WILLIAMSBURG, Va., Feb. 21, 2017 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ:SOHO),
(“Sotherly” or the “Company”), a self-managed and self-administered lodging real estate investment trust (a “REIT”), today reported
its consolidated results for the fourth quarter and year ended December 31, 2016. The Company’s results include the following*:
|
Three Months Ended |
|
|
Year Ended |
|
|
December 31,
2016 |
|
|
December 31,
2015 |
|
|
December 31,
2016 |
|
|
December 31,
2015 |
|
|
($ in thousands except per share data) |
|
|
($ in thousands except per share data) |
|
Total Revenue |
$ |
35,935 |
|
|
$ |
36,751 |
|
|
$ |
152,846 |
|
|
$ |
138,533 |
|
Net income/(loss) attributable to the common shareholders |
|
(746 |
) |
|
|
(522 |
) |
|
|
(218 |
) |
|
|
5,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
6,732 |
|
|
|
6,897 |
|
|
|
33,954 |
|
|
|
36,990 |
|
Adjusted EBITDA |
|
6,732 |
|
|
|
6,908 |
|
|
|
33,954 |
|
|
|
37,625 |
|
Hotel EBITDA |
|
8,392 |
|
|
|
8,777 |
|
|
|
40,013 |
|
|
|
36,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
|
2,915 |
|
|
|
3,543 |
|
|
|
15,140 |
|
|
|
14,104 |
|
Adjusted FFO attributable to common shareholders |
|
2,077 |
|
|
|
3,257 |
|
|
|
15,100 |
|
|
|
14,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) per share attributable to the common shareholders |
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
0.43 |
|
FFO per share and unit |
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.91 |
|
|
$ |
0.95 |
|
Adjusted FFO attributable to common holders per share and unit |
$ |
0.12 |
|
|
$ |
0.20 |
|
|
$ |
0.90 |
|
|
$ |
1.00 |
|
(*) 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. The Company is the sole general partner of Sotherly Hotels LP, a Delaware limited partnership (the
“Operating Partnership”), and all references in this release to the “Company”, “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:
- RevPAR. Room revenue per available room (“RevPAR”) for the Company’s wholly-owned properties during
the twelve-month period ending December 31, 2016, increased 4.7% over the twelve months ended December 31, 2015, to $98.18 driven
by a 0.1% decrease in occupancy and a 4.8% increase in average daily rate (“ADR”). For the fourth quarter 2016, RevPAR
decreased 2.9%, compared to the fourth quarter 2015, to $87.73 driven by a 4.0% decrease in occupancy and a 1.2% increase in
ADR.
- Common Dividends. As previously reported on October 25, 2016, the Company announced its quarterly dividend
(distribution) on its common stock (and units) at $0.095 per share (and unit) which was paid on January 11, 2017 to stockholders
(and unitholders) of record as of December 15, 2016.
- Hotel EBITDA. The Company generated hotel EBITDA of approximately $40.0 million during the twelve-month
period ending December 31, 2016, an increase of 9.8%, or approximately $3.6 million, over the twelve months ended December 31,
2015. For the fourth quarter 2016, hotel EBITDA decreased by 4.4%, or approximately $0.4 million, compared to the fourth
quarter 2015.
- Adjusted EBITDA. The Company generated adjusted EBITDA of approximately $34.0 million during the
twelve-month period ending December 31, 2016, a decrease of 9.8% or approximately $3.7 million compared to the twelve months
ended December 31, 2015. Excluding the results from a one-time gain on change in control of approximately $6.6 million
during the twelve months ended December 31, 2015, adjusted EBITDA for the twelve-month period ended December 31, 2016 increased
9.5%, or approximately $2.9 million, over the twelve months ended December 31, 2015. For the fourth quarter 2016, adjusted
EBITDA decreased by 2.6%, or approximately $0.2 million, compared to the fourth quarter 2015. Excluding the results from a
one-time gain on change in control of approximately $0.04 million during the fourth quarter ended December 31, 2015, adjusted
EBITDA for the fourth quarter 2016 decreased 2.0%, or approximately $0.1 million, over the fourth quarter 2015.
- Adjusted FFO. For the twelve-month period ending December 31, 2016, adjusted FFO increased 1.3% or
approximately $0.2 million over the twelve months ended December 31, 2015. The Company generated adjusted FFO of
approximately $2.1 million during the fourth quarter 2016, a decrease of 36.2% or approximately $1.2 million compared to the
fourth quarter 2015.
Andrew M. Sims, Chairman and Chief Executive Officer of Sotherly Hotels Inc., commented, “The company experienced a difficult
quarter largely as the result of two events. Hurricane Matthew disrupted operations at six of our twelve hotels during the
high season. Because we have not concluded negotiations with our insurance carriers, we have not included any lost revenue in
the fourth quarter financials. In addition, the Zika scare had a negative effect on the Miami market that severely hurt our
Hollywood operations in the fourth quarter. On a more positive note, for 2016, Total Revenue increased 10.3% over the prior
year, exceeding industry averages for the same period. For 2016, Hotel EBITDA increased 9.8% and FFO increased 7.3%.
With these two acts of God behind us, we look forward to returning to good operating metrics in the first quarter of 2017.”
