SoTHERLY Hotels Inc. (NASDAQ:
SOHO) (the “Company”) today announced that the Company
has acquired the
Georgian Terrace Hotel (the “Hotel”), an adjacent 698-space parking
structure and a 0.6 acre development parcel (collectively, the
“Property”) for $61.0 million. The 326-room independent, full-service
hotel is located in Atlanta, Georgia’s revitalized Midtown business
district. The Hotel will be managed by Chesapeake Hospitality.
The Historic Georgian Terrace Hotel - Atlanta, Georgia (Photo: Business Wire)
As a part of the transaction, the Company closed on a $41.5 million loan
with Bank of the Ozarks collateralized by a first mortgage on the
Property. The loan carries a floating interest rate of the 3-month LIBOR
rate plus 3.75% with a 4.00% interest rate floor and amortizes on a
25-year schedule following a 12-month interest only period. Also as part
of the transaction, the Company closed on a $19.0 million loan with
Richmond Hill Partners, LP and Essex Equity Joint Investment Vehicle,
LLC. The loan carries a fixed interest rate of 10.00% and a one-year
term. Proceeds from both loans were used to fund the acquisition in
addition to available cash.
Drew Sims, Chief Executive Officer of the Company, commented, “The
Georgian Terrace Hotel is a significant acquisition for SoTHERLY
Hotels. This iconic hotel gives us a landmark property in the second
largest MSA in the Southern United States. Atlanta also serves as a
primary feeder market to our existing hotel portfolio and therefore it
has been a high priority for us. We are pleased to not only enter this
market but to acquire a property of this caliber. We believe there is
tremendous upside to both the market and the Hotel.”
The historic Georgian Terrace Hotel, nicknamed the “Grand Dame of
Atlanta”, was built in 1911. Located directly across from the “Fabulous”
Fox Theatre along Atlanta’s Midtown Mile, the Hotel is an architectural
masterpiece prominently displayed at the intersection of Peachtree and
Ponce de Leon Streets. Midtown is Atlanta’s strongest performing lodging
submarket and is benefiting from a surge in development and business
activity with strong office leasing trends and several projects
currently under construction. Most notably, Emory University’s $225.0
million Proton Cancer Therapy Center is being constructed adjacent to
the Hotel and is set to open in late 2015.
The Hotel features guest rooms averaging over 800 square feet each, the
largest in the market, over 16,000 square feet of flexible meeting
space, and three food and beverage outlets. The Hotel was modernized in
1991 with the addition of a new tower. Since 2009, over $15.0 million
has been invested in the Hotel to renovate the guest rooms and public
spaces in order to position the property as “Atlanta’s Modern Classic”.
The Hotel is a member of Preferred Hotels Group, Historic Hotels of
America, and is listed on the National Register of Historic Places.
For year-end 2013, the Hotel operated at approximately 72.0 percent
occupancy, with an average daily rate (“ADR”) of approximately $135.85,
room revenue per available room (“RevPAR”) of approximately $97.44,
hotel earnings before interest, taxes, depreciation, and amortization
(“Hotel EBITDA”) of approximately $4.5 million, and net operating income
after capital reserves (“NOI”) of $3.7 million. The acquisition price
represents a cap rate of approximately 7.5% on 2015 estimates. The Hotel
is being acquired at an allocated cost of approximately $140,000 per key.
About SoTHERLY
Hotels Inc.
SoTHERLY
Hotels Inc., formerly MHI Hospitality Corporation, is a self-managed
and self-administered lodging REIT focused on the acquisition,
renovation, upbranding and repositioning of upscale and upper upscale
full-service hotels in the Southern United States. Currently, the
Company’s portfolio
consists of investments in twelve hotel properties, eleven of which are
wholly-owned and comprise 2,698 rooms. The Company also has a 25.0
percent interest in the Crowne Plaza Hollywood Beach Resort. All of the
Company’s properties operate under the Hilton Worldwide,
InterContinental Hotels Group and Starwood Hotels and Resorts brands. SoTHERLY
Hotels Inc. was organized in 2004 and is headquartered in
Williamsburg, Virginia. For more information, please visit www.sotherlyhotels.com.
Forward-Looking Statements
This news release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. 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, increases in
wages and other labor costs, energy costs and other operating costs; the
magnitude and sustainability of the economic recovery in the hospitality
industry and in the markets in which the Company operates; the
availability and terms of financing and capital and the general
volatility of the securities markets; 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 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; 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.
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