WILLIAMSBURG, Va., Nov. 4, 2014 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (Nasdaq:SOHO), ("Sotherly", "SoTHERLY", or the "Company"), a self-managed and self-administered lodging real estate investment trust (a "REIT"), today reported its consolidated results for the third quarter ended September 30, 2014. The Company's results include the following*:
| Three months ended | Nine months ended | |||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |
| ($ in thousands except per share data) | ||||
| Total Revenue | $ 31,764 | $ 21,459 | $ 93,115 | $ 68,899 |
| Net income (loss) attributable to the Company | (215) | (1,650) | 2,735 | (2,934) |
| EBITDA | 6,762 | 4,159 | 23,172 | 13,454 |
| Adjusted EBITDA | 6,762 | 4,474 | 23,327 | 16,404 |
| Hotel EBITDA | 7,509 | 5,106 | 25,271 | 17,922 |
| FFO | 3,332 | 60 | 12,788 | 2,758 |
| Adjusted FFO | 2,954 | 2,068 | 12,258 | 9,055 |
| Net income (loss) per basic and diluted share attributable to the Company | $ (0.02) | $ (0.16) | $ 0.27 | $ (0.29) |
| FFO per share and unit | 0.25 | 0.00 | 0.98 | 0.21 |
| Adjusted FFO per share and unit | 0.23 | 0.16 | 0.94 | 0.69 |
(*) Earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, hotel EBITDA, funds from operations ("FFO"), adjusted FFO, FFO per share and unit and adjusted FFO per share and unit are non‑GAAP financial measures. See further discussion of these non-GAAP measures, including definitions related thereto, and reconciliations to net income (loss) later in this press release. All references in this release to the "Company", "Sotherly", "SoTHERLY", "we", "us" and "our" refer to Sotherly Hotels Inc., its operating partnership and its subsidiaries and predecessors, unless the context otherwise requires or where otherwise indicated.
HIGHLIGHTS:
- Adjusted FFO. The Company generated adjusted FFO of approximately $3.0 million during the third quarter 2014, an increase of 42.9% or approximately $0.9 million over the third quarter 2013.
- Common Dividends. On July 22, 2014, the Company announced a quarterly dividend (distribution) on its common stock (and units) of $0.065 per share (and unit), which was paid on October 15, 2014 to stockholders (and unitholders) of record as of October 2, 2014. On October 28, 2014, the Company announced a quarterly dividend (distribution) on its common stock (and units) of $0.065 per share (and unit), payable on January 9, 2015 to stockholders (and unitholders) of record as of December 15, 2014.
- RevPAR. Room revenue per available room ("RevPAR") for the Company's wholly-owned properties during the third quarter 2014 increased 13.9% over the third quarter 2013 to $89.60 driven by a 5.9% increase in occupancy and a 7.5% increase in average daily rate ("ADR").
- Hotel EBITDA. The Company generated hotel EBITDA of approximately $7.5 million during the third quarter 2014, an increase of 47.0% or approximately $2.4 million over the third quarter 2013.
- Adjusted EBITDA. The Company generated adjusted EBITDA of approximately $6.8 million during the third quarter 2014, an increase of 51.1% or approximately $2.2 million over the third quarter 2013.
Andrew M. Sims, Chairman and Chief Executive Officer of Sotherly Hotels Inc., commented, "We continued our string of posting impressive quarterly financial results. The third quarter experienced significant increases in RevPAR, EBITDA, FFO and AFFO. Most of our markets remain healthy and we expect favorable market conditions to continue into 2015."
Balance Sheet/Liquidity
At September 30, 2014, the Company had total cash of approximately $24.1 million, consisting of available cash and cash equivalents of approximately $16.9 million, and restricted cash of approximately $7.2 million reserved for real estate taxes, insurance, capital improvements and certain other expenses or otherwise restricted. The Company had approximately $250.2 million in outstanding debt at a weighted average interest rate of approximately 5.47%.
