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,
2018. The Company’s results include the following*:
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands except per share
data) |
|
|
($ in thousands except per share
data) |
|
Total Revenue |
$ |
41,418 |
|
|
$ |
36,769 |
|
|
$ |
134,707 |
|
|
$ |
116,107 |
|
Net (loss) income available to common stockholders |
|
(3,066 |
) |
|
|
(1,551 |
) |
|
|
(1,952 |
) |
|
|
597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
7,782 |
|
|
|
6,650 |
|
|
|
33,013 |
|
|
|
26,073 |
|
Hotel EBITDA |
|
9,175 |
|
|
|
7,989 |
|
|
|
37,437 |
|
|
|
30,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
|
1,088 |
|
|
|
2,710 |
|
|
|
12,684 |
|
|
|
12,311 |
|
Adjusted FFO available to common stockholders |
|
946 |
|
|
|
1,676 |
|
|
|
14,046 |
|
|
|
12,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share available to common stockholders |
$ |
(0.23 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.04 |
|
FFO per share and unit |
$ |
0.07 |
|
|
$ |
0.17 |
|
|
$ |
0.83 |
|
|
$ |
0.79 |
|
Adjusted FFO available to common holders per share and unit |
$ |
0.06 |
|
|
$ |
0.11 |
|
|
$ |
0.92 |
|
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) 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:
- Revenue and RevPAR. For the three-month
period ending September 30, 2018, Total Revenue increased 12.6%
over the three-month period ending September 30, 2017. 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 September 30,
2018, increased 2.2% over the three months ended September 30,
2017, to $99.72 reflecting a 2.2% decrease in occupancy and a 4.5%
increase in average daily rate (“ADR”). For the nine-month period
ending September 30, 2018, RevPAR increased 7.0% over the nine
months ended September 30, 2017, to $111.60 driven by a 1.3%
decrease in occupancy and an 8.4% increase in ADR.
- Common Dividends. The Company has declared a
quarterly dividend (distribution) on its common stock (and units)
of $0.125 per share (and unit) to stockholders (and unitholders) of
record as of December 14, 2018, payable on January 11, 2019.
- Hotel EBITDA. The Company generated hotel
EBITDA of approximately $9.2 million during the three-month period
ending September 30, 2018, an increase of 14.8%, or approximately
$1.2 million, from the three months ended September 30, 2017. For
the nine-month period ending September 30, 2018, hotel EBITDA
increased 20.8%, or approximately $6.5 million, over the nine
months ended September 30, 2017.
- EBITDA. The Company generated EBITDA of
approximately $7.8 million during the three-month period ending
September 30, 2018, an increase of 17.0% or approximately $1.1
million compared to the three months ended September 30, 2017. For
the nine-month period ending September 30, 2018, EBITDA increased
26.6% or approximately $6.9 million from the nine months ended
September 30, 2017.
- Adjusted FFO. For the three-month period
ending September 30, 2018, Adjusted FFO decreased 43.5% or
approximately $0.7 million from the three months ended September
30, 2017. For the nine-month period ending September 30, 2018,
adjusted FFO increased 13.9% or approximately $1.7 million over the
nine months ended September 30, 2017.
Andrew M. Sims, Chairman and Chief Executive Officer of Sotherly
Hotels Inc., commented, “We had a difficult quarter, with most of
the negative results being attributable to natural events. A
tropical storm in South Florida during the busy Labor Day weekend,
followed by a series of “red tide” warnings along the greater
Miami/Fort Lauderdale beaches, and road construction along the A1A
caused our South Florida hotels to suffer significant demand loss
in the quarter. Hurricane Florence, a highly destructive and
long-lasting hurricane, severely impacted the Carolinas.
Travel throughout the southeast region was disrupted from early
September through the end of the month. While our hotels
survived the storm mostly intact and were continuously operating,
the resulting demand loss had a significant negative effect on the
Company’s profitability.”
Balance Sheet/Liquidity
At September 30, 2018, the Company had approximately $42.0
million of available cash and cash equivalents, of which
approximately $5.0 million was reserved for real estate taxes,
insurance, capital improvements and certain other expenses or
otherwise restricted. The Company had principal balances of
approximately $394.5 million in outstanding debt at a weighted
average interest rate of approximately 5.10%.
On July 27, 2018, we entered into a loan agreement and other
documents, including a promissory note, to secure a mortgage on the
DoubleTree by Hilton Raleigh Brownstone-University with MetLife
Commercial Mortgage Originator, LLC. The mortgage has an initial
principal balance of $18.3 million, with an additional $5.2 million
available upon the satisfaction of certain conditions. The mortgage
has an initial term of 4 years with a 1-year extension subject to
certain terms and conditions, bears a floating rate of interest
equal to the 1-month LIBOR rate plus 4.00%. The mortgage requires
monthly interest-only payments and, following a 12-month lockout,
can be prepaid with a penalty during its second year and without
penalty thereafter. We entered into an interest-rate cap agreement
to limit our exposure through August 1, 2022 to increases in LIBOR
exceeding 3.25% on a notional amount of $23,500,000. We used a
portion of the proceeds to repay the existing first mortgage on the
DoubleTree by Hilton Raleigh Brownstone-University and to pay
closing costs and intends to use the balance of the proceeds for
general corporate purposes.
