Core Viewpoint - Sotherly Hotels Inc. reported a decline in financial performance for the second quarter of 2025, with decreases in total revenues, net income, and key operating metrics such as RevPAR and EBITDA, reflecting broader macroeconomic challenges impacting hotel demand [1][3][5]. Financial Performance - Total revenues for Q2 2025 were approximately $48.8 million, down from $50.7 million in Q2 2024 [2][7]. - Net income attributable to common stockholders decreased from approximately $2.6 million in Q2 2024 to a loss of approximately $0.4 million in Q2 2025 [7]. - EBITDA for Q2 2025 was approximately $12.0 million, compared to $14.3 million in Q2 2024 [7]. Key Operating Metrics - RevPAR for the composite portfolio decreased by 5.4% to $130.20 in Q2 2025 from $137.67 in Q2 2024, driven by a 3.5% decrease in occupancy and a 1.9% decrease in average daily rate (ADR) [2][22]. - Occupancy rates for the composite portfolio were 70.8% in Q2 2025, down from 73.4% in Q2 2024 [22]. - ADR decreased to $183.88 in Q2 2025 from $187.51 in Q2 2024 [22]. Balance Sheet and Liquidity - As of June 30, 2025, the company had approximately $26.5 million in available cash, with $16.0 million reserved for various expenses [5]. - The company had outstanding debt of approximately $315.8 million at a weighted average interest rate of 5.89% [5]. Strategic Initiatives - The company is working on extending certain mortgages and refinancing hotels with significant equity to improve liquidity [4][5]. - A prospective sale of a parking garage in Atlanta for $17.75 million is expected to close in Q4 2025, which will provide additional liquidity [6][8]. Outlook - The company updated its 2025 guidance, projecting total revenues between $185.2 million and $188.2 million, with a net loss attributable to common stockholders ranging from $9.2 million to $8.6 million [9]. - The company remains cautious about demand in the lodging market, citing macroeconomic factors as potential catalysts for future improvement [5].

Company Overview - 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 [3] - The company's portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs [3] - Sotherly Hotels operates hotels under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels [3] - The company was organized in 2004 and is headquartered in Williamsburg, Virginia [3] Upcoming Financial Results - The company will report financial results for the second quarter of 2025 prior to the market opening on August 12, 2025 [1] - A conference call for investors and interested parties is scheduled for 10:00 a.m. Eastern Time on the same day to discuss the second quarter results [1] - The earnings release will be available on the company's website in the Investors section under Financial Information [1] Conference Call Details - The conference call will be accessible by telephone at 833-470-1428 (United States) with access code 203681 [2] - A webcast will also be available, and participants are advised to visit the Investor Relations section of the company's website at least 15 minutes before the call [2] - A taped rebroadcast of the call will be available approximately one hour after the live call through August 19, 2025, accessible by dialing 866-813-9403 with access code 298292 [2]

Core Viewpoint - Sotherly Hotels Inc. has received a Notice of Default regarding its mortgage loan secured by the Georgian Terrace in Atlanta, indicating financial distress with an estimated obligation of approximately $38.0 million as of July 2, 2025 [1][2][3] Financial Situation - The Company is currently in default due to failure to pay amounts due under the loan documents, with the lender indicating potential foreclosure actions [1][3] - A consultant has been engaged to negotiate an extension of the mortgage loan, and the Company plans to continue making interest payments and required reserve payments during this period [2][3] Management Commentary - The Chairman noted that extensions of CMBS loans typically involve a formal process, and the Company is currently in the negotiation phase with assistance from a CMBS consultant [3] - The President and CEO acknowledged that the default was anticipated and emphasized that it is a maturity default, which does not affect the Company's ability to meet ongoing interest payments [3] Company Overview - Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on acquiring, renovating, and repositioning upscale hotels primarily in the Southern United States, with a portfolio of ten hotel properties comprising 2,786 rooms [7]

