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Sotherly Hotels Inc. (SOHO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $43.95M (+4.3% YoY), Hotel EBITDA $10.67M (+3.6% YoY), while diluted EPS was $(0.16); Adjusted FFO per share was $0.10 .
  • 2025 outlook introduced: total revenue $183.4–$188.2M, Hotel EBITDA $48.8–$49.6M, Adjusted FFO $11.5–$12.3M ($0.57–$0.61 per share), RevPAR $119.77–$122.89, Hotel EBITDA margin 26.1–26.4% .
  • Management highlighted strong occupancy recovery in urban markets, resilient performance at Hollywood (FL), and ongoing insurance proceeds offsetting Tampa (Hotel Alba) hurricane impacts; Q4 RevPAR rose 2.6% to $108.99 on 64.1% occupancy and ADR of $170.10 .
  • Key stock reaction catalysts: potential NASDAQ compliance actions (reverse split under consideration), interest expense pressure weighing on FFO despite revenue/EBITDA growth, and visibility into 2025 RevPAR (103–105% of 2024) .
  • Wall Street consensus estimates (S&P Global) were unavailable at time of report due to data limits; estimate comparisons not included [GetEstimates error]*.

What Went Well and What Went Wrong

What Went Well

  • Occupancy-led recovery in slower-to-recover urban markets; portfolio occupancy up 6.1% in Q4 with robust RevPAR share gains at Philadelphia and Houston (Whitehall) and outperformance at Hollywood, FL DoubleTree .
  • Q4 RevPAR +2.6% to $108.99 on 64.1% occupancy; stripping Tampa hurricane impact, actual portfolio RevPAR +5.8% YoY; several properties gained meaningful comp-set share .
  • Achieved full-year guidance targets for revenue, Hotel EBITDA, and Adjusted FFO; management cites streamlined revenue management and ancillary revenue capture supporting stable margins ex one-time items .

“Preliminary January RevPAR showed a 12.8% improvement over prior year… 2025 RevPAR forecasted to range between 103% and 105% of full year 2024 RevPAR.” — CEO David Folsom .

What Went Wrong

  • Rate softness: ADR declined 3.9% YoY in Q4; management noted normalization following “revenge travel” trends, partially offsetting occupancy gains .
  • FFO pressure: despite revenue/EBITDA growth, higher refinancing interest costs expected to drive FFO down until legacy mortgages are fully refinanced .
  • Hurricane Helene impacted Tampa (Hotel Alba) operations; while business interruption insurance credits helped revenue/profitability, restoration work and minor ongoing BI impacts continue into Q2 2025 .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$50.694 $40.700 $43.952
Diluted EPS ($)$0.13 $(0.29) $(0.16)
FFO per common share and unit ($)$0.37 $(0.04) $0.08
Adjusted FFO per common share and unit ($)$0.38 $(0.02) $0.10
Hotel EBITDA ($USD Millions)$15.698 $8.087 $10.668
Hotel EBITDA Margin (%)30.9% 19.9% 24.3%

Notes: Hotel EBITDA margin is calculated as Hotel EBITDA divided by Total Revenue using reported figures .

Segment Revenue Breakdown (by department)

Revenue ComponentQ2 2024 ($USD M)Q3 2024 ($USD M)Q4 2024 ($USD M)
Rooms Department$34.576 $26.833 $27.600
Food & Beverage$9.902 $9.460 $9.213
Other Operating Depts$6.217 $5.856 $7.138
Total Revenue$50.694 $42.148 $43.952

Lodging KPIs (Composite Portfolio)

KPIQ2 2024Q3 2024Q4 2024
Occupancy (%)73.4% 66.3% 64.1%
ADR ($)$187.51 $161.37 $170.10
RevPAR ($)$137.67 $107.02 $108.99

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD M)FY 2025—$183.4–$188.2 Initiated
Hotel EBITDA ($USD M)FY 2025—$48.8–$49.6 Initiated
Adjusted FFO ($USD M)FY 2025—$11.5–$12.3; $0.57–$0.61/sh Initiated
RevPAR ($)FY 2025—$119.77–$122.89 Initiated
Hotel EBITDA Margin (%)FY 2025—26.1%–26.4% Initiated
Capital Expenditures ($USD M)CY 2025Routine ~$7.2; PIPs ~$11.6 As stated Established
FY 2024 Outlook (for reference)FY 2024Revised revenue $177.8–$180.1; Hotel EBITDA $45.0–$45.6; Adj. FFO $12.82–$13.42 Actual: Revenue $181.9; Hotel EBITDA $46.8; Adj. FFO $14.29 Achieved above revised ranges
Preferred DividendsQ1 2025 pay date—Series B $0.50; Series C $0.492188; Series D $0.515625 (paid Mar 14, 2025) Ongoing