On July 31, 2018, we entered into a second amendment to loan and
security agreement; an amended, restated and consolidated mortgage
loan note; and other related documents with our existing lender, TD
Bank, N.A., to amend the terms of our mortgage loan on the
DoubleTree by Hilton Philadelphia Airport. Concurrent with
the loan modification, we also entered into a 5-year swap agreement
with The Toronto-Dominion Bank. Pursuant to the amended loan
documents: (i) the principal balance of the loan was increased from
approximately $30.0 million to $42.2 million; (ii) the loan’s
maturity date was extended to July 31, 2023; (iii) the loan bears a
floating interest rate equal to the 1-month LIBOR rate plus 2.27%
(the “Loan Rate”); (iv) the loan amortizes on a 30-year schedule
with payments of principal and interest beginning immediately; (v)
the loan can be prepaid without penalty; and (vi) the loan will no
longer be fully guaranteed by the Operating Partnership, but the
Operating Partnership has guaranteed certain standard “bad boy”
carveouts. Pursuant to the swap agreement: (i) the Loan Rate
is swapped for a fixed interest rate of 5.237%; (ii) notional
amounts of the swap approximate the declining balance of the loan;
and (iii) we are responsible for any potential termination fees
associated with early termination of the swap agreement. We
used a portion of the proceeds to repay in full the existing Note B
to the mortgage loan on our Hyatt Centric Arlington and to pay
closing costs associated with the amendment and will use the
balance of the proceeds for general corporate purposes.
On August 31, 2018, we entered into a Sales Agency Agreement,
with Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”),
under which the Company may sell from time to time through Sandler
O’Neill, as sales agent, shares of the Company’s common stock, par
value $0.01 per share, having an aggregate gross sales price of up
to $5,000,000 and up to 400,000 shares of the Company’s 7.875%
Series C Cumulative Redeemable Preferred Stock, $0.01 par value per
share. Through September 30, 2018, the Company sold 88,297
shares of common stock and 50,541 shares of Series C Preferred
Stock, for an aggregate net total of approximately $1.8
million.
On September 18, 2018, we entered into a loan agreement and
other documents, including a promissory note, to secure a mortgage
on the Hyatt Centric Arlington with MetLife Real Estate Lending
LLC. Pursuant to the loan documents, the Mortgage Loan has an
initial principal balance of $50.0 million; has a term of 10 years;
bears a fixed interest rate of 5.25%; amortizes on a 30-year
schedule; and following a 5-year lockout, can be prepaid with
penalty in years 6-10 and without penalty during the final 4 months
of the term. The Company used the proceeds to repay the
existing first mortgage on the Hyatt Centric Arlington, to pay
closing costs, and for general corporate purposes.
Portfolio Update
At the Company’s hotel in Tampa, Florida, renovations are
underway for an estimated $11.0 million renovation project in
anticipation of a planned conversion in June 2019 from the Crowne
Plaza Tampa Westshore to Hotel Alba, which we expect to become a
member of the Tapestry Collection by Hilton. As of September
30, 2018, we incurred costs totaling approximately $5.4 million
toward this renovation.