Balance Sheet/Liquidity
At December 31, 2016, the Company had approximately $36.4 million of available cash and cash equivalents, of which approximately
$4.6 million was reserved for real estate taxes, insurance, capital improvements and certain other expenses or otherwise
restricted. The Company had approximately $307.0 million in outstanding debt at a weighted average interest rate of approximately
4.66%.
On October 12, 2016, we entered into a loan agreement to secure a $20.5 million mortgage on The Whitehall with International
Bank of Commerce. Pursuant to the loan documents, the loan provides initial proceeds of $15.0 million, with an additional
$5.5 million available upon the satisfaction of certain conditions; has a term of five years; bears a floating interest rate of the
30-day LIBOR plus 3.5%, subject to a floor rate of 4.0%; amortizes on an 18-year schedule after a 2-year interest only period; is
subject to prepayment fees; and is guaranteed by the Operating Partnership.
On November 3, 2016, we entered into a loan agreement to refinance the mortgage on the Sheraton Louisville Riverside with
Symetra Life Insurance Company. Pursuant to the loan documents, the loan: provides proceeds of $12.0 million; has a maturity
date of December 1, 2026; bears a fixed interest rate of 4.27% for the first 5 years of the loan with an option for the lender to
reset that rate after 5 years; amortizes on a 25-year schedule; is subject to prepayment fees; and is guaranteed by the Operating
Partnership at 50% of the unpaid principal balance, interest, and other amounts owed.
On December 1, 2016, we entered into a promissory note agreement and other loan documents to secure a $35.0 million
mortgage on the Hilton Wilmington Riverside with MONY Life Insurance Company. Pursuant to the loan documents, the
loan provides initial proceeds of $30.0 million, with an additional $5.0 million available upon the satisfaction of certain
conditions, namely, the completion of a renovation project; has a term of 10 years; bears a fixed interest rate of 4.25%; amortizes
on a 25-year schedule after a 1-year interest-only period; and is subject to a prepayment premium.
On December 2, 2016, the Company’s Board of Directors authorized a stock repurchase program under which the Company may
purchase up to $10.0 million of its outstanding common stock, par value $0.01 per share, at prevailing prices on the open market or
in privately negotiated transaction, at the discretion of management. The Company has used and expects to continue to use
available working capital to fund purchases under the stock repurchase program and intends to complete the repurchase program prior
to December 31, 2017, unless extended by the Board of Directors. Through December 31, 2016, the Company repurchased
481,100 shares of common stock for approximately $3.2 million, and the repurchased
shares have been returned to the status of authorized but unissued shares of common stock. In December of
2016 the Company initiated an Employee Stock Ownership Plan (the “ESOP”) and agreed to loan up to $5.0 million to the trust that
implements and forms a part of the ESOP (the “Trust”) in order to allow the Trust to purchase shares of the Company’s common
stock.
Portfolio Update
On September 14, 2016, we entered into a Commercial Unit Purchase Agreement and a related addendum to purchase the commercial
unit and certain related inventories of the Hyde Resort & Residences, a condominium hotel located in the Hollywood, Florida market,
for an aggregate price of approximately $4.8 million from 4111 South Ocean Drive, LLC. The purchase agreement and addendum
includes the purchase of certain inventories consistent with the management and operation of the hotel and the related condominium
association for a price of approximately $0.5 million. In connection with the closing of the transaction which occurred on January
30, 2017, the Company entered into a lease agreement for the 400-space parking garage and meeting rooms associated with the hotel,
a management agreement relating to the operation and management of the hotel condominium association, and a pre-opening services
agreement whereby the Seller paid the Company a fee of approximately $0.8 million for certain pre-opening preparations.
Photos accompanying this release are available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/f5df7660-90a5-4c6f-9ef8-c65b9a7e8553
http://www.globenewswire.com/NewsRoom/AttachmentNg/d86f2eb7-64b3-42f7-b6b4-bf28f9c86ebe
http://www.globenewswire.com/NewsRoom/AttachmentNg/9caedc4e-1b19-499e-824f-3004c7a72b63
At the Company’s hotel in Savannah, Georgia, renovations of the guestrooms and public spaces totaling an estimated
$8.2 million are underway. As of December 31, 2016, the Company had incurred costs totaling approximately $5.1 million
toward this renovation. Renovations are expected to be complete in August 2017.
At the Company’s hotel in Hollywood, Florida the Company previously announced that it has entered into a 10-year franchise
agreement with Hilton Worldwide to rebrand its Hollywood, Florida hotel as the DoubleTree Resort by Hilton Hollywood Beach. The
Company is currently making renovations of the guestrooms and public spaces totaling an estimated $6.9 million. As of December
31, 2016, the Company had incurred costs totaling approximately $0.3 million toward this rebranding. The conversion is
expected to take place on or before October 31, 2017.
Subsequent Events
On January 30, 2017, we closed on the purchase of the commercial unit of the Hyde Resort & Residences, a condominium hotel
located in the Hollywood, Florida market, for an aggregate price of approximately $4.8 million, including inventory and closing
fees, from 4111 South Ocean Drive, LLC.
On February 7, 2017, we closed on the sale of the Crowne Plaza Hampton Marina to Marina Hotels, LLC for a price of approximately
$5.6 million.
