Sotherly Hotels Inc. (NASDAQ: SOHO), (“Sotherly”, “SoTHERLY”,
or the “Company”), a self-managed and self-administered lodging real
estate investment trust (a “REIT”), today reported its consolidated
results for the first quarter ended March 31, 2014. The Company’s
results include the following*:
|
|
|
|
|
Three Months ended
|
|
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March 31, 2014
|
|
March 31, 2013
|
|
|
(in $000s, except per share data)
|
|
|
|
|
|
|
Total Revenue
|
|
$
|
25,010
|
|
|
$
|
20,190
|
|
Net income (loss) attributable to the Company
|
|
|
783
|
|
|
|
(2,595
|
)
|
|
|
|
|
|
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EBITDA
|
|
|
5,883
|
|
|
|
1,880
|
|
Adjusted EBITDA
|
|
|
6,038
|
|
|
|
4,622
|
|
Hotel EBITDA
|
|
|
6,319
|
|
|
|
4,848
|
|
|
|
|
|
|
|
FFO
|
|
|
3,575
|
|
|
|
(1,168
|
)
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Adjusted FFO
|
|
|
2,995
|
|
|
|
2,173
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|
|
|
|
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Net income (loss) per share attributable to the Company
|
|
$
|
0.08
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|
|
$
|
(0.26
|
)
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FFO per share and unit
|
|
|
0.27
|
|
|
|
(0.09
|
)
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Adjusted FFO per share and unit
|
|
|
0.23
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|
|
|
0.17
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|
|
|
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|
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(*) Earnings before interest, taxes, depreciation and
amortization (“EBITDA”), adjusted EBITDA, hotel EBITDA, funds from
operations (“FFO”), adjusted FFO, FFO per share and unit and adjusted
FFO per share and unit are non-GAAP financial measures. See further
discussion of these non-GAAP measures, including definitions related
thereto, and reconciliations to net income (loss) later in this press
release. All references in this release to the “Company”, “Sotherly”, “SoTHERLY”,
“we”, “us” and “our” refer to Sotherly Hotels Inc., its operating
partnership and its subsidiaries and predecessors, unless the context
otherwise requires or where otherwise indicated.
HIGHLIGHTS:
-
Adjusted FFO. The Company generated adjusted FFO of
approximately $3.0 million during the first quarter 2014, an increase
of 37.9% or approximately $0.8 million over the first quarter 2013.
-
Common Dividends. On April 21, 2014, the Company announced an
11.1% increase in its quarterly dividend (distribution) on its common
stock (and units) to $0.050 per share (and unit), payable on July 11,
2014 to stockholders (and unitholders) of record as of June 13, 2014.
-
RevPAR. Room revenue per available room (“RevPAR”) for the
Company’s wholly-owned properties during the first quarter 2014
increased 8.3% over the first quarter 2013 to $81.14 driven by a 2.5%
increase in occupancy and a 5.6% increase in average daily rate
(“ADR”).
-
Hotel EBITDA. The Company generated hotel EBITDA of
approximately $6.3 million during the first quarter 2014, an increase
of 30.3% or approximately $1.5 million over the first quarter 2013.
-
Adjusted EBITDA. The Company generated adjusted EBITDA of
approximately $6.0 million during the first quarter 2014, an increase
of 30.7% or approximately $1.4 million over the first quarter 2013.
Andrew M. Sims, Chairman and Chief Executive Officer of Sotherly Hotels
Inc., commented, “We had a stellar first quarter, which resulted from
last year’s balance sheet restructuring, strength in our core markets,
and our expanding portfolio of hotels. We are pleased with the results
and are optimistic about the balance of the year.”
Acquisition
On March 27, 2014, the Company acquired the Georgian Terrace in Atlanta,
Georgia for approximately $61.1 million. 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 matures in
March 2017, but can be extended through the fourth and fifth anniversary
of the commencement date of the loan, subject to certain terms and
conditions. The loan bears a floating rate of interest of 3-month LIBOR
plus 3.75%, with a 4.00% interest rate floor and requires payments of
interest-only during the first twelve months, after which the loan
amortizes on a 25-year schedule.