2018 Updated Outlook
The Company is updating its previously issued guidance for 2018,
accounting for current and expected performance within its
portfolio, taking into account market conditions, the refinance of
the Hyatt Centric Arlington, and weather-related events, including
Hurricane Florence. The updated 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 prior and revised
projections, within a range, of various financial measures for
2018, in thousands of dollars, except per share and RevPAR
data:
|
|
|
|
|
|
|
Prior 2018
Guidance |
|
|
Revised 2018
Guidance |
|
|
Low Range |
|
|
High Range |
|
|
Low Range |
|
|
High Range |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
172,308 |
|
|
$ |
175,187 |
|
|
$ |
175,702 |
|
|
$ |
178,103 |
|
Net loss |
|
(7,177 |
) |
|
|
(6,711 |
) |
|
|
(7,995 |
) |
|
|
(7,583 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
41,498 |
|
|
|
42,079 |
|
|
|
41,073 |
|
|
|
41,645 |
|
Hotel EBITDA |
|
47,498 |
|
|
|
48,179 |
|
|
|
47,023 |
|
|
|
47,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
|
15,259 |
|
|
|
15,725 |
|
|
|
14,441 |
|
|
|
14,853 |
|
Adjusted FFO available to common stockholders |
|
15,874 |
|
|
|
16,490 |
|
|
|
15,444 |
|
|
|
16,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share available to common stockholders |
$ |
(0.47 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.52 |
) |
|
$ |
(0.50 |
) |
FFO per share and unit |
$ |
1.00 |
|
|
$ |
1.03 |
|
|
$ |
0.94 |
|
|
$ |
0.97 |
|
Adjusted FFO available to common holders per share and unit |
$ |
1.04 |
|
|
$ |
1.08 |
|
|
$ |
1.01 |
|
|
$ |
1.05 |
|
Rev PAR |
$ |
104.74 |
|
|
$ |
105.59 |
|
|
$ |
103.44 |
|
|
$ |
104.27 |
|
Hotel EBITDA margin |
|
27.5 |
|
% |
|
27.6 |
% |
|
|
26.8 |
|
% |
|
26.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Call/Webcast
The Company will conduct its third quarter 2018 conference call
for investors and other interested parties at 10:00 a.m. Eastern
Time on Tuesday, November 6, 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 November 6, 2018 through
November 5, 2019. To access the rebroadcast, dial 877-344-7529 and
enter conference number 10124880. A replay of the call also
will be available on the Internet at www.sotherlyhotels.com until
November 5, 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 twelve hotel properties, comprising
3,156 rooms, and an interest in the Hyde Resort & Residences, a
luxury condo hotel. The Company owns hotels that operate under the
Hilton Worldwide, InterContinental Hotels Group 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:
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.
SOTHERLY HOTELS
INC.CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
September 30,
2018 |
|
|
December 31,
2017 |
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Investment in hotel properties, net |
|
$ |
437,525,800 |
|
|
$ |
357,799,512 |
|
Cash and cash equivalents |
|
|
37,015,264 |
|
|
|
29,777,845 |
|
Restricted cash |
|
|
5,025,467 |
|
|
|
3,651,197 |
|
Accounts receivable, net |
|
|
7,822,946 |
|
|
|
5,587,077 |
|
Accounts receivable - affiliate |
|
|
402,985 |
|
|
|
394,026 |
|
Prepaid expenses, inventory and other assets |
|
|
6,889,076 |
|
|
|
7,292,565 |
|
Favorable lease assets, net |
|
|
2,560,245 |
|
|
|
— |
|
Deferred income taxes |
|
|
4,700,379 |
|
|
|
5,451,118 |
|
TOTAL ASSETS |
|
$ |
501,942,162 |
|
|
$ |
409,953,340 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
Mortgage loans, net |
|
$ |
366,576,645 |
|
|
$ |
297,318,816 |
|
Unsecured notes, net |
|
|
23,765,024 |
|
|
|
— |
|
Accounts payable and accrued liabilities |
|
|
17,324,207 |
|