PART I [Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Sotherly Hotels Inc. and LP's unaudited consolidated financial statements for Q1 2025, showing increased revenue and net income [Sotherly Hotels Inc. Financial Statements](index=5&type=section&id=Sotherly%20Hotels%20Inc.%20Financial%20Statements) Unaudited financial statements for Sotherly Hotels Inc. detail Q1 2025 key financials, balance sheet, and cash flow activities - Net cash provided by operating activities was approximately **$8.2 million** for the three months ended March 31, 2025, a slight increase from **$8.1 million** in the prior year period[28](index=28&type=chunk) Sotherly Hotels Inc. - Key Financials (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (unaudited) | Q1 2024 (unaudited) | | :--- | :--- | :--- | | **Total Revenue** | $48,312,344 | $46,548,432 | | **Net Operating Income** | $6,112,724 | $5,674,112 | | **Net Income** | $4,733,526 | $1,322,821 | | **Net Income Attributable to Common Stockholders** | $2,690,529 | $(659,373) | | **EPS (Basic and Diluted)** | $0.13 | $(0.03) | Sotherly Hotels Inc. - Balance Sheet Summary | Metric | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $418,088,238 | $414,375,920 | | **Total Liabilities** | $373,427,887 | $372,777,154 | | **Total Equity** | $44,660,351 | $41,598,766 | [Sotherly Hotels LP Financial Statements](index=11&type=section&id=Sotherly%20Hotels%20LP%20Financial%20Statements) Unaudited financial statements for Sotherly Hotels LP present Q1 2025 key financials and balance sheet data Sotherly Hotels LP - Key Financials (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (unaudited) | Q1 2024 (unaudited) | | :--- | :--- | :--- | | **Total Revenue** | $48,312,344 | $46,548,432 | | **Net Operating Income** | $6,112,724 | $5,674,112 | | **Net Income** | $4,733,526 | $1,322,821 | | **Net Income Attributable to Unit Holders** | $2,739,214 | $(671,491) | Sotherly Hotels LP - Balance Sheet Summary | Metric | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $418,500,327 | $415,183,080 | | **Total Liabilities** | $373,427,887 | $372,777,154 | | **Total Partners' Capital** | $45,072,440 | $42,405,926 | [Notes to Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes cover portfolio, debt, preferred stock dividends, related party transactions, and asset conversions - As of March 31, 2025, the company's portfolio consisted of **ten hotel properties** with **2,786 rooms** and interests in two hotel commercial condominium units[46](index=46&type=chunk) - Total mortgage debt outstanding was approximately **$315.3 million** as of March 31, 2025, with significant maturities in 2025 and 2026 requiring potential refinancing or extensions[96](index=96&type=chunk)[101](index=101&type=chunk) - As of March 31, 2025, cumulative undeclared and unpaid dividends on preferred stock totaled approximately **$21.9 million**[131](index=131&type=chunk) - The company has management agreements with Our Town Hospitality, a related party, for all ten wholly-owned hotels, with base management fees of approximately **$1.3 million** for Q1 2025[146](index=146&type=chunk)[150](index=150&type=chunk) - A gain of approximately **$3.9 million** was recognized on the involuntary conversion of assets, primarily from insurance proceeds for Hurricane Helene damage to the Hotel Alba in Tampa[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, highlighting revenue growth, net income increase, liquidity challenges, and dividend policy [Key Operating Metrics and Results of Operations](index=52&type=section&id=Key%20Operating%20Metrics%20and%20Results%20of%20Operations) This section details Q1 2025 key operating metrics and financial results, including revenue, occupancy, ADR, RevPAR, and net income drivers - Total revenue for Q1 2025 increased by **3.8%** to **$48.3 million**, primarily due to a **3.9%** increase in room occupancy, with food and beverage revenues also rising by **4.1%**[189](index=189&type=chunk)[192](index=192&type=chunk) - Net income for Q1 2025 was **$4.7 million**, a significant increase from **$1.3 million** in Q1 2024, largely driven by a **$3.9 million** gain on involuntary conversion of assets[203](index=203&type=chunk)[204](index=204&type=chunk) Composite Portfolio Key Performance Indicators (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Occupancy %** | 68.8% | 64.9% | +3.9 p.p. | | **ADR** | $188.49 | $190.50 | -1.1% | | **RevPAR** | $129.74 | $123.59 | +5.0% | [Non-GAAP Financial Measures](index=56&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP financial measures, including FFO, Adjusted FFO, and Hotel EBITDA, to GAAP net income for Q1 2025 FFO and Adjusted FFO Reconciliation (Q1 2025 vs Q1 2024) (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net Income** | $4.73 | $1.32 | | **FFO** | $5.76 | $5.96 | | **Adjusted FFO** | $4.52 | $5.18 | | **FFO per Share/Unit** | $0.19 | $0.20 | | **Adjusted FFO per Share/Unit** | $0.22 | $0.26 | Hotel EBITDA Reconciliation (Q1 2025 vs Q1 2024) (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net Income** | $4.73 | $1.32 | | **EBITDA** | $15.03 | $10.78 | | **Hotel EBITDA** | $12.92 | $12.36 | [Liquidity, Capital Resources, and Expenditures](index=58&type=section&id=Liquidity%2C%20Capital%20Resources%2C%20and%20Expenditures) This section discusses liquidity, capital resources, and planned expenditures, highlighting cash, upcoming debt maturities, and renovation commitments - As of March 31, 2025, the company had approximately **$11.5 million** of unrestricted cash and **$21.3 million** of restricted cash[212](index=212&type=chunk)[222](index=222&type=chunk) - The company faces significant upcoming mortgage maturities for The Georgian Terrace (June 2025), DoubleTree Hollywood Beach (October 2025), and DoubleTree Philadelphia Airport (May 2026), potentially requiring debt reductions of up to **$3.9 million**, **$10.3 million**, and **$13.9 million**, respectively[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Significant capital expenditures are planned for renovations in Philadelphia (~**$11.5 million**) and Jacksonville (~**$14.6 million**) during fiscal years 2025 and 2026, as required by franchise license renewals[220](index=220&type=chunk)[221](index=221&type=chunk) - To fund capital needs, the company may seek to refinance mortgages on its Wilmington and Savannah hotels ahead of their maturity dates[231](index=231&type=chunk) [Dividend Policy](index=63&type=section&id=Dividend%20Policy) This section outlines the company's dividend policy, including resumed preferred stock dividends and cumulative unpaid amounts - The company has resumed quarterly dividend payments on its preferred stock[236](index=236&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) - As of March 31, 2025, cumulative unpaid dividends on outstanding preferred shares amounted to approximately **$21.9 million**[240](index=240&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk from interest rate changes on variable-rate debt, with a hypothetical 1% increase impacting annual interest expense by $0.4 million - A one percent increase in SOFR and the Prime Rate would result in an approximate **$0.4 million** increase in annual interest expense on the company's variable-rate debt[250](index=250&type=chunk) Debt Structure and Interest Rate Sensitivity (as of March 31, 2025) | Debt Type | Amount | Weighted-Average Interest Rate | | :--- | :--- | :--- | | **Fixed-Rate Debt** | ~$242.0 million | 5.4% | | **Variable-Rate Debt** | ~$75.6 million | N/A | [Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control - The CEO and CFO concluded that as of March 31, 2025, the disclosure controls and procedures for both Sotherly Hotels Inc. and Sotherly Hotels LP were effective[252](index=252&type=chunk)[256](index=256&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[255](index=255&type=chunk)[258](index=258&type=chunk) PART II [Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings, expecting routine litigation to be covered by insurance without material impact - The company reports no material legal proceedings and expects routine litigation to be covered by insurance without material impact[261](index=261&type=chunk) [Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) No material changes in risk factors are reported since the last Annual Report on Form 10-K - No material changes in risk factors are reported since the last Annual Report on Form 10-K[262](index=262&type=chunk) [Defaults Upon Senior Securities](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company is in arrears on preferred stock dividends for eleven quarters, entitling preferred stockholders to elect two additional directors, with total arrearage of $21.9 million - Dividends on Series B, C, and D Preferred Stock are in arrears for **eleven quarterly periods**[264](index=264&type=chunk)[265](index=265&type=chunk) - Due to the arrearage exceeding six quarters, preferred stockholders are entitled to vote for the election of **two additional company directors**[264](index=264&type=chunk) - The total cumulative unpaid cash dividends for all preferred series through May 12, 2025, is approximately **$21.9 million** ($8.05M for Series B, $7.29M for Series C, and $6.60M for Series D)[265](index=265&type=chunk) [Other Information](index=68&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the quarter ended March 31, 2025[267](index=267&type=chunk)