2017 Outlook
Set forth below is guidance for 2017, which accounts for the sale of the Crowne Plaza Hampton Marina. The guidance is
predicated on estimates of occupancy and ADR that are consistent with the most recent 2017 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 2017, in thousands of
dollars, except per share and RevPAR data:
|
2017
Guidance |
|
Low
Range |
|
High
Range
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
156,016 |
|
|
$ |
158,494 |
|
Net income |
|
5,335 |
|
|
|
6,111 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
35,375 |
|
|
|
36,336 |
|
Adjusted EBITDA |
|
35,375 |
|
|
|
36,336 |
|
Hotel EBITDA |
|
41,575 |
|
|
|
42,436 |
|
|
|
|
|
|
|
|
|
FFO |
|
17,115 |
|
|
|
17,891 |
|
Adjusted FFO |
|
16,265 |
|
|
|
17,541 |
|
|
|
|
|
|
|
|
|
Net income per share attributable to the common shareholders |
$ |
0.13 |
|
|
$ |
0.18 |
|
FFO per share and unit |
$ |
1.07 |
|
|
$ |
1.12 |
|
Adjusted FFO per share and unit |
$ |
1.02 |
|
|
$ |
1.10 |
|
Rev PAR |
$ |
103.04 |
|
|
$ |
103.25 |
|
Hotel EBITDA margin |
|
26.6 |
% |
|
|
26.8 |
% |
|
|
|
|
|
|
|
|
Earnings Call/Webcast
The Company will conduct its fourth quarter 2016 conference call for investors and other interested parties at 10:00 a.m.
Eastern Time today, Tuesday, February 21, 2017. The conference call will be accessible by telephone and through the Internet.
Interested individuals are invited to listen to the call by telephone at 888-339-0107 (United States) or 855-669-9657 (Canada) or
+1 412-902-4188 (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 February 21, 2017 through February 21, 2018. To access the rebroadcast, dial 877-344-7529 and enter conference
number 10098762. A replay of the call also will be available on the Internet at www.sotherlyhotels.com until February 21, 2018.
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 eleven hotel properties, comprising 2,838 rooms, and an interest in the Hyde Resort & Residences, a
400-unit luxury condo-hotel. Most of the Company’s properties operate under the Hilton Worldwide, InterContinental Hotels Group and
Marriott International, Inc. 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, 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 maintaining our system of
internal controls; 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; risks associated with our ability to maintain our franchise agreements with our third party
franchisors; 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…
|
|
SOTHERLY HOTELS INC.
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
December 31,
2016 |
|
|
December 31,
2015 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Investment in hotel properties, net |
|
$ |
348,593,912 |
|
|
$ |
354,963,242 |
|
Investment in hotel properties held for sale, net |
|
|
5,333,000 |
|
|
|
— |
|
Cash and cash equivalents |
|
|
31,766,775 |
|
|
|
11,493,914 |
|
Restricted cash |
|
|
4,596,145 |
|
|
|
5,793,840 |
|
Accounts receivable, net |
|
|
4,127,748 |
|
|
|
4,071,175 |
|
Accounts receivable-affiliate |
|
|
4,175 |
|
|
|
226,552 |
|
Loan proceeds receivable |
|
|
— |
|
|
|
2,600,711 |
|
Prepaid expenses, inventory and other assets |
|
|
4,648,469 |
|
|
|
4,432,431 |
|
Deferred income taxes |
|
|
6,949,340 |
|
|
|
5,390,374 |
|
TOTAL ASSETS |
|
$ |
406,019,564 |
|
|
$ |
388,972,239 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
Mortgage loans, net |
|
$ |
282,708,289 |
|
|
$ |
270,331,724 |
|
Unsecured notes, net |
|
|
24,308,713 |
|
|
|
50,460,106 |
|
Accounts payable and accrued expenses |
|
|
12,970,960 |
|
|
|
12,334,878 |
|
Advance deposits |
|
|
2,315,787 |
|
|
|
1,651,840 |
|
Dividends and distributions payable |
|
|
2,376,527 |
|
|
|
1,335,323 |
|
TOTAL LIABILITIES |
|
$ |
324,680,276 |
|
|
$ |
336,113,871 |
|
Commitments and contingencies |
|
|
— |
|
|
|
— |
|
EQUITY |
|
|
|
|
|
|
|
|
Sotherly Hotels Inc. stockholders’ equity |
|
|
|
|
|
|
|
|
8% Series B Cumulative Redeemable Perpetual Preferred stock, par
value $0.01,
11,000,000 shares authorized, liquidation preference $25 per share, 1,610,000