Earnings Call Themes & Trends

TopicQ2 2024 (Previous)Q3 2024 (Previous)Q4 2024 (Current)Trend
Urban market recoveryPositive momentum at Hyatt Centric Arlington, DeSoto, Georgian Terrace; comp-set share capture Urban submarkets improving, strong airport traffic at Philadelphia “Occupancy growth was especially strong in our slower-to-recover urban markets” Improving
ADR softness / pricingADR softened due to leisure price sensitivity, particularly FL ADR down, mixed across markets ADR down 3.9% YoY; normalization post “revenge travel” Normalizing/lower
Group/corporate demandUpside at Arlington, Savannah, Atlanta; bookings strong Group strength at Wilmington (banquet/catering) Group is strongest growth driver; Hollywood group revenue +15% Strengthening
Hurricane Helene impactN/AHotel Alba impacted; BI insurance expected to recover lost revenues Alba fully operational in Q4; BI proceeds collected; residual impact minimal Recovering
Debt/refinancing~$100M refinancings/extensions by mid-year Jacksonville mortgage refinanced; DeSoto 2nd mortgage Several extensions/refis completed; interest costs expected to creep up; cautious approach to maturities Ongoing
NASDAQ deficiencyN/AN/AReverse split considered to cure <$1 deficiency; 180 days to cure Active compliance planning

Management Commentary

  • “We were pleased with our portfolio’s fourth quarter results… improved operating fundamentals and continued occupancy growth… achieved our full year guidance targets for revenue, hotel EBITDA and adjusted FFO” — CEO David Folsom .
  • “RevPAR increased 2.9%… occupancy +7% with ADR down 3.7%; excluding Tampa, Q4 RevPAR +5.8% YoY… EBITDA margin improved +152 bps ex prior-year grant” — COO Scott Kucinski .
  • “We’re projecting total revenue $183.4–$188.2M, Hotel EBITDA $48.8–$49.6M, Adjusted FFO $11.5–$12.3M ($0.57–$0.61/sh)” — CFO Anthony Domalski .
  • “Preliminary January RevPAR… +12.8% YoY; FY2025 RevPAR forecast 103–105% of FY2024” — CEO David Folsom .
  • “Restoration at Hotel Alba fully insured; hotel remained fully operational; final FF&E and elevator work remain” — Press release .

Q&A Highlights

  • FFO trajectory: Despite revenue/EBITDA growth, rising interest expense from refinancing legacy mortgages expected to weigh on FFO until refinancings complete; plateau thereafter .
  • NASDAQ compliance: Reverse split is an option to cure <$1 deficiency within 180 days; could also cure via stock price appreciation .
  • Insurance recoveries/Alba: Guidance assumes normal operations and BI proceeds making results whole monthly; residual BI minimal as restoration largely complete .
  • Portfolio strategy/leverage: Asset sales not a primary focus; priority is optimizing each refinancing given sticky debt yield/coverage constraints, with rates lower than last year .

Estimates Context

  • S&P Global consensus estimates (EPS/revenue) for Q4 2024 were unavailable at time of report due to SPGI daily request limits; therefore, explicit beat/miss versus consensus cannot be provided [GetEstimates error]*.
  • Given management guidance and actuals, Street models may need to incorporate: ADR normalization dynamics, 2025 RevPAR 103–105% of 2024, higher interest expense burden compressing FFO despite EBITDA growth .

*Values would be retrieved from S&P Global when accessible.

Key Takeaways for Investors

  • Occupancy-led recovery and group strength underpin stable-to-improving property-level margins even as ADR normalizes; Q4 RevPAR improved and January trends were strong .
  • FY2025 guide implies Hotel EBITDA up vs 2024 (midpoint +5.2%), but FFO down due to higher interest costs; monitor refinancing pacing and debt service metrics .
  • Hurricane impacts are largely mitigated via insurance; Alba operations normal with minor residual BI; reduces tail risk from weather events .
  • NASDAQ <$1 compliance is a near-term event risk; reverse split is on the table and could act as a technical catalyst .
  • Property-specific momentum (Hollywood, Philadelphia, Houston) and planned PIPs ($11.5M Philadelphia, $14.6M Jacksonville) should support rate capture and long-term value once completed .
  • Portfolio-level KPIs suggest stabilization: Q4 occupancy 64.1%, ADR $170.10, RevPAR $108.99; 2025 RevPAR guidance provides visibility (119.77–122.89) .
  • Near-term trading lens: favor setups around refinancing headlines and NASDAQ compliance actions; medium-term thesis hinges on execution of PIPs, urban recovery, and interest cost normalization .