Sotherly Hotels(SOHO) - 2025 Q1 - Quarterly Results

Financial Results and Highlights First Quarter 2025 Financial Summary 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 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] - Total revenue for Q1 2025 increased to approximately $48.3 million from $46.5 million in Q1 2024[3] - 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] - Hotel EBITDA increased to approximately $12.9 million in Q1 2025 from $12.4 million in the same period of 2024[3] Management Commentary and Outlook Management Commentary 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] - 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] - The company is dedicated to controlling costs, including maintaining a lean payroll structure, to manage profitability amid macroeconomic uncertainty[5] Balance Sheet and Liquidity 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 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 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] Financial Statements Consolidated Balance Sheets 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 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 Key Operating Metrics 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 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] 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) 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) 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 | $119.06 | Reconciliation of Non-GAAP Measures This section reconciles Net Income to non-GAAP measures like FFO, Adjusted FFO, EBITDA, and Hotel EBITDA for Q1 2025 and full-year 2025 guidance Q1 2025 Reconciliation of Net Income to FFO and Adjusted FFO ($ 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][30] Definition of Non-GAAP Measures 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][33] - 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] - 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]