Sotherly Hotels Inc. Q4 FY2024 earnings call

• Q4 results: Actual portfolio RevPAR up 2.9%, stripping Tampa up 5.8% yoy; same-store vs 2019 RevPAR up 3.8%. Full-year 2024 RevPAR up 3.5% driven by occupancy and rate changes. - Hurricane impact: Hotel Alba sustained water intrusion from Hurricane Helene, with restoration ongoing and impact to continue through Q2 2025. - Hotel highlights: DoubleTree Resort Hollywood FL RevPAR up 13.8%; Whitehall Houston RevPAR up nearly 50%; DoubleTree Philadelphia RevPAR up 9.4%; Hotel Ballast Wilmington RevPAR up 7.1%. - Profitability: Hotel EBITDA margin slight yoy decline, but stripping one-time event, Q4 margin up 150 basis points. - Corporate activity: PIP renovations in Philadelphia (DoubleTree, $11.5M budget, completion May 2026) and Jacksonville (Hotel Bellamy, $14.6M budget, completion Jan 2027).

For the fourth quarter, total revenue was approximately $44 million, an increase of 4.3% over Q4 2023. Year-to-date total revenue was approximately $182 million, up 4.6% from full-year 2023. Hotel EBITDA for Q4 was approximately $10.7 million, a 3.6% increase from Q4 2023, and year-to-date hotel EBITDA was approximately $46.8 million, up 4.5% from full-year 2023. Adjusted FFO for Q4 was approximately $2 million, up about $850,000 from Q4 2023, while year-to-date adjusted FFO was approximately $14.3 million, a decrease of approximately $250,000 from the prior year. Q4 actual portfolio RevPAR increased 2.9% driven by 7% occupancy growth and 3.7% ADR decrease; stripping Tampa due to hurricane impact, Q4 RevPAR increased 5.8% yoy. Same-store portfolio vs 2019: RevPAR up 3.8% with 7.9% ADR growth and 3% occupancy decline. Full-year 2024 RevPAR up 3.5% driven by 6.1% occupancy growth and 2.5% rate decrease; stripping Tampa, full-year RevPAR up 3.9% yoy. Same-store vs 2019: RevPAR up 1.3% with 8.6% ADR growth and 6.8% occupancy decline.

• 2025 guidance: Total revenue projected $183.4M-$188.2M (midpoint +2.1% yoy), hotel EBITDA $48.8M-$49.6M (midpoint +5.2% yoy), adjusted FFO $11.5M-$12.3M ($0.57-$0.61 per share, midpoint +16.4% yoy). - Preliminary Jan 2025 RevPAR up 12.8% yoy. - 2025 RevPAR forecast for portfolio: 103%-105% of 2024 RevPAR.

• Hurricane Helene impact on Hotel Alba continuing through Q2 2025. - Interest cost creep due to refinancing legacy loans with higher interest rates. - Stock price below $1 threshold needing cure by August 2025 via reverse split or price increase.

Q: Looking at guidance, revenue and EBITDA are higher but FFO looks to decline; color on refinancing activities and FFO trajectory.

A: Tony Domalski says interest costs creep up due to refinancing legacy loans with lower past interest rates.

Q: Thoughts on reverse split to cure stock price below $1 threshold.

A: Dave Folsom says they have 180 days to cure, which can be done via reverse split or stock price rising above $1.

Q: Insurance recoveries impact on FFO in guidance.

A: Scott Kucinski says guidance assumes normal operations with business interruption proceeds already factored in, assuming full recovery.

Q: Thought on selling assets to unencumber and improve leverage.

A: Dave Folsom says they are always looking at options but not focused on selling assets for that purpose currently, focusing on refinancing legacy mortgages.