018, the Company announced its quarterly dividend
(distribution) on its common stock (and units) at $0.115 per share
(and unit) to be paid on April 11, 2018 to stockholders (and
unitholders) of record as of March 15, 2018.
- Hotel EBITDA. The Company generated hotel
EBITDA of approximately $10.0 million during the three-month period
ending December 31, 2017, an increase of 19.2%, or approximately
$1.6 million, from the three months ended December 31, 2016.
For the twelve-month period ending December 31, 2017, hotel EBITDA
increased 2.4%, or approximately $1.0 million, from the twelve
months ended December 31, 2016.
- EBITDA. The Company generated EBITDA of
approximately $8.6 million during the three-month period ending
December 31, 2017, an increase of 27.0% or approximately $1.8
million compared to the three months ended December 31, 2016. For
the twelve-month period ending December 31, 2017, EBITDA increased
2.0% or approximately $0.7 million from the twelve months ended
December 31, 2016.
- Impact of Tax Reform on Our Current Period Income Tax
Provision. The Tax Cuts and Jobs Act was recently enacted
and made numerous changes to the U.S. federal income tax laws. The
Company is required to revalue its deferred tax assets and deferred
tax liabilities to account for the future impact of lower corporate
tax rates on these deferred amounts. The reduction in the federal
corporate tax rate negatively impacted fourth quarter 2017 results
but is expected to positively impact future after-tax earnings. The
impact of the revaluation of the deferred tax asset is
approximately $2.7 million, which is a one-time non-cash charge to
earnings.
- Adjusted FFO. For the three-month period
ending December 31, 2017, adjusted FFO increased 60.5% or
approximately $1.3 million from the three months ended December 31,
2016. For the twelve-month period ending December 31, 2017,
adjusted FFO increased 3.7% or approximately $0.6 million from the
twelve months ended December 31, 2016.
Andrew M. Sims, Chairman and Chief Executive Officer of Sotherly
Hotels Inc., commented, “The Company posted a very strong fourth
quarter to end 2017 on a high note, with favorable financial
metrics measured against the prior year. For the quarter,
RevPAR increased 7.6%, EBITDA increased 27.0%, and Adjusted FFO
increased 60.5%, as compared to prior year. Notwithstanding
two major hurricanes and a significant property casualty at our
Houston hotel, we were able to manage through to post respectable
year over year results, with annual Adjusted FFO per share
increasing 11.1% over 2016.”
Balance Sheet/Liquidity
At December 31, 2017, the Company had approximately $33.4
million of available cash and cash equivalents, of which
approximately $3.7 million was reserved for real estate taxes,
insurance, capital improvements and certain other expenses or
otherwise restricted. The Company had approximately $297.3 million
in outstanding debt at a weighted average interest rate of
approximately 4.66%.
On October 11, 2017, the Company closed a sale and issuance
of 1,200,000 shares of its 7.875% Series C Cumulative
Redeemable Perpetual Preferred Stock (the “Series C Preferred
Stock”), for net proceeds after expenses of approximately
$28.1 million. On October 17, 2017, the Company closed a
sale and issuance of an additional 100,000 shares of its Series C
Preferred Stock, for net proceeds of approximately $2.4 million, in
connection with the partial exercise of the underwriters’ option to
purchase additional shares. We used a portion of the net
proceeds to redeem on November 15, 2017, the entire $25.3 million
aggregate principal amount of the Operating Partnership’s 7.0%
Senior Unsecured Notes due 2019 (the “7% Notes”), and we intend to
use the remaining net proceeds for general corporate purposes,
including potential future acquisitions of hotel properties.
On December 2, 2016, the Company’s board of directors authorized
a stock repurchase program under which the Company may purchase up
to $10.0 million of its outstanding common stock, par value $0.01
per share, at prevailing prices on the open market or in privately
negotiated transactions, at the discretion of
management. The Company has used and expects to continue
to use available working capital to fund purchases under the stock
repurchase program. The repurchase program is authorized
until December 31, 2018, unless extended by the board of
directors. As of December 31, 2017, the Company has
repurchased 882,820 shares of common stock at an average price of
$6.68 per share totaling approximately $5.9 million. The
repurchase program may be suspended or discontinued at any time,
and the Company is not obligated to acquire any particular amount
or number of shares.
Subsequent to the balance sheet date, on February 1, 2018 the
Company drew down the final $5.0 million of loan proceeds available
on the Hilton Wilmington Riverside mortgage loan after completing a
significant portion of the renovation of the hotel and meeting
certain other requirements under the loan documents.