Portfolio Update
On August 28, 2014, the Company announced the execution of a 10-year franchise agreement with Hilton Worldwide to rebrand its Jacksonville, Florida hotel as the DoubleTree by Hilton Jacksonville Riverfront. The Company currently operates the hotel under IHG's Crowne Plaza brand. Included in the Company's operating results is a charge of approximately $0.4 million for early termination of the franchise agreement with Holiday Hospitality Franchising, Inc. (IHG). The hotel is scheduled to open under the new brand on September 1, 2015, subject to the completion of certain product improvement requirements. The hotel is currently undergoing an extensive renovation which is scheduled to be completed in the third quarter 2015.
On October 21, 2014, the Company announced a new 10-year franchise agreement with Hilton Worldwide to rebrand its Laurel, Maryland hotel to operate under under the DoubleTree brand as the DoubleTree by Hilton Laurel. The Company currently operates the hotel under IHG's Holiday Inn brand. The hotel is scheduled to open under the new brand on or before October 31, 2015, subject to the completion of certain product improvement requirements.
On October 27, 2014, the Company's hotel in Philadelphia, Pennsylvania was rebranded as the DoubleTree by Hilton Philadelphia Airport. The Company had previously operated the hotel as the Hilton Philadelphia Airport.
2014 Outlook
The Company is updating its prior guidance for 2014, accounting for current and expected performance within its portfolio and is predicated on estimates of occupancy and ADR that are consistent with the most recent 2014 calendar year forecasts by Smith Travel Research for the market segments in which the Company operates.
The table below reflects the Company's projections, within a range, of various financial measures for 2014, as compared to its previously updated guidance for 2014 (in $000s, except per share data):
| Prior 2014 Guidance | Revised 2014 Guidance | |||
| Low Range | High Range | Low Range | High Range | |
| Total revenue | $ 120,441 | $ 122,997 | $ 120,441 | $ 122,997 |
| Net income | 4,110 | 5,425 | 3,900 | 5,215 |
| EBITDA | 29,058 | 30,403 | 28,708 | 30,053 |
| Hotel EBITDA | 31,500 | 32,730 | 31,150 | 32,380 |
| FFO | 13,760 | 15,075 | 13,550 | 14,865 |
| Adjusted FFO | 14,411 | 15,726 | 14,411 | 15,726 |
| Net income per share attributable to the Company | $ 0.31 | $ 0.41 | $ 0.30 | $ 0.40 |
| FFO per share and unit | 1.05 | 1.15 | 1.03 | 1.13 |
| Adjusted FFO per share and unit | 1.10 | 1.20 | 1.10 | 1.20 |
Earnings Call/Webcast
The Company will conduct its third quarter 2014 conference call for investors and other interested parties at 10:00 a.m. Eastern Time on Tuesday, November 4, 2014. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 888-339-0107 (United States) or 855-669-9657 (Canada) or +1 412-902-4188 (International). To participate on the webcast, log on to www.sotherlyhotels.com at least 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning one hour after completion of the live call on November 4, 2014 through September 30, 2015. To access the rebroadcast, dial 877-344-7529 and enter conference number 10053943. A replay of the call also will be available on the Internet at www.sotherlyhotels.com until September 30, 2015.
About Sotherly Hotels Inc.
Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. Currently, the Company's portfolio consists of investments in twelve hotel properties, eleven of which are wholly-owned and comprise 2,698 rooms. The Company also has a 25.0% interest in the Crowne Plaza Hollywood Beach Resort. Many of the Company's properties operate under the Hilton, Crowne Plaza, DoubleTree, Sheraton and Holiday Inn brands. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information please visit www.sotherlyhotels.com.
