Executive Summary

Q1 2025 revenue was $48.31M, up 3.8% YoY and above S&P Global consensus by ~$0.91M; Hotel EBITDA rose 4.5% YoY while Adjusted FFO fell 12.8% YoY, reflecting higher interest costs and non-GAAP items . Revenue beat: $48.31M vs $47.40M estimate (1 estimate) – small positive surprise. Values retrieved from S&P Global.*
Management reiterated full‑year 2025 guidance (revenues $183.4–$188.2M; Hotel EBITDA $48.8–$49.6M; Adj. FFO $11.5–$12.3M; RevPAR $119.77–$122.89; Hotel EBITDA margin 26.1%–26.4%), signaling stable outlook despite macro caution .
Operating momentum was driven by occupancy gains, especially in urban markets (Philadelphia, Houston, Atlanta); ADR stabilized after sequential declines, supporting flow‑through and margin expansion; storm‑impacted Tampa (Hotel Alba) largely offset by business interruption insurance .
Balance sheet: $32.8M cash (incl. $21.3M restricted), $317.6M debt at 5.88% WAC; near‑term maturities in Atlanta and Hollywood likely addressed via CMBS extensions/modifications; potential to tap $20–$30M equity from Savannah/Wilmington to support refinancing .
Tactical catalysts: imminent reverse split (target July–August) to cure NASDAQ $1 bid deficiency; execution of PIP renovations ($11.5M Philadelphia; $14.6M Jacksonville) could improve rate capture and asset competitiveness .

What Went Well and What Went Wrong

What Went Well
- “Overall, we delivered a solid first quarter with results ahead of our internal expectations” as urban markets strengthened; ADR stabilized across top business/group markets .
- Property outperformance: DoubleTree Philadelphia (+34.3% RevPAR; +38.7% occupancy), Whitehall Houston (+19.4% RevPAR; +20.5% occupancy), Hollywood Beach Resort (+11.9% RevPAR; +11.8% occupancy), Ballast Wilmington (+6.5% RevPAR) .
- Margin tailwinds: portfolio Hotel EBITDA +9.4% YoY excluding a prior‑year $550K grant; ~100 bps Hotel EBITDA margin improvement; management expects margins to remain stable as wage pressures ease .
What Went Wrong
- Adj. FFO declined 12.8% YoY ($4.52M vs $5.18M) due to higher interest and non‑GAAP adjustments, despite top‑line growth; rate growth remains an industry challenge .
- Macro caution: weakened consumer sentiment, compressed booking windows; government segment demand pulled back in D.C.; pauses in group lead conversions late March–April .
- Financing headwinds: tighter underwriting, higher DSCR requirements and lower proceeds for CMBS refinancings (Atlanta, Hollywood) – likely resolved via extensions/mods; preferred dividends remain 11 quarters in arrears (~$21.9M accrued) .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD)	$40,699,981	$43,951,508	$48,312,344
Net income per common share – diluted ($)	$(0.29)	$(0.16)	$0.13
Hotel EBITDA ($USD)	$8,087,048	$10,667,747	$12,920,801
Adjusted FFO ($USD)	$(347,722)	$1,954,631	$4,517,131
Adjusted FFO per common share and unit ($)	$(0.02)	$0.10	$0.22
Composite Occupancy (%)	66.3%	64.1%	68.8%
Composite ADR ($)	$161.37	$170.10	$188.49
Composite RevPAR ($)	$107.02	$108.99	$129.74

Revenue vs Estimates

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue Consensus Mean ($USD)	$42,000,000*	$42,800,000*	$47,400,000*
Actual Revenue ($USD)	$40,699,981	$43,951,508	$48,312,344
Revenue – # of Estimates	1*	1*	1*

Values retrieved from S&P Global.*

Year-over-Year (Q1)