Subsequent to the balance sheet date, on February 12, 2018 the
Company and the Operating Partnership closed on a sale and issuance
by the Operating Partnership of an aggregate $25.0 million of the
7.25% senior unsecured notes of the Operating Partnership,
unconditionally guaranteed by the Company (the “7.25% Notes”), for
net proceeds after estimated expenses of approximately $23.3
million. The Operating Partnership intends to use the net
proceeds from this offering, together with existing cash on hand
and $57.0 million of first and second lien asset-level mortgage
indebtedness, to finance the acquisition of the Hyatt Centric
Arlington hotel located in Arlington, Virginia (the “Arlington
Hotel”) and for general corporate purposes, including acquisition
of additional hotels, the repayment of other outstanding
indebtedness, capital expenditures, the improvement of hotels in
our portfolio and working capital and other general purposes
Subsequent to the balance sheet date, on February 26, 2018 we
entered into a First Amendment to Loan Agreement, Amended and
Restated Promissory Note, and other related documents with
International Bank of Commerce to amend the terms of the mortgage
loan on The Whitehall hotel located in Houston, TX. Pursuant
to the amended loan documents, the maturity date is extended until
February 26, 2023, the loan amortizes on a 25-year schedule with
payments of principal and interest beginning immediately, and the
loan has an initial principal balance of $15.0 million.
Portfolio Update
On October 25, 2017, the Company rebranded its property in
Hollywood, Florida from the Crowne Plaza Hollywood Beach Resort to
the DoubleTree Resort by Hilton Hollywood Beach and a $7.1 million
renovation of the guestrooms and public space is
complete.
At the Company’s hotel in Wilmington, North Carolina, a $10.0
million renovation of the guestrooms and public space is underway,
in anticipation of an upcoming rebranding in early 2018. As
of December 31, 2017, the Company had incurred costs of
approximately $7.0 million. Renovations are expected to be
complete in March 2018.
On December 13, 2017, we entered into a hotel purchase and sale
agreement to purchase the Arlington Hotel from RP/HH Rosslyn Hotel
Owner, LP (the “Seller”) for an aggregate purchase price of
approximately $81.0 million. On January 11, 2018, we
entered into an amendment to the hotel purchase and sale agreement
to provide an additional credit at closing in the amount of $1.3
million, following which the aggregate purchase price will be
approximately $79.7 million. Pursuant to the hotel purchase
and sale agreement, we have agreed to purchase, subject to the
satisfaction of certain conditions, including entering into a new
franchise agreement with Hyatt or making other arrangements to
satisfy the obligations of the Seller under the existing franchise
agreement, the accuracy of representations and warranties contained
in the hotel purchase agreement through closing, and conditions
related to the operation and maintenance of the Arlington Hotel,
the Seller’s right, title, and interest in: (i) the Arlington
Hotel; (ii) a ground lease for the real property associated with
the Arlington Hotel; and (iii) certain other tangible and
intangible property relating to the Arlington Hotel. Pursuant
to the hotel purchase and sale agreement, as amended, we have made
non-refundable deposits totaling $2.0 million. We structured
the transaction to provide flexibility in qualifying the hotel as a
replacement property in a potential future like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986.
2018 Outlook
Set forth below is the Company’s guidance for 2018, which
accounts for the impact of renovations at the Company’s hotels in
Wilmington and Tampa, the issuance of the 7.25% Notes, and the
anticipated closing of the acquisition of the Arlington
Hotel. The guidance is predicated on estimates of occupancy
and ADR that are consistent with the most recent 2018 calendar year
forecasts by STR 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 2018, in thousands of
dollars, except per share and RevPAR data:
|
2018 Guidance |
|
Low Range |
|
High Range |
|
|
Total revenue |
$ |
167,750 |
|
|
$ |
169,095 |
|
Net loss |
|
(2,804 |
) |
|
|
(2,352 |
) |
|
|
|
|
|
|
EBITDA |
|
40,997 |
|
|
|
41,481 |
|
Hotel EBITDA |
|
46,997 |
|
|
|
47,581 |
|
|
|
|
|
|
|
FFO |
|
15,843 |
|
|
|
16,352 |
|
Adjusted FFO available
to common stockholders |
|
15,873 |
|
|
|
16,493 |
|
|
|
|
|
|
|
Net income (loss) per
share available to common stockholders |
$ |
(0.21 |
) |
|
$ |
(0.17 |
) |
FFO per share and
unit |
$ |
1.04 |
|
|
$ |
1.07 |
|
Adjusted FFO available
to common holders per share and unit |
$ |
1.04 |
|
|
$ |
1.08 |
|
Rev PAR |
$ |
106.23 |
|
|
$ |
107.09 |
|
Hotel EBITDA
margin |
|
31.4 |
% |
|
|
31.6 |
% |
|
|
|
|
|
|
|
|
Earnings Call/Webcast
The Company will conduct its fourth quarter 2017 conference call
for investors and other interested parties at 10:00 a.m. Eastern
Time on Tuesday, February 27, 2018. 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, 2018 through
February 26, 2019. To access the rebroadcast, dial 877-344-7529 and
enter conference number 10113019. A replay of the call also
will be available on the Internet at www.sotherlyhotels.com until
February 26, 2019.