Forward-Looking Statements
This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable, these statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict and many of which are beyond the Company's control. Therefore, actual outcomes and results may differ materially from what is expressed, forecasted or implied in such forward-looking statements. Factors which could have a material adverse effect on the Company's future results, performance and achievements, include, but are not limited to: national and local economic and business conditions that affect occupancy rates and revenues at the Company's hotels and the demand for hotel products and services; risks associated with the hotel industry, including competition, increases in wages and other labor costs, energy costs and other operating costs; the magnitude and sustainability of the economic recovery in the hospitality industry and in the markets in which the Company operates; the availability and terms of financing and capital and the general volatility of the securities markets; risks associated with the level of the Company's indebtedness and its ability to meet covenants in its debt agreements and, if necessary, to refinance or seek an extension of the maturity of such indebtedness or modify such debt agreements; management and performance of the Company's hotels; risks associated with the conflicts of interest of the Company's officers and directors; risks associated with redevelopment and repositioning projects, including delays and cost overruns; supply and demand for hotel rooms in the Company's current and proposed market areas; the Company's ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations; the Company's ability to successfully expand into new markets; legislative/regulatory changes, including changes to laws governing taxation of REITs; the Company's ability to maintain its qualification as a REIT; and the Company's ability to maintain adequate insurance coverage. These risks and uncertainties are described in greater detail under "Risk Factors" in the Company's Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to and does not intend to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Although the Company believes its current expectations to be based upon reasonable assumptions, it can give no assurance that its expectations will be attained or that actual results will not differ materially.
Financial Tables Follow…
| SOTHERLY HOTELS INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| September 30, 2014 | December 31, 2013 | |
| (unaudited) | (audited) | |
| ASSETS | ||
| Investment in hotel properties, net | $ 260,580,066 | $ 202,645,633 |
| Investment in joint venture | 1,944,843 | 2,446,039 |
| Cash and cash equivalents | 16,916,480 | 9,376,628 |
| Restricted cash | 7,185,323 | 3,796,141 |
| Accounts receivable, net | 2,977,140 | 1,982,091 |
| Accounts receivable-affiliate | 65,254 | 101,439 |
| Prepaid expenses, inventory and other assets | 3,535,636 | 2,444,975 |
| Shell Island sublease, net | 60,049 | 240,196 |
| Deferred income taxes | 2,223,303 | 1,186,122 |
| Deferred financing costs, net | 4,209,837 | 3,820,838 |
| TOTAL ASSETS | $ 299,697,931 | $ 228,040,102 |
| LIABILITIES | ||
| Mortgage debt | $ 203,564,851 | $ 160,363,549 |
| Loans payable | 19,000,000 | — |
| Unsecured notes | 27,600,000 | 27,600,000 |
| Accounts payable and accrued liabilities | 14,244,465 | 7,650,219 |
| Advance deposits | 1,519,127 | 666,758 |
| Dividends and distributions payable | 853,129 | 588,197 |
| TOTAL LIABILITIES | 266,781,572 | 196,868,723 |
| Commitments and contingencies | ||
| EQUITY | ||
| Sotherly Hotels Inc. stockholders' equity | ||
| Preferred stock, par value $0.01; 1,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | — | — |
| Common stock, par value $0.01; 49,000,000 shares authorized; 10,370,932 shares and 10,206,927 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 103,709 | 102,069 |
| Additional paid in capital | 58,158,255 | 57,534,113 |
| Distributions in excess of retained earnings | (31,128,942) | (32,210,917) |
| Total Sotherly Hotels Inc. stockholders' equity | 27,133,022 | 25,425,265 |
| Noncontrolling interest | 5,783,337 | 5,746,114 |
| TOTAL EQUITY | 32,916,359 | 31,171,379 |
| TOTAL LIABILITIES AND EQUITY | $ 299,697,931 | $ 228,040,102 |
| SOTHERLY HOTELS INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (unaudited) | ||||
|
Three months ended September 30, 2014 |
Three months ended September 30, 2013 |
Nine months ended September 30, 2014 |
Nine months ended September 30, 2013 |
|
| REVENUE | ||||
| Rooms department | $ 22,240,896 | $ 15,290,818 | $ 65,110,333 | $ 47,692,797 |
| Food and beverage department | 7,643,454 | 5,121,631 | 22,915,192 | 15,947,997 |
| Other operating departments | 1,880,103 | 1,046,188 | 5,089,017 | 3,258,298 |
| Total revenue | 31,764,453 | 21,458,637 | 93,114,542 | 66,899,092 |
| EXPENSES | ||||
| Hotel operating expenses | ||||
| Rooms department | 6,175,342 | 4,300,441 | 17,205,451 | 12,877,637 |
| Food and beverage department | 5,417,434 | 3,358,603 | 15,424,254 | 10,273,994 |
| Other operating departments | 327,942 | 121,715 | 864,949 | 347,739 |
| Indirect | 12,190,045 | 8,438,237 | 33,863,830 | 25,009,858 |
| Total hotel operating expenses | 24,110,763 | 16,218,996 | 67,358,484 | 48,509,228 |
| Depreciation and amortization | 3,472,760 | 2,038,000 | 8,896,057 | 6,121,871 |
| Corporate general and administrative | 1,039,318 | 866,551 | 3,738,314 | 3,084,023 |
| Total operating expenses | 28,622,841 | 19,123,547 | 79,992,855 | 57,715,122 |
| NET OPERATING INCOME | 3,141,612 | 2,335,090 | 13,121,687 | 9,183,970 |
| Other income (expense) | ||||
| Interest expense | (3,994,261) | (3,899,128) | (10,803,127) | (8,912,319) |
| Interest income | 6,630 | 3,579 | 13,785 | 11,139 |
| Equity (loss) income in joint venture | (156,165) | (122,637) | 248,803 | 434,479 |
| Unrealized gain (loss) on warrant derivative | — | (340,750) | — | (3,020,960) |
| Net income (loss) before income taxes | (1,002,184) | (2,023,846) | 2,581,148 | (2,303,691) |
| Income tax benefit (provision) | 722,170 | (93,962) | 893,706 | (1,468,835) |
| Net income (loss) | (280,014) | (2,117,808) | 3,474,854 | (3,772,526) |
| Add: Net (income) loss attributable to the noncontrolling interest | 65,112 | 468,086 | (740,065) | 838,478 |
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ (214,902) | $ (1,649,722) | $ 2,734,789 | $ (2,934,048) |
| Net income (loss) per share attributable to the Company | ||||
| Basic and diluted | $ (0.02) | $ (0.16) | $ 0.27 | $ (0.29) |
| Weighted average number of shares outstanding | ||||
| Basic and diluted | 10,353,988 | 10,181,927 | 10,311,595 | 10,137,021 |
SOTHERLY HOTELS INC.
KEY OPERATING METRICS
(unaudited)
The following tables illustrate the key operating metrics for the three and nine months ended September 30, 2014 and 2013, respectively, for the Company's wholly-owned properties during each respective reporting period ("consolidated" properties) as well as the nine wholly-owned properties in the portfolio that were under the Company's control during both the three and nine months ended September 30, 2014 and the corresponding periods in 2013 ("same-store" properties). Accordingly, the same-store data does not reflect the performance of the Crowne Plaza Houston Downtown, which was acquired in November 2013, or the Georgian Terrace, which was acquired in March 2014. Each table excludes performance data for the Crowne Plaza Hollywood Beach Resort, which was acquired through a joint venture in August 2007 and in which the Company has a 25.0% indirect interest.