On March 26, 2014, the Company entered into a Note Agreement, Guaranty,
and Pledge Agreement to secure a $19.0 million secured loan (the “Bridge
Loan”) with Richmond Hill Capital Partners, LP and Essex Equity Joint
Investment Vehicle, LLC. The Bridge Loan bears interest at a fixed rate
of 10.00%, is subject to a prepayment premium if the loan is prepaid in
full or in part prior to its maturity on March 26, 2015, and requires
mandatory prepayment upon certain events. Proceeds of the Bridge Loan
were used to partially fund the acquisition of the Georgian Terrace.
The balance of the cash portion of the purchase price was funded by the
Company with available cash.
Financing Transactions
On March 31, 2014, the Company entered into a First Amendment and other
amended loan documents to extend the maturity date and secure additional
proceeds on the original $30.0 million mortgage on the Hilton
Philadelphia Airport hotel with its existing lender, TD Bank, N.A.
Pursuant to the First Amendment and other amended loan documents, the
principal balance of the mortgage was increased by $5.6 million to
approximately $34.1 million and the maturity extended to April 1, 2019,
with no prepayment penalty. The mortgage continues to bear a floating
rate of interest of 1-month LIBOR plus 3.00%, with a LIBOR floor of
0.50% and re-amortizes over the 25-year period that began with the
commencement of the mortgage in March 2012.
Balance Sheet/Liquidity
At March 31, 2014, the Company had total cash of approximately $18.4
million, consisting of available cash and cash equivalents of
approximately $13.0 million, and restricted cash of approximately $5.4
million reserved for real estate taxes, insurance, capital improvements
and certain other expenses or otherwise restricted. The Company had
approximately $253.2 million in outstanding debt at a weighted average
interest rate of approximately 5.46%.
2014 Outlook
The Company is updating its prior guidance for 2014, accounting for
current and expected performance within its portfolio as well as its
recent acquisition of the Georgian Terrace. The guidance is predicated
on estimates of occupancy and ADR that are consistent with the most
recent 2014 calendar year forecasts by Smith Travel Research for the
market segments in which the Company operates.
The table below reflects the Company’s projections, within a range, of
various financial measures for 2014, as compared to its prior guidance
for 2014 (in $000s, except per share data):
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Initial 2014 Guidance
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Revised 2014 Guidance
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Low Range
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High Range
|
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Low Range
|
|
High Range
|
Total revenue
|
|
$
|
103,171
|
|
$
|
106,224
|
|
$
|
118,020
|
|
$
|
121,524
|
Net income
|
|
|
2,949
|
|
|
4,282
|
|
|
3,458
|
|
|
4,776
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
24,995
|
|
|
26,351
|
|
|
28,775
|
|
|
30,128
|
Hotel EBITDA
|
|
|
26,294
|
|
|
28,293
|
|
|
30,854
|
|
|
32,393
|
|
|
|
|
|
|
|
|
|
FFO
|
|
|
12,599
|
|
|
13,932
|
|
|
13,108
|
|
|
14,426
|
Adjusted FFO
|
|
|
13,099
|
|
|
14,432
|
|
|
13,759
|
|
|
15,077
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|
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Net income per share attributable to the Company
|
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$
|
0.22
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$
|
0.33
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$
|
0.26
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$
|
0.36
|
FFO per share and unit
|
|
|
0.96
|
|
|
1.06
|
|
|
1.00
|
|
|
1.10
|
Adjusted FFO per share and unit
|
|
|
1.00
|
|
|
1.10
|
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|
1.05
|
|
|
1.15
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Earnings Call/Webcast
The Company will conduct its first quarter 2014 conference call for
investors and other interested parties at 10:00 a.m. Eastern Time on
Tuesday, May 13, 2014. The conference call will be accessible by
telephone and through the Internet. Interested individuals are invited
to listen to the call by telephone at 888-317-6016 (United States) or
855-669-9657 (Canada) or +1 412-317-6016 (International). To participate
on the webcast, log on to www.sotherlyhotels.com
at least 15 minutes before the call to download the necessary software.