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 eleven hotel properties, comprising
2,838 rooms, and an interest in the Hyde Resort & Residences, a
luxury condo hotel. Most of the Company’s properties operate under
the Hilton Worldwide, InterContinental Hotels Group and Marriott
International, Inc. brands. 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:
Scott KucinskiVice President – Operations & Investor
RelationsSotherly Hotels Inc.410 West Francis StreetWilliamsburg,
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, 2017 |
|
|
December 31, 2016 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Investment in hotel properties, net |
|
$ |
357,799,512 |
|
|
$ |
348,593,912 |
|
Investment in hotel properties held for sale, net |
|
|
- |
|
|
|
5,333,000 |
|
Cash and
cash equivalents |
|
|
29,777,845 |
|
|
|
31,766,775 |
|
Restricted cash |
|
|
3,651,197 |
|
|
|
4,596,145 |
|
Accounts
receivable, net |
|
|
5,587,077 |
|
|
|
4,127,748 |
|
Accounts
receivable - affiliate |
|
|
394,026 |
|
|
|
4,175 |
|
Prepaid
expenses, inventory and other assets |
|
|
7,292,565 |
|
|
|
4,648,469 |
|
Deferred
income taxes |
|
|
5,451,118 |
|
|
|
6,949,340 |
|
TOTAL
ASSETS |
|
$ |
409,953,340 |
|
|
$ |
406,019,564 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
Mortgage
loans, net |
|
$ |
297,318,816 |
|
|
$ |
282,708,289 |
|
Unsecured
notes, net |
|
|
- |
|
|
|
24,308,713 |
|
Accounts
payable and accrued liabilities |
|
|
13,813,623 |
|
|
|
12,970,960 |
|
Advance
deposits |
|
|
1,572,388 |
|
|
|
2,315,787 |
|
Dividends
and distributions payable |
|
|
3,073,483 |
|
|
|
2,376,527 |
|
TOTAL
LIABILITIES |
|
$ |
315,778,310 |
|
|
$ |
324,680,276 |
|
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 December 31, 2017 and 2016, respectively |
|
|
16,100 |
|
|
|
16,100 |
|
7.875%
Series C cumulative redeemable perpetual preferred stock,
liquidation preference $25 per share, 1,300,000 and 0 shares
issued and outstanding at December 31, 2017 and 2016,
respectively |
|
|
13,000 |
|
|
|
— |
|
Common
stock, par value $0.01, 49,000,000 shares authorized,
14,078,831 shares and 14,468,551 shares issued and
outstanding at December 31, 2017 and 2016, respectively |
|
|
140,788 |
|
|
|
144,685 |
|
Additional paid-in capital |
|
|
146,249,339 |
|
|
|
118,395,082 |
|
Unearned
ESOP shares |
|
|
(4,633,112 |
) |
|
|
— |
|
Distributions in excess of retained earnings |
|
|
(48,765,860 |
) |
|
|
(39,545,754 |
) |
Total
Sotherly Hotels Inc. stockholders’ equity |
|
|
93,020,255 |
|
|
|
79,010,113 |
|
Noncontrolling interest |
|
|
1,154,775 |
|
|
|
2,329,175 |
|
TOTAL
EQUITY |
|
|
94,175,030 |
|
|
|
81,339,288 |
|
TOTAL
LIABILITIES AND EQUITY |
|
$ |
409,953,340 |
|
|
$ |
406,019,564 |
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
$ |
24,360,641 |
|
|
$ |
24,302,318 |
|
|
$ |
105,727,372 |
|
|
$ |
108,199,151 |
|
Food and beverage department |
|
|
9,608,761 |
|
|
|
9,143,598 |
|
|
|
34,513,695 |
|
|
|
35,384,530 |
|
Other operating departments |
|
|
4,190,302 |
|
|
|
2,489,423 |
|
|
|
14,025,626 |
|
|
|
9,262,071 |
|
Total
revenue |
|
|
38,159,704 |
|
|
|
35,935,339 |
|
|
|
154,266,693 |
|
|
|
152,845,752 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
|
6,420,838 |
|
|
|
6,978,596 |
|
|
|
26,673,727 |
|
|
|
28,300,126 |
|
Food and beverage department |
|
|
6,666,781 |
|
|
|
6,106,707 |
|
|
|
24,585,923 |
|
|
|
24,357,248 |
|
Other operating departments |