Metric	Q1 2024	Q1 2025
Revenue ($USD)	$46,548,432	$48,312,344
Hotel EBITDA ($USD)	$12,360,355	$12,920,801
Adjusted FFO ($USD)	$5,178,340	$4,517,131
Net income per common share – diluted ($)	$(0.03)	$0.13
Composite Occupancy (%)	64.9%	68.8%
Composite ADR ($)	$190.50	$188.49
Composite RevPAR ($)	$123.59	$129.74
Hotel EBITDA margin change (YoY)	—	+0.2%

Selected Property KPIs (Q1 2025 YoY)

Property	RevPAR YoY	Occupancy YoY	Notes
DoubleTree Philadelphia Airport	+34.3%	+38.7%	Group business +158% YoY; submarket demand tied to events/air traffic
The Whitehall (Houston)	+19.4%	+20.5%	Group +64% YoY; strong citywide demand
DoubleTree Resort Hollywood Beach	+11.9%	+11.8%	Hotel EBITDA +~37% YoY; group revenue +41%
Hotel Ballast (Wilmington)	+6.5%	+3.5%	RevPAR index 115.3%
Hotel Alba (Tampa)	RevPAR $180.57	—	BI insurance largely making EBITDA whole; operations normalized since Christmas

Non‑GAAP and One‑time items (Q1): Gain on involuntary conversion $3.87M recognized; BI insurance proceeds support reported revenue/EBITDA while headline ADR/RevPAR reflect pre‑insurance operations .

Guidance Changes

Metric	Period	Previous Guidance (Mar-13-2025)	Current Guidance (May-13-2025)	Change
Total revenues ($USD)	FY 2025	$183,388,000–$188,168,000	$183,388,000–$188,168,000	Maintained
Hotel EBITDA ($USD)	FY 2025	$48,829,000–$49,619,000	$48,829,000–$49,619,000	Maintained
Adjusted FFO ($USD)	FY 2025	$11,544,000–$12,349,000	$11,544,000–$12,349,000	Maintained
FFO per share and unit ($)	FY 2025	$0.52–$0.56	$0.52–$0.56	Maintained
Adjusted FFO per share and unit ($)	FY 2025	$0.57–$0.61	$0.57–$0.61	Maintained
RevPAR ($)	FY 2025	$119.77–$122.89	$119.77–$122.89	Maintained
Hotel EBITDA margin (%)	FY 2025	26.1%–26.4%	26.1%–26.4%	Maintained
CapEx – routine ($USD)	CY 2025	~$7.2M	~$7.2M	Maintained
PIP CapEx (Philadelphia/ Jacksonville) ($USD)	CY 2025	~$11.6M	~$11.4M	Updated (minor)

Dividend‑related: Preferred series cash dividends declared Apr‑29 ($0.50 B; $0.492188 C; $0.515625 D) payable Jun‑16 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 & Q4 2024)	Current Period (Q1 2025)	Trend
Urban market recovery	Strong occupancy gains in Philadelphia, Houston; stabilization across urban hotels	“Most pronounced gains in our urban markets… demand normalized”	Improving
ADR/rate dynamics	ADR declined YoY; rate softness offset by occupancy	ADR held flat YoY; rate stabilization observed	Stabilizing
Group/corporate demand	Group pacing +5.7%; solid corporate transient	Group strong but late‑Mar/Apr conversion pause; coastal assets healthy	Stable to cautious
Government segment	Not highlighted	Pullback in government demand in D.C. submarket	Negative
Hurricane Helene/BI insurance	Q4: BI proceeds expected to make EBITDA whole	Alba operating largely normal; BI ~$100–$200K in Q1 making EBITDA ~95% whole	Fading impact
Refinancing/CMBS maturities	Planned approach; refinancing completed at several assets	Atlanta/Hollywood likely extensions/mods; tighter DSCR yields lower proceeds	Manageable via extensions
Reverse split/NASDAQ compliance	Discussed timing window to cure <$1 bid	Target reverse split in July/August	Imminent
PIP renovations	Planned DoubleTree Philadelphia & Jacksonville	10‑year Hilton agreements; PIP budgets $11.5M (Philly) and $14.6M (JAX)	Executing