For those unable to listen to the call live, a taped rebroadcast will be
available beginning one hour after completion of the live call on May
13, 2014 through March 31, 2015. To access the rebroadcast, dial
877-344-7529 and enter conference number 10044206. A replay of the call
also will be available on the Internet at www.sotherlyhotels.com
until March 31, 2015.
About Sotherly Hotels Inc.
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. 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% interest in the
Crowne Plaza Hollywood Beach Resort. Many of the Company’s properties
operate under the Hilton, Crowne Plaza, DoubleTree, Sheraton and Holiday
Inn brands. Sotherly Hotels Inc. was organized in 2004 and is
headquartered in Williamsburg, Virginia. For more information please
visit www.sotherlyhotels.com.
|
Contact at the Company:
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|
Scott Kucinski
|
Vice President – Operations & Investor Relations
|
Sotherly Hotels Inc.
|
410 West Francis Street
|
Williamsburg, Virginia 23185
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757.229.5648
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|
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.
Financial Tables Follow…
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|
SOTHERLY HOTELS INC.
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
|
|
(unaudited)
|
|
(audited)
|
ASSETS
|
|
|
|
|
Investment in hotel properties, net
|
|
$
|
262,204,677
|
|
|
$
|
202,645,633
|
|
Investment in joint venture
|
|
|
2,083,590
|
|
|
|
2,446,039
|
|
Cash and cash equivalents
|
|
|
13,008,035
|
|
|
|
9,376,628
|
|
Restricted cash
|
|
|
5,439,820
|
|
|
|
3,796,141
|
|
Accounts receivable, net
|
|
|
3,367,565
|
|
|
|
1,982,091
|
|
Accounts receivable-affiliate
|
|
|
77,692
|
|
|
|
101,439
|
|
Prepaid expenses, inventory and other assets
|
|
|
3,459,365
|
|
|
|
2,444,975
|
|
Shell Island sublease, net
|
|
|
180,147
|
|
|
|
240,196
|
|
Deferred income taxes
|
|
|
1,921,441
|
|
|
|
1,186,122
|
|
Deferred financing costs, net
|
|
|
5,066,625
|
|
|
|
3,820,838
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
296,808,957
|
|
|
$
|
228,040,102
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Mortgage debt
|
|
$
|
206,554,064
|
|
|
$
|
160,363,549
|
|
Bridge loan
|
|
|
19,000,000
|
|
|
|
—
|
|
Unsecured notes
|
|
|
27,600,000
|
|
|
|
27,600,000
|
|
Accounts payable and accrued liabilities
|
|
|
9,677,240
|
|
|
|
7,650,219
|
|
Advance deposits
|
|
|
1,573,335
|
|
|
|
666,758
|
|
Dividends and distributions payable
|
|
|
589,851
|
|
|
|
588,197
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
264,994,490
|
|
|
|
196,868,723
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Sotherly Hotels Inc. stockholders’ equity
|
|
|
|
|
Preferred stock, par value $0.01; 1,000,000 shares authorized; 0
shares issued and outstanding at each of March 31, 2014 and
December 31, 2013
|
|
|
—
|
|
|
|
—
|
|
Common stock, par value $0.01; 49,000,000 shares authorized;
10,243,677 shares and 10,206,927 shares issued and outstanding at
March 31, 2014 and December 31, 2013, respectively
|
|
|
102,437
|
|
|
|
102,069
|
|
Additional paid in capital
|
|
|
57,764,370
|
|
|
|
57,534,113
|
|
Distributions in excess of retained earnings
|
|
|
(31,888,880
|
)
|
|
|
(32,210,917
|
)
|
Total Sotherly Hotels Inc. stockholders’ equity
|
|
|
25,977,927
|
|
|
|
25,425,265
|
|
Noncontrolling interest
|
|
|
5,836,540
|
|
|
|
5,746,114
|
|
TOTAL EQUITY
|
|
|
31,814,467
|
|
|
|
