Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 10, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | SOHO | |
Entity Registrant Name | SOTHERLY HOTELS INC. | |
Entity Central Index Key | 1,301,236 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 14,290,714 | |
Sotherly Hotels LP [Member] | ||
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | SOTHERLY HOTELS LP | |
Entity Central Index Key | 1,301,236 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
ASSETS | ||
Investment in hotel properties, net | $ 263,831,439 | $ 260,192,153 |
Investment in joint venture | 1,880,824 | 1,982,107 |
Cash and cash equivalents | 17,274,676 | 16,634,499 |
Restricted cash | 6,817,281 | 6,621,864 |
Accounts receivable | 4,203,338 | 1,908,762 |
Accounts receivable-affiliate | 156,940 | 197,674 |
Prepaid expenses, inventory and other assets | 3,792,347 | 3,334,401 |
Deferred income taxes | 3,134,491 | 3,543,295 |
Deferred financing costs, net | 4,331,736 | 5,405,288 |
TOTAL ASSETS | 305,423,072 | 299,820,043 |
LIABILITIES | ||
Mortgage loans | 208,434,927 | 205,291,657 |
Unsecured notes | 52,900,000 | 52,900,000 |
Accounts payable and accrued expenses | 12,439,225 | 12,044,886 |
Advance deposits | 1,628,919 | 1,220,729 |
Dividends and distributions payable | 995,408 | 852,914 |
TOTAL LIABILITIES | $ 276,398,479 | $ 272,310,186 |
Commitments and contingencies | ||
Sotherly Hotels Inc. stockholders’ equity | ||
Preferred stock, par value $0.01, 972,350 shares authorized, 0 shares issued and outstanding | ||
Common stock, par value $0.01, 49,000,000 shares authorized, 10,855,714 shares and 10,570,932 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | $ 108,557 | $ 105,709 |
Additional paid in capital | 59,854,743 | 58,659,799 |
Distributions in excess of retained earnings | (34,938,539) | (35,388,313) |
Total Sotherly Hotels Inc. stockholders’ equity | 25,024,761 | 23,377,195 |
Noncontrolling interest | 3,999,832 | 4,132,662 |
TOTAL EQUITY | 29,024,593 | 27,509,857 |
TOTAL LIABILITIES AND OWNERS' EQUITY | 305,423,072 | 299,820,043 |
Sotherly Hotels LP [Member] | ||
ASSETS | ||
Investment in hotel properties, net | 263,831,439 | 260,192,153 |
Investment in joint venture | 1,880,824 | 1,982,107 |
Cash and cash equivalents | 17,274,676 | 16,634,499 |
Restricted cash | 6,817,281 | 6,621,864 |
Accounts receivable | 4,203,338 | 1,908,762 |
Accounts receivable-affiliate | 156,940 | 197,674 |
Prepaid expenses, inventory and other assets | 3,792,347 | 3,334,401 |
Deferred income taxes | 3,134,491 | 3,543,295 |
Deferred financing costs, net | 4,331,736 | 5,405,288 |
TOTAL ASSETS | 305,423,072 | 299,820,043 |
LIABILITIES | ||
Mortgage loans | 208,434,927 | 205,291,657 |
Unsecured notes | 52,900,000 | 52,900,000 |
Accounts payable and accrued expenses | 12,439,225 | 12,044,886 |
Advance deposits | 1,628,919 | 1,220,729 |
Dividends and distributions payable | 995,408 | 852,914 |
TOTAL LIABILITIES | $ 276,398,479 | $ 272,310,186 |
Commitments and contingencies | ||
Sotherly Hotels Inc. stockholders’ equity | ||
TOTAL LIABILITIES AND OWNERS' EQUITY | $ 305,423,072 | $ 299,820,043 |
PARTNERS’ CAPITAL | ||
General Partner: 132,573 and 131,218 units issued and outstanding as of June 30, 2015 and December 31, 2014, respectively | 536,014 | 520,791 |
Limited Partners: 13,123,968 and 12,990,541 units issued and outstanding as of June 30, 2015 and December 31, 2014, respectively | 28,488,579 | 26,989,066 |
TOTAL PARTNERS’ CAPITAL | $ 29,024,593 | $ 27,509,857 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 972,350 | 972,350 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 49,000,000 | 49,000,000 |
Common stock, shares issued | 10,855,714 | 10,570,932 |
Common stock, shares outstanding | 10,855,714 | 10,570,932 |
Sotherly Hotels LP [Member] | ||
General Partner, units issued | 132,573 | 131,218 |
General Partner, units outstanding | 132,573 | 131,218 |
Limited Partner, units issued | 13,123,968 | 13,123,968 |
Limited Partner, units outstanding | 12,990,541 | 12,990,541 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
REVENUE | ||||
Rooms department | $ 26,351,371 | $ 25,416,248 | $ 47,687,785 | $ 42,869,437 |
Food and beverage department | 8,605,316 | 9,020,055 | 16,332,123 | 15,271,738 |
Other operating departments | 1,908,421 | 1,903,398 | 3,820,830 | 3,208,915 |
Total revenue | 36,865,108 | 36,339,701 | 67,840,738 | 61,350,090 |
Hotel operating expenses | ||||
Rooms department | 6,498,077 | 6,278,583 | 12,341,017 | 11,030,109 |
Food and beverage department | 5,700,236 | 5,936,451 | 11,105,621 | 10,006,821 |
Other operating departments | 362,987 | 335,502 | 701,166 | 537,008 |
Indirect | 12,332,869 | 12,189,910 | 23,801,212 | 21,673,784 |
Total hotel operating expenses | 24,894,169 | 24,740,446 | 47,949,016 | 43,247,722 |
Depreciation and amortization | 3,304,906 | 2,988,968 | 6,209,297 | 5,423,296 |
Corporate general and administrative | 1,490,380 | 1,391,206 | 2,941,604 | 2,698,997 |
Total operating expenses | 29,689,455 | 29,120,620 | 57,099,917 | 51,370,015 |
NET OPERATING INCOME | 7,175,653 | 7,219,081 | 10,740,821 | 9,980,075 |
Other income (expense) | ||||
Interest expense | (3,840,435) | (3,925,428) | (7,614,970) | (6,808,867) |
Interest income | 15,308 | 5,267 | 25,409 | 7,156 |
Equity income in joint venture | 24,368 | 17,417 | 498,717 | 404,968 |
Loss on early debt extinguishment | (698,083) | (698,083) | ||
Gain on involuntary conversion of asset | 37,833 | 37,833 | ||
Net income (loss) before income taxes | 2,714,644 | 3,316,337 | 2,989,727 | 3,583,332 |
Income tax (provision) benefit | (955,535) | (563,782) | (516,760) | 171,537 |
Net income (loss) | 1,759,109 | 2,752,555 | 2,472,967 | 3,754,869 |
Less: Net income attributable to the noncontrolling interest | (327,999) | (585,866) | (466,523) | (805,178) |
Net income attributable to the Company | $ 1,431,110 | $ 2,166,689 | $ 2,006,444 | $ 2,949,691 |
Net income per share attributable to the Company | ||||
Basic and diluted | $ 0.13 | $ 0.21 | $ 0.19 | $ 0.29 |
Weighted average number of shares outstanding | ||||
Basic and diluted | 10,768,730 | 10,353,677 | 10,682,743 | 10,290,047 |
Sotherly Hotels LP [Member] | ||||
REVENUE | ||||
Rooms department | $ 26,351,371 | $ 25,416,248 | $ 47,687,785 | $ 42,869,437 |
Food and beverage department | 8,605,316 | 9,020,055 | 16,332,123 | 15,271,738 |
Other operating departments | 1,908,421 | 1,903,398 | 3,820,830 | 3,208,915 |
Total revenue | 36,865,108 | 36,339,701 | 67,840,738 | 61,350,090 |
Hotel operating expenses | ||||