|
|
782,820 |
|
|
|
558,242 |
|
|
|
2,711,481 |
|
|
|
2,438,860 |
|
Indirect |
|
|
14,286,495 |
|
|
|
13,900,259 |
|
|
|
59,306,237 |
|
|
|
57,736,937 |
|
Total
hotel operating expenses |
|
|
28,156,934 |
|
|
|
27,543,804 |
|
|
|
113,277,368 |
|
|
|
112,833,171 |
|
Depreciation and
amortization |
|
|
4,291,071 |
|
|
|
3,758,083 |
|
|
|
16,999,619 |
|
|
|
15,019,071 |
|
Loss on disposal of
assets |
|
|
1,438,323 |
|
|
|
35,859 |
|
|
|
1,489,892 |
|
|
|
365,319 |
|
Corporate general and
administrative |
|
|
1,453,385 |
|
|
|
1,689,169 |
|
|
|
6,335,926 |
|
|
|
6,021,065 |
|
Total
operating expenses |
|
|
35,339,713 |
|
|
|
33,026,915 |
|
|
|
138,102,805 |
|
|
|
134,238,626 |
|
NET OPERATING
INCOME |
|
|
2,819,991 |
|
|
|
2,908,424 |
|
|
|
16,163,888 |
|
|
|
18,607,126 |
|
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(3,900,567 |
) |
|
|
(3,862,974 |
) |
|
|
(15,727,628 |
) |
|
|
(17,735,107 |
) |
Interest income |
|
|
92,415 |
|
|
|
52,262 |
|
|
|
218,656 |
|
|
|
115,785 |
|
Loss on early debt extinguishment |
|
|
(950,261 |
) |
|
|
(260,217 |
) |
|
|
(1,178,348 |
) |
|
|
(1,417,905 |
) |
Unrealized gain (loss) on hedging activities |
|
|
2,364 |
|
|
|
29,182 |
|
|
|
(28,384 |
) |
|
|
(37,384 |
) |
Gain (loss) on sale of assets |
|
|
(1,574 |
) |
|
|
— |
|
|
|
76,233 |
|
|
|
— |
|
Gain on involuntary conversion of assets |
|
|
1,201,061 |
|
|
|
— |
|
|
|
2,242,876 |
|
|
|
— |
|
Net income (loss)
before income taxes |
|
|
(736,571 |
) |
|
|
(1,133,323 |
) |
|
|
1,767,293 |
|
|
|
(467,485 |
) |
Income tax (provision) benefit |
|
|
(2,319,694 |
) |
|
|
1,059,236 |
|
|
|
(1,737,804 |
) |
|
|
1,367,634 |
|
Net income
(loss) |
|
|
(3,056,265 |
) |
|
|
(74,087 |
) |
|
|
29,489 |
|
|
|
900,149 |
|
Less: Net loss attributable to the noncontrolling
interest |
|
|
486,379 |
|
|
|
132,944 |
|
|
|
413,014 |
|
|
|
26,567 |
|
Net income (loss)
attributable to the Company |
|
|
(2,569,886 |
) |
|
|
58,857 |
|
|
|
442,503 |
|
|
|
926,716 |
|
Distributions to preferred stockholders |
|
|
(1,366,639 |
) |
|
|
(805,000 |
) |
|
|
(3,781,639 |
) |
|
|
(1,144,889 |
) |
Net loss
available to common stockholders |
|
$ |
(3,936,525 |
) |
|
$ |
(746,143 |
) |
|
$ |
(3,339,136 |
) |
|
$ |
(218,173 |
) |
Net loss per
share available to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic & Diluted |
|
$ |
(0.29 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.01 |
) |
Weighted average
number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic & Diluted |
|
|
13,699,225 |
|
|
|
14,895,203 |
|
|
|
13,829,330 |
|
|
|
14,896,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.KEY
OPERATING METRICS(unaudited)
The following tables illustrate the key operating metrics for
the three and twelve months ended December 31, 2017 and 2016,
respectively, for the Company’s 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, 2017 and the
corresponding periods in 2016 (“same-store” portfolio metrics).
Accordingly, the same-store data does not reflect the performance
of the Crowne Plaza Hampton Marina which was sold in February 2017,
or our interest in the Hyde Resort & Residences which was
acquired on January 30, 2017. The composite portfolio metrics
represent all of the Company’s wholly-owned properties and the
participating condominium hotel rooms at the Hyde Resort &
Residences during the three and twelve months ended December 31,
2017 and the corresponding periods in 2016.