| Consolidated Properties | Three Months Ended September 30, | ||
| 2014 | 2013 | Variance | |
| Occupancy | 73.1% | 69.0% | 5.9% |
| ADR | $ 122.61 | $ 114.00 | 7.5% |
| RevPAR | $ 89.60 | $ 78.66 | 13.9% |
| Consolidated Properties | Nine months Ended September 30, | ||
| 2014 | 2013 | Variance | |
| Occupancy | 72.7% | 69.5% | 4.7% |
| ADR | $ 126.32 | $ 119.02 | 6.1% |
| RevPAR | $ 91.85 | $ 82.68 | 11.1% |
| Same-Store Properties (9 Hotels) | Three Months Ended September 30, | ||
| 2014 | 2013 | Variance | |
| Occupancy | 71.7% | 69.0% | 4.0% |
| ADR | $ 118.14 | $ 114.00 | 3.6% |
| RevPAR | $ 84.75 | $ 78.66 | 7.7% |
| Same-Store Properties (9 Hotels) | Nine months Ended September 30, | ||
| 2014 | 2013 | Variance | |
| Occupancy | 71.2% | 69.5% | 2.5% |
| ADR | $ 123.20 | $ 119.02 | 3.5% |
| RevPAR | $ 87.71 | $ 82.68 | 6.1% |
SOTHERLY HOTELS INC.
SUPPLEMENTAL DATA
(unaudited)
The following tables illustrate the key operating metrics for the three and nine months ended September 30, 2014, 2013 and 2012, respectively, for each of the Company's wholly-owned properties during each respective reporting period as well as the Company's joint venture property, Crowne Plaza Hollywood Beach Resort, in which it owns a 25.0% interest.
Occupancy
|
Q3 2014 9 mos 2014 |
Q3 2013 9 mos 2013 |
Q3 2012 9 mos 2012 |
|
| Crowne Plaza Hampton Marina | 65.7% | 64.4% | 68.1% |
| Hampton, Virginia | 53.9% | 54.4% | 59.5% |
| Crowne Plaza Hollywood Beach | 79.7% | 73.9% | 72.4% |
| Hollywood, Florida | 84.1% | 82.7% | 80.1% |
| Crowne Plaza Houston Downtown* | 75.0% | 73.1% | 68.3% |
| Houston, Texas | 77.9% | 75.7% | 69.6% |
| Crowne Plaza Jacksonville Riverfront | 59.9% | 51.2% | 53.5% |
| Jacksonville, Florida | 66.2% | 58.7% | 63.9% |
| Crowne Plaza Tampa Westshore | 66.8% | 55.5% | 64.7% |
| Tampa, Florida | 74.5% | 67.6% | 74.6% |
| DoubleTree by Hilton Raleigh Brownstone – University | 77.4% | 72.5% | 70.9% |
| Raleigh, North Carolina | 75.9% | 72.8% | 68.1% |
| The Georgian Terrace* | 80.3% | 70.5% | 63.5% |
| Atlanta, Georgia | 79.4% | 71.9% | 66.8% |
| DoubleTree by Hilton Philadelphia Airport | 78.4% | 78.1% | 81.3% |
| Philadelphia, Pennsylvania | 80.0% | 79.0% | 78.0% |
| Hilton Savannah DeSoto | 77.2% | 76.3% | 73.0% |
| Savannah, Georgia | 77.0% | 73.8% | 76.0% |
| Hilton Wilmington Riverside | 80.7% | 82.8% | 84.1% |
| Wilmington, North Carolina | 73.1% | 76.0% | 77.3% |
| Holiday Inn Laurel West | 64.0% | 61.3% | 73.3% |
| Laurel, Maryland | 63.2% | 66.6% | 70.9% |
| Sheraton Louisville Riverside | 72.5% | 76.7% | 66.6% |
| Jeffersonville, Indiana | 69.1% | 70.2% | 65.1% |
| *Includes periods of non-ownership. | |||
ADR
|
Q3 2014 9 mos 2014 |
Q3 2013 9 mos 2013 |
Q3 2012 9 mos 2012 |
|
| Crowne Plaza Hampton Marina | $ 93.81 | $ 95.98 | $ 95.63 |
| Hampton, Virginia | $ 94.81 | $ 95.71 | $ 92.32 |
| Crowne Plaza Hollywood Beach | $ 125.44 | $ 120.57 | $ 110.29 |
| Hollywood, Florida | $ 162.37 | $ 157.32 | $ 142.78 |
| Crowne Plaza Houston Downtown* | $ 129.97 | $ 132.69 | $ 109.88 |
| Houston, Texas | $ 139.06 | $ 134.50 | $ 123.28 |
| Crowne Plaza Jacksonville Riverfront | $ 95.47 | $ 93.63 | $ 91.65 |
| Jacksonville, Florida | $ 97.41 | $ 95.82 | $ 93.00 |
| Crowne Plaza Tampa Westshore | $ 96.64 | $ 94.48 | $ 111.70 |