Financial Data and Key Metrics Changes - For Q1 2025, total revenue was approximately $48.3 million, representing a 3.8% increase year-over-year [14] - Hotel EBITDA for the quarter was approximately $12.9 million, reflecting a 4.5% increase compared to the same quarter last year [14] - FFO was approximately $4.5 million, a decrease of approximately $700,000 from the same quarter last year [14] - RevPAR increased by 6.4%, driven by a 6.4% increase in occupancy, with ADR remaining flat compared to the prior year [3][4] - Hotel EBITDA across the entire portfolio increased by 4.5% year-over-year, and when excluding a one-time benefit from a COVID-related grant, it increased by 9.4% [10] Business Line Data and Key Metrics Changes - The Doubletree Resort in Hollywood, Florida, saw RevPAR up 11.9%, primarily due to an 11.8% increase in occupancy [6] - Hotel Ballast in Wilmington achieved RevPAR growth of 6.5%, supported by a 3.5% increase in occupancy and a 2.9% increase in rate [7] - The Whitehall in Houston reported a 19.4% increase in RevPAR, driven by a 20.5% gain in occupancy [8] - The Doubletree Philadelphia Airport experienced a 34.3% increase in RevPAR, driven by a 38.7% increase in occupancy, despite a 3.1% decline in rate [9] Market Data and Key Metrics Changes - Urban markets showed pronounced gains, indicating stabilization in lodging fundamentals and normalization of demand patterns [4] - Group business and special events significantly contributed to performance, particularly in urban markets [4][20] - The company noted a pullback in government segment demand, particularly in the Washington DC submarket [21] Company Strategy and Development Direction - The company is advancing planning for two upcoming PIP renovations, with a total budget of $26.1 million for properties in Philadelphia and Jacksonville [11][12] - The company is taking a disciplined approach to managing its capital structure, with a focus on refinancing and extensions for upcoming debt maturities [12][36] - The portfolio is expected to outperform the broader market, with upscale and upper upscale assets positioned well [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter results, driven by occupancy recovery in urban markets and strong group business [20] - There is caution regarding macroeconomic uncertainty impacting near-term visibility in the lodging industry, with potential increased price sensitivity among transient guests [21] - Despite uncertainty, the company has not seen widespread cancellations and maintains a solid group booking pace [22] Other Important Information - The company has approximately $32.8 million in total cash, with $11.5 million in unrestricted cash [15][16] - The principal balance of outstanding debt is approximately $317.6 million at a weighted average interest rate of 5.88% [17] - The accrued balance on preferred dividends is approximately $21.9 million, with current payments being made [43][44] Q&A Session Summary Question: Renovation plans for the Philadelphia hotel - Management indicated that the reverse split timing is likely to occur close to the August 11 deadline, with preparations ongoing [26][27] Question: Business interruption insurance for Hotel Alba - Management clarified that while room revenue is down due to fewer guests, profitability is largely maintained through insurance coverage [28][30] Question: Refinancing of loans for Hollywood and Atlanta - Management discussed the likelihood of extensions and modifications for upcoming debt maturities, reflecting broader market trends [33][36] Question: Cash management regarding CapEx and refinancing - Management noted that they are evaluating cash needs against refinancing activities and have significant equity in other assets that could be leveraged [38][39] Question: Accrued balance on preferred dividends - Management confirmed that the accrued balance is approximately $21.9 million, with current payments being made [43][44]

Financial Data and Key Metrics Changes - In Q1 2025, RevPAR increased by 6.4%, driven by a 6.4% increase in occupancy, while ADR remained flat compared to the prior year [3] - Excluding the impact of Hurricane Helene in Tampa, RevPAR increased by 7.3% year over year, supported by a 7.5% increase in occupancy [3] - Total revenue for Q1 2025 was approximately $48.3 million, representing a 3.8% increase over the same quarter last year [15] - Hotel EBITDA for the quarter was approximately $12.9 million, reflecting a 4.5% increase year over year [15] - Adjusted FFO was approximately $4.5 million, a decrease of about $700,000 from the same quarter last year [15] Business Line Data and Key Metrics Changes - The Doubletree Resort in Hollywood, Florida, saw RevPAR increase by 11.9%, driven by an 11.8% increase in occupancy [7] - Hotel Ballast in Wilmington achieved