shares and 0 shares issued and outstanding at December 31, 2016 and 2015, respectively |
|
|
16,100 |
|
|
|
— |
|
Common stock, par value $0.01, 49,000,000 shares authorized,
14,468,551 shares and
14,490,714 shares issued and outstanding at December 31, 2016 and 2015, respectively |
|
|
144,685 |
|
|
|
144,907 |
|
Additional paid in capital |
|
|
118,395,082 |
|
|
|
82,749,058 |
|
Distributions in excess of retained earnings |
|
|
(39,545,754 |
) |
|
|
(33,890,834 |
) |
Total Sotherly Hotels Inc. stockholders’ equity |
|
|
79,010,113 |
|
|
|
49,003,131 |
|
Noncontrolling interest |
|
|
2,329,175 |
|
|
|
3,855,237 |
|
TOTAL EQUITY |
|
|
81,339,288 |
|
|
|
52,858,368 |
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
406,019,564 |
|
|
$ |
388,972,239 |
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
$ |
24,302,318 |
|
|
$ |
25,017,420 |
|
|
$ |
108,199,151 |
|
|
$ |
96,837,386 |
|
Food and beverage department |
|
|
9,143,598 |
|
|
|
9,384,508 |
|
|
|
35,384,530 |
|
|
|
33,273,599 |
|
Other operating departments |
|
|
2,489,423 |
|
|
|
2,348,935 |
|
|
|
9,262,071 |
|
|
|
8,422,491 |
|
Total revenue |
|
|
35,935,339 |
|
|
|
36,750,863 |
|
|
|
152,845,752 |
|
|
|
138,533,476 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms department |
|
|
6,978,596 |
|
|
|
6,784,028 |
|
|
|
28,895,371 |
|
|
|
25,782,992 |
|
Food and beverage department |
|
|
6,106,707 |
|
|
|
6,337,605 |
|
|
|
24,357,248 |
|
|
|
23,005,629 |
|
Other operating departments |
|
|
558,242 |
|
|
|
593,279 |
|
|
|
2,438,860 |
|
|
|
1,786,197 |
|
Indirect |
|
|
13,900,259 |
|
|
|
14,264,017 |
|
|
|
57,141,692 |
|
|
|
51,310,292 |
|
Total hotel operating expenses |
|
|
27,543,804 |
|
|
|
27,978,929 |
|
|
|
112,833,171 |
|
|
|
101,885,110 |
|
Depreciation and amortization |
|
|
3,758,083 |
|
|
|
4,007,989 |
|
|
|
15,019,071 |
|
|
|
13,591,495 |
|
Impairment of investment in hotel properties, net |
|
|
— |
|
|
|
500,000 |
|
|
|
— |
|
|
|
500,000 |
|
(Gain) loss on disposal of assets |
|
|
35,859 |
|
|
|
(248,673 |
) |
|
|
365,319 |
|
|
|
(41,435 |
) |
Corporate general and administrative |
|
|
1,689,169 |
|
|
|
1,889,228 |
|
|
|
6,021,065 |
|
|
|
7,268,256 |
|
Total operating expenses |
|
|
33,026,915 |
|
|
|
34,127,473 |
|
|
|
134,238,626 |
|
|
|
123,203,426 |
|
NET OPERATING INCOME |
|
|
2,908,424 |
|
|
|
2,623,390 |
|
|
|
18,607,126 |
|
|
|
15,330,050 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(3,862,974 |
) |
|
|
(4,655,178 |
) |
|
|
(17,735,107 |
) |
|
|
(16,515,827 |
) |
Interest income |
|
|
52,262 |
|
|
|
9,573 |
|
|
|
115,785 |
|
|
|
50,461 |
|
Equity income (loss) in joint venture |
|
|
— |
|
|
|
(31,377 |
) |
|
|
— |
|
|
|
475,514 |
|
Loss on early debt extinguishment |
|
|
(260,217 |
) |
|
|
— |
|
|
|
(1,417,905 |
) |
|
|
(772,907 |
) |
Unrealized gain (loss) on hedging activities |
|
|
29,182 |
|
|
|
(2,011 |
) |
|
|
(37,384 |
) |
|
|
(108,819 |
) |
Gain on change in control |
|
|
— |
|
|
|
42,191 |
|
|
|
— |
|
|
|
6,603,148 |
|
Loss on involuntary conversion of asset |
|
|
— |
|
|
|
(37,835 |
) |
|
|
— |
|
|
— |
|
Net income/(loss) before income taxes |
|
|
(1,133,323 |
) |
|
|
(2,051,247 |
) |
|
|
(467,485 |
) |
|
|
5,061,620 |
|
Income tax benefit |
|
|
1,059,236 |
|
|
|
1,339,288 |
|
|
|
1,367,634 |
|
|
|
1,336,033 |
|
Net income/(loss) |
|
|
(74,087 |
) |
|
|
(711,959 |
) |
|
|
900,149 |
|
|
|
6,397,653 |
|
Less: Net (income) loss attributable to the noncontrolling
interest |
|
|
132,944 |
|
|
|
189,785 |
|
|
|
26,567 |
|
|
|
(1,040,987 |
) |
Net income/(loss) attributable to the Company |
|
|
58,857 |
|
|
|
(522,174 |
) |
|
|
926,716 |
|
|
|
5,356,666 |
|
Distributions to preferred shareholders |
|
|
(805,000 |
) |
|
|
— |
|
|
|
(1,144,889 |
) |
|
|
— |
|
Net income/(loss) attributable to the common shareholders |
|
$ |
(746,143 |
) |
|
$ |
(522,174 |
) |
|
$ |
(218,173 |
) |
|
$ |
5,356,666 |
|
Net income/(loss) per share attributable to the common
shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
14,895,203 |
|
|
|
14,490,714 |
|
|
|
14,896,994 |
|
|
|
12,541,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.