31,171,379
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
$
|
296,808,957
|
|
|
$
|
228,040,102
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
|
|
|
|
|
Quarter ended
|
|
Quarter ended
|
|
|
March 31, 2014
|
|
March 31, 2013
|
REVENUE
|
|
|
|
|
Rooms department
|
|
$
|
17,453,189
|
|
|
$
|
14,249,959
|
|
Food and beverage department
|
|
|
6,251,683
|
|
|
|
4,851,571
|
|
Other operating departments
|
|
|
1,305,517
|
|
|
|
1,088,282
|
|
|
|
|
|
|
Total revenue
|
|
|
25,010,389
|
|
|
|
20,189,812
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
Hotel operating expenses
|
|
|
|
|
Rooms department
|
|
|
4,751,526
|
|
|
|
4,013,733
|
|
Food and beverage department
|
|
|
4,070,370
|
|
|
|
3,224,480
|
|
Other operating departments
|
|
|
201,507
|
|
|
|
106,674
|
|
Indirect
|
|
|
9,483,873
|
|
|
|
7,815,061
|
|
|
|
|
|
|
Total hotel operating expenses
|
|
|
18,507,276
|
|
|
|
15,159,948
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
2,434,328
|
|
|
|
2,052,821
|
|
Corporate general and administrative
|
|
|
1,307,790
|
|
|
|
1,093,787
|
|
|
|
|
|
|
Total operating expenses
|
|
|
22,249,394
|
|
|
|
18,306,556
|
|
|
|
|
|
|
NET OPERATING INCOME
|
|
|
2,760,995
|
|
|
|
1,883,256
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
Interest expense
|
|
|
(2,883,439
|
)
|
|
|
(2,680,547
|
)
|
Interest income
|
|
|
1,889
|
|
|
|
3,906
|
|
Equity income in joint venture
|
|
|
387,550
|
|
|
|
469,739
|
|
Unrealized loss on warrant derivative
|
|
|
—
|
|
|
|
(2,769,065
|
)
|
|
|
|
|
|
Net income (loss) before taxes
|
|
|
266,995
|
|
|
|
(3,092,711
|
)
|
Income tax benefit (provision)
|
|
|
735,319
|
|
|
|
(263,055
|
)
|
|
|
|
|
|
Net income (loss)
|
|
|
1,002,314
|
|
|
|
(3,355,766
|
)
|
Add: Net income (loss) attributable to the noncontrolling interest
|
|
|
(219,312
|
)
|
|
|
760,850
|
|
|
|
|
|
|
Net income (loss) attributable to the Company
|
|
$
|
783,002
|
|
|
$
|
(2,594,916
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
|
|
$
|
0.08
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
10,225,710
|
|
|
|
10,080,375
|
|
|
SOTHERLY HOTELS INC.
|
KEY OPERATING METRICS
|
(unaudited)
|
|
The following tables illustrate the key operating metrics for the
three months ended March 31, 2014 and 2013, respectively, for the
Company’s wholly-owned properties during each respective reporting
period (“consolidated” properties) as well as the nine wholly-owned
properties in the portfolio that were under the Company’s control
during both the three months ended March 31, 2014 and the
corresponding period in 2013 (“same-store” properties). Accordingly,
the same-store data does not reflect the performance of the Crowne
Plaza Houston Downtown, which was acquired in November 2013, or the
Georgian Terrace, which was acquired in March 2014. Each table
excludes performance data for the Crowne Plaza Hollywood Beach
Resort, which was acquired through a joint venture in August 2007
and in which the Company has a 25.0% indirect interest.
|
|
|
|
|
Consolidated Properties (All Hotels)
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
Variance
|
Occupancy
|
|
|
67.3%
|
|
|
65.6%
|
|
2.5%
|
ADR
|
|
$
|
120.60
|
|
$
|
114.19
|
|
5.6%
|
RevPAR
|
|
$
|
81.14
|
|
$
|
74.93
|
|
8.3%
|
|
|
|
|
|
|
|
|
Same-Store Properties (9 Hotels)
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
Variance
|
Occupancy
|
|
|
65.7%
|
|
|
65.6%
|
|
0.1%
|
ADR
|
|
$
|
116.93
|
|
$
|
114.19
|
|
2.4%
|
RevPAR
|
|
$
|
76.81
|
|
$
|
74.93
|
|
2.5%
|
|
SOTHERLY HOTELS INC.
