• Revenue: Q4 2024 total revenue approximately $44 million, up 4.3% from Q4 2023; full-year 2024 revenue approximately $182 million, up 4.6% from 2023.
• RevPAR: Q4 2024 revPAR increased 2.9% compared to 2023; full-year 2024 revPAR increased 3.5% over 2023.
• Occupancy: Q4 2024 occupancy increased 7%; full-year 2024 occupancy increased 6.1% over 2023.
• ADR: Q4 2024 ADR decreased 3.7%; full-year 2024 ADR decreased 2.5%.
• Hotel EBITDA: Q4 2024 hotel EBITDA approximately $10.7 million, up 3.6% from Q4 2023; full-year 2024 hotel EBITDA approximately $46.8 million, up 4.5% from 2023.
• Adjusted FFO: Q4 2024 adjusted FFO approximately $2 million, down $850,000 from Q4 2023; full-year 2024 adjusted FFO approximately $14.3 million, down $250,000 from 2023.
• Cash and Debt: As of December 31, 2024, total cash approximately $28.7 million; outstanding debt approximately $319.3 million at a weighted average interest rate of 5.88%.
• Guidance for 2025: Projected total revenue $183.4 million to $188.2 million; hotel EBITDA $48.8 million to $49.6 million; adjusted FFO $11.5 million to $12.3 million.

• Warning! GuruFocus has detected 4 Warning Signs with SOHO.

Release Date: March 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sotherly Hotels Inc (NASDAQ:SOHO) reported a 2.9% increase in revPAR for Q4 2024, driven by a 7% increase in occupancy.
• Excluding the impact of Hurricane Helene, the actual portfolio revPAR increased by 5.8% compared to the prior year.
• The DoubleTree Resort in Hollywood, Florida, posted a strong 13.8% increase in revPAR, fueled by a 13.4% increase in occupancy.
• The Whitehall in Houston showed significant growth, with revPAR increasing by nearly 50%, driven by a 46.1% increase in occupancy.
• The company executed new 10-year franchise agreements with Hilton for properties in Philadelphia and Jacksonville, indicating long-term growth plans.

Negative Points

• The ADR decreased by 3.7% in Q4 2024, partially offsetting occupancy gains.
• Hurricane Helene caused significant operational impacts at Hotel Alba, with ongoing effects expected through Q2 2025.
• Adjusted FFO for Q4 2024 decreased by approximately $850,000 compared to the same quarter in 2023.
• Interest costs are expected to increase due to refinancing activities, impacting FFO negatively.
• The company received a notice from Nasdaq regarding its stock trading below $1, which may require a reverse stock split to comply with listing requirements.

Q & A Highlights

Q: Looking at guidance, your revenues and EBITDA are projected to be higher, yet FFO looks to decline. Is this due to refinancing activities or interest? What is the trajectory of FFO if operations are improving but FFO is going down? A: This is Tony, Alex. We're seeing improvements in revenue and EBITDA, but we have a number of loans originated 5 to 10 years ago at 4% to 5% interest rates that we're now refinancing. As a result, interest costs are increasing, which affects FFO. This trend will continue until we complete refinancing these legacy mortgages.

Q: Regarding the Nasdaq notice about the stock trading below $1, is a reverse split the easiest solution? How are you addressing this issue? A: That's right, Alex, it's Dave here. We have 180 days upon notice to cure the deficiency, typically by executing a reverse split to get above the dollar threshold. Alternatively, if the stock price rises above $1 during that period, it will resolve itself.

Q: For the hotels undergoing repairs, like Hotel Alba, is there anything in guidance for insurance recoveries? Is any part of FFO enhanced by recovering insurance dollars? A: This is Scott speaking. Our guidance assumes normal operations at the hotel, with business interruption proceeds from insurance carriers making us whole. The guidance assumes we're fully made whole, and any shortfall in expected operations will be covered by business interruption proceeds.

Q: Regarding refinancing this year, given the debt load and every asset encumbered, is there a plan to sell assets to unencumber others and improve leverage? A: Yes, we're always considering options to manage cash and the portfolio. We haven't focused on selling assets for this purpose. As fundamentals improve, we aim for better refinancing outcomes. Our strategy is to manage each mortgage due with legacy loan rates and structures for the best market outcome.

Q: Is the guidance for 2025 a good run rate for the portfolio, or is it enhanced by insurance recoveries? A: The guidance for 2025 reflects a good run rate for the portfolio without enhancement from insurance recoveries. It assumes normal operations and that any shortfall will be covered by business interruption proceeds.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.