RevPAR growth of 6.5%, supported by a 3.5% increase in occupancy and a 2.9% increase in rate [8] - The Whitehall in Houston reported a 19.4% increase in RevPAR, driven by a 20.5% gain in occupancy [9] - The Doubletree Philadelphia Airport experienced a 34.3% increase in RevPAR, with a 38.7% increase in occupancy [10] Market Data and Key Metrics Changes - Urban markets showed pronounced gains in occupancy, indicating a stabilization of lodging fundamentals post-pandemic [4] - Group business and special events contributed significantly to performance in urban markets, with notable events like the presidential inauguration and NFL playoffs [4] Company Strategy and Development Direction - The company is advancing plans for two upcoming PIP renovations, including a $11.5 million renovation in Philadelphia and a $14.6 million project in Jacksonville [12][13] - The company is taking a disciplined approach to managing its capital structure, with a focus on refinancing and addressing upcoming debt maturities [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the overall outlook for the industry, despite macroeconomic uncertainties impacting near-term visibility [21] - The company noted a solid group booking pace and a lack of widespread cancellations, although there was a pause in group lead conversions in late March [22] - The company expects full-year 2025 RevPAR to range between 103-105% of 2024 levels, indicating confidence in continued occupancy growth [25] Other Important Information - The company had total cash of approximately $32.8 million as of March 31, 2025, with $11.5 million in unrestricted cash [16][17] - The principal balance of outstanding debt was approximately $317.6 million at a weighted average interest rate of 5.88% [18] Q&A Session Summary Question: Reverse split timing - Management indicated that the reverse split is likely to occur close to the August 11 deadline, with preparations ongoing [27][28] Question: Business interruption insurance for Hotel Alba - Management clarified that while room revenue has decreased due to fewer guests, profitability is largely maintained through insurance proceeds, estimating a 95% recovery of expected performance [31][32] Question: Refinancing of loans for Hollywood and Atlanta - Management discussed the likelihood of extensions and modifications for upcoming loan maturities, reflecting broader trends in the CMBS market [36][39] Question: Cash management regarding CapEx and refinancing - Management noted that they are evaluating cash needs against refinancing activities and have significant equity in other assets that could be leveraged [41][43] Question: Accrued balance on preferred dividends - Management confirmed that the accrued balance on preferred dividends is approximately $21.9 million, with current payments being made [44][45]

Core Viewpoint - Sotherly Hotels (SOHO) reported quarterly funds from operations (FFO) of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, but down from $0.20 per share a year ago, indicating an FFO surprise of 18.75% [1] Financial Performance - The company achieved revenues of $48.31 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.92% and up from $46.55 million year-over-year [2] - Over the last four quarters, Sotherly Hotels has exceeded consensus FFO estimates three times and topped consensus revenue estimates two times [2] Stock Performance and Outlook - Sotherly Hotels shares have declined approximately 15% since the beginning of the year, contrasting with the S&P 500's decline of only 0.6% [3] - The future performance of the stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement based on recent numbers and future FFO expectations [3][4] Estimate Revisions and Market Position - The current consensus FFO estimate for the upcoming quarter is $0.36 on revenues of $52.1 million, and for the current fiscal year, it is $0.54 on revenues of $186.6 million [7] - The estimate revisions trend for Sotherly Hotels is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The REIT and Equity Trust - Other industry, to which Sotherly Hotels belongs, is currently positioned in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [8]

