Sotherly Hotels Inc. Q3 FY2024 earnings call

• Portfolio metrics: Q3 RevPAR trends, occupancy growth, and ADR impact from economic factors and storms.
• Hurricane impacts: Hurricanes Debby and Helene affected operations; Helene caused damage to Tampa asset with financial impact in Q4; Hotel Alba sustained water intrusion but remained open.
• Corporate activity: Secured loan on DoubleTree by Hilton Jacksonville Riverfront, new 10-year franchise agreement with Hilton, and renovation plans for Jacksonville hotel.
• Urban markets: Occupancy growth in Houston, Philadelphia, Atlanta; Whitehall Houston and DoubleTree Philadelphia Airport had strong occupancy gains.

The Composite portfolio's third quarter 2024 RevPAR increased 4.1% compared to 2023, driven by a 7.8% occupancy increase and a 3.4% decrease in ADR. Relative to 2019, Q3 RevPAR was up 6.4% due to 10.9% ADR growth but a 3.6% occupancy decrease. Year-to-date, RevPAR increased 4.6% over 2023 (6.9% occupancy gain, 2.2% rate decrease) and 5.3% relative to 2019 (10.6% ADR growth, 4.9% occupancy decline). Specific hotels: Hotel Alba and Tampa grew RevPAR by 13.6% (14.5% occupancy gain); DoubleTree Hotel in Philadelphia had 11% RevPAR growth (15.7% occupancy gain); Whitehall in Houston saw 51.9% RevPAR growth (60.4% occupancy gain); Hyatt Centric in Arlington had 3.7% RevPAR growth.

• 2024 total revenue projected in the range of $177.8 million to $180.1 million, representing a 3% increase at the midpoint.
• Hotel EBITDA projected in the range of $45 million to $45.6 million, a 1.1% increase at the midpoint.
• Adjusted FFO projected in the range of $12.8 million to $13.4 million or $0.65 to $0.68 per share, a 9.8% decrease at the midpoint.

• Hurricane impacts: Physical damage and operational disruptions from Hurricanes Debby, Helene, and Milton; potential financial impact on operations and recovery timelines.
• Weather-related business interruption: Uncertainty in timing of insurance recovery for hurricane-related damages and potential variances in earnings impact.

Q: Is the portfolio overall back to 2019?

A: Occupancy still far underperforms 2019, but there's opportunity to get occupancy back online with growth in group and business transient bookings.

Q: Can you explain the hurricane damage impact on earnings?

A: There will be impairment at the hotel reported in earnings, but business interruption insurance will recover it. Timing of recovery can be 30-90 days, and it's not expected to impact guidance.

Q: Thoughts on the second mortgage on the DeSoto?

A: Directly related to an exterior restoration project at the property, with funds used for property improvements as the asset has significant equity and low leverage.