KEY OPERATING METRICS
(unaudited)
The following tables illustrate the key operating metrics for the three and twelve months ended December 31, 2016 and 2015,
respectively, for the Company’s wholly-owned properties, including the Crowne Plaza Hollywood Beach Resort for the period from
August 1, 2015 to December 31, 2015, during each respective reporting period (“actual” portfolio metrics), as well as the eleven
wholly-owned properties in the portfolio that were under the Company’s control during the three and twelve months ended December
31, 2016 and the corresponding periods in 2015 (“same-store” portfolio metrics). Accordingly, the same-store data does not reflect
the performance of the Crowne Plaza Hollywood Beach Resort, which was acquired through a joint venture in August 2007 and in which
the Company had a 25.0% indirect interest during each respective reporting period prior to its acquisition of the remaining 75.0%
interest in July 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
Actual Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
63.2 |
% |
|
|
65.9 |
% |
|
|
69.8 |
% |
|
|
69.9 |
% |
ADR |
|
$ |
138.81 |
|
|
$ |
137.21 |
|
|
$ |
140.63 |
|
|
$ |
134.21 |
|
RevPAR |
|
$ |
87.73 |
|
|
$ |
90.37 |
|
|
$ |
98.18 |
|
|
$ |
93.80 |
|
Same-Store Portfolio Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy % |
|
|
62.0 |
% |
|
|
63.8 |
% |
|
|
68.7 |
% |
|
|
65.7 |
% |
ADR |
|
$ |
136.39 |
|
|
$ |
128.76 |
|
|
$ |
136.63 |
|
|
$ |
130.09 |
|
RevPAR |
|
$ |
84.63 |
|
|
$ |
82.14 |
|
|
$ |
93.86 |
|
|
$ |
85.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOTHERLY HOTELS INC.
SUPPLEMENTAL DATA
(unaudited)
The following tables illustrate the key operating metrics for the three and twelve months ended December 31, 2016, 2015 and
2014, respectively, for each of the Company’s wholly-owned properties during each respective reporting period, irrespective of
ownership percentage during any period.
Occupancy
|
Q4 2016 |
|
|
Q4 2015 |
|
|
Q4 2014 |
|
|
12 Months
2016 |
|
|
12 Months
2015 |
|
|
12 Months
2014 |
|
Crowne Plaza Hampton Marina
Hampton, Virginia |
|
40.3 |
% |
|
|
49.3 |
% |
|
|
45.6 |
% |
|
|
55.2 |
% |
|
|
55.2 |
% |
|
|
51.8 |
% |
Crowne Plaza Hollywood Beach Resort*
Hollywood, Florida |
|
73.2 |
% |
|
|
81.9 |
% |
|
|
80.1 |
% |
|
|
79.6 |
% |
|
|
80.5 |
% |
|
|
83.1 |
% |
Crowne Plaza Tampa Westshore
Tampa, Florida |
|
67.2 |
% |
|
|
71.0 |
% |
|
|
66.7 |
% |
|
|
74.6 |
% |
|
|
72.5 |
% |
|
|
72.5 |
% |
DoubleTree by Hilton Jacksonville Riverfront
Jacksonville, Florida |
|
72.0 |
% |
|
|
62.7 |
% |
|
|
64.5 |
% |
|
|
77.4 |
% |
|
|
67.4 |
% |
|
|
65.8 |
% |
DoubleTree by Hilton Laurel
Laurel, Maryland |
|
52.7 |
% |
|
|
39.0 |
% |
|
|
53.9 |
% |
|
|
60.5 |
% |
|
|
48.2 |
% |
|
|
60.8 |
% |
DoubleTree by Hilton Philadelphia Airport
Philadelphia, Pennsylvania |
|
67.7 |
% |
|
|
72.9 |
% |
|
|
63.9 |
% |
|
|
77.0 |
% |
|
|
79.3 |
% |
|
|
75.9 |
% |
DoubleTree by Hilton Raleigh Brownstone – University
Raleigh, North Carolina |
|
66.9 |
% |
|
|
61.7 |
% |
|
|
66.1 |
% |
|
|
70.0 |
% |
|
|
71.5 |
% |
|
|
73.4 |
% |
The Georgian Terrace *
Atlanta, Georgia |
|
70.2 |
% |
|
|
65.7 |
% |
|
|
66.4 |
% |
|
|
70.8 |
% |
|
|
69.9 |
% |
|
|
76.2 |
% |
Hilton Savannah DeSoto Ϯ
Savannah, Georgia |
|
63.0 |
% |
|
|
72.4 |
% |
|
|
71.9 |
% |
|
|
71.5 |
% |
|
|
76.9 |
% |
|
|
75.7 |
% |
Hilton Wilmington Riverside
Wilmington, North Carolina |
|
61.9 |
% |
|
|
67.6 |
% |
|
|
59.5 |
% |
|
|
70.5 |
% |
|
|
71.6 |
% |
|
|
69.7 |
% |
Sheraton Louisville Riverside
Jeffersonville, Indiana |
|
53.8 |
% |
|
|
63.6 |
% |
|
|
59.9 |
% |
|
|
63.1 |
% |
|
|
69.5 |
% |
|
|
66.8 |
% |
The Whitehall
Houston, Texas |
|
52.3 |
% |
|
|
66.2 |
% |
|
|
70.7 |
% |
|
|
54.4 |
% |
|
|
70.9 |
% |
|
|
76.1 |
% |
All properties weighted average* |
|
63.2 |
% |
|
|
65.9 |
% |
|
|
65.1 |
% |
|
|
69.8 |
% |
|
|
70.5 |
% |
|
|
71.8 |
% |
* |
Includes periods of non-ownership/partial ownership. |
† |
Property undergoing renovation during the current quarter.