[Financial Results and Highlights](index=1&type=section&id=Financial%20Results%20and%20Highlights) [First Quarter 2025 Financial Summary](index=1&type=section&id=First%20Quarter%202025%20Financial%20Summary) Sotherly Hotels reported significant Q1 2025 growth, with total revenues reaching **$48.3 million**, net income rising to **$4.7 million**, and diluted EPS at **$0.13**, a notable improvement from Q1 2024 Q1 2025 vs. Q1 2024 Financial Results ($ in thousands except per share data) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenues** | $48,312 | $46,548 | | **Net income** | $4,734 | $1,323 | | **Net income (loss) attributable to common stockholders** | $2,691 | $(659) | | **EBITDA** | $15,032 | $10,785 | | **Hotel EBITDA** | $12,921 | $12,360 | | **Adjusted FFO attributable to common stockholders and unitholders** | $4,517 | $5,178 | | **Net income (loss) per common share - diluted** | $0.13 | $(0.03) | | **Adjusted FFO per common share and unit** | $0.22 | $0.26 | [First Quarter 2025 Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Q1 2025 highlights include a **5.0%** RevPAR increase to **$129.74**, driven by higher occupancy, alongside growth in total revenue and Hotel EBITDA, and improved net income - Composite portfolio RevPAR increased **5.0%** to **$129.74**, driven by a **3.9%** increase in occupancy to **68.8%**, while ADR decreased by **1.1%** to **$188.49**[3](index=3&type=chunk) - Total revenue for Q1 2025 increased to approximately **$48.3 million** from **$46.5 million** in Q1 2024[3](index=3&type=chunk) - Net income attributable to common stockholders improved by approximately **$3.3 million**, from a loss of **$0.7 million** in Q1 2024 to income of **$2.7 million** in Q1 2025[3](index=3&type=chunk) - Hotel EBITDA increased to approximately **$12.9 million** in Q1 2025 from **$12.4 million** in the same period of 2024[3](index=3&type=chunk) [Management Commentary and Outlook](index=2&type=section&id=Management%20Commentary%20and%20Outlook) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management expressed satisfaction with Q1 results, noting Hotel EBITDA and RevPAR growth, but adopted a cautious outlook for the year due to potential demand slowdowns and macroeconomic uncertainty - Q1 results exceeded budget, with Hotel EBITDA up **4.5%** and RevPAR up **6.4%** over the prior year, aided by improvements in urban properties and one-time events like the U.S. Presidential Inauguration[4](index=4&type=chunk) - The company is becoming more cautious for the second half of the year due to potential demand slowdowns, reduced international travel, and cancellations of bookings linked to government funding[5](index=5&type=chunk) - The company is dedicated to controlling costs, including maintaining a lean payroll structure, to manage profitability amid macroeconomic uncertainty[5](index=5&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity) As of March 31, 2025, the company reported **$32.8 million** in cash and equivalents, with total outstanding debt at **$317.6 million** at a **5.88%** weighted average interest rate Liquidity and Debt as of March 31, 2025 | Metric | Value | | :--- | :--- | | Available cash and cash equivalents | ~$32.8 million | | Restricted cash | ~$21.3 million | | Outstanding debt principal | ~$317.6 million | | Weighted average interest rate | ~5.88% | [2025 Outlook](index=2&type=section&id=2025%20Outlook) The 2025 full-year guidance projects total revenues between **$183.4 million** and **$188.2 million**, Hotel EBITDA between **$48.8 million** and **$49.6 million**, and a net loss per share between **($0.43)** and **($0.39)** 2025 Full-Year Guidance | Metric | Low Range | High Range | | :--- | :--- | :--- | | Total revenues | $183,388k | $188,168k | | Hotel EBITDA | $48,829k | $49,619k | | Adjusted FFO attributable to common stockholders | $11,544k | $12,349k | | Net loss per share attributable to common stockholders | $(0.43) | $(0.39) | | Adjusted FFO per common share and unit | $0.57 | $0.61 | | RevPAR | $119.77 | $122.89 | | Hotel EBITDA margin | 26.1% | 26.4% | [Preferred Dividends](index=2&type=section&id=Preferred%20Dividends) On April 29, 2025, quarterly cash dividends were declared for Series B, C, and D preferred stock, payable June 16, 2025 - The company announced the following quarterly cash dividends per share: - **8.0% Series B:** **$0.50** - **7.875% Series C:** **$0.492188** - **8.25% Series D:** **$0.515625**[8](index=8&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Consolidated Balance Sheets](index=5&type=section&id=SOTHERLY%20HOTELS%20INC.