|
|
13,813,623 |
|
Advance deposits |
|
|
2,361,234 |
|
|
|
1,572,388 |
|
Dividends and distributions payable |
|
|
3,412,239 |
|
|
|
3,073,483 |
|
TOTAL LIABILITIES |
|
$ |
413,439,349 |
|
|
$ |
315,778,310 |
|
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, 2018
and December 31, 2017, respectively |
|
|
16,100 |
|
|
|
16,100 |
|
7.875% Series C cumulative redeemable perpetual
preferred stock, liquidation preference $25 per share,
1,350,541 and 1,300,000 shares issued and outstanding at
September 30, 2018 and December 31, 2017, respectively |
|
|
13,505 |
|
|
|
13,000 |
|
Common stock, par value $0.01, 49,000,000 shares
authorized, 14,209,378 shares and 14,078,831 shares issued
and outstanding at September 30, 2018 and December 31, 2017,
respectively |
|
|
142,093 |
|
|
|
140,788 |
|
Additional paid-in capital |
|
|
148,140,659 |
|
|
|
146,249,339 |
|
Unearned ESOP shares |
|
|
(4,446,975 |
) |
|
|
(4,633,112 |
) |
Distributions in excess of retained earnings |
|
|
(55,631,915 |
) |
|
|
(48,765,860 |
) |
Total Sotherly Hotels Inc. stockholders’
equity |
|
|
88,233,467 |
|
|
|
93,020,255 |
|
Noncontrolling interest |
|
|
269,346 |
|
|
|
1,154,775 |
|
TOTAL EQUITY |
|
|
88,502,813 |
|
|
|
94,175,030 |
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
501,942,162 |
|
|
$ |
409,953,340 |
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months
Ended |
|
|
Nine Months
Ended |
|
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
$ |
28,626,265 |
|
|
$ |
25,093,226 |
|
|
$ |
92,242,385 |
|
|
$ |
81,366,731 |
|
Food and beverage department |
|
|
8,417,293 |
|
|
|
7,997,818 |
|
|
|
27,849,844 |
|
|
|
24,904,934 |
|
Other operating departments |
|
|
4,374,504 |
|
|
|
3,678,427 |
|
|
|
14,614,915 |
|
|
|
9,835,322 |
|
Total revenue |
|
|
41,418,062 |
|
|
|
36,769,471 |
|
|
|
134,707,144 |
|
|
|
116,106,987 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
|
7,873,836 |
|
|
|
6,826,822 |
|
|
|
22,750,381 |
|
|
|
20,252,889 |
|
Food and beverage department |
|
|
6,680,563 |
|
|
|
6,039,174 |
|
|
|
20,748,688 |
|
|
|
17,919,142 |
|
Other operating departments |
|
|
1,661,128 |
|
|
|
705,111 |
|
|
|
4,870,037 |
|
|
|
1,928,662 |
|
Indirect |
|
|
16,027,496 |
|
|
|
15,209,249 |
|
|
|
48,901,037 |
|
|
|
45,019,742 |
|
Total hotel operating expenses |
|
|
32,243,023 |
|
|
|
28,780,356 |
|
|
|
97,270,143 |
|
|
|
85,120,435 |
|
Depreciation and amortization |
|
|
4,547,043 |
|
|
|
4,427,738 |
|
|
|
15,783,174 |
|
|
|
12,708,548 |
|
(Gain) loss on disposal of assets |
|
|
(7,555 |
) |
|
|
— |
|
|
|
(3,816 |
) |
|
|
51,569 |
|
Corporate general and administrative |
|
|
1,516,408 |
|
|
|
1,335,192 |
|
|
|
4,566,258 |
|
|
|
4,882,541 |
|
Total operating expenses |
|
|
38,298,919 |
|
|
|
34,543,286 |
|
|
|
117,615,759 |
|
|
|
102,763,093 |
|
NET OPERATING INCOME |
|
|
3,119,143 |
|
|
|
2,226,185 |
|
|
|
17,091,385 |
|
|
|
13,343,894 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5,306,641 |
) |
|
|
(4,139,267 |
) |
|
|
(14,571,142 |
) |
|
|
(11,827,061 |
) |
Interest income |
|
|
88,484 |
|
|
|
53,314 |
|
|
|
236,693 |
|
|
|
126,241 |
|
Loss on early extinguishment of debt |
|
|
(753,133 |
) |
|
|
— |
|
|
|
(753,133 |
) |
|
|
(228,087 |
) |
Unrealized gain (loss) on hedging
activities |
|
|
123,443 |
|
|
|
(3,542 |
) |
|
|
141,970 |
|
|
|
(30,748 |
) |
(Loss) gain on sale of assets |
|
|
— |
|
|
|
(23,000 |
) |
|
|
— |
|
|
|
77,807 |
|
Gain on involuntary conversion of assets |
|
|
— |
|
|
|
— |
|
|
|
898,565 |
|
|
|
1,041,815 |
|
Net (loss) income before income taxes |
|
|
(2,728,704 |
) |
|
|
(1,886,310 |
) |
|
|
3,044,338 |
|
|
|
2,503,861 |
|
Income tax benefit (provision) |