Rooms department | 6,498,077 | 6,278,583 | 12,341,017 | 11,030,109 |
Food and beverage department | 5,700,236 | 5,936,451 | 11,105,621 | 10,006,821 |
Other operating departments | 362,987 | 335,502 | 701,166 | 537,008 |
Indirect | 12,332,869 | 12,189,910 | 23,801,212 | 21,673,784 |
Total hotel operating expenses | 24,894,169 | 24,740,446 | 47,949,016 | 43,247,722 |
Depreciation and amortization | 3,304,906 | 2,988,968 | 6,209,297 | 5,423,296 |
Corporate general and administrative | 1,490,380 | 1,391,206 | 2,941,603 | 2,698,997 |
Total operating expenses | 29,689,455 | 29,120,620 | 57,099,916 | 51,370,015 |
NET OPERATING INCOME | 7,175,653 | 7,219,081 | 10,740,822 | 9,980,075 |
Other income (expense) | ||||
Interest expense | (3,840,435) | (3,925,428) | (7,614,970) | (6,808,867) |
Interest income | 15,308 | 5,267 | 25,408 | 7,156 |
Equity income in joint venture | 24,368 | 17,417 | 498,717 | 404,968 |
Loss on early debt extinguishment | (698,083) | (698,083) | ||
Gain on involuntary conversion of asset | 37,833 | 37,833 | ||
Net income (loss) before income taxes | 2,714,644 | 3,316,337 | 2,989,727 | 3,583,332 |
Income tax (provision) benefit | (955,535) | (563,782) | (516,760) | 171,537 |
Net income (loss) | $ 1,759,109 | $ 2,752,555 | $ 2,472,967 | $ 3,754,869 |
Net income per share attributable to the Company | ||||
Basic and diluted | $ 0.13 | $ 0.21 | $ 0.19 | $ 0.29 |
Weighted average number of shares outstanding | ||||
Basic and diluted | 13,052,524 | 13,107,804 | 13,099,316 | 13,098,870 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity - 6 months ended Jun. 30, 2015 - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Distributions in Excess of Retained Earnings [Member] | Noncontrolling Interest [Member] |
Balances, beginning at Dec. 31, 2014 | $ 27,509,857 | $ 105,709 | $ 58,659,799 | $ (35,388,313) | $ 4,132,662 |
Balances, shares, beginning at Dec. 31, 2014 | 10,570,932 | ||||
Issuance of unrestricted common stock awards | 194,199 | $ 263 | 193,936 | ||
Issuance of unrestricted common stock awards, shares | 26,350 | ||||
Issuance of restricted common stock awards | 71,858 | $ 98 | 71,760 | ||
Issuance of restricted common stock awards, shares | 9,750 | ||||
Issuance of common stock from ATM sales | 682,210 | $ 987 | 681,223 | ||
Issuance of common stock from ATM sales, shares | 98,682 | ||||
Conversion of units into common stock | $ 1,500 | 238,065 | (239,565) | ||
Conversion of units into common stock, shares | 150,000 | ||||
Amortization of restricted stock award | 9,960 | 9,960 | |||
Dividends and distributions declared | (1,916,458) | (1,556,670) | (359,788) | ||
Net income | 2,472,967 | 2,006,444 | 466,523 | ||
Balances, ending at Jun. 30, 2015 | $ 29,024,593 | $ 108,557 | $ 59,854,743 | $ (34,938,539) | $ 3,999,832 |
Balances, shares, ending at Jun. 30, 2015 | 10,855,714 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 2,472,967 | $ 3,754,869 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,209,297 | 5,423,296 |
Equity income in joint venture | (498,717) | (404,968) |
Amortization of deferred financing costs | 1,384,332 | 613,279 |
Charges related to equity-based compensation | 276,016 | 235,605 |
Changes in assets and liabilities: | ||
Restricted cash | (417,603) | (1,018,062) |
Accounts receivable | (2,294,576) | (1,705,481) |
Prepaid expenses, inventory and other assets | (467,358) | (1,063,887) |
Deferred income taxes | 408,804 | (307,245) |
Accounts payable and other accrued liabilities | 1,844,024 | 6,455,198 |
Advance deposits | 408,191 | 438,763 |
Accounts receivable - affiliate | 40,734 | (55,559) |
Net cash provided by operating activities | 9,366,111 | 12,365,808 |
Cash flows from investing activities: | ||
Acquisition of hotel properties | (61,106,085) | |
Improvements and additions to hotel properties | (10,702,570) | (2,559,086) |
Distributions from joint venture | 600,000 | 750,000 |
Funding of restricted cash reserves | (3,715,397) | (1,652,014) |
Proceeds from involuntary conversion of assets | 37,833 | |
Proceeds of restricted cash reserves | 3,937,582 | 1,727,194 |
Net cash used in investing activities | (9,842,552) | (62,839,991) |
Cash flows from financing activities: | ||
Proceeds of mortgage debt | 47,000,000 | 45,600,000 |
Proceeds of loans | 19,000,000 | |
Proceeds from the sale of common stock | 682,210 | |
Dividends and distributions paid | (1,773,965) | (1,178,049) |
Payment of deferred financing costs | (934,897) | (1,686,615) |
Payments on mortgage debt and loans | (43,856,730) | (2,712,097) |
Net cash provided by financing activities | 1,116,618 | 59,023,239 |
Net increase in cash and cash equivalents | 640,177 | 8,549,056 |
Cash and cash equivalents at the beginning of the period | 16,634,499 | 9,376,628 |
Cash and cash equivalents at the end of the period | 17,274,676 | 17,925,684 |
Supplemental disclosures: | ||
Cash paid during the period for interest | 6,019,832 | 5,515,200 |
Cash paid during the period for income taxes | 97,200 | 221,157 |
Non-cash investing and financing activities: | ||
Proceeds of mortgage debt contributed to restricted cash reserves | 1,500,000 | |
Change in amount of hotel property improvements in accounts payable and accrued liabilities | 633,167 | |
Sotherly Hotels LP [Member] | ||
Cash flows from operating activities: | ||
Net income | 2,472,967 | 3,754,869 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,209,297 | 5,423,296 |
Equity income in joint venture | (498,717) | (404,968) |
Amortization of deferred financing costs | 1,384,332 | 613,279 |
Charges related to equity-based compensation | 276,016 | 235,605 |
Changes in assets and liabilities: | ||
Restricted cash | (417,603) | (1,018,062) |
Accounts receivable | (2,294,576) | (1,705,481) |
Prepaid expenses, inventory and other assets | (467,358) | (1,063,887) |
Deferred income taxes | 408,804 | (307,245) |
Accounts payable and other accrued liabilities | 1,844,024 | 6,455,198 |
Advance deposits | 408,191 | 438,763 |
Accounts receivable - affiliate | 40,734 | (55,559) |
Net cash provided by operating activities | 9,366,111 | 12,365,808 |
Cash flows from investing activities: | ||
Acquisition of hotel properties | (61,106,085) | |
Improvements and additions to hotel properties | (10,702,570) | (2,559,086) |
Distributions from joint venture | 600,000 | 750,000 |
Funding of restricted cash reserves | (3,715,397) | (1,652,014) |
Proceeds from involuntary conversion of assets | 37,833 | |
Proceeds of restricted cash reserves | 3,937,582 | 1,727,194 |
Net cash used in investing activities | (9,842,552) | (62,839,991) |