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
Actual Portfolio
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
% |
|
|
64.0 |
% |
|
|
63.2 |
% |
|
|
|
70.4 |
% |
|
|
69.8 |
% |
ADR |
|
$ |
145.71 |
|
|
$ |
138.81 |
|
|
|
$ |
144.03 |
|
|
$ |
140.63 |
|
RevPAR |
|
$ |
93.30 |
|
|
$ |
87.73 |
|
|
|
$ |
101.44 |
|
|
$ |
98.18 |
|
Same-Store Portfolio
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
% |
|
|
64.0 |
% |
|
|
64.6 |
% |
|
|
|
70.6 |
% |
|
|
70.7 |
% |
ADR |
|
$ |
145.71 |
|
|
$ |
140.71 |
|
|
|
$ |
144.21 |
|
|
$ |
142.71 |
|
RevPAR |
|
$ |
93.30 |
|
|
$ |
90.90 |
|
|
|
$ |
101.88 |
|
|
$ |
100.91 |
|
Composite Portfolio
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
% |
|
|
62.4 |
% |
|
|
63.2 |
% |
|
|
|
68.8 |
% |
|
|
69.8 |
% |
ADR |
|
$ |
151.21 |
|
|
$ |
138.81 |
|
|
|
$ |
147.77 |
|
|
$ |
140.63 |
|
RevPAR |
|
$ |
94.42 |
|
|
$ |
87.73 |
|
|
|
$ |
101.70 |
|
|
$ |
98.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS
INC.SUPPLEMENTAL
DATA(unaudited)
The following tables illustrate the key operating metrics for
the three and twelve months ended December 31, 2017, 2016 and 2015,
respectively, for each of the Company’s wholly-owned properties
during each respective reporting period, irrespective of ownership
percentage during any period.
Occupancy
|
Q4 2017 |
|
|
Q4 2016 |
|
|
Q4 2015 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
Crowne Plaza Hampton
Marina (1)Hampton, Virginia |
N/A |
|
|
|
40.3 |
% |
|
|
49.3 |
% |
|
|
35.4 |
% |
|
|
55.2 |
% |
|
|
55.2 |
% |
Crowne Plaza Tampa
WestshoreTampa, Florida |
|
78.7 |
% |
|
|
67.2 |
% |
|
|
71.0 |
% |
|
|
79.1 |
% |
|
|
74.6 |
% |
|
|
72.5 |
% |
The DeSotoSavannah,
Georgia |
|
61.6 |
% |
|
|
63.0 |
% |
|
|
72.4 |
% |
|
|
66.6 |
% |
|
|
71.5 |
% |
|
|
76.9 |
% |
DoubleTree by Hilton
Jacksonville RiverfrontJacksonville, Florida |
|
78.0 |
% |
|
|
72.0 |
% |
|
|
62.7 |
% |
|
|
79.9 |
% |
|
|
77.4 |
% |
|
|
67.4 |
% |
DoubleTree by Hilton
LaurelLaurel, Maryland |
|
57.8 |
% |
|
|
52.7 |
% |
|
|
39.0 |
% |
|
|
64.9 |
% |
|
|
60.5 |
% |
|
|
48.2 |
% |
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
|
72.2 |
% |
|
|
67.7 |
% |
|
|
72.9 |
% |
|
|
75.5 |
% |
|
|
77.0 |
% |
|
|
79.3 |
% |
DoubleTree by Hilton
Raleigh Brownstone – UniversityRaleigh, North Carolina |
|
69.9 |
% |
|
|
66.9 |
% |
|
|
61.7 |
% |
|
|
74.2 |
% |
|
|
70.0 |
% |
|
|
71.5 |
% |
DoubleTree Resort by
Hilton Hollywood Beach (2)(3)Hollywood, Florida |
|
61.0 |
% |
|
|
73.2 |
% |
|
|
81.9 |
% |
|
|
72.1 |
% |
|
|
79.6 |
% |
|
|
80.5 |
% |
The Georgian
TerraceAtlanta, Georgia |
|
67.0 |
% |
|
|
70.2 |
% |
|
|
65.7 |
% |
|
|
70.6 |
% |
|
|
70.8 |
% |
|
|
69.9 |
% |
Hilton Wilmington
Riverside (3)Wilmington, North Carolina |
|
61.8 |
% |
|
|
61.9 |
% |
|
|
67.6 |
% |
|
|
68.3 |
% |
|
|
70.5 |
% |
|
|
71.6 |
% |
Sheraton Louisville
RiversideJeffersonville, Indiana |
|
48.6 |
% |
|
|
53.8 |
% |
|
|
63.6 |
% |
|
|
63.8 |
% |
|
|
63.1 |
% |
|
|
69.5 |
% |
The WhitehallHouston,
Texas |
|
41.2 |
% |
|
|
52.3 |
% |
|
|
66.2 |
% |
|
|
58.1 |
% |
|
|
54.4 |
% |
|
|
70.9 |
% |
Hyde Resort &
Residences (4)Hollywood Beach, Florida |
|
38.4 |
% |
|
N/A |
|
|
N/A |
|
|
|
37.9 |
% |
|
N/A |
|
|
N/A |
|
All properties weighted
average (1)(2) |
|
62.4 |
% |
|
|
63.2 |
% |
|
|
65.9 |
% |
|
|
68.8 |
% |