|
|
746,924 |
|
|
|
950,310 |
|
|
|
(882,045 |
) |
|
|
581,890 |
|
Net (loss) income |
|
|
(1,981,780 |
) |
|
|
(936,000 |
) |
|
|
2,162,293 |
|
|
|
3,085,751 |
|
Less: Net loss (income) attributable to the
noncontrolling interest |
|
|
385,616 |
|
|
|
190,445 |
|
|
|
245,298 |
|
|
|
(73,366 |
) |
Net (loss) income attributable to the Company |
|
|
(1,596,164 |
) |
|
|
(745,555 |
) |
|
|
2,407,591 |
|
|
|
3,012,385 |
|
Distributions to preferred stockholders |
|
|
(1,469,719 |
) |
|
|
(805,000 |
) |
|
|
(4,359,407 |
) |
|
|
(2,415,000 |
) |
Net (loss) income available to common stockholders |
|
$ |
(3,065,883 |
) |
|
$ |
(1,550,555 |
) |
|
$ |
(1,951,816 |
) |
|
$ |
597,385 |
|
Net (loss) income per share available to common
stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.23 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.04 |
|
Diluted |
|
$ |
(0.23 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.04 |
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
13,513,996 |
|
|
|
13,822,543 |
|
|
|
13,491,807 |
|
|
|
13,873,175 |
|
Diluted |
|
|
13,513,996 |
|
|
|
13,822,543 |
|
|
|
13,491,807 |
|
|
|
13,885,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.KEY
OPERATING METRICS(unaudited)
The following tables illustrate the key operating metrics for
the three and nine months ended September 30, 2018 and 2017,
respectively, for the Company’s wholly-owned properties (“actual”
portfolio metrics), as well as the ten wholly-owned properties in
the portfolio that were under the Company’s control during the
three and nine months ended September 30, 2018 and the
corresponding periods in 2017 (“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,
our interest in the Hyde Resort & Residences which was acquired
on January 30, 2017, or the Hyatt Centric Arlington which we
acquired in March 2018. 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 nine months ended September 30,
2018 and the corresponding periods in 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, 2018 |
|
|
September 30, 2017 |
|
|
|
September 30, 2018 |
|
|
September 30, 2017 |
|
Actual Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
69.3 |
% |
|
|
71.1 |
% |
|
|
|
71.6 |
% |
|
|
72.6 |
% |
ADR |
|
$ |
142.26 |
|
|
$ |
135.09 |
|
|
|
$ |
152.75 |
|
|
$ |
143.53 |
|
RevPAR |
|
$ |
98.59 |
|
|
$ |
96.11 |
|
|
|
$ |
109.44 |
|
|
$ |
104.16 |
|
Same-Store Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
67.4 |
% |
|
|
71.1 |
% |
|
|
|
70.2 |
% |
|
|
72.9 |
% |
ADR |
|
$ |
140.71 |
|
|
$ |
135.09 |
|
|
|
$ |
149.16 |
|
|
$ |
143.77 |
|
RevPAR |
|
$ |
94.89 |
|
|
$ |
96.11 |
|
|
|
$ |
104.77 |
|
|
$ |
104.77 |
|
Composite Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
68.0 |
% |
|
|
69.6 |
% |
|
|
|
70.1 |
% |
|
|
71.1 |
% |
ADR |
|
$ |
146.54 |
|
|
$ |
140.24 |
|
|
|
$ |
159.10 |
|
|
$ |
146.73 |
|
RevPAR |
|
$ |
99.72 |
|
|
$ |
97.56 |
|
|
|
$ |
111.60 |
|
|
$ |
104.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS
INC.SUPPLEMENTAL
DATA(unaudited)
The following tables illustrate the key operating metrics for
the three and nine months ended September 30, 2018, 2017 and 2016,
respectively, for each of the Company’s wholly-owned properties
during each respective reporting period, irrespective of ownership
percentage during any period.
Occupancy
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2018 |
|
|
Q3 2017 |
|
|
Q3 2016 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
Crowne Plaza Tampa WestshoreTampa, Florida |
|
56.1 |
% |
|
|
72.2 |
% |
|
|
67.9 |
% |
|
|
74.4 |
% |
|
|
79.3 |
% |
|
|
77.1 |
% |
The DeSotoSavannah, Georgia |
|
58.8 |
% |
|