Cash flows from financing activities: | ||
Proceeds of mortgage debt | 47,000,000 | 45,600,000 |
Proceeds of loans | 19,000,000 | |
Proceeds from the sale of common stock | 682,210 | |
Dividends and distributions paid | (1,773,965) | (1,178,049) |
Payment of deferred financing costs | (934,897) | (1,686,615) |
Payments on mortgage debt and loans | (43,856,730) | (2,712,097) |
Net cash provided by financing activities | 1,116,618 | 59,023,239 |
Net increase in cash and cash equivalents | 640,177 | 8,549,056 |
Cash and cash equivalents at the beginning of the period | 16,634,499 | 9,376,628 |
Cash and cash equivalents at the end of the period | 17,274,676 | 17,925,684 |
Supplemental disclosures: | ||
Cash paid during the period for interest | 6,019,832 | 5,515,200 |
Cash paid during the period for income taxes | 97,200 | 221,157 |
Non-cash investing and financing activities: | ||
Proceeds of mortgage debt contributed to restricted cash reserves | $ 1,500,000 | |
Change in amount of hotel property improvements in accounts payable and accrued liabilities | $ 633,167 |
Consolidated Statement of Chan7
Consolidated Statement of Changes in Partners' Capital - 6 months ended Jun. 30, 2015 - USD ($) | Total | Sotherly Hotels LP [Member] | Sotherly Hotels LP [Member]General Partner [Member] | Sotherly Hotels LP [Member]Limited Partners [Member] |
Balances, beginning at Dec. 31, 2014 | $ 27,509,857 | $ 520,791 | $ 26,989,066 | |
Balances, units, beginning at Dec. 31, 2014 | 131,218 | 12,990,541 | ||
Issuance of partnership units | 948,267 | $ 9,607 | $ 938,660 | |
Issuance of partnership units, number of units | 1,355 | 133,427 | ||
Amortization of restricted stock award | $ 9,960 | 9,960 | $ 50 | $ 9,910 |
Distributions declared | (1,916,458) | (19,165) | (1,897,293) | |
Net income | $ 2,472,967 | 2,472,967 | 24,731 | 2,448,236 |
Balances, ending at Jun. 30, 2015 | $ 29,024,593 | $ 536,014 | $ 28,488,579 | |
Balances, units, ending at Jun. 30, 2015 | 132,573 | 13,123,968 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | 1. Organization and Description of Business Sotherly Hotels Inc., formerly MHI Hospitality Corporation (the “Company”), is a self-managed and self-administered lodging real estate investment trust (“REIT”) that was incorporated in Maryland on August 20, 2004 to own full-service, primarily upscale and upper-upscale hotels located in primary and secondary markets in the Mid-Atlantic and Southern United States. Many of the hotels operate under well-known national hotel brands such as Hilton, Crowne Plaza, Sheraton and Holiday Inn. The Company commenced operations on December 21, 2004 when it completed its initial public offering and thereafter consummated the acquisition of six hotel properties (the “initial properties”). Substantially all of the Company’s assets are held by, and all of its operations are conducted through, Sotherly Hotels LP, formerly MHI Hospitality, L.P. (the “Operating Partnership”). The Company and the Operating Partnership as of June 30, 2015, also owned a 25.0% noncontrolling interest in the Crowne Plaza Hollywood Beach Resort through a joint venture with CRP/MHI Holdings, LLC, an affiliate of both Carlyle Realty Partners V, L.P. and The Carlyle Group (“Carlyle”). Pursuant to the terms of the Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of the Operating Partnership, the Company, as general partner, is not entitled to compensation for its services to the Operating Partnership. The Company, as general partner, conducts substantially all of its operations through the Operating Partnership and the Company’s administrative expenses are the obligations of the Operating Partnership. Additionally, the Company is entitled to reimbursement for any expenditure incurred by it on the Operating Partnership’s behalf. For the Company to qualify as a REIT, it cannot operate hotels. Therefore, the Operating Partnership, which, at June 30, 2015, was approximately 81.9% owned by the Company, and its subsidiaries, lease the hotels to a subsidiary of MHI Hospitality TRS Holding Inc., MHI Hospitality TRS, LLC, (collectively, “MHI TRS”), a wholly-owned subsidiary of the Operating Partnership. MHI TRS then engages an eligible independent hotel management company, MHI Hotels Services, LLC, which does business as Chesapeake Hospitality (“Chesapeake Hospitality”), to operate the hotels under a management contract. MHI TRS is treated as a taxable REIT subsidiary for federal income tax purposes. All references in this report to “we”, “us” and “our” refer to the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated. Significant transactions occurring during the current and prior fiscal year include the following: On March 26, 2014, we entered into a Note Agreement, Guaranty, and Pledge Agreement to secure a $19.0 million secured loan (the “Bridge Loan”) with Richmond Hill Capital Partners, LP (“Richmond Hill”) and Essex Equity Joint Investment Vehicle, LLC (collectively with Richmond Hill, the “Bridge Lenders”). The Bridge Loan bore interest at the rate of 10.0% per annum and was scheduled to mature on March 26, 2015. The loan also required mandatory prepayment upon certain events, was subject to a prepayment premium if the loan was prepaid in full or in part prior to maturity and contained limited financial covenants. The loan was secured by a lien on our interest in our subsidiary that owns the DoubleTree by Hilton Philadelphia Airport. The Bridge Loan was repaid in full in November 2014. On March 27, 2014, we acquired the Georgian Terrace, a 326-room hotel in Atlanta, Georgia for the aggregate purchase price of approximately $61.1 million. Also included in the acquisition was a 698-space parking structure; all personal property and equipment located in or at the hotel; and a separate 0.6 acre development parcel with related development rights and improvements located thereon. In conjunction with the acquisition, we obtained a $41.5 million first mortgage from Bank of the Ozarks, of which $1.5 million of the proceeds was placed in a restricted cash reserve. The mortgage had a floating rate of interest equal to LIBOR plus 3.75%, with a 4.00% floor and required monthly payments of principal and interest on a 25-year amortization schedule following a 12-month interest-only period. The mortgage would have matured on March 27, 2017, but could have been extended for two additional 1-year period subject to certain terms and conditions. We refinanced the mortgage on the Georgian Terrace on May 5, 2015, see below. On March 31, 2014, we entered