%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets were **$418.1 million**, total liabilities **$373.4 million**, and total equity **$44.7 million**, showing slight increases from year-end 2024 Consolidated Balance Sheets Highlights ($ in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $11,511 | $7,328 | | Restricted cash | $21,300 | $21,383 | | **TOTAL ASSETS** | **$418,088** | **$414,376** | | **LIABILITIES** | | | | Mortgage loans, net | $315,290 | $316,516 | | **TOTAL LIABILITIES** | **$373,428** | **$372,777** | | **EQUITY** | | | | Total Sotherly Hotels Inc. stockholders' equity | $46,066 | $43,053 | | **TOTAL EQUITY** | **$44,660** | **$41,599** | | **TOTAL LIABILITIES AND EQUITY** | **$418,088** | **$414,376** | [Consolidated Statements of Operations](index=6&type=section&id=SOTHERLY%20HOTELS%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 total revenues reached **$48.3 million**, with net operating income at **$6.1 million** and net income significantly increasing to **$4.7 million**, partly due to a **$3.9 million** gain Consolidated Statements of Operations Highlights ($ in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | **$48,312** | **$46,548** | | Total hotel operating expenses | $35,392 | $34,188 | | **NET OPERATING INCOME** | **$6,113** | **$5,674** | | Interest expense | $(5,448) | $(4,889) | | Gain on involuntary conversion of assets | $3,874 | $122 | | **Net income** | **$4,734** | **$1,323** | | **Net income (loss) attributable to common stockholders** | **$2,691** | **$(659)** | [Supplemental Data and Non-GAAP Reconciliations](index=7&type=section&id=Supplemental%20Data%20and%20Non-GAAP%20Reconciliations) [Key Operating Metrics](index=7&type=section&id=SOTHERLY%20HOTELS%20INC.%20KEY%20OPERATING%20METRICS) Q1 2025 composite portfolio RevPAR increased **5.0%** to **$129.74**, driven by **68.8%** occupancy, with the actual portfolio also showing **6.4%** RevPAR growth Q1 2025 vs. Q1 2024 Key Operating Metrics | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Actual Portfolio Metrics** | | | | Occupancy % | 68.3% | 64.2% | | ADR | $182.74 | $182.75 | | RevPAR | $124.83 | $117.30 | | **Composite Portfolio Metrics** | | | | Occupancy % | 68.8% | 64.9% | | ADR | $188.49 | $190.50 | | RevPAR | $129.74 | $123.59 | [Property-Level Supplemental Data](index=8&type=section&id=SOTHERLY%20HOTELS%20INC.%20SUPPLEMENTAL%20DATA) This section details Q1 2025, 2024, and 2023 property-level Occupancy, ADR, and RevPAR, highlighting significant performance changes across the hotel portfolio - The following tables break down key operating metrics by individual property for the first quarter of the last three years, showing performance trends at the asset level[23](index=23&type=chunk) [Occupancy](index=8&type=section&id=Occupancy) Weighted average occupancy for all properties rose to **68.8%** in Q1 2025, with notable gains at DoubleTree Philadelphia Airport and The Whitehall Occupancy by Property | Property | Q1 2025 | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | :--- | | The DeSoto | 71.0% | 70.9% | 64.4% | | DoubleTree by Hilton Philadelphia Airport | 62.7% | 45.2% | 54.5% | | DoubleTree Resort by Hilton Hollywood Beach | 84.4% | 75.5% | 64.9% | | The Whitehall | 71.2% | 59.1% | 48.6% | | **All properties weighted average** | **68.8%** | **64.9%** | **60.4%** | [Average Daily Rate (ADR)](index=9&type=section&id=ADR) Weighted average ADR slightly decreased to **$188.49** in Q1 2025, with some properties seeing increases and others, like Lyfe Resort & Residences, experiencing declines ADR by Property | Property | Q1 2025 | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | :--- | | Hyatt Centric Arlington | $212.47 | $198.85 | $193.53 | | Hotel Alba Tampa | $221.35 | $215.30 | $214.33 | | Lyfe Resort & Residences | $322.04 | $368.11 | $443.65 | | **All properties weighted average** | **$188.49** | **$190.50** | **$197.07** | [Revenue Per Available Room (RevPAR)](index=10&type=section&id=RevPAR) Weighted average RevPAR grew to **$129.74** in Q1 2025, driven by strong performance at DoubleTree Philadelphia Airport, The Whitehall, and DoubleTree Resort Hollywood Beach RevPAR by Property | Property | Q1 2025 | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | :--- | | DoubleTree by Hilton Philadelphia Airport | $75.12 | $55.92 | $69.51 | | DoubleTree Resort by Hilton Hollywood Beach | $194.86 | $174.07 | $172.66 | | The Whitehall | $115.37 | $96.60 | $80.03 | | **All properties weighted average** | **$129.74** | **$123.59** | **$119.06** | [Reconciliation of Non-GAAP Measures](index=11&type=section&id=SOTHERLY%20HOTELS%20INC.