|
62.8 |
% |
|
|
70.8 |
% |
|
|
63.4 |
% |
|
|
68.2 |
% |
|
|
74.4 |
% |
DoubleTree by Hilton Jacksonville RiverfrontJacksonville,
Florida |
|
79.1 |
% |
|
|
79.7 |
% |
|
|
79.2 |
% |
|
|
82.7 |
% |
|
|
80.5 |
% |
|
|
79.2 |
% |
DoubleTree by Hilton LaurelLaurel, Maryland |
|
70.3 |
% |
|
|
68.5 |
% |
|
|
64.9 |
% |
|
|
66.9 |
% |
|
|
67.3 |
% |
|
|
63.2 |
% |
DoubleTree by Hilton Philadelphia AirportPhiladelphia,
Pennsylvania |
|
81.3 |
% |
|
|
77.4 |
% |
|
|
81.8 |
% |
|
|
79.6 |
% |
|
|
76.6 |
% |
|
|
80.2 |
% |
DoubleTree by Hilton Raleigh Brownstone – UniversityRaleigh, North
Carolina |
|
74.7 |
% |
|
|
74.3 |
% |
|
|
68.4 |
% |
|
|
76.0 |
% |
|
|
75.7 |
% |
|
|
71.0 |
% |
DoubleTree Resort by Hilton Hollywood BeachHollywood, Florida |
|
63.0 |
% |
|
|
68.7 |
% |
|
|
78.7 |
% |
|
|
71.4 |
% |
|
|
75.8 |
% |
|
|
81.7 |
% |
Georgian TerraceAtlanta, Georgia |
|
69.4 |
% |
|
|
69.4 |
% |
|
|
68.4 |
% |
|
|
69.3 |
% |
|
|
71.9 |
% |
|
|
71.0 |
% |
Hotel Ballast Wilmington, Tapestry Collection by HiltonWilmington,
North Carolina |
|
69.8 |
% |
|
|
70.0 |
% |
|
|
78.2 |
% |
|
|
63.8 |
% |
|
|
70.5 |
% |
|
|
73.4 |
% |
Hyatt Centric Arlington (1)Arlington, Virginia |
|
86.0 |
% |
|
|
87.5 |
% |
|
|
82.6 |
% |
|
|
82.5 |
% |
|
|
86.7 |
% |
|
|
84.1 |
% |
Sheraton Louisville RiversideJeffersonville, Indiana |
|
63.1 |
% |
|
|
73.7 |
% |
|
|
72.1 |
% |
|
|
61.2 |
% |
|
|
69.0 |
% |
|
|
66.1 |
% |
The WhitehallHouston, Texas |
|
50.2 |
% |
|
|
65.0 |
% |
|
|
51.7 |
% |
|
|
58.5 |
% |
|
|
63.8 |
% |
|
|
55.1 |
% |
Hyde Resort & Residences (2)Hollywood Beach, Florida |
|
48.4 |
% |
|
|
46.3 |
% |
|
N/A |
|
|
|
47.9 |
% |
|
|
38.4 |
% |
|
N/A |
|
All properties weighted average (1) |
|
69.6 |
% |
|
|
75.7 |
% |
|
|
78.0 |
% |
|
|
71.4 |
% |
|
|
74.0 |
% |
|
|
74.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(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 the condominium units at the Hyde Resort &
Residences participating in our rental program for the period those
units participated in our rental program. |
|
|
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2018 |
|
|
Q3 2017 |
|
|
Q3 2016 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
Crowne Plaza Tampa WestshoreTampa, Florida |
$ |
112.25 |
|
|
$ |
110.98 |
|
|
$ |
102.74 |
|
|
$ |
127.01 |
|
|
$ |
121.00 |
|
|
$ |
116.26 |
|
The DeSotoSavannah, Georgia |
$ |
161.68 |
|
|
$ |
146.76 |
|
|
$ |
146.47 |
|
|
$ |
178.34 |
|
|
$ |
159.98 |
|
|
$ |
157.02 |
|
DoubleTree by Hilton Jacksonville RiverfrontJacksonville,
Florida |
$ |
136.77 |
|
|
$ |
125.14 |
|
|
$ |
119.52 |
|
|
$ |
141.46 |
|
|
$ |
129.54 |
|
|
$ |
121.69 |
|
DoubleTree by Hilton LaurelLaurel, Maryland |
$ |
104.26 |
|
|
$ |
104.72 |
|
|
$ |
101.62 |
|
|
$ |
109.28 |
|
|
$ |
108.64 |
|
|
$ |
104.11 |
|
DoubleTree by Hilton Philadelphia AirportPhiladelphia,
Pennsylvania |
$ |
138.80 |
|
|
$ |
131.76 |
|
|
$ |
163.24 |
|
|
$ |
139.14 |
|
|
$ |
134.55 |
|
|
$ |
147.13 |
|
DoubleTree by Hilton Raleigh Brownstone – UniversityRaleigh, North
Carolina |
$ |
131.28 |
|
|
$ |
130.42 |
|
|
$ |
126.69 |
|
|
$ |
134.28 |
|
|
$ |
133.85 |
|
|
$ |
132.80 |
|
DoubleTree Resort by Hilton Hollywood BeachHollywood, Florida |
$ |
131.74 |
|
|
$ |
134.83 |
|
|
$ |
132.73 |
|
|
$ |
177.20 |
|
|
$ |
171.58 |
|
|
$ |
174.77 |
|
Georgian TerraceAtlanta, Georgia |
$ |
183.46 |
|
|
$ |
173.31 |
|
|
$ |
166.11 |
|
|
$ |
183.98 |
|
|
$ |
171.56 |
|
|
$ |
161.09 |
|
Hotel Ballast Wilmington, Tapestry Collection by HiltonWilmington,
North Carolina |
$ |
159.76 |
|
|
$ |
155.41 |
|
|
$ |
154.36 |
|
|
$ |
151.09 |
|
|
$ |
150.19 |
|
|
$ |
148.77 |
|