into a First Amendment and other amended loan documents to extend the maturity date and secure additional proceeds of approximately $5.6 million on the original $30.0 million mortgage on the DoubleTree by Hilton Philadelphia Airport hotel with its existing lender, TD Bank, N.A. Pursuant to the First Amendment and other amended loan documents, the mortgage continues to bear interest at a rate of LIBOR plus 3.0% with a 3.50% floor, requires monthly payments of principal and interest on an amortization schedule over the remainder of the 25-year period that began with the commencement of the loan in March 2012, and extends the maturity date to April 1, 2019. As a condition to obtaining the First Amendment to the mortgage on the Hilton Philadelphia Airport hotel, we were required to enter into a license agreement with a national hotel franchise through at least the term of the amended mortgage loan. As such, we entered into a 10-year franchise agreement with Hilton Worldwide to rebrand the Hilton Philadelphia Airport hotel as a DoubleTree by Hilton in November 2014, subject to the completion of certain product improvement requirements that were met as of October 27, 2014. On June 27, 2014, we entered into an agreement with TowneBank to extend the maturity of the mortgage on the Crowne Plaza Hampton Marina in Hampton, Virginia, until June 30, 2016. Under the terms of the extension, we made a principal payment of $0.8 million and are required to make monthly principal payments of $83,000 and interest payments at a rate of 5.0% per annum. On November 21, 2014, we closed on a 7.0% unsecured note offering in the aggregate amount of $25.3 million, of which a portion of the proceeds was used to repay the $19.0 million Bridge Loan, with the remainder to be used for general corporate purposes. On November 24, 2014, we repaid the $19.0 million Bridge Loan. On December 19, 2014, we secured $3.0 million additional proceeds on our mortgage loan on the Crowne Plaza Jacksonville Riverfront property as part of an earn-out pursuant to the terms of the existing loan agreement. On May 5, 2015, we entered into a mortgage loan agreement to secure a $47.0 million mortgage loan on the Georgian Terrace with Bank of America, N.A. The Company used the proceeds to repay the existing first mortgage on the Georgian Terrace, to pay closing costs and the remainder of the proceeds to partially fund ongoing renovations at the Georgian Terrace and for general corporate purposes. On June 25, 2015, we entered into an Underwriting Agreement (the “Underwriting Agreement”) with Sandler O’Neill & Partners, L.P. as representative of the several underwriters listed therein (collectively, the “Underwriters”), relating to the issuance and sale (the “Offering”) of 3,000,000 shares of the Company’s common stock, par value $0.01 per share (the “Shares”). In addition, the Underwriting Agreement provided the Underwriters a 30-day option to purchase up to an additional 450,000 shares of common stock from the Company to cover over-allotments. The issuance and sale of the Shares was completed on July 1, 2015. The net proceeds from the Offering, after deducting underwriting discounts and commissions and estimated offering expenses, were approximately $22.7 million. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation – The consolidated financial statements of the Company presented herein include all of the accounts of Sotherly Hotels Inc., the Operating Partnership, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated financial statements of the Operating Partnership presented herein include all of the accounts of Sotherly Hotels LP, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. Additionally, all administrative expenses of the Company and those expenditures made by the Company on behalf of the Operating Partnership are reflected as the administrative expenses, expenditures and obligations thereto of the Operating Partnership, pursuant to the terms of the Partnership Agreement. Investment in Hotel Properties – Investments in hotel properties include investments in operating properties which are recorded at acquisition cost and allocated to land, property and equipment and identifiable intangible assets. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is included in the statements of operations. Expenditures under a renovation project, which constitute additions or improvements that extend the life of the property, are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 7 to 39 years for buildings and building improvements and 3 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets. We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceed its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property’s estimated fair market value would be recorded and an impairment loss recognized. Our review of possible impairment at one of our hotel properties revealed an excess of current carrying cost over the estimated undiscounted future cash flows, which was triggered by a combination of a change in anticipated use and future branding of the property; and a re-evaluation of future revenues based on anticipated market conditions, market penetration and costs necessary to achieve such market penetration, resulting in an impairment of approximately $3.2 million, as of December 31, 2014. Assets Held For Sale – The Company records assets as held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year. Investment in Joint Venture – Investment in joint venture represents our noncontrolling indirect 25.0% equity interest in (i) the entity that owns the Crowne Plaza Hollywood Beach Resort and (ii) the entity that leases the hotel and has engaged Chesapeake Hospitality to operate the hotel under a management contract. Carlyle owns a 75.0% controlling indirect interest in these entities. We account for our investment in the joint venture under the equity method of accounting and are entitled to receive our pro rata share of annual cash flow. We also have the opportunity to earn an incentive participation in the net sale proceeds based upon the achievement of certain overall investment returns, in addition to our pro rata share of net sale proceeds. Cash and Cash Equivalents – We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Concentration of Credit Risk – We hold cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) protection limits of $250,000. Our exposure to credit loss in the event of the failure of these institutions is represented by the difference between the FDIC protection limit