Management Commentary

“We were very pleased with our first quarter results, which came in ahead of expectations… continued occupancy recovery in our urban markets… ADR held flat year‑over‑year… translated into healthy margin performance” – CEO David Folsom .
“Hotel EBITDA across our entire portfolio increased 4.5%… excluding a $550,000 COVID‑related grant last year, Hotel EBITDA increased a healthy 9.4%… ~100 bps increase in Hotel EBITDA margins” – COO Scott Kucinski .
“We are reiterating our full year guidance for 2025… Total revenue $183.4M–$188.2M… Hotel EBITDA $48.8M–$49.6M… Adjusted FFO $11.5M–$12.3M or $0.57–$0.61 per share” – CFO Anthony Domalski .
Macro caution: “Consumer sentiment has weakened… increased price sensitivity and compressed booking windows… government segment… pullback” – CEO .
PIP execution: “10‑year franchise [Hilton]… DoubleTree Philadelphia PIP budget $11.5M… Jacksonville reposition to Hotel Bellamy with $14.6M renovation” – COO .

Q&A Highlights

Reverse split timing: execution likely in July/August to meet August 11 deadline; legal/documentation work underway .
Tampa BI insurance: hotel EBITDA “pretty much made whole” (~95%); BI proceeds ~$100K–$200K in the quarter; Alba RevPAR $180.57, slightly above prior year .
Refinancing plan: Atlanta and Hollywood CMBS maturities most likely addressed via 1–2 year extensions/modifications; expect higher rates, tighter underwriting, special servicing fees .
Liquidity strategy: potential to refinance Savannah and Wilmington conventionally, extracting $20–$30M cash to support refinancing/extensions elsewhere .
Preferred dividends accrual: ~$21.9M accrued; 11 quarters behind; making current payments on preferreds .

Estimates Context

Revenue v. consensus: Q1 2025 beat by ~$0.91M (Actual $48.31M vs Estimate $47.40M; 1 estimate); Q4 2024 beat by ~$1.15M; Q3 2024 missed by ~$1.30M. Values retrieved from S&P Global.*
EPS consensus: Unavailable via S&P Global for the quarters reviewed; reliance on reported diluted EPS.
Implication: Low estimate count (n=1) reduces signal quality; nonetheless, recurring small revenue beats in Q4/Q1 align with occupancy‑driven momentum and BI insurance smoothing effects .

Key Takeaways for Investors

Q1 demonstrated occupancy‑led outperformance with ADR stabilization; modest revenue beat and margin improvement support a constructive near‑term view despite Adj. FFO pressure from higher interest costs .
Guidance reiteration and healthy booking trends (RevPAR forecast 103%–105% of 2024) underpin 2025 stability; watch for second‑half caution around government demand and group conversion pacing .
Near‑term maturities likely addressed via CMBS extensions/mods; management has multiple levers (Savannah/Wilmington equity refi) to buttress liquidity; monitor terms (rates, fees, amortization) and impact on FFO .
Asset upgrades (Philadelphia PIP; Jacksonville reposition) are potential catalysts for rate capture and comp‑set outperformance; expect incremental benefits as projects progress through 2026–2027 .
Reverse split is a procedural catalyst to cure NASDAQ deficiency; execution (Jul/Aug) reduces listing risk and may broaden investor access .
Preferred dividends: current payments continue, but accrued balance remains large; equity holders should factor the capital allocation and refinancing path to reduce leverage over time .
Tactical positioning: momentum in urban/group assets and BI insurance tailwinds favor near‑term operations; risk‑watch on macro sensitivity (ADR recovery pace, government segment), refinancing outcomes, and second‑half demand volatility .

Notes:
- All document-based figures and quotes are cited inline.
- S&P Global consensus values marked with * and provided where available; EPS consensus was unavailable.

Sotherly Hotels Inc. (SOHO)·Q1 2025 Earnings Summary