| Tampa, Florida | $ 106.72 | $ 100.16 | $ 103.33 |
| DoubleTree by Hilton Raleigh Brownstone – University | $ 119.58 | $ 109.62 | $ 103.03 |
| Raleigh, North Carolina | $ 121.19 | $ 110.83 | $ 101.94 |
| The Georgian Terrace* | $ 143.02 | $ 138.06 | $ 142.39 |
| Atlanta, Georgia | $ 136.78 | $ 136.28 | $ 135.99 |
| DoubleTree by Hilton Philadelphia Airport | $ 133.32 | $ 128.12 | $ 131.66 |
| Philadelphia, Pennsylvania | $ 133.78 | $ 135.66 | $ 135.06 |
| Hilton Savannah DeSoto | $ 138.33 | $ 126.35 | $ 125.56 |
| Savannah, Georgia | $ 146.83 | $ 138.04 | $ 133.15 |
| Hilton Wilmington Riverside | $ 142.00 | $ 144.13 | $ 131.17 |
| Wilmington, North Carolina | $ 141.23 | $ 140.04 | $ 130.41 |
| Holiday Inn Laurel West | $ 82.69 | $ 78.67 | $ 84.54 |
| Laurel, Maryland | $ 89.00 | $ 88.14 | $ 89.36 |
| Sheraton Louisville Riverside | $ 128.78 | $ 112.51 | $ 108.97 |
| Jeffersonville, Indiana | $ 157.41 | $ 136.69 | $ 128.68 |
| *Includes periods of non-ownership. | |||
RevPAR
|
Q3 2014 9 mos 2014 |
Q3 2013 9 mos 2013 |
Q3 2012 9 mos 2012 |
|
| Crowne Plaza Hampton Marina | $ 61.66 | $ 61.80 | $ 65.08 |
| Hampton, Virginia | $ 51.11 | $ 52.04 | $ 54.92 |
| Crowne Plaza Hollywood Beach | $ 99.97 | $ 89.11 | $ 79.89 |
| Hollywood, Florida | $ 136.54 | $ 130.12 | $ 114.41 |
| Crowne Plaza Houston Downtown* | $ 97.49 | $ 97.05 | $ 75.03 |
| Houston, Texas | $ 108.27 | $ 101.84 | $ 85.82 |
| Crowne Plaza Jacksonville Riverfront | $ 57.15 | $ 47.93 | $ 49.03 |
| Jacksonville, Florida | $ 64.49 | $ 56.27 | $ 59.39 |
| Crowne Plaza Tampa Westshore | $ 64.52 | $ 52.48 | $ 72.31 |
| Tampa, Florida | $ 79.51 | $ 67.67 | $ 77.13 |
| DoubleTree by Hilton Raleigh Brownstone – University | $ 92.55 | $ 79.43 | $ 73.10 |
| Raleigh, North Carolina | $ 92.01 | $ 80.68 | $ 69.41 |
| The Georgian Terrace* | $ 114.81 | $ 97.31 | $ 90.42 |
| Atlanta, Georgia | $ 108.73 | $ 98.01 | $ 90.81 |
| DoubleTree by Hilton Philadelphia Airport | $ 104.52 | $ 100.03 | $ 106.98 |
| Philadelphia, Pennsylvania | $ 106.98 | $ 107.22 | $ 105.41 |
| Hilton Savannah DeSoto | $ 106.73 | $ 96.35 | $ 91.64 |
| Savannah, Georgia | $ 113.10 | $ 101.85 | $ 101.20 |
| Hilton Wilmington Riverside | $ 114.64 | $ 119.33 | $ 110.29 |
| Wilmington, North Carolina | $ 103.20 | $ 106.45 | $ 100.78 |
| Holiday Inn Laurel West | $ 52.95 | $ 48.21 | $ 61.97 |
| Laurel, Maryland | $ 56.21 | $ 58.69 | $ 63.38 |
| Sheraton Louisville Riverside | $ 96.40 | $ 86.26 | $ 72.53 |
| Jeffersonville, Indiana | $ 108.75 | $ 95.91 | $ 83.83 |
| * Includes periods of non-ownership. | |||
| SOTHERLY HOTELS INC. | ||||
| RECONCILIATION OF NET INCOME (LOSS) TO | ||||
| FFO, Adjusted FFO, EBITDA, Adjusted EBITDA and Hotel EBITDA | ||||
| (unaudited) | ||||
| Three months ended September 30, | Nine months ended September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net income (loss) attributable to the Company | $ (214,902) | $ (1,649,722) | $ 2,734,789 | $ (2,934,048) |
| Noncontrolling interest | (65,112) | (468,086) | 740,065 | (838,478) |
| Depreciation and amortization | 3,472,760 | 2,038,000 | 8,896,057 | 6,121,871 |
| Equity in depreciation and amortization of joint venture | 139,675 | 140,238 | 417,177 | 408,727 |
| FFO | 3,332,421 | 60,430 | 12,788,088 | 2,758,072 |
| Unrealized gain on hedging activities(1) | — | (25,734) | — | (71,309) |