and the total amounts on deposit. Management monitors, on a regular basis, the financial condition of the financial institutions along with the balances there on deposit to minimize our potential risk. Restricted Cash – Restricted cash includes real estate tax escrows, insurance escrows and reserves for replacements of furniture, fixtures and equipment pursuant to certain requirements in our various mortgage agreements. Accounts Receivable – Accounts receivable consists primarily of hotel guest and banqueting receivables. Ongoing evaluations of collectability are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible. Inventories – Inventories, consisting primarily of food and beverages, are stated at the lower of cost or market, with cost determined on a method that approximates first-in, first-out basis. Franchise License Fees – Fees expended to obtain or renew a franchise license are amortized over the life of the license or renewal. The unamortized franchise fees as of June 30, 2015 and December 31, 2014 were approximately $368,639 and $394,139, respectively. Amortization expense for the three month periods ended June 30, 2015 and 2014 totaled $12,750 and $10,875, respectively, and for the six month periods ended June 30, 2015 and 2014 totaled $25,500 and $21,750, respectively. Deferred Financing and Offering Costs – Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt. Deferred offering costs are recorded at cost and consist of offering fees and other costs incurred in issuing equity and are reflected in prepaid expenses, inventory and other assets on the consolidated balance sheets. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statements of operations. Amortization of deferred offering costs occurs when the equity offering is complete, whereby the costs are offset against the equity funds raised in the future and included in additional paid in capital on the consolidated balance sheets, or if the offering expires and the offering costs exceed the funds raised in the offering then the excess will be included in corporate general and administrative expenses in the consolidated statements of operations. Derivative Instruments – Our derivative instruments are reflected as assets or liabilities on the balance sheet and measured at fair value. Derivative instruments used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as an interest rate risk, are considered fair value hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For a derivative instrument designated as a cash flow hedge, the change in fair value each period is reported in accumulated other comprehensive income in stockholders’ equity and partners’ capital to the extent the hedge is effective. For a derivative instrument designated as a fair value hedge, the change in fair value each period is reported in earnings along with the change in fair value of the hedged item attributable to the risk being hedged. For a derivative instrument that does not qualify for hedge accounting or is not designated as a hedge, the change in fair value each period is reported in earnings. We use derivative instruments to add stability to interest expense and to manage our exposure to interest-rate movements. To accomplish this objective, we primarily used an interest-rate swap, which was required under our then-existing credit agreement and acted as a cash flow hedge involving the receipts of variable-rate amounts from a counterparty in exchange for our making fixed-rate payments without exchange of the underlying principal amount. We valued our interest-rate swap at fair value, which we define as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We also use derivative instruments in the Company’s stock to obtain more favorable terms on our financing. We do not enter into contracts to purchase or sell derivative instruments for speculative trading purposes. Fair Value Measurements – We classify the inputs used to measure fair value into the following hierarchy: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or Inputs other than quoted prices that are observable for the asset or liability. Level 3 Unobservable inputs for the asset or liability. We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table represents our mortgage loans and unsecured notes measured at fair value and the basis for that measurement: Level 1 Level 2 Level 3 December 31, 2014 Investment in hotel property, net (1) $ — $ — $ 6,396,787 Mortgage loans (2) $ — $ (209,994,659 ) $ — Unsecured notes (3) $ (53,816,320 ) $ — $ — June 30, 2015 (unaudited) Mortgage loans (2) $ — $ (212,379,506 ) $ — Unsecured notes (3) $ (55,181,600 ) $ — $ — (1) A non-recurring fair value measurement was conducted in 2014 for our investment in hotel property, which resulted in impairment charges for the year ended December 31, 2014, which represent the amount by which the carrying value of the asset group exceeded its fair value. (2) Mortgage loans are reflected at outstanding principal balance on our Consolidated Balance Sheet as of June 30, 2015 and December 31, 2014. (3) Unsecured notes are recorded at outstanding principal balance on our Consolidated Balance Sheet as of June 30, 2015 and December 31, 2014. Noncontrolling Interest in Operating Partnership – Certain hotel properties have been acquired, in part, by the Operating Partnership through the issuance of limited partnership units of the Operating Partnership. The noncontrolling interest in the Operating Partnership is: (i) increased or decreased by the limited partners’ pro-rata share of the Operating Partnership’s net income or net loss, respectively; (ii) decreased by distributions; (iii) decreased by redemption of partnership units for the Company’s common stock; and (iv) adjusted to equal the net equity of the Operating Partnership multiplied by the limited partners’ ownership percentage immediately after each issuance of units of the Operating Partnership and/or the Company’s common stock through an adjustment to additional paid-in capital. Net income or net loss is allocated to the noncontrolling interest in the Operating Partnership based on the weighted average percentage ownership throughout the period. Revenue Recognition – Revenues from operations of the hotels are recognized when the services are provided. Revenues consist of room sales, food and beverage sales, and other hotel department revenues, such as telephone, parking, gift shop sales and rentals from restaurant tenants, rooftop leases and gift shop operators. Revenues are reported net of occupancy and other