|
SUPPLEMENTAL DATA
|
(unaudited)
|
|
The following tables illustrate the key operating metrics for the
three months ended March 31, 2014, 2013 and 2012, respectively, for
each of the Company’s wholly-owned properties during each respective
reporting period as well as the Company’s joint venture property,
Crowne Plaza Hollywood Beach Resort, in which it owns a 25.0%
interest.
|
|
|
|
|
|
|
|
Occupancy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q1 2013
|
|
Q1 2012
|
Crowne Plaza Hampton Marina
|
|
|
|
|
|
|
|
|
|
Hampton, Virginia
|
|
40.0
|
%
|
|
38.9
|
%
|
|
45.6
|
%
|
Crowne Plaza Hollywood Beach
|
|
|
|
|
|
|
|
|
|
Hollywood, Florida
|
|
89.6
|
%
|
|
88.6
|
%
|
|
87.5
|
%
|
Crowne Plaza Houston Downtown*
|
|
|
|
|
|
|
|
Houston, Texas
|
|
79.6
|
%
|
|
|
|
|
Crowne Plaza Jacksonville Riverfront
|
|
|
|
|
|
|
|
|
|
Jacksonville, Florida
|
|
65.9
|
%
|
|
62.5
|
%
|
|
72.5
|
%
|
Crowne Plaza Tampa Westshore
|
|
|
|
|
|
|
|
|
|
Tampa, Florida
|
|
85.6
|
%
|
|
81.4
|
%
|
|
83.7
|
%
|
DoubleTree by Hilton Raleigh Brownstone – University
|
|
|
|
|
|
|
|
|
|
Raleigh, North Carolina
|
|
73.0
|
%
|
|
69.6
|
%
|
|
61.5
|
%
|
The Georgian Terrace*
|
|
|
|
|
|
|
|
Atlanta, Georgia
|
|
76.9
|
%
|
|
|
|
|
Hilton Philadelphia Airport
|
|
|
|
|
|
|
|
|
|
Philadelphia, Pennsylvania
|
|
79.2
|
%
|
|
74.5
|
%
|
|
69.8
|
%
|
Hilton Savannah DeSoto
|
|
|
|
|
|
|
|
|
|
Savannah, Georgia
|
|
70.1
|
%
|
|
68.0
|
%
|
|
73.5
|
%
|
Hilton Wilmington Riverside
|
|
|
|
|
|
|
|
|
|
Wilmington, North Carolina
|
|
55.4
|
%
|
|
64.4
|
%
|
|
63.2
|
%
|
Holiday Inn Laurel West
|
|
|
|
|
|
|
|
|
|
Laurel, Maryland
|
|
50.6
|
%
|
|
58.5
|
%
|
|
56.6
|
%
|
Sheraton Louisville Riverside
|
|
|
|
|
|
|
|
|
|
Jeffersonville, Indiana
|
|
59.8
|
%
|
|
63.1
|
%
|
|
57.0
|
%
|
* Data is provided for only those periods in which the Company owned the
property.