| Unrealized (gain) loss on warrant derivative | — | 340,750 | — | 3,020,960 |
| (Increase) decrease in deferred income taxes | (729,937) | 93,771 | (1,037,181) | 1,411,523 |
| Acquisition costs | — | — | 155,187 | — |
| Franchise termination fee | 351,800 | — | 351,800 | — |
| Loss on early extinguishment of debt(2) | — | 1,598,556 | — | 1,935,692 |
| Adjusted FFO | $ 2,954,284 | $ 2,067,773 | $ 12,257,894 | $ 9,054,938 |
| Weighted average shares outstanding | 10,353,988 | 10,181,927 | 10,311,595 | 10,137,021 |
| Weighted average units outstanding | 2,754,127 | 2,856,198 | 2,790,391 | 2,900,401 |
| Weighted average shares and units | 13,108,115 | 13,038,125 | 13,101,986 | 13,037,422 |
| FFO per share and unit | $ 0.25 | $ 0.00 | $ 0.98 | $ 0.21 |
| Adjusted FFO per share and unit | $ 0.23 | $ 0.16 | $ 0.94 | $ 0.69 |
| Three months ended September 30, | Nine months ended September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net income (loss) attributable to the Company | $ (214,902) | $ (1,649,722) | $ 2, 734,789 | $ (2,934,048) |
| Noncontrolling interest | (65,112) | (468,086) | 740,065 | (838,478) |
| Interest expense | 3,994,261 | 3,899,128 | 10,803,127 | 8,912,319 |
| Interest income | (6,630) | (3,579) | (13,785) | (11,139) |
| Income tax (benefit) provision | (722,170) | 93,962 | (893,706) | 1,468,835 |
| Depreciation and amortization | 3,472,760 | 2,038,000 | 8,896,057 | 6,121,871 |
| Equity in interest expense and depreciation and amortization of joint venture | 304,218 | 249,639 | 905,683 | 735,058 |
| EBITDA | 6,762,425 | 4,159,342 | 23,172,230 | 13,454,418 |
| Unrealized (gain) loss on hedging activities(1) | — | (25,734) | — | (71,309) |
| Unrealized (gain) loss on warrant derivative | — | 340,750 | — | 3,020,960 |
| Acquisition costs | — | — | 155,187 | — |
| Adjusted EBITDA | 6,762,425 | 4,474,358 | 23,327,417 | 16,404,069 |
| Corporate general and administrative | 1,039,318 | 866,551 | 3,583,127 | 3,084,023 |
| Equity in adjusted EBITDA of joint venture | (148,053) | (101,268) | (1,154,486) | (1,098,228) |
| Net lease rental income | (87,500) | (87,500) | (262,500) | (262,500) |
| Other fee income | (57,260) | (45,651) | (222,829) | (205,810) |
| Hotel EBITDA | $ 7,508,930 | $ 5,106,490 | $ 25,270,729 | $ 17,921,554 |
| (1) Includes equity in unrealized gain on hedging activities of joint venture. | ||||
| (2) Reflected in interest expense for the periods presented above. | ||||
Non-GAAP Financial Measures
The Company considers the non-GAAP measures of FFO (including FFO per share), EBITDA and hotel EBITDA to be key supplemental measures of the Company's performance and could be considered along with, not alternatives to, net income (loss) as a measure of the Company's performance. These measures do not represent cash generated from operating activities determined by generally accepted accounting principles ("GAAP") or amounts available for the Company's discretionary use and should not be considered alternative measures of net income, cash flows from operations or any other operating performance measure prescribed by GAAP.
FFO