taxes collected from customers and remitted to governmental authorities. Receivables for amounts earned under various contracts are subject to audit, including a receivable for approximately $1.6 million from Starwood Resorts and Hotels. Lease Revenue – Several of our properties generate revenue from leasing commercial space adjacent to the hotel, the restaurant space within the hotel, apartment units and space on the roofs of our hotels for antennas and satellite dishes. We account for the lease income as revenue from other operating departments within the statement of consolidated operations pursuant to the terms of each lease. Lease revenue was approximately $0.4 million and $0.4 million, for the three months ended June 30, 2015 and 2014, respectively, and approximately $0.9 million and $0.8 million, for the six months ended June 30, 2015 and 2014, respectively. A schedule of minimum future lease payments receivable for the following twelve-month periods is as follows: Remaining six months ending December 31, 2015 $ 755,417 December 31, 2016 1,321,344 December 31, 2017 867,447 December 31, 2018 356,179 December 31, 2019 236,372 December 31, 2020 and thereafter 1,086,188 Total $ 4,622,947 Income Taxes – The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. MHI TRS, our wholly owned taxable REIT subsidiary which leases our hotels from subsidiaries of the Operating Partnership, is subject to federal and state income taxes. We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. As of June 30, 2015 and December 31, 2014, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2015, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2010 through 2014. In addition, as of June 30, 2015, the tax years that remain subject to examination by the major tax jurisdictions to which MHI TRS is subject generally include 2004 through 2014. The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership’s taxable income. Stock-based Compensation – The Company’s 2004 Long Term Incentive Plan (the “2004 Plan”) and its 2013 Long-Term Incentive Plan (the “2013 Plan”), which the Company’s stockholders approved in April 2013, permit the grant of stock options, restricted stock and performance share compensation awards to its employees for up to 350,000 and 750,000 shares of common stock, respectively. The Company believes that such awards better align the interests of its employees with those of its stockholders. Under the 2004 Plan, the Company has made restricted stock and deferred stock awards totaling 337,438 shares including 255,938 shares issued to certain executives and employees and 81,500 restricted shares issued to its independent directors. Of the 255,938 shares issued to certain of our executives and employees, all have vested except 18,000 shares issued to the Chief Financial Officer upon execution of his employment contract which will vest pro rata on each of the next three anniversaries of the effective date of his employment agreement. All of the 81,500 restricted shares issued to the Company’s independent directors have vested. The 2004 plan was terminated in 2013. Under the 2013 Plan, the Company has made stock awards totaling 72,850 shares, including 50,350 non-restricted shares to certain executives and employees and 22,500 restricted shares issued to its independent directors. All awards have vested except for 9,000 shares issued to the Company’s independent directors in January 2015, which will vest on December 31, 2015. Previously, under the 2004 Plan, and currently, under the 2013 Plan, the Company may issue a variety of performance-based stock awards, including nonqualified stock options. The value of the awards is charged to compensation expense on a straight-line basis over the vesting or service period based on the value of the award as determined by the Company’s stock price on the date of grant or issuance. As of June 30, 2015, no performance-based stock awards have been granted. Consequently, stock-based compensation as determined under the fair-value method would be the same under the intrinsic-value method. Total compensation cost recognized under the 2004 Plan and 2013 Plan for the three months ended June 30, 2015 and 2014 was $276,016 and $235,605, respectively. The 2004 Plan was terminated in April 2013. Advertising – Advertising costs were $56,799 and $69,293 for the three months ended June 30, 2015 and 2014, respectively, and were $109,655 and $113,153 for the six months ended June 30, 2015 and 2014, respectively. Advertising costs are expensed as incurred. Comprehensive Income – Comprehensive income as defined, includes all changes in equity during a period from non-owner sources. We do not have any items of comprehensive income other than net income. Segment Information – We have determined that our business is conducted in one reportable segment: hotel ownership. Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications – Certain reclassifications in the amount of $69,130, from accounts receivable to accounts receivable – affiliate on the consolidated statements of cash flows, have been made to the prior period balances to conform to the current period presentation. New Accounting Pronouncements – In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03 related to . To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. This guidance will be effective for annual reporting periods beginning after December 15, 2015. Other than the change in presentation of deferred financing costs from an asset to a liability, we do not expect this ASU to have an impact on the Company’s consolidated financial position, results of operations or cash flows. In February 2015, the FASB issued ASU 2015-02 related to ASC Topic 810, Consolidation In May 2014, the FASB issued ASU 2014-09 related to ASC Topic 606, Revenue from Contracts with Customers. Revenue Recognition Revenue Recognition—Construction-Type and Production-Type Contracts Property, Plant, and Equipment Intangibles—Goodwill and Other |
Acquisition of Hotel Properties