|
|
|
|
|
|
|
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q1 2013
|
|
Q1 2012
|
Crowne Plaza Hampton Marina
|
|
|
|
|
|
|
|
|
|
Hampton, Virginia
|
|
$
|
81.57
|
|
$
|
82.32
|
|
$
|
77.03
|
Crowne Plaza Hollywood Beach
|
|
|
|
|
|
|
|
|
|
Hollywood, Florida
|
|
$
|
207.62
|
|
$
|
207.01
|
|
$
|
178.52
|
Crowne Plaza Houston Downtown*
|
|
|
|
|
|
|
|
Houston, Texas
|
|
$
|
142.82
|
|
|
|
|
Crowne Plaza Jacksonville Riverfront
|
|
|
|
|
|
|
|
|
|
Jacksonville, Florida
|
|
$
|
97.49
|
|
$
|
95.92
|
|
$
|
94.20
|
Crowne Plaza Tampa Westshore
|
|
|
|
|
|
|
|
|
|
Tampa, Florida
|
|
$
|
114.50
|
|
$
|
106.62
|
|
$
|
104.41
|
DoubleTree by Hilton Raleigh Brownstone – University
|
|
|
|
|
|
|
|
|
|
Raleigh, North Carolina
|
|
$
|
119.68
|
|
$
|
108.88
|
|
$
|
99.32
|
The Georgian Terrace*
|
|
|
|
|
|
|
|
Atlanta, Georgia
|
|
$
|
157.19
|
|
|
|
|
Hilton Philadelphia Airport
|
|
|
|
|
|
|
|
|
|
Philadelphia, Pennsylvania
|
|
$
|
125.77
|
|
$
|
128.41
|
|
$
|
126.63
|
Hilton Savannah DeSoto
|
|
|
|
|
|
|
|
|
|
Savannah, Georgia
|
|
$
|
141.85
|
|
$
|
139.37
|
|
$
|
130.75
|
Hilton Wilmington Riverside
|
|
|
|
|
|
|
|
|
|
Wilmington, North Carolina
|
|
$
|
125.37
|
|
$
|
124.48
|
|
$
|
119.31
|
Holiday Inn Laurel West
|
|
|
|
|
|
|
|
|
|
Laurel, Maryland
|
|
$
|
88.27
|
|
$
|
91.38
|
|
$
|
90.65
|
Sheraton Louisville Riverside
|
|
|
|
|
|
|
|
|
|
Jeffersonville, Indiana
|
|
$
|
129.88
|
|
$
|
121.07
|
|
$
|
118.72
|
* Data is provided for only those periods in which the Company owned the
property.
|
|
|
|
|
|
|
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q1 2013
|
|
Q1 2012
|
Crowne Plaza Hampton Marina
|
|
|
|
|
|
|
Hampton, Virginia
|
|
$
|
32.60
|
|
$
|
32.00
|
|
$
|
35.09
|
Crowne Plaza Hollywood Beach
|
|
|
|
|
|
|
Hollywood, Florida
|
|
$
|
186.06
|
|
$
|
183.47
|
|
$
|
156.25
|
Crowne Plaza Houston Downtown*
|
|
|
|
|
|
|
Houston, Texas
|
|
$
|
113.62
|
|
|
|
|
Crowne Plaza Jacksonville Riverfront
|
|
|
|
|
|
|
Jacksonville, Florida
|
|
$
|
64.29
|
|
$
|
59.97
|
|
$
|
68.31
|
Crowne Plaza Tampa Westshore
|
|
|
|
|
|
|
Tampa, Florida
|
|
$
|
97.96
|
|
$
|
86.79
|
|
$
|
87.41
|
DoubleTree by Hilton Raleigh Brownstone – University
|
|
|
|
|
|
|
Raleigh, North Carolina
|
|
$
|
87.38
|
|
$
|
75.76
|
|
$
|
61.05
|
The Georgian Terrace*
|
|
|
|
|
|
|
Atlanta, Georgia
|
|
$
|
120.93
|
|
|
|
|
Hilton Philadelphia Airport
|
|
|
|
|
|
|
Philadelphia, Pennsylvania
|
|
$
|
99.57
|
|
$
|
95.69
|
|
$
|
88.38
|
Hilton Savannah DeSoto
|
|
|
|
|
|
|
Savannah, Georgia
|
|
$
|
99.43
|
|
$
|
94.77
|
|
$
|
96.12
|
Hilton Wilmington Riverside
|
|
|
|
|
|
|
Wilmington, North Carolina
|
|
$
|
69.49
|
|
$
|
80.19
|
|
$
|
75.44
|
Holiday Inn Laurel West
|
|
|
|
|
|
|
Laurel, Maryland
|
|
$
|
44.71
|
|
$
|
53.47
|
|
$
|
51.28
|
Sheraton Louisville Riverside
|
|
|
|
|
|
|
Jeffersonville, Indiana
|
|
$
|
77.63
|
|
$
|
76.42
|
|
$
|
67.62
|
* Data is provided for only those periods in which the Company owned the
property.
|
|
|
SOTHERLY HOTELS INC.
|
RECONCILIATION OF NET INCOME (LOSS) TO
|
FFO, Adjusted FFO, EBITDA, Adjusted EBITDA and Hotel EBITDA
|
(unaudited)
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
Net income (loss) attributable to the Company
|
|
$
|
783,002
|
|
|
$
|
(2,594,916
|
)
|
Noncontrolling interest
|
|
|
219,312
|
|
|
|
(760,850
|
)
|
Depreciation and amortization
|
|
|
2,434,328
|
|
|
|
2,052,821
|
|
Equity in depreciation and amortization of joint venture
|
|
|
138,684
|
|
|
|
135,101
|
|
|
|
|
|
|
FFO
|
|
|
3,575,326
|
|
|
|
(1,167,844
|
)
|
Unrealized (gain)/loss on hedging activities(1)
|
|
|
—
|
|
|
|
(27,323
|
)
|
Unrealized loss on warrant derivative
|
|
|
—
|
|
|
|
2,769,065
|
|
(Increase) decrease in deferred income taxes
|
|
|
(735,319
|
)
|
|
|
261,696
|
|
Acquisition costs
|
|
|
155,187
|
|
|
|
—
|
|
Loss on early extinguishment of debt(2)
|
|
|
—
|
|
|
|
337,136
|
|
|
|
|
|
|
Adjusted FFO
|
|
$
|
2,995,194
|
|
|
$
|
2,172,730
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
10,225,710
|
|
|
|
10,080,375
|
|
Weighted average units outstanding
|
|
|
2,864,127
|
|
|
|
2,955,617
|
|
|
|
|
|
|
Weighted average shares and units
|
|
|
13,089,837
|
|
|
|
13,035,992
|
|
|
|
|
|
|
FFO per share and unit
|
|
$
|
0.27
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
Adjusted FFO per share and unit
|
|
$
|
0.23
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
Net income (loss) attributable to the Company
|
|
$
|
783,002
|
|
|
$
|
(2,594,916
|
)
|
Noncontrolling interest
|
|
|
219,312
|
|
|
|
(760,850
|
)
|
Interest expense
|
|
|
2,883,439
|
|
|
|
2,680,547
|
|
Interest income
|
|
|
(1,889
|
)
|
|
|
(3,906
|
)
|
Income tax (benefit) provision
|
|
|
(735,319
|
)
|
|
|
263,055
|
|
Depreciation and amortization
|
|
|
2,434,328
|
|
|
|
2,052,821
|
|
Equity in interest expense and depreciation and amortization of
joint venture
|
|
|
300,225
|
|
|
|
243,170
|
|
|
|
|
|
|
EBITDA
|
|
|
5,883,098
|
|
|
|
1,879,921
|
|
Unrealized (gain)/loss on hedging activities(1)
|
|
|
—
|
|
|
|
(27,323
|
)
|
Unrealized loss on warrant derivative
|
|
|
—
|
|
|
|
2,769,065
|
|
Acquisition costs
|
|
|
155,187
|
|
|
|
—
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
6,038,285
|
|
|
|
4,621,663
|
|
Corporate general and administrative
|
|
|
1,152,603
|
|
|
|
1,093,787
|
|
Equity in Adjusted EBITDA of joint venture
|
|
|
(687,775
|
)
|
|
|
(685,586
|
)
|
Net lease rental income
|
|
|
(87,500
|
)
|
|
|
(87,500
|
)
|
Other fee income
|
|
|
(96,440
|
)
|
|
|
(94,323
|
)
|
|
|
|
|
|
Hotel EBITDA
|
|
$
|
6,319,173
|
|
|
$
|
4,848,041
|
|
|
|
|
(1)
|
|
Includes equity in unrealized (gain)/loss on hedging activities of
joint venture.
|
(2)
|
|
Reflected in interest expense for the periods presented above.
|
|
|
|
Non-GAAP Financial Measures
The Company considers the non-GAAP measures of FFO (including FFO per
share), EBITDA and hotel EBITDA to be key supplemental measures of the
Company’s performance and could be considered along with, not
alternatives to, net income (loss) as a measure of the Company’s
performance. These measures do not represent cash generated from
operating activities determined by generally accepted accounting
principles (“GAAP”) or amounts available for the Company’s discretionary
use and should not be considered alternative measures of net income,
cash flows from operations or any other operating performance measure
prescribed by GAAP.