%20RECONCILIATION%20OF%20NET%20(LOSS)%20INCOME%20TO%20FFO,%20Adjusted%20FFO,%20EBITDA%20and%20Hotel%20EBITDA) This section reconciles Net Income to non-GAAP measures like FFO, Adjusted FFO, EBITDA, and Hotel EBITDA for Q1 2025 and full-year 2025 guidance Q1 2025 Reconciliation of Net Income to FFO and Adjusted FFO ($ in thousands) | | Three Months Ended March 31, 2025 | | :--- | :--- | | Net income | $4,734 | | Depreciation and amortization - real estate | $4,904 | | Gain on involuntary conversion of assets | $(3,874) | | **FFO** | **$5,764** | | Distributions to preferred stockholders | $(1,994) | | **FFO attributable to common stockholders and unitholders** | **$3,769** | | Adjustments (ESOP, amortization, etc.) | $748 | | **Adjusted FFO attributable to common stockholders and unitholders** | **$4,517** | Q1 2025 Reconciliation of Net Income to EBITDA and Hotel EBITDA ($ in thousands) | | Three Months Ended March 31, 2025 | | :--- | :--- | | Net income | $4,734 | | Interest expense | $5,448 | | Depreciation and amortization | $4,919 | | **EBITDA** | **$15,032** | | Adjustments (Gain on conversion, Corp G&A, etc.) | $(2,112) | | **Hotel EBITDA** | **$12,921** | - The report also includes reconciliations for the full-year 2025 guidance, converting projected Net (Loss) Income to EBITDA, Hotel EBITDA, FFO, and Adjusted FFO[29](index=29&type=chunk)[30](index=30&type=chunk) [Definition of Non-GAAP Measures](index=12&type=section&id=Non-GAAP%20Financial%20Measures) The company defines and explains its key non-GAAP financial measures: FFO, Adjusted FFO, EBITDA, and Hotel EBITDA, as supplemental tools for performance evaluation - FFO is a standard REIT performance measure calculated per NAREIT guidelines, excluding items like real estate depreciation and gains/losses from property sales to better represent operating performance[32](index=32&type=chunk)[33](index=33&type=chunk) - Adjusted FFO further removes items not in the NAREIT definition, such as unrealized gains/losses on hedging, loan modification fees, and stock compensation, to provide a clearer view of ongoing business performance[34](index=34&type=chunk) - Hotel EBITDA focuses on property-level operational performance by excluding corporate-level expenses, financing costs, and other non-property specific items from net income[36](index=36&type=chunk)

Core Viewpoint - Sotherly Hotels Inc. reported strong financial results for Q1 2025, with significant increases in net income and total revenues compared to the same period in 2024, despite some challenges in the hotel industry. Financial Performance - Total revenues for Q1 2025 were approximately $48.3 million, up from approximately $46.5 million in Q1 2024, representing a growth of 3.8% [2][3] - Net income attributable to common stockholders increased from a loss of approximately $0.7 million in Q1 2024 to income of approximately $2.7 million in Q1 2025, a change of about $3.4 million [2][3] - EBITDA for Q1 2025 was approximately $15.0 million, compared to approximately $10.8 million in Q1 2024, marking a significant increase [2][3] Key Operating Metrics - RevPAR for the composite portfolio increased by 5.0% to $129.74 in Q1 2025 from $123.59 in Q1 2024, driven by a 3.9% increase in occupancy to 68.8% [2][3] - Hotel EBITDA rose to approximately $12.9 million in Q1 2025, up from approximately $12.4 million in Q1 2024, reflecting a 4.5% increase [2][3] Balance Sheet and Liquidity - As of March 31, 2025, the company had approximately $32.8 million in available cash, with $21.3 million reserved for various expenses [5] - The company had outstanding debt of approximately $317.6 million at a weighted average interest rate of 5.88% [5] 2025 Outlook - The company provided guidance for 2025, projecting total revenues between $183.4 million and $188.2 million, with a net loss attributable to common stockholders ranging from $8.7 million to $7.8 million [6] - The guidance reflects macroeconomic uncertainties and potential volatility in hotel demand [6] Preferred Dividends - The company announced quarterly cash dividends for its preferred stock series, with payments scheduled for June 16, 2025 [3]

Company Overview - 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 [3] - The company's portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs [3] - Sotherly Hotels operates hotels under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels [3] - The company was organized in 2004 and is headquartered in Williamsburg, Virginia [3] Upcoming Financial Results - The company will report financial results for the first quarter of 2025 prior to the market opening on Tuesday, May 13, 2025 [1] - A conference call for investors and other interested parties is scheduled for 10:00 a.m. Eastern Time (ET) on the same day to discuss the results [1] - The earnings release will be available on the company's website in the Investors section under Financial Information [1] Conference Call Details - The conference call will be accessible by telephone at 833-470-1428 (United States) with access code 808300 [2] - Individuals can also participate via webcast by visiting the Investor Relations section on the company's website at least 15 minutes before the call [2] - A taped rebroadcast will be available approximately one hour after the live call through March 20, 2025, accessible by dialing 866-813-9403 with access code 926357 [2]