Acquisition of Hotel Properties | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisition of Hotel Properties | 3. Acquisition of Hotel Properties Georgian Terrace Acquisition. On March 27, 2014, we acquired the 326-room Georgian Terrace in Atlanta, Georgia, for approximately $61.1 million. The allocation of the purchase price based on fair values is as follows: Georgian Terrace Land and land improvements $ 10,127,687 Buildings and improvements 45,385,939 Furniture, fixtures and equipment 5,163,135 Investment in hotel properties 60,676,761 Restricted cash 124,658 Accounts receivable 465,287 Prepaid expenses, inventory and other assets 430,997 Accounts payable and accrued liabilities (591,618 ) Net cash $ 61,106,085 The results of operations of the hotel are included in our consolidated financial statements from the date of acquisition. The total revenue and net loss related to the acquisition for the period March 27, 2014 to March 31, 2014 are approximately $333,000 and $172,000, respectively. The following pro forma financial information presents the results of operations of the Company and the Operating Partnership for the three and six months ended June 30, 2014, as if the acquisition of the Georgian Terrace had taken place on January 1, 2014. The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually occurred had the transaction taken place on January 1, 2014, or of future results of operations: Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 (unaudited) (unaudited) Pro forma revenues $ 36,339,701 $ 66,120,754 Pro forma operating expenses 29,120,620 58,222,109 Pro forma operating income 7,219,081 7,898,645 Pro forma net income (loss) 2,166,689 615,372 Pro forma earnings (loss) per basic share and unit 0.21 0.06 Pro forma earnings (loss) per diluted share and unit 0.21 0.06 Pro forma basic common shares 10,353,677 10,290,047 Pro forma diluted common shares 10,353,677 10,290,047 |
Investment in Hotel Properties
Investment in Hotel Properties | 6 Months Ended |
Jun. 30, 2015 | |
Real Estate [Abstract] | |
Investment in Hotel Properties | 4. Investment in Hotel Properties Investment in hotel properties as of June 30, 2015 and December 31, 2014 consisted of the following: June 30, 2015 December 31, 2014 (unaudited) Land and land improvements $ 37,550,809 $ 37,483,400 Buildings and improvements 262,674,458 257,343,516 Furniture, fixtures and equipment 41,129,789 38,762,997 341,355,056 333,589,913 Less: accumulated depreciation and impairment (77,523,617 ) (73,397,760 ) $ 263,831,439 $ 260,192,153 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | 5. Debt Mortgage Debt . As of June 30, 2015 and December 31, 2014, we had approximately $208.4 million and approximately $205.3 million of outstanding mortgage debt, respectively. The following table sets forth our mortgage debt obligations on our hotels. Balance Outstanding as of June 30, 2015 December 31, Prepayment Maturity Amortization Interest Property (unaudited) 2014 Penalties Date Provisions Rate Crowne Plaza Hampton Marina $ 4,011,500 $ 4,509,500 None 6/30/2016 $ 83,000 (1) 5.00% (2) Crowne Plaza Houston Downtown $ 20,708,585 20,954,867 Yes (3) 4/12/2016 (4) 25 years 4.50% Crowne Plaza Jacksonville Riverfront $ 16,198,315 16,358,706 None 7/10/2015 (5) 25 years LIBOR plus 3.00 % Crowne Plaza Tampa Westshore $ 13,167,978 13,317,684 None 6/18/2017 25 years 5.60% DoubleTree by Hilton Raleigh Brownstone – University $ 15,171,384 15,274,284 (6) 8/1/2018 30 years 4.78% DoubleTree by Hilton Philadelphia Airport $ 32,880,282 33,378,102 None 4/1/2019 25 years LIBOR plus 3.00 % (7) Georgian Terrace $ 47,000,000 41,500,000 None 6/1/2025 (8) 30 years 4.42% Hilton Savannah DeSoto $ 20,834,269 21,050,093 Yes (9) 9/1/2017 25 years 6.06% Hilton Wilmington Riverside $ 20,111,911 20,389,325 Yes (9) 4/1/2017 25 years 6.21% Holiday Inn Laurel West $ 6,884,563 6,974,458 Yes (10) 8/5/2021 25 years 5.25 % (11) Sheraton Louisville Riverside $ 11,466,140 11,584,638 (6) 1/6/2017 25 years 6.24% Total $ 208,434,927 $ 205,291,657 (1) The Operating Partnership is required to make monthly principal payments of $83,000. (2) The note rate was changed to a fixed rate of 5.00%, effective June 27, 2014. (3) The note is subject to a prepayment penalty if the loan is prepaid in full or in part prior to November 13, 2015. (4) The note provides that the mortgage can be extended until November 2018 if certain conditions have been satisfied. (5) The note provides that the mortgage can be extended until July 2016 if certain conditions have been satisfied. (6) With limited exception, the note may not be prepaid until two months before maturity. (7) The note bears a minimum interest rate of 3.50%. (8) The note may not be prepaid on or prior to February 2025. Prepayment can be made without penalty thereafter with not less than 30 days and not more than 90 days, prior written notice. (9) The notes may not be prepaid during the first six years of the terms. Prepayment can be made with penalty thereafter until 90 days before maturity. (1 0 ) Pre-payment can be made with penalty until 180 days before the fifth anniversary of the commencement date of the loan or from such date until 180 days before the maturity. (11 ) The note provides that after five years, the rate of interest will adjust to a rate of 3.00% per annum plus the then-current five-year U.S. Treasury rate of interest, with a floor of 5.25%. We were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, as of June 30, 2015. Total future mortgage debt maturities, without respect to any extension of loan maturity, as of June 30, 2015 were as follows: The remaining six month period ending December 31, 2015 $ 18,971,364 December 31, 2016 $ 27,887,107 December 31, 2017 $ 65,365,256 December 31, 2018 $ 16,678,581 December 31, 2019 $ 30,242,785 December 31, 2020 and thereafter $ 49,289,834 Total future maturities $ 208,434,927 7.0% Unsecured Notes. On November 21, 2014, the Operating Partnership issued 7.0% senior unsecured notes in the aggregate amount of $25.3 million (the “7% Notes”). The indenture requires quarterly payments of interest and matures on November 15, 2019. The 7% Notes are callable after November 15, 2017 at 101% of face value. 8.0% Unsecured Notes. On September 30, 2013, the Operating Partnership issued 8.0% senior unsecured notes in the aggregate amount of $27.6 million (the “8% Notes”). The indenture requires quarterly payments of interest and matures on September 30, 2018. The 8% Notes are callable after September 30, 2016 at 101% of face value. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Ground, Building and Submerged Land Leases – We lease 2,086 square feet of commercial space next to the Hilton Savannah DeSoto for use as an office, retail or conference space, or for any related or ancillary purposes for the hotel and/or atrium space. In December 2007, we signed an amendment to the lease to include rights to the outdoor esplanade adjacent to the leased commercial space. The areas are leased under a six-year operating lease, which expired October 31, 2006 and has been renewed for the second of three optional five-year renewal periods expiring October 31, 2011, October 31, 2016 and October 31, 2021, respectively. Rent expense for this operating lease for the three and six months ended June 30, 2015 and 2014 each totaled $15,866 and $31,734, respectively. We lease, as landlord, the entire fourteenth floor of the Savannah hotel property to The Chatham Club, Inc. under a ninety-nine year lease expiring July 31, 2086. This lease was assumed upon the purchase of the building under the terms and conditions agreed to by the previous owner of the property. No rental income is recognized under the terms of this lease as the original lump sum rent payment of $990 was received by the previous owner and not prorated over the life of the lease. We lease a parking lot adjacent to the DoubleTree by Hilton Brownstone-University in Raleigh, North Carolina. The land is leased under a second amendment, dated April 28, 1998, to a ground lease originally dated May 25, 1966. The original lease is a 50-year operating lease, which expires August 31, 2016. We exercised a renewal option for the first of three additional ten-year periods expiring August 31, 2026, August 31, 2036, and August 31, 2046, respectively. We hold an exclusive and irrevocable option to purchase the leased land at fair market value at the end of the original lease term, subject to the payment of an annual fee of $9,000, and other conditions. Rent expense for the three and six months ended June 30, 2015 and 2014, each totaled $23,871 and $47,741, respectively.. We lease land adjacent to the Crowne Plaza Tampa Westshore for use as parking under a five-year agreement with the Florida Department of Transportation that commenced in July 2009 and expires in July 2019. The agreement requires annual payments of $2,432, plus tax, and may be renewed for an additional five years. Rent expense for the three and six months ended June 30, 2015 and 2014, each totaled $651 and $1,301, respectively. We lease certain submerged land in the Saint Johns River in front of the Crowne Plaza Jacksonville Riverfront from the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida. The submerged land was leased under a five-year operating lease requiring annual payments of $4,961, which expired September 18, 2012. A new operating lease was executed requiring annual payments of $6,020 and expires September 18, 2017. Rent expense for the three and six months ended June 30, 2015 and 2014, each totaled $1,505 and $3,010, respectively. We lease 5,216 square feet of commercial office space in Williamsburg, Virginia under an agreement, as amended, that commenced September 1, 2009 and expires August 31, 2018. Rent expense for the three and six months ended June 30, 2015 totaled $22,222 and $41,369, respectively, for the three months and six months ended June 30, 2014 totaled $20,398 and $40,796, respectively. We lease 1,632 square feet of commercial office space in Rockville, Maryland under an agreement that expires February 28, 2017. The agreement requires monthly payments at an annual rate of $22,848 for the first year of the lease term and monthly payments at an annual rate of $45,696 for the second year of the lease term, increasing 2.75% per year for the remainder of the lease term. Rent expense totaled $12,584 and $25,168 for the three and six months ended June 30, 2015, respectively, and totaled $11,046 and $22,091 for the three and six months ended June 30, 2014, respectively. We also lease certain furniture and equipment under financing arrangements expiring between August 2015 and February 2018. A schedule of minimum future lease payments for the following twelve-month periods is as follows: The remaining six month period ending December 31, 2015 $ 202,195 December 31, 2016 $ 358,204 December 31, 2017 $ 241,609 December 31, 2018 $ 176,740 December 31, 2019 $ 100,480 December 31, 2020 and thereafter $ 636,547 Total $ 1,715,775 Employment Agreements - The Company has entered into various employment contracts with employees that could result in obligations to the Company in the event of a change in control or termination without cause. Management Agreements – At June 30, 2015, each of our wholly-owned operating hotels was operated under a management agreement with Chesapeake Hospitality. Effective January 1, 2015, each of our wholly-owned hotels operated under a new master agreement as well as an individual hotel management agreement (see Note 8). Each of the individual hotel management agreements may be terminated earlier than the stated term upon the sale of the hotel covered by the respective management agreement, in which case we may incur early termination fees. Franchise Agreements – As of June 30, 2015, most of our hotels operate under franchise licenses from national hotel companies. Under the franchise agreements, we are required to pay a franchise fee generally between 2.5% and 5.0% of room revenues, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 2.5% and 6.0% of room revenues from the hotels. The franchise agreements currently expire between September 2015 and October 2024. On August 7, 2014, we voluntarily terminated the franchise agreement with Holiday Hospitality Franchising, LLC (IHG) for the Crowne Plaza Jacksonville Riverfront effective September 1, 2015 and recognized a termination fee of $351,800. The property is being rebranded as the DoubleTree by Hilton Jacksonville Riverfront. Each of our franchise agreements provides for early termination fees in the event the agreement is terminated before the stated term. Restricted Cash Reserves – Each month, we are required to escrow with the lenders on the Hilton Wilmington Riverside, the Hilton Savannah DeSoto, the DoubleTree by Hilton Brownstone-University, the Sheraton Louisville Riverside and the Georgian Terrace an amount equal to 1/12 Litigation – We are not involved in any material litigation, nor, to our knowledge, is any material litigation threatened against us. We are involved in routine litigation arising out of the ordinary course of business, all of which we expect to be covered by insurance and we believe it is not reasonably possible such matters will have a material adverse impact on our financial condition or results of operations or cash flows. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Equity | 7. Equity Preferred Stock – The Company has authorized 1,000,000 shares of preferred stock, of which 27,650 shares were issued as Series A Cumulative Redeemable Preferred Stock, and subsequently redeