Sotherly Hotels Inc. Q1 FY2025 earnings call

• Q1 RevPAR increased 6.4% y-o-y, with occupancy up 6.4%, ADR flat. Stripping out Tampa due to Hurricane Helene, RevPAR increased 7.3% y-o-y. - Urban markets saw strong occupancy growth buoyed by special events like Presidential Inauguration, NFL playoffs, and College Football National Championship. - Key assets: DoubleTree Resort Hollywood had RevPAR up 11.9%, Hotel Ballast Wilmington had RevPAR up 6.5%, The Whitehall Houston had RevPAR up 19.4%, DoubleTree Philadelphia Airport had RevPAR up 34.3%. - Portfolio hotel EBITDA increased 4.5% y-o-y, excluding COVID grant it was 9.4%, margins up 100 basis points. - Corporate activity: PIP renovations planned for DoubleTree Philadelphia Airport (budget $11.5M, completed May 1, 2026) and DoubleTree Jacksonville (budget $14.6M, completed Jan 1, 2027). - Balance sheet: As of March 31, 2025, total cash was ~$32.8M, outstanding debt ~$317.6M at 5.88% weighted average rate, ~84.4% fixed rate. Anticipated 2025 capital expenditures: ~$7.2M routine, ~$11.4M for PIP projects.

For the first quarter, total revenue was approximately $48.3 million, a 3.8% increase over Q1 2024. Hotel EBITDA was approximately $12.9 million, up 4.5% y-o-y. Excluding the $550,000 one-time COVID-related grant in Savannah in Q1 2024, hotel EBITDA increased 9.4% y-o-y, translating to a 100 basis point increase in hotel EBITDA margins. Key assets: DoubleTree Resort in Hollywood had RevPAR up 11.9%, Hotel Ballast in Wilmington had RevPAR up 6.5%, The Whitehall in Houston had RevPAR up 19.4%, and DoubleTree Philadelphia Airport had RevPAR up 34.3%. The portfolio's hotel EBITDA across the entire portfolio increased 4.5% y-o-y, with urban markets benefiting from occupancy growth driving ancillary revenue and operating efficiency.

• Reiterated full year 2025 guidance: Total revenue projected $183.4M - $188.2M (midpoint +2.1% y-o-y). Hotel EBITDA projected $48.8M - $49.6M (midpoint +5.2% y-o-y). Adjusted FFO projected $11.5M - $12.3M ($0.57 - $0.61 per share, midpoint -16.4% y-o-y).

• Macro-economic uncertainty impacting lodging industry, including consumer sentiment weakness, government segment demand pullback, and group booking lead conversions pause in late March/April. - Debt maturities in Atlanta and Hollywood CMBS deals, with uncertainty in refinancing due to higher rates, tighter underwriting standards, and DSCR coverages.

Q: Regarding reverse split timing, last quarter mentioned August 11 drop dead date, intent?

A: We'll get it done close to that date or sooner, working on it now, expecting to execute in July or August.

Q: Delta between actual revenue from Alba and business interruption insurance?

A: Top-line room revenue suffers, but hotel EBITDA is pretty much made whole, though debate with insurance carriers on exact percentage, but hotel is operating mostly normal now.

Q: Refinancing of Atlanta and Hollywood loans, outlook?

A: Most likely extensions and modifications, with higher rates, tighter underwriting, preference is to extend, consistent with market trends.

Q: Cash on hand vs CapEx and refinancing needs?

A: Have $11.5M unrestricted cash, planning $7M CapEx, but can refinance Savannah and Wilmington assets with $20M - $30M financeable equity to support refinancing needs.

Q: Accrued balance on preferred dividends?

A: About $21.9 million, 11 quarters behind, but current payments are being made.