Sotherly Hotels(US:SOHO)2025-11-14 20:39Hotel Portfolio and Operations - The hotel portfolio consists of 10 full-service hotels with a total of 2,786 rooms, and interests in two condominium hotels, bringing the total to 2,906 rooms[200][201]. - The Company operates under well-known brands such as DoubleTree by Hilton and Hyatt Centric, focusing on upscale to upper-upscale hotels[199][200]. - The Company has a 99.9% interest in its Operating Partnership, which conducts substantially all business operations[202]. - The Company’s hotel properties are leased to MHI TRS Entities, which engage independent hotel management companies for operations[203]. Financial Performance - Total revenue for the three months ended September 30, 2025, decreased by approximately $2.7 million, or 6.6%, to approximately $38.0 million compared to $40.7 million for the same period in 2024[213]. - Rooms revenue decreased approximately $2.0 million, or 7.3%, to approximately $25.2 million for the three months ended September 30, 2025, compared to $27.2 million for the same period in 2024[214]. - RevPAR decreased 7.3% from $105.98 in 2024 to $98.23 in 2025, driven by a 5.9% decrease in occupancy and a 1.5% decrease in ADR[214]. - Total revenue for the nine months ended September 30, 2025, decreased by approximately $2.8 million, or 2.0%, to approximately $135.1 million compared to $137.9 million for the same period in 2024[226]. - Rooms revenue decreased approximately $2.5 million, or 2.7%, to approximately $89.0 million for the nine months ended September 30, 2025, compared to $91.5 million for the same period in 2024[227]. - Hotel operating expenses decreased approximately $0.3 million, or 0.3%, to approximately $101.5 million for the nine months ended September 30, 2025, compared to $101.8 million for the same period in 2024[232]. - Corporate general and administrative expenses for the nine months ended September 30, 2025, increased approximately $0.6 million, or 12.2%, to approximately $5.6 million compared to $5.0 million for the same period in 2024[237]. - Interest expense for the nine months ended September 30, 2025, increased approximately $1.3 million, or 8.4%, to approximately $16.5 million compared to $15.2 million for the same period in 2024[238]. - The company realized a net loss of approximately $5.6 million for the three months ended September 30, 2025, compared to a net loss of approximately $3.7 million for the same period in 2024[225]. - The company reported a net income of approximately $0.7 million for the nine months ended September 30, 2025, compared to a net income of approximately $2.3 million for the same period in 2024[241]. - For the three months ended September 30, 2025, the net loss was $5,558,390 compared to a net loss of $3,689,621 for the same period in 2024[246]. - FFO attributable to common stockholders and unitholders for the nine months ended September 30, 2025, was $5,628,195, down from $10,445,891 in 2024, representing a decrease of approximately 46%[246]. - Adjusted FFO attributable to common stockholders and unitholders for the nine months ended September 30, 2025, was $7,294,408, compared to $12,335,590 in 2024, indicating a decline of about 41%[246]. - Hotel EBITDA for the nine months ended September 30, 2025, was $33,601,663, down from $36,145,082 in 2024, reflecting a decrease of approximately 7%[249]. Cash Flow and Capital Expenditures - The company had approximately $9.4 million of unrestricted cash and $20.2 million of restricted cash as of September 30, 2025[250]. - Cash used in investing activities for the nine months ended September 30, 2025, was approximately $7.5 million, primarily for capital expenditures of $11.5 million related to hotel improvements[252]. - The company received gross proceeds of $42.0 million from refinancing the mortgage on The DeSoto in Savannah, Georgia during the nine months ended September 30, 2025[253]. - Total capital expenditures for 2025 are expected to be approximately $7.3 million, maintaining a target of 4.0% of gross revenue[255]. - The company expects total capital expenditures of approximately $11.5 million for renovations in Philadelphia, Pennsylvania, and $14.6 million for renovations in Jacksonville, Florida, as conditions for franchise license renewals[258][259]. - Net cash flow provided by operating activities for the nine months ended September 30, 2025, was approximately $9.8 million, primarily from hotel operations[251]. - As of September 30, 2025, total cash and cash equivalents were approximately $9.4 million, with restricted cash of approximately $20.2 million[260]. Debt and Financing - Mortgages maturing in 2025 total approximately $87.3 million, and those maturing in 2026 total approximately $68.4 million, which cannot be repaid from working capital[260]. - A $35.0 million mortgage was secured on Hotel Alba with an interest rate of 8.49%, maturing on March 6, 2029, used partially to repay the existing mortgage[261]. - A $26.25 million mortgage was secured on DoubleTree by Hilton Jacksonville Riverfront, maturing on July 8, 2029, with an additional $9.49 million available for product improvement[264]. - As of September 30, 2025, cumulative unpaid dividends on outstanding preferred shares amount to approximately $21.9 million[282]. - The company is in compliance with all debt covenants except for a payment default on the Georgian Terrace mortgage and a covenant default on the DoubleTree by Hilton Jacksonville Riverfront[268]. - A merger agreement was entered into on October 24, 2025, which is expected to extinguish several mortgages, enhancing liquidity[269]. - Approximately $247.5 million of fixed-rate debt was reported, with a weighted-average interest rate of 5.80%[292]. - A one percent increase in SOFR and the Prime Rate would impact annual interest incurred and cash flows by approximately $0.4 million[292]. - The company intends to continue investing in hotel properties as opportunities arise, although access to capital may be limited due to upcoming maturities[270]. Market Outlook and Risks - The outlook for the U.S. lodging market indicates potential near-term deceleration in demand for hotel rooms, which may affect profitability[204]. - The Company has faced risks related to the Merger, including uncertainties in securing stockholder approval and potential disruptions to current operations[194][197]. - The Company’s financial performance may be affected by national and local economic conditions, competition, and operational costs in the hotel industry[197]. - Key performance indicators in the hotel industry include RevPAR, which is influenced by occupancy and average daily rate (ADR) changes, impacting overall revenues and profitability[210].