Sotherly Hotels(US:SOHO)2024-11-12 19:45Financial Data and Key Metrics Changes - For Q3 2024, total revenue was approximately $40.7 million, representing a 3.9% increase over the same quarter in 2023 [19] - Year-to-date total revenue was approximately $137.9 million, reflecting a 4.7% increase over the same period last year [19] - Hotel EBITDA for the quarter was approximately $8.1 million, a 6.8% increase from the same quarter in 2023 [20] - Year-to-date hotel EBITDA was approximately $36.1 million, representing a 4.8% increase over the same period last year [20] - Adjusted FFO for the quarter was a deficit of approximately $350,000, a decrease of approximately $400,000 from the same quarter last year [21] - Year-to-date adjusted FFO was approximately $12.3 million, reflecting a 5% increase over the same period in 2023 [21] Business Line Data and Key Metrics Changes - RevPAR for the Composite portfolio increased 4.1% in Q3 2024, driven by a 7.8% increase in occupancy and a 3.4% decrease in ADR [4] - Year-to-date RevPAR performance represents an increase of 4.6% over the same period in 2023, driven by a 6.9% increase in occupancy and a 2.2% decrease in rate [5] - Hotel Alba in Tampa grew RevPAR by 13.6%, fueled by a 14.5% occupancy gain over the prior year [9] - The Whitehall in Houston grew occupancy by 60.4%, resulting in a 51.9% growth in RevPAR over the prior year [11] Market Data and Key Metrics Changes - The portfolio's occupancy growth was highlighted by slower-to-recover urban markets, indicating stabilization in lodging fundamentals [6] - Preliminary October RevPAR shows a 6.1% improvement over the prior year, driven by continued improvement at urban hotels [38] - Full year 2024 RevPAR for the portfolio is forecasted to range between 102% and 104% of full year 2023 RevPAR [38] Company Strategy and Development Direction - The company is focusing on a repositioning strategy to lifestyle hotels to enhance competitiveness in dynamic markets [37] - A secured loan was executed for the DoubleTree by Hilton Jacksonville Riverfront hotel to fund a product improvement plan [17] - The company plans to undertake a complete renovation of the Jacksonville hotel with an estimated cost of approximately $14.6 million [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding operating fundamentals for the balance of the year, with upscale hotels expected to outperform the broader lodging market [38] - The occupancy improvement at urban locations is seen as an encouraging sign of nearing stabilization following an uneven recovery [28] - Despite challenges from major storms, the company expects to recover lost revenues through business interruption insurance [30] Other Important Information - Two major storms impacted operations, with Hurricane Helene causing significant operational challenges and damage to the Tampa asset [8][14] - The company anticipates routine capital expenditures for the replacement and refurbishment of furniture, fixtures, and equipment to be approximately $7.2 million for 2024 [24] Q&A Session Summary Question: Is the portfolio overall back to 2019 performance levels? - Management indicated that there is still room for growth in occupancy, suggesting that the portfolio has not fully returned to 2019 levels [40] Question: Can you explain the hurricane damage impact on earnings? - Management clarified that there will be some impairment at the hotel due to the casualty, but they expect to recover this through business interruption insurance [41][45] Question: What is the rationale behind the second mortgage on the DeSoto? - The second mortgage is directly related to funding an exterior restoration project at the property [49][50]