|
|
69.8 |
% |
|
|
70.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Includes
only the period of ownership for the Crowne Plaza Hampton Marina up
to February 7, 2017. |
2 |
Includes
periods of partial ownership in the YTD figures. |
3 |
Property
undergoing renovation during the current quarter. |
4 |
Reflects
only the condominium units at the Hyde Resort & Residences
participating in our rental program for the period those units
participated in our rental program. |
|
|
ADR
|
Q4 2017 |
|
|
Q4 2016 |
|
|
Q4 2015 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
Crowne Plaza Hampton
Marina (1)Hampton, Virginia |
N/A |
|
|
$ |
88.88 |
|
|
$ |
97.64 |
|
|
$ |
84.95 |
|
|
$ |
96.81 |
|
|
$ |
95.09 |
|
Crowne Plaza Tampa
WestshoreTampa, Florida |
$ |
116.39 |
|
|
$ |
115.81 |
|
|
$ |
106.81 |
|
|
$ |
119.85 |
|
|
$ |
116.15 |
|
|
$ |
111.08 |
|
The DeSotoSavannah,
Georgia |
$ |
157.93 |
|
|
$ |
151.81 |
|
|
$ |
152.61 |
|
|
$ |
159.50 |
|
|
$ |
155.87 |
|
|
$ |
154.52 |
|
DoubleTree by Hilton
Jacksonville RiverfrontJacksonville, Florida |
$ |
140.34 |
|
|
$ |
143.00 |
|
|
$ |
122.40 |
|
|
$ |
132.19 |
|
|
$ |
126.67 |
|
|
$ |
99.48 |
|
DoubleTree by Hilton
LaurelLaurel, Maryland |
$ |
104.74 |
|
|
$ |
105.18 |
|
|
$ |
95.19 |
|
|
$ |
107.77 |
|
|
$ |
104.35 |
|
|
$ |
94.09 |
|
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
$ |
138.64 |
|
|
$ |
137.14 |
|
|
$ |
136.33 |
|
|
$ |
135.54 |
|
|
$ |
144.92 |
|
|
$ |
136.32 |
|
DoubleTree by Hilton
Raleigh Brownstone – UniversityRaleigh, North Carolina |
$ |
131.29 |
|
|
$ |
140.87 |
|
|
$ |
138.33 |
|
|
$ |
133.24 |
|
|
$ |
134.74 |
|
|
$ |
131.61 |
|
DoubleTree Resort by
Hilton Hollywood Beach (2)(3)Hollywood, Florida |
$ |
167.71 |
|
|
$ |
156.61 |
|
|
$ |
122.83 |
|
|
$ |
170.76 |
|
|
$ |
170.57 |
|
|
$ |
172.89 |
|
The Georgian
TerraceAtlanta, Georgia |
$ |
186.21 |
|
|
$ |
160.31 |
|
|
$ |
153.83 |
|
|
$ |
175.06 |
|
|
$ |
160.89 |
|
|
$ |
155.56 |
|
Hilton Wilmington
Riverside (3)Wilmington, North Carolina |
$ |
143.62 |
|
|
$ |
141.37 |
|
|
$ |
132.55 |
|
|
$ |
148.69 |
|
|
$ |
147.14 |
|
|
$ |
138.36 |
|
Sheraton Louisville
RiversideJeffersonville, Indiana |
$ |
138.65 |
|
|
$ |
125.95 |
|
|
$ |
131.74 |
|
|
$ |
133.86 |
|
|
$ |
137.44 |
|
|
$ |
161.03 |
|
The WhitehallHouston,
Texas |
$ |
154.94 |
|
|
$ |
136.22 |
|
|
$ |
141.61 |
|
|
$ |
147.66 |
|
|
$ |
140.70 |
|
|
$ |
142.05 |
|
Hyde Resort &
Residences (4)Hollywood Beach, Florida |
$ |
289.66 |
|
|
N/A |
|
|
N/A |
|
|
$ |
282.20 |
|
|
N/A |
|
|
N/A |
|
All properties weighted
average (1)(2) |
$ |
151.21 |
|
|
$ |
138.81 |
|
|
$ |
137.21 |
|
|
$ |
147.77 |
|
|
$ |
140.63 |
|
|
$ |
134.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Includes
only the period of ownership for the Crowne Plaza Hampton Marina up
to February 7, 2017. |
2 |
Includes
periods of partial ownership in the YTD figures. |
3 |
Property
undergoing renovation during the current quarter. |
4 |
Reflects
only the condominium units at the Hyde Resort & Residences
participating in our rental program for the period those units
participated in our rental program. |
|
|
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2017 |
|
|
Q4 2016 |
|
|
Q4 2015 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
Crowne Plaza Hampton
Marina (1)Hampton, Virginia |