|
|
|
ADR
|
Q4 2016 |
|
|
Q4 2015 |
|
|
Q4 2014 |
|
|
12 Months
2016 |
|
|
12 Months
2015 |
|
|
12 Months
2014 |
|
Crowne Plaza Hampton Marina
Hampton, Virginia |
$ |
88.88 |
|
|
$ |
88.41 |
|
|
$ |
87.43 |
|
|
$ |
96.81 |
|
|
$ |
93.59 |
|
|
$ |
93.17 |
|
Crowne Plaza Hollywood Beach Resort*
Hollywood, Florida |
$ |
156.61 |
|
|
$ |
122.83 |
|
|
$ |
164.20 |
|
|
$ |
170.57 |
|
|
$ |
172.89 |
|
|
$ |
163.13 |
|
Crowne Plaza Tampa Westshore
Tampa, Florida |
$ |
115.81 |
|
|
$ |
106.81 |
|
|
$ |
98.84 |
|
|
$ |
116.15 |
|
|
$ |
111.08 |
|
|
$ |
104.90 |
|
DoubleTree by Hilton Jacksonville Riverfront
Jacksonville, Florida |
$ |
143.00 |
|
|
$ |
122.40 |
|
|
$ |
104.65 |
|
|
$ |
126.67 |
|
|
$ |
109.20 |
|
|
$ |
99.20 |
|
DoubleTree by Hilton Laurel
Laurel, Maryland |
$ |
105.18 |
|
|
$ |
99.48 |
|
|
$ |
89.39 |
|
|
$ |
104.35 |
|
|
$ |
95.19 |
|
|
$ |
89.08 |
|
DoubleTree by Hilton Philadelphia Airport
Philadelphia, Pennsylvania |
$ |
137.14 |
|
|
$ |
136.33 |
|
|
$ |
133.75 |
|
|
$ |
144.92 |
|
|
$ |
136.32 |
|
|
$ |
133.78 |
|
DoubleTree by Hilton Raleigh Brownstone – University
Raleigh, North Carolina |
$ |
140.87 |
|
|
$ |
138.33 |
|
|
$ |
127.39 |
|
|
$ |
134.74 |
|
|
$ |
131.61 |
|
|
$ |
122.60 |
|
The Georgian Terrace *
Atlanta, Georgia |
$ |
160.31 |
|
|
$ |
153.83 |
|
|
$ |
140.75 |
|
|
$ |
160.89 |
|
|
$ |
155.56 |
|
|
$ |
137.65 |
|
Hilton Savannah DeSoto Ϯ
Savannah, Georgia |
$ |
151.81 |
|
|
$ |
152.61 |
|
|
$ |
146.52 |
|
|
$ |
155.87 |
|
|
$ |
154.52 |
|
|
$ |
146.75 |
|
Hilton Wilmington Riverside
Wilmington, North Carolina |
$ |
141.37 |
|
|
$ |
132.55 |
|
|
$ |
131.30 |
|
|
$ |
147.14 |
|
|
$ |
138.36 |
|
|
$ |
139.09 |
|
Sheraton Louisville Riverside
Jeffersonville, Indiana |
$ |
125.95 |
|
|
$ |
131.74 |
|
|
$ |
125.55 |
|
|
$ |
137.34 |
|
|
$ |
161.03 |
|
|
$ |
150.20 |
|
The Whitehall
Houston, Texas |
$ |
136.22 |
|
|
$ |
141.61 |
|
|
$ |
138.51 |
|
|
$ |
140.70 |
|
|
$ |
142.05 |
|
|
$ |
138.93 |
|
All properties weighted average* |
$ |
138.81 |
|
|
$ |
137.21 |
|
|
$ |
124.00 |
|
|
$ |
140.63 |
|
|
$ |
134.21 |
|
|
$ |
125.77 |
|
* |
Includes periods of non-ownership/partial ownership. |
† |
Property undergoing renovation during the current quarter.
