Exhibit 99.1
Overview
On February 10, 2022, we closed on the sale of the Sheraton Louisville Riverside hotel. The following table presents the audited consolidated balance sheet and consolidated statement of operations as of December 31, 2021 of the Company, unaudited pro forma financial adjustments of Sheraton Louisville Riverside hotel, unaudited pro forma balance sheet, as if the hotel had been disposed on December 31, 2021 and unaudited pro forma statement of income, as if the Sheraton Louisville Riverside hotel had been disposed on January 1, 2021. Accordingly, the unaudited pro forma balance sheet and unaudited pro forma income statement are not necessarily indicative of future consolidated financial position or results of operations.
The following pro forma information has been prepared for comparative purposes only and are based upon the historical financial statements and operating results for the Company, adjusted to reflect the sale:
Exhibit 99.1
SOTHERLY HOTELS INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2021
| | | | | | | | | | | | |
| | Sotherly Hotels, Inc. | | | Pro Forma Adjustments | | | | |
| | Balance Sheet | | | of Sheraton Louisville | | | Pro Forma | |
| | December 31, 2021 (a) | | | Riverside Sale | | | Balance Sheet | |
| | | | | (unaudited) | | | (unaudited) | |
ASSETS | | | | | | | | | |
Investment in hotel properties, net | | $ | 375,885,224 | | | $ | - | | | $ | 375,885,224 | |
Investment in hotel properties held for sale, net | | | 22,870,487 | | | | (11,063,952 | ) | (c) | | 11,806,535 | |
Cash and cash equivalents | | | 13,166,883 | | | | 161,816 | | (j) | | 13,328,699 | |
Restricted cash | | | 12,411,654 | | | | — | | | | 12,411,654 | |
Accounts receivable, net | | | 4,822,187 | | | | (697,877 | ) | (c) | | 4,124,310 | |
Prepaid expenses, inventory and other assets | | | 6,894,228 | | | | (150,471 | ) | (c) | | 6,743,757 | |
TOTAL ASSETS | | $ | 436,050,663 | | | $ | (11,750,484 | ) | | $ | 424,300,179 | |
LIABILITIES | | | | | | | | | |
Mortgage loans, net | | $ | 351,170,883 | | | $ | (10,860,762 | ) | (c) | $ | 340,310,121 | |
Secured notes, net | | | 19,128,330 | | | | — | | | | 19,128,330 | |
Unsecured notes, net | | | 7,609,934 | | | | — | | | | 7,609,934 | |
Accounts payable and accrued liabilities | | | 35,960,293 | | | | (975,770 | ) | (c) | | 34,984,523 | |
Advance deposits | | | 1,552,942 | | | | — | | | | 1,552,942 | |
Dividends and distributions payable | | | 4,125,351 | | | | — | | | | 4,125,351 | |
TOTAL LIABILITIES | | $ | 419,547,733 | | | $ | (11,836,532 | ) | | $ | 407,711,201 | |
Commitments and contingencies (See Note 6) | | | — | | | | — | | | | — | |
EQUITY | | | | | | | | | |
Sotherly Hotels Inc. stockholders’ equity | | | | | | | | | |
Preferred stock, $0.01 par value, 11,000,000 shares authorized: | | | | | | | | | |
8.0% Series B cumulative redeemable perpetual preferred stock, 1,510,000 shares issued and outstanding; aggregate liquidation preference $43,035,000, at December 31, 2021. | | | 15,100 | | | | — | | | | 15,100 | |
7.875% Series C cumulative redeemable perpetual preferred stock, 1,384,610 shares issued and outstanding; aggregate liquidation preference $39,385,669, at December 31, 2021. | | | 13,846 | | | | — | | | | 13,846 | |
8.25% Series D cumulative redeemable perpetual preferred stock, 1,165,000 shares issued and outstanding; aggregate liquidation preference $33,329,922, at December 31, 2021. | | | 11,650 | | | | — | | | | 11,650 | |
Common stock, par value $0.01, 69,000,000 shares authorized, 17,441,058 shares issued and outstanding at December 31, 2021. | | | 174,410 | | | | — | | | | 174,410 | |
Additional paid-in capital | | | 177,651,954 | | | | — | | | | 177,651,954 | |
Unearned ESOP shares | | | (3,083,398 | ) | | | — | | | | (3,083,398 | ) |
Distributions in excess of retained earnings | | | (153,521,704 | ) | | | 86,048 | | (d) | | (153,435,656 | ) |
Total Sotherly Hotels Inc. stockholders’ equity | | | 21,261,858 | | | | 86,048 | | | | 21,347,906 | |
Noncontrolling interest | | | (4,758,928 | ) | | | - | | | | (4,758,928 | ) |
TOTAL EQUITY | | | 16,502,930 | | | | 86,048 | | | | 16,588,978 | |
TOTAL LIABILITIES AND EQUITY | | $ | 436,050,663 | | | $ | (11,750,484 | ) | | $ | 424,300,179 | |
Exhibit 99.1
SOTHERLY HOTELS INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2021
| | | | | | | | | | | | |
| | Sotherly Hotels, Inc. | | | Pro Forma Adjustments | | | Pro Forma | |
| | Twelve Months Ended | | | of Sheraton Louisville | | | Statement of | |
| | December 31, 2021 (b) | | | Riverside Sale | | | Operations | |
| | | | | (unaudited) | | | (unaudited) | |
REVENUE | | | | | | | | | |
Rooms department | | $ | 88,625,659 | | | $ | (3,972,310 | ) | (e) | $ | 84,653,349 | |
Food and beverage department | | | 15,829,487 | | | | (284,317 | ) | (e) | | 15,545,170 | |
Other operating departments | | | 23,132,778 | | | | (281,162 | ) | (e) | | 22,851,616 | |
Total revenue | | | 127,587,924 | | | | (4,537,789 | ) | | | 123,050,135 | |