Industry analysts and investors use Funds from Operations ("FFO"), as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). FFO, as defined by NAREIT, represents net income or loss determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after adjustment for any noncontrolling interest from unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by itself.
The Company considers FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance because we believe FFO is most directly comparable to net income (loss), which remains the primary measure of performance, because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company's real estate between periods or as compared to different companies. Although FFO is intended to be a REIT industry standard, other companies may not calculate FFO in the same manner as we do, and investors should not assume that FFO as reported by us is comparable to FFO as reported by other REITs.
EBITDA
The Company believes that excluding the effect of non-operating expenses and non-cash charges, and the portion of those items related to unconsolidated entities, all of which are also based on historical cost accounting and may be of limited significance in evaluating current performance, can help eliminate the accounting effects of depreciation and financing decisions and facilitate comparisons of core operating profitability between periods and between REITs, even though EBITDA also does not represent an amount that accrued directly to shareholders.
Hotel EBITDA
The Company defines hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) equity in the income or loss of equity investees, (4) unrealized gains and losses on derivative instruments not included in other comprehensive income, (5) gains and losses on disposal of assets, (6) realized gains and losses on investments, (7) impairment of long-lived assets or investments, (8) corporate general and administrative expense; (9) depreciation and amortization; and (10) other operating revenue not related to the Company's wholly-owned portfolio. We believe this provides a more complete understanding of the operating results over which the Company's wholly-owned hotels and its operators have direct control. We believe hotel EBITDA provides investors with supplemental information on the on-going operational performance of the Company's hotels and the effectiveness of third-party management companies operating the Company's business on a property-level basis. The Company's calculation of hotel EBITDA may be different from similar measures calculated by other REITs.
Adjusted FFO and Adjusted EBITDA
The Company presents adjusted FFO, including adjusted FFO per share and unit, and adjusted EBITDA, which adjusts for certain additional items including any unrealized gain (loss) on its hedging instruments or warrant derivative, loan impairment losses, losses on early extinguishment of debt, aborted offering costs, costs associated with the departure of executive officers and acquisition transaction costs. In addition, adjusted FFO, including adjusted FFO per share and unit, adjusts for franchise termination fees. The Company excludes these items as it believes it allows for meaningful comparisons between periods and among other REITs and is more indicative of the on-going performance of its business and assets. The Company's calculation of adjusted FFO and adjusted EBITDA may be different from similar measures calculated by other REITs.