|
|
|
RevPAR
|
Q4 2016 |
|
|
Q4 2015 |
|
|
Q4 2014 |
|
|
12 Months
2016 |
|
|
12 Months
2015 |
|
|
12 Months
2014 |
|
Crowne Plaza Hampton Marina
Hampton, Virginia |
$ |
35.80 |
|
|
$ |
43.63 |
|
|
$ |
39.84 |
|
|
$ |
53.40 |
|
|
$ |
51.64 |
|
|
$ |
48.27 |
|
Crowne Plaza Hollywood Beach Resort*
Hollywood, Florida |
$ |
114.65 |
|
|
$ |
99.73 |
|
|
$ |
132.56 |
|
|
$ |
135.74 |
|
|
$ |
146.53 |
|
|
$ |
135.55 |
|
Crowne Plaza Tampa Westshore
Tampa, Florida |
$ |
77.81 |
|
|
$ |
75.85 |
|
|
$ |
65.93 |
|
|
$ |
86.69 |
|
|
$ |
80.53 |
|
|
$ |
76.09 |
|
DoubleTree by Hilton Jacksonville Riverfront
Jacksonville, Florida |
$ |
102.93 |
|
|
$ |
76.77 |
|
|
$ |
67.47 |
|
|
$ |
98.06 |
|
|
$ |
73.60 |
|
|
$ |
65.24 |
|
DoubleTree by Hilton Laurel
Laurel, Maryland |
$ |
55.42 |
|
|
$ |
38.75 |
|
|
$ |
48.18 |
|
|
$ |
63.16 |
|
|
$ |
45.86 |
|
|
$ |
54.19 |
|
DoubleTree by Hilton Philadelphia Airport
Philadelphia, Pennsylvania |
$ |
92.88 |
|
|
$ |
99.34 |
|
|
$ |
85.53 |
|
|
$ |
111.66 |
|
|
$ |
108.13 |
|
|
$ |
101.58 |
|
DoubleTree by Hilton Raleigh Brownstone – University
Raleigh, North Carolina |
$ |
94.28 |
|
|
$ |
85.31 |
|
|
$ |
84.17 |
|
|
$ |
94.33 |
|
|
$ |
94.16 |
|
|
$ |
90.04 |
|
The Georgian Terrace *
Atlanta, Georgia |
$ |
112.54 |
|
|
$ |
101.05 |
|
|
$ |
93.46 |
|
|
$ |
113.88 |
|
|
$ |
108.70 |
|
|
$ |
105.88 |
|
Hilton Savannah DeSoto Ϯ
Savannah, Georgia |
$ |
95.67 |
|
|
$ |
110.52 |
|
|
$ |
105.31 |
|
|
$ |
111.48 |
|
|
$ |
118.89 |
|
|
$ |
111.14 |
|
Hilton Wilmington Riverside
Wilmington, North Carolina |
$ |
87.53 |
|
|
$ |
89.64 |
|
|
$ |
78.18 |
|
|
$ |
103.72 |
|
|
$ |
99.07 |
|
|
$ |
96.90 |
|
Sheraton Louisville Riverside
Jeffersonville, Indiana |
$ |
67.82 |
|
|
$ |
83.74 |
|
|
$ |
75.26 |
|
|
$ |
86.60 |
|
|
$ |
111.87 |
|
|
$ |
100.31 |
|
The Whitehall
Houston, Texas |
$ |
71.24 |
|
|
$ |
93.70 |
|
|
$ |
97.91 |
|
|
$ |
76.56 |
|
|
$ |
100.66 |
|
|
$ |
105.66 |
|
All properties weighted average* |
$ |
87.73 |
|
|
$ |
86.00 |
|
|
$ |
84.17 |
|
|
$ |
98.18 |
|
|
$ |
98.00 |
|
|
$ |
93.73 |
|
* |
Includes periods of non-ownership/partial ownership. |
† |
Property undergoing renovation during the current quarter. |
|
|
|
|
SOTHERLY HOTELS INC.
RECONCILIATION OF NET INCOME (LOSS) TO
FFO, Adjusted FFO, EBITDA, Adjusted EBITDA and Hotel EBITDA
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31,
2016 |
|
|
December 31,
2015 |
|
|
December 31,
2016 |
|
|
December 31,
2015 |
|
Net income/(loss) attributable to the common shareholders |
|
$ |
(746,143 |
) |
|
$ |
(522,174 |
) |
|
$ |
(218,173 |
) |
|
$ |
5,356,666 |
|
Add: Net income/(loss) attributable to the noncontrolling
interest |
|
|
(132,944 |
) |
|
|
(189,785 |
) |
|
|
(26,567 |
) |
|
|
1,040,987 |
|
Depreciation and amortization |
|
|
3,758,083 |
|
|
|
4,007,989 |
|
|
|
15,019,071 |
|
|
|
13,591,495 |
|
Impairment of Investment in hotel properties, net |
|
|
— |
|
|
|
500,000 |
|
|
|
— |
|
|
|
500,000 |
|
Equity in depreciation and amortization of joint venture |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
259,279 |
|
Loss on involuntary conversion of asset |
|
|
— |
|
|
|
37,835 |
|
|
|
— |
|
|
— |
|
Gain on change in control |
|
|
— |
|
|
|
(42,191 |
) |
|
|
— |
|
|
|
(6,603,148 |
) |
Loss (gain) on disposal of assets |
|
|
35,859 |
|
|
|
(248,673 |
) |
|
|
365,319 |
|
|
|
(41,435 |
) |
FFO |
|
$ |
2,914,855 |
|
|
$ |
3,543,001 |
|
|
$ |
15,139,650 |
|
|
$ |
14,103,844 |
|
Increase in deferred income taxes |
|
|
(1,102,777 |
) |
|
|
(1,364,402 |
) |
|
|
(1,558,966 |
) |
|
|
(1,780,571 |
) |
Acquisition costs |
|
|
— |
|
|
|
11,402 |
|
|
|
— |
|
|
|
634,376 |
|
Loss on Starwood settlement |
|
|
— |
|
|
|
324,271 |
|
|
|
— |
|
|
|
324,271 |
|
Over-assessed real estate taxes under appeal |
|
|
— |
|
|
|
497,733 |
|
|
|
— |
|
|
|
497,733 |
|
Loss on early debt extinguishment |
|
|
260,217 |
|
|
|
— |
|
|
|
1,417,905 |
|
|
|
772,907 |
|
Loan modification fees |
|
|
33,980 |
|
|
|
243,229 |
|
|
|
64,215 |
|
|
|
243,229 |
|
Unrealized (gain)loss on hedging activities |
|
|
(29,182 |
) |
|
|
2,011 |
|
|
|
37,384 |
|
|
|
108,819 |
|
Adjusted FFO attributed to common shareholders |
|
$ |
2,077,093 |
|
|
$ |
3,257,245 |
|
|
$ |
15,100,188 |
|
|
$ |
14,904,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted |
|
|
14,895,203 |
|
|
|
14,490,714 |
|
|
|
14,896,994 |
|
|
|
12,541,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of non-controlling units |
|
|
1,778,140 |
|
|
|
2,125,175 |
|
|
|
1,813,941 |
|
|
|
2,383,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares and units outstanding, basic and
diluted |
|
|
16,673,343 |
|
|
|
16,615,889 |
|
|
|
16,710,935 |
|
|
|
14,924,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share and unit |
|
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.91 |
|
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FFO per share and unit |
|
$ |
0.12 |
|
|
$ |
0.20 |
|
|
$ |
0.90 |
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31,
2016 |
|
|
December 31,
2015 |
|
|
December 31,
2016 |
|
|
December 31,
2015 |
|
Net income/(loss) attributable to the common shareholders |
|
$ |
(746,143 |
) |
|
$ |
(522,174 |
) |
|
$ |
(218,173 |
) |
|
$ |
5,356,666 |
|
Add: Net income/(loss) attributable to the noncontrolling
interest |
|
|
(132,944 |
) |
|
|
(189,785 |
) |
|
|
(26,567 |
) |
|
|
1,040,987 |
|
Interest expense |
|
|
3,862,974 |
|
|
|
4,655,178 |
|
|
|
17,735,107 |
|
|
|
16,515,827 |
|
Interest income |
|
|
(52,262 |
) |
|
|
(9,573 |
) |
|
|
(115,785 |
) |
|
|
(50,461 |
) |
Income tax benefit |
|
|
(1,059,236 |
) |
|
|
(1,339,288 |
) |
|
|
(1,367,634 |
) |
|
|
(1,336,033 |
) |
Depreciation and amortization |
|
|
3,758,083 |
|
|
|
4,007,989 |
|
|
|
15,019,071 |
|
|
|
13,591,495 |
|
Impairment of Investment in hotel properties, net |
|
|
— |
|
|
|
500,000 |
|
|
|
— |
|
|
|
500,000 |
|
Equity in interest, depreciation and amortization of joint
venture |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
640,188 |
|
Loss on early debt extinguishment |
|
|
260,217 |
|
|
|
— |
|
|
|
1,417,905 |
|
|
|
772,907 |
|
Loss (gain) on disposal of assets |
|
|
35,859 |
|
|
|
(243,271 |
) |
|
|
365,319 |
|
|
|
(41,435 |
) |
Loss on involuntary conversion of asset |
|
|
— |
|
|
|
37,835 |
|
|
|
— |
|
|
|
— |
|
Distributions to preferred shareholders |
|
|
805,000 |
|
|
|
— |
|
|
|
1,144,889 |
|
|
|
— |
|
EBITDA |
|
|
6,731,548 |
|
|
|
6,896,911 |
|
|
|
33,954,132 |
|
|
|
36,990,141 |
|
Acquisition costs |
|
|
— |
|
|
|
11,402 |
|
|
|
— |
|
|
|
634,376 |
|
Adjusted EBITDA |
|
|
6,731,548 |
|
|
|
6,908,313 |
|
|
|
33,954,132 |
|
|
|
37,624,517 |
|
Corporate general and administrative |
|
|
1,689,169 |
|
|
|
1,877,822 |
|
|
|
6,021,065 |
|
|
|
6,633,880 |
|
Equity in Adjusted EBITDA of joint venture |
|
|
— |
|
|
|
31,377 |
|
|
|
— |
|
|
|
(1,115,702 |
) |
Unrealized (gain) loss on hedging activities |
|
|
(29,182 |
) |
|
|
2,011 |
|
|
|
37,384 |
|
|
|
108,819 |
|
Gain on change in control |
|
|
— |
|
|
|
(42,191 |
) |
|
|
— |
|
|
|
(6,603,148 |
) |
Other fee income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(200,976 |
) |
Hotel EBITDA |
|
$ |
8,391,535 |
|
|
$ |
8,777,332 |
|
|
$ |
40,012,581 |
|
|
$ |
36,447,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
income tax provision or benefit, (4) equity in the income or loss of equity investees, (5) unrealized gains and losses on
derivative instruments not included in other comprehensive income, (6) gains and losses on disposal of assets,
(7) realized gains and losses on investments, (8) impairment of long-lived assets or investments, (9) loss on early
debt extinguishment, (10) gains or losses on change in control, (11) corporate general and administrative expense,
(12) depreciation and amortization, (13) gains and losses on involuntary conversions of assets, (14) loan modification
fees and (15) 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 changes in deferred income taxes, any unrealized gain (loss) on its hedging instruments or warrant
derivative, loan impairment losses, losses on early extinguishment of debt, aborted offering costs, franchise termination costs,
loan modification fees, costs associated with the departure of executive officers, litigation settlement, over-assessed real estate
taxes on appeal, change in control gains or losses 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.
Contact at the Company: Scott Kucinski Vice President – Operations & Investor Relations Sotherly Hotels Inc. 410 West Francis Street Williamsburg, Virginia 23185 757.229.5648
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