FFO
Industry analysts and investors use Funds from Operations (“FFO”), as a
supplemental operating performance measure of an equity REIT. FFO is
calculated in accordance with the definition adopted by the Board of
Governors of the National Association of Real Estate Investment Trusts
(“NAREIT”). FFO, as defined by NAREIT, represents net income or loss
determined in accordance with GAAP, excluding extraordinary items as
defined under GAAP and gains or losses from sales of previously
depreciated operating real estate assets, plus certain non-cash items
such as real estate asset depreciation and amortization, and after
adjustment for any noncontrolling interest from unconsolidated
partnerships and joint ventures. Historical cost accounting for real
estate assets in accordance with GAAP implicitly assumes that the value
of real estate assets diminishes predictably over time. Since real
estate values instead have historically risen or fallen with market
conditions, many investors and analysts have considered the presentation
of operating results for real estate companies that use historical cost
accounting to be insufficient by itself.
The Company considers FFO to be a useful measure of adjusted net income
(loss) for reviewing comparative operating and financial performance
because we believe FFO is most directly comparable to net income (loss),
which remains the primary measure of performance, because by excluding
gains or losses related to sales of previously depreciated operating
real estate assets and excluding real estate asset depreciation and
amortization, FFO assists in comparing the operating performance of a
company’s real estate between periods or as compared to different
companies. Although FFO is intended to be a REIT industry standard,
other companies may not calculate FFO in the same manner as we do, and
investors should not assume that FFO as reported by us is comparable to
FFO as reported by other REITs.
EBITDA
The Company believes that excluding the effect of non-operating expenses
and non-cash charges, and the portion of those items related to
unconsolidated entities, all of which are also based on historical cost
accounting and may be of limited significance in evaluating current
performance, can help eliminate the accounting effects of depreciation
and financing decisions and facilitate comparisons of core operating
profitability between periods and between REITs, even though EBITDA also
does not represent an amount that accrued directly to shareholders.
Hotel EBITDA
The Company defines hotel EBITDA as net income or loss excluding: (1)
interest expense, (2) interest income, (3) equity in the income or loss
of equity investees, (4) unrealized gains and losses on derivative
instruments not included in other comprehensive income, (5) gains and
losses on disposal of assets, (6) realized gains and losses on
investments, (7) impairment of long-lived assets or investments, (8)
corporate general and administrative expense; (9) depreciation and
amortization; and (10) other operating revenue not related to the
Company’s wholly-owned portfolio. We believe this provides a more
complete understanding of the operating results over which the Company’s
wholly-owned hotels and its operators have direct control. We believe
hotel EBITDA provides investors with supplemental information on the
on-going operational performance of the Company’s hotels and the
effectiveness of third-party management companies operating the
Company’s business on a property-level basis. The Company’s calculation
of hotel EBITDA may be different from similar measures calculated by
other REITs.
Adjusted FFO and Adjusted EBITDA
The Company presents adjusted FFO, including adjusted FFO per share and
unit, and adjusted EBITDA, which adjusts for certain additional items
including any unrealized gain (loss) on its hedging instruments or
warrant derivative, loan impairment losses, losses on early
extinguishment of debt, aborted offering costs, costs associated with
the departure of executive officers and acquisition transaction costs.
The Company excludes these items as it believes it allows for meaningful
comparisons between periods and among other REITs and is more indicative
of the on-going performance of its business and assets. The Company’s
calculation of adjusted FFO and adjusted EBITDA may be different from
similar measures calculated by other REITs.
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