EXPENSES | | | | | | | | | |
Hotel operating expenses | | | | | | | | | |
Rooms department | | | 22,688,063 | | | | (1,714,831 | ) | (f) | | 20,973,232 | |
Food and beverage department | | | 10,297,461 | | | | (222,930 | ) | (f) | | 10,074,531 | |
Other operating departments | | | 8,607,594 | | | | (41,171 | ) | (f) | | 8,566,423 | |
Indirect | | | 55,100,245 | | | | (2,587,696 | ) | (f) | | 52,512,549 | |
Total hotel operating expenses | | | 96,693,363 | | | | (4,566,628 | ) | | | 92,126,735 | |
Depreciation and amortization | | | 19,909,226 | | | | (797,617 | ) | (g) | | 19,111,609 | |
Impairment of investment in hotel properties, net | | | 12,201,461 | | | | (4,329,028 | ) | (g) | | 7,872,433 | |
(Gain) loss on disposal of assets | | | (158,286 | ) | | | 200,763 | | (g) | | 42,477 | |
Corporate general and administrative | | | 6,997,166 | | | | — | | | | 6,997,166 | |
Total operating expenses | | | 135,642,930 | | | | (9,492,510 | ) | | | 126,150,420 | |
NET OPERATING (LOSS) INCOME | | | (8,055,006 | ) | | | 4,954,721 | | | | (3,100,285 | ) |
Other income (expense) | | | | | | | | | |
Interest expense | | | (22,686,694 | ) | | | 479,319 | | (h) | | (22,207,375 | ) |
Interest income | | | 147,025 | | | | — | | | | 147,025 | |
Unrealized gain on hedging activities | | | 1,493,841 | | | | — | | | | 1,493,841 | |
Gain on involuntary conversion of assets | | | 588,586 | | | | — | | | | 588,586 | |
Net (loss) income before income taxes | | | (28,512,248 | ) | | | 5,434,040 | | | | (23,078,208 | ) |
Income tax provision | | | (27,392 | ) | | | — | | | | (27,392 | ) |
Net (loss) income | | | (28,539,640 | ) | | | 5,434,040 | | | | (23,105,600 | ) |
Less: Net loss attributable to noncontrolling interest | | | 2,318,166 | | | | — | | | | 2,318,166 | |
Net (loss) income attributable to the Company | | | (26,221,474 | ) | | | 5,434,040 | | | | (20,787,434 | ) |
Declared and undeclared distributions to preferred stockholders | | | (7,541,891 | ) | | | — | | | | (7,541,891 | ) |
Gain on extinguishment of preferred stock | | | 361,476 | | | | — | | | | 361,476 | |
Net (loss) income attributable to common stockholders | | $ | (33,401,889 | ) | | $ | 5,434,040 | | (d) | $ | (27,967,849 | ) |
Net (loss) income per share attributable to common stockholders | | | | | | | | | |
Basic | | $ | (2.15 | ) | | $ | 0.35 | | (i) | $ | (1.80 | ) |
Weighted average number of common shares outstanding | | | | | | | | | |
Basic | | | 15,531,684 | | | | 15,531,684 | | | | 15,531,684 | |
Exhibit 99.1
SOTHERLY HOTELS INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
1) Basis of Presentation
The unaudited pro forma financial information is presented to reflect the sale of the Sheraton Louisville Riverside hotel, as if the hotel assets and liabilities had been disposed on December 31, 2021 and unaudited pro forma statement of income, as if the hotel had been disposed on January 1, 2021 and the proforma adjustments are reflected in the unaudited pro forma balance sheet and unaudited pro forma statement of operations. The unaudited pro forma adjustments are included only to the extent that they are directly attributable and factually supportable assets and liabilities of the hotel as of December 31, 2021 and results of operations of the hotel, for the year ending December 31, 2021.
The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported if the sale was completed as of the date presented, and should not be taken as representation of our future consolidated results of operations or financial position.
2) Pro Forma Adjustments
(a) Reflects the Company's consolidated balance as of December 31, 2021.
(b) Reflects the Company's consolidated statement of operations for the year ended December 31, 2021.
(c) Reflects the elimination of assets and liabilities of the Sheraton Louisville Riverside hotel as of December 31, 2021.
(d) Reflects an adjustment of the net assets realized on the sale of the hotel offset by the gains resulting from the sale of the operations of the hotel.
(e) Reflects the elimination of revenues from: rooms department, food and beverage department and other operating departments of the hotel.
(f) Reflects the elimination of expenses from: rooms department, food and beverage department and other operating departments and indirect expenses of the hotel.
(g) Reflects the elimination of depreciation and amortization, impairment of the investment in hotel properties, net, loss on disposal of assets of the hotel and forfeiture of deposit on an earlier failed sale of hotel.
(h) Reflects the elimination of mortgage interest expense on the hotel's mortgage.
(i) Reflects the pro forma net income per share attributable to common shareholders, as if the sale had taken place on January 1, 2021, accordingly is not necessarily indicative of future results of operations.
(j) Reflects the elimination of the cash overdraft of the hotel as well as the cash used to close on the sale of the hotel, including closing costs.