Hyatt Centric Arlington (1)Arlington, Virginia |
$ |
153.12 |
|
|
$ |
154.90 |
|
|
$ |
154.60 |
|
|
$ |
178.06 |
|
|
$ |
177.27 |
|
|
$ |
170.39 |
|
Sheraton Louisville RiversideJeffersonville, Indiana |
$ |
113.70 |
|
|
$ |
117.55 |
|
|
$ |
119.47 |
|
|
$ |
125.99 |
|
|
$ |
132.72 |
|
|
$ |
140.45 |
|
The WhitehallHouston, Texas |
$ |
141.85 |
|
|
$ |
135.55 |
|
|
$ |
126.10 |
|
|
$ |
145.51 |
|
|
$ |
146.08 |
|
|
$ |
142.13 |
|
Hyde Resort & Residences (2)Hollywood Beach, Florida |
$ |
242.62 |
|
|
$ |
256.68 |
|
|
N/A |
|
|
$ |
299.26 |
|
|
$ |
278.60 |
|
|
N/A |
|
All properties weighted average (1) |
$ |
147.25 |
|
|
$ |
155.45 |
|
|
$ |
151.95 |
|
|
$ |
161.38 |
|
|
$ |
154.06 |
|
|
$ |
150.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 the condominium units at the Hyde Resort &
Residences participating in our rental program for the period those
units participated in our rental program. |
|
|
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2018 |
|
|
Q3 2017 |
|
|
Q3 2016 |
|
|
YTD |
|
|
YTD |
|
|
YTD |
|
Crowne Plaza Tampa WestshoreTampa, Florida |
$ |
62.98 |
|
|
$ |
80.08 |
|
|
$ |
69.73 |
|
|
$ |
94.47 |
|
|
$ |
95.91 |
|
|
$ |
89.67 |
|
The DeSotoSavannah, Georgia |
$ |
95.01 |
|
|
$ |
92.22 |
|
|
$ |
103.72 |
|
|
$ |
113.01 |
|
|
$ |
109.16 |
|
|
$ |
116.80 |
|
DoubleTree by Hilton Jacksonville RiverfrontJacksonville,
Florida |
$ |
108.12 |
|
|
$ |
99.69 |
|
|
$ |
94.68 |
|
|
$ |
117.01 |
|
|
$ |
104.27 |
|
|
$ |
96.43 |
|
DoubleTree by Hilton LaurelLaurel, Maryland |
$ |
73.25 |
|
|
$ |
71.71 |
|
|
$ |
65.98 |
|
|
$ |
73.08 |
|
|
$ |
73.06 |
|
|
$ |
65.76 |
|
DoubleTree by Hilton Philadelphia AirportPhiladelphia,
Pennsylvania |
$ |
112.78 |
|
|
$ |
101.98 |
|
|
$ |
133.59 |
|
|
$ |
110.75 |
|
|
$ |
103.07 |
|
|
$ |
117.96 |
|
DoubleTree by Hilton Raleigh Brownstone – UniversityRaleigh, North
Carolina |
$ |
98.11 |
|
|
$ |
96.83 |
|
|
$ |
86.64 |
|
|
$ |
102.07 |
|
|
$ |
101.30 |
|
|
$ |
94.34 |
|
DoubleTree Resort by Hilton Hollywood BeachHollywood, Florida |
$ |
83.02 |
|
|
$ |
92.60 |
|
|
$ |
104.42 |
|
|
$ |
126.48 |
|
|
$ |
130.12 |
|
|
$ |
142.82 |
|
Georgian TerraceAtlanta, Georgia |
$ |
127.39 |
|
|
$ |
120.35 |
|
|
$ |
113.60 |
|
|
$ |
127.49 |
|
|
$ |
123.30 |
|
|
$ |
114.33 |
|
Hotel Ballast Wilmington, Tapestry Collection by HiltonWilmington,
North Carolina |
$ |
111.52 |
|
|
$ |
108.74 |
|
|
$ |
120.65 |
|
|
$ |
96.34 |
|
|
$ |
105.95 |
|
|
$ |
109.16 |
|
Hyatt Centric Arlington (1)Arlington, Virginia |
$ |
131.66 |
|
|
$ |
135.55 |
|
|
$ |
127.75 |
|
|
$ |
146.94 |
|
|
$ |
153.75 |
|
|
$ |
143.28 |
|
Sheraton Louisville RiversideJeffersonville, Indiana |
$ |
71.78 |
|
|
$ |
86.60 |
|
|
$ |
86.19 |
|
|
$ |
77.17 |
|
|
$ |
91.54 |
|
|
$ |
92.91 |
|
The WhitehallHouston, Texas |
$ |
71.23 |
|
|
$ |
88.09 |
|
|
$ |
65.14 |
|
|
$ |
85.09 |
|
|
$ |
93.15 |
|
|
$ |
78.34 |
|
Hyde Resort & Residences (2)Hollywood Beach, Florida |
$ |
117.37 |
|
|
$ |
118.96 |
|
|
N/A |
|
|
$ |
143.45 |
|
|
$ |
107.09 |
|
|
N/A |
|
All properties weighted average (1) |
$ |
102.48 |
|
|
$ |
117.60 |
|
|
$ |
118.54 |
|
|
$ |
115.19 |
|
|
$ |
114.01 |
|
|
$ |
111.89 |
|
(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 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 (LOSS) INCOME
TOFFO, Adjusted FFO, EBITDA and Hotel
EBITDA(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Three Months
Ended |
|
|
|
Nine Months
Ended |
|
|
Nine Months
Ended |
|
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
Net (loss) income available to common
stockholders |
|
$ |
(3,065,883 |
) |
|
$ |
(1,550,555 |
) |
|
|
$ |
(1,951,816 |
) |
|
$ |
597,385 |
|
Add: Net (loss) income attributable to