N/A |
|
|
$ |
35.80 |
|
|
$ |
43.63 |
|
|
$ |
30.03 |
|
|
$ |
53.40 |
|
|
$ |
51.64 |
|
Crowne Plaza Tampa
WestshoreTampa, Florida |
$ |
91.57 |
|
|
$ |
77.81 |
|
|
$ |
75.85 |
|
|
$ |
94.81 |
|
|
$ |
86.69 |
|
|
$ |
80.53 |
|
The DeSotoSavannah,
Georgia |
$ |
97.22 |
|
|
$ |
95.67 |
|
|
$ |
110.52 |
|
|
$ |
106.15 |
|
|
$ |
111.48 |
|
|
$ |
118.89 |
|
DoubleTree by Hilton
Jacksonville RiverfrontJacksonville, Florida |
$ |
109.41 |
|
|
$ |
102.93 |
|
|
$ |
76.77 |
|
|
$ |
105.56 |
|
|
$ |
98.06 |
|
|
$ |
73.60 |
|
DoubleTree by Hilton
LaurelLaurel, Maryland |
$ |
60.57 |
|
|
$ |
55.42 |
|
|
$ |
38.75 |
|
|
$ |
69.91 |
|
|
$ |
63.16 |
|
|
$ |
45.86 |
|
DoubleTree by Hilton
Philadelphia AirportPhiladelphia, Pennsylvania |
$ |
100.09 |
|
|
$ |
92.88 |
|
|
$ |
99.34 |
|
|
$ |
102.32 |
|
|
$ |
111.66 |
|
|
$ |
108.11 |
|
DoubleTree by Hilton
Raleigh Brownstone – UniversityRaleigh, North Carolina |
$ |
91.83 |
|
|
$ |
94.28 |
|
|
$ |
85.31 |
|
|
$ |
98.91 |
|
|
$ |
94.33 |
|
|
$ |
94.16 |
|
DoubleTree Resort by
Hilton Hollywood Beach (2)(3)Hollywood, Florida |
$ |
102.34 |
|
|
$ |
114.65 |
|
|
$ |
99.73 |
|
|
$ |
123.12 |
|
|
$ |
135.74 |
|
|
$ |
146.53 |
|
The Georgian
TerraceAtlanta, Georgia |
$ |
124.75 |
|
|
$ |
112.54 |
|
|
$ |
101.05 |
|
|
$ |
123.66 |
|
|
$ |
113.88 |
|
|
$ |
108.70 |
|
Hilton Wilmington
Riverside (3)Wilmington, North Carolina |
$ |
88.75 |
|
|
$ |
87.53 |
|
|
$ |
89.64 |
|
|
$ |
101.62 |
|
|
$ |
103.72 |
|
|
$ |
99.07 |
|
Sheraton Louisville
RiversideJeffersonville, Indiana |
$ |
67.38 |
|
|
$ |
67.82 |
|
|
$ |
83.74 |
|
|
$ |
85.45 |
|
|
$ |
86.60 |
|
|
$ |
111.87 |
|
The WhitehallHouston,
Texas |
$ |
63.90 |
|
|
$ |
71.24 |
|
|
$ |
93.70 |
|
|
$ |
85.78 |
|
|
$ |
76.56 |
|
|
$ |
100.66 |
|
Hyde Resort &
Residences (4)Hollywood Beach, Florida |
$ |
111.27 |
|
|
N/A |
|
|
N/A |
|
|
$ |
106.84 |
|
|
N/A |
|
|
N/A |
|
All properties weighted
average (1) (2) |
$ |
94.42 |
|
|
$ |
87.73 |
|
|
$ |
86.00 |
|
|
$ |
101.70 |
|
|
$ |
98.18 |
|
|
$ |
98.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Includes
only the period of ownership for the Crowne Plaza Hampton Marina up
to February 7, 2017. |
2 |
Includes
periods of partial ownership in the YTD figures. |
3 |
Property
undergoing renovation during the current quarter. |
4 |
Reflects
only the condominium units at the Hyde Resort & Residences
participating in our rental program for the period those units
participated in our rental program. |
|
|
SOTHERLY HOTELS
INC.RECONCILIATION OF NET INCOME (LOSS)
TOFFO, Adjusted FFO, EBITDA and Hotel
EBITDA(unaudited)
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
Net loss
available to common stockholders |
|
$ |
(3,936,525 |
) |
|
$ |
(746,143 |
) |
|
|
$ |
(3,339,136 |
) |
|
$ |
(218,173 |
) |
Add: Net
loss attributable to noncontrolling interest |
|
|
(486,379 |
) |
|
|
(132,944 |
) |
|
|
|
(413,014 |
) |
|
|
(26,567 |
) |
Depreciation and amortization |
|
|
4,291,071 |
|
|
|
3,758,083 |
|
|
|
|
16,999,619 |
|
|
|
15,019,071 |
|
Gain on
involuntary conversion of assets |
|
|
(1,201,061 |
) |
|
|
— |
|
|
|
|
(2,242,876 |
) |
|
|
— |
|
Loss on
disposal and/or sale of assets |
|
|
1,439,897 |
|
|
|
35,859 |
|
|
|
|
1,413,659 |
|
|
|
365,319 |
|
FFO |
|
$ |
107,003 |
|
|
$ |
2,914,855 |
|
|
|
$ |
12,418,252 |
|
|
$ |
15,139,650 |
|