noncontrolling interest |
|
|
(385,616 |
) |
|
|
(190,445 |
) |
|
|
|
(245,298 |
) |
|
|
73,366 |
|
Depreciation and amortization |
|
|
4,547,043 |
|
|
|
4,427,738 |
|
|
|
|
15,783,174 |
|
|
|
12,708,548 |
|
Gain on involuntary conversion of assets |
|
|
— |
|
|
|
— |
|
|
|
|
(898,565 |
) |
|
|
(1,041,815 |
) |
Loss (gain) on disposal and/or sale of assets |
|
|
(7,555 |
) |
|
|
23,000 |
|
|
|
|
(3,816 |
) |
|
|
(26,238 |
) |
FFO |
|
$ |
1,087,989 |
|
|
$ |
2,709,738 |
|
|
|
$ |
12,683,679 |
|
|
$ |
12,311,246 |
|
(Increase) decrease in deferred income taxes |
|
|
(771,190 |
) |
|
|
(1,037,767 |
) |
|
|
|
750,739 |
|
|
|
(779,771 |
) |
Loss on early extinguishment of debt |
|
|
753,133 |
|
|
|
— |
|
|
|
|
753,133 |
|
|
|
228,087 |
|
Loss on aborted offering costs |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
541,129 |
|
Unrealized (gain) loss on hedging activities |
|
|
(123,443 |
) |
|
|
3,542 |
|
|
|
|
(141,970 |
) |
|
|
30,748 |
|
Adjusted FFO available to common stockholders |
|
$ |
946,489 |
|
|
$ |
1,675,513 |
|
|
|
$ |
14,045,581 |
|
|
$ |
12,331,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding,
basic |
|
|
13,513,996 |
|
|
|
13,822,543 |
|
|
|
|
13,491,807 |
|
|
|
13,873,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of non-controlling
units |
|
|
1,778,140 |
|
|
|
1,778,140 |
|
|
|
|
1,778,140 |
|
|
|
1,778,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares and units
outstanding, basic |
|
|
15,292,136 |
|
|
|
15,600,683 |
|
|
|
|
15,269,947 |
|
|
|
15,651,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share and unit |
|
$ |
0.07 |
|
|
$ |
0.17 |
|
|
|
$ |
0.83 |
|
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FFO per share and unit |
|
$ |
0.06 |
|
|
$ |
0.11 |
|
|
|
$ |
0.92 |
|
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Three Months
Ended |
|
|
|
Nine Months
Ended |
|
|
Nine Months
Ended |
|
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
|
|
September 30,
2018 |
|
|
September 30,
2017 |
|
Net (loss) income available to common
stockholders |
|
$ |
(3,065,883 |
) |
|
$ |
(1,550,555 |
) |
|
|
$ |
(1,951,816 |
) |
|
$ |
597,385 |
|
Add: Net (loss) income attributable to
noncontrolling interest |
|
|
(385,616 |
) |
|
|
(190,445 |
) |
|
|
|
(245,298 |
) |
|
|
73,366 |
|
Interest expense |
|
|
5,306,641 |
|
|
|
4,139,267 |
|
|
|
|
14,571,142 |
|
|
|
11,827,061 |
|
Interest income |
|
|
(88,484 |
) |
|
|
(53,314 |
) |
|
|
|
(236,693 |
) |
|
|
(126,241 |
) |
Income tax (benefit) provision |
|
|
(746,924 |
) |
|
|
(950,310 |
) |
|
|
|
882,045 |
|
|
|
(581,890 |
) |
Depreciation and amortization |
|
|
4,547,043 |
|
|
|
4,427,738 |
|
|
|
|
15,783,174 |
|
|
|
12,708,548 |
|
Loss on early extinguishment of debt |
|
|
753,133 |
|
|
|
— |
|
|
|
|
753,133 |
|
|
|
228,087 |
|
Loss (gain) on disposal and/or sale of assets |
|
|
(7,555 |
) |
|
|
23,000 |
|
|
|
|
(3,816 |
) |
|
|
(26,238 |
) |
Gain on involuntary conversion of assets |
|
|
— |
|
|
|
— |
|
|
|
|
(898,565 |
) |
|
|
(1,041,815 |
) |
Distributions to preferred stockholders |
|
|
1,469,719 |
|
|
|
805,000 |
|
|
|
|
4,359,407 |
|
|
|
2,415,000 |
|
EBITDA |
|
|
7,782,074 |
|
|
|
6,650,381 |
|
|
|
|
33,012,713 |
|
|
|
26,073,263 |
|
Corporate general and administrative |
|
|
1,516,408 |
|
|
|
1,335,192 |
|
|
|
|
4,566,258 |
|
|
|
4,882,541 |
|
Unrealized (gain) loss on hedging activities |
|
|
(123,443 |
) |
|
|
3,542 |
|
|
|
|
(141,970 |
) |
|
|
30,748 |
|
Hotel EBITDA |
|
$ |
9,175,039 |
|
|
$ |
7,989,115 |
|
|
|
$ |
37,437,001 |
|
|
$ |
30,986,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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