Decrease
(increase) in deferred income taxes |
|
|
2,277,994 |
|
|
|
(1,102,777 |
) |
|
|
|
1,498,222 |
|
|
|
(1,558,966 |
) |
Loss on
early debt extinguishment |
|
|
950,261 |
|
|
|
260,217 |
|
|
|
|
1,178,348 |
|
|
|
1,417,905 |
|
Loss on
aborted offering costs |
|
|
— |
|
|
|
— |
|
|
|
|
541,129 |
|
|
|
— |
|
Loan
modification fees |
|
|
— |
|
|
|
33,980 |
|
|
|
|
— |
|
|
|
64,215 |
|
Unrealized (gain) loss on hedging activities |
|
|
(2,364 |
) |
|
|
(29,182 |
) |
|
|
|
28,384 |
|
|
|
37,384 |
|
Adjusted FFO
available to common stockholders |
|
$ |
3,332,894 |
|
|
$ |
2,077,093 |
|
|
|
$ |
15,664,335 |
|
|
$ |
15,100,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding, basic |
|
|
13,699,225 |
|
|
|
14,895,203 |
|
|
|
|
13,829,330 |
|
|
|
14,896,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of non-controlling units |
|
|
1,778,140 |
|
|
|
1,778,140 |
|
|
|
|
1,778,140 |
|
|
|
1,813,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares and units outstanding, basic |
|
|
15,477,365 |
|
|
|
16,673,343 |
|
|
|
|
15,607,470 |
|
|
|
16,710,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per
share and unit |
|
$ |
0.01 |
|
|
$ |
0.17 |
|
|
|
$ |
0.80 |
|
|
$ |
0.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
FFO per share and unit |
|
$ |
0.22 |
|
|
$ |
0.12 |
|
|
|
$ |
1.00 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
Net loss
available to common stockholders |
|
$ |
(3,936,525 |
) |
|
$ |
(746,143 |
) |
|
|
$ |
(3,339,136 |
) |
|
$ |
(218,173 |
) |
Add: Net
loss attributable to noncontrolling interest |
|
|
(486,379 |
) |
|
|
(132,944 |
) |
|
|
|
(413,014 |
) |
|
|
(26,567 |
) |
Interest
expense |
|
|
3,900,567 |
|
|
|
3,862,974 |
|
|
|
|
15,727,628 |
|
|
|
17,735,107 |
|
Interest
income |
|
|
(92,415 |
) |
|
|
(52,262 |
) |
|
|
|
(218,656 |
) |
|
|
(115,785 |
) |
Income
tax provision (benefit) |
|
|
2,319,694 |
|
|
|
(1,059,236 |
) |
|
|
|
1,737,804 |
|
|
|
(1,367,634 |
) |
Depreciation and amortization |
|
|
4,291,071 |
|
|
|
3,758,083 |
|
|
|
|
16,999,619 |
|
|
|
15,019,071 |
|
Loss on
early debt extinguishment |
|
|
950,261 |
|
|
|
260,217 |
|
|
|
|
1,178,348 |
|
|
|
1,417,905 |
|
Loss on
disposal and/or sale of assets |
|
|
1,439,897 |
|
|
|
35,859 |
|
|
|
|
1,413,659 |
|
|
|
365,319 |
|
Gain on
involuntary conversion of assets |
|
|
(1,201,061 |
) |
|
|
— |
|
|
|
|
(2,242,876 |
) |
|
|
— |
|
Distributions to preferred stockholders |
|
|
1,366,639 |
|
|
|
805,000 |
|
|
|
|
3,781,639 |
|
|
|
1,144,889 |
|
EBITDA |
|
|
8,551,749 |
|
|
|
6,731,548 |
|
|
|
|
34,625,015 |
|
|
|
33,954,132 |
|
Corporate
general and administrative |
|
|
1,453,385 |
|
|
|
1,689,169 |
|
|
|
|
6,335,926 |
|
|
|
6,021,065 |
|
Unrealized (gain) loss on hedging activities |
|
|
(2,364 |
) |
|
|
(29,182 |
) |
|
|
|
28,384 |
|
|
|
37,384 |
|
Hotel
EBITDA |
|
$ |
10,002,770 |
|
|
$ |
8,391,535 |
|
|
|
$ |
40,989,325 |
|
|
$ |
40,012,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
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) corporate general and administrative
expense, (12) depreciation and amortization, (13) gains and losses
on involuntary conversions of assets, (14) distributions to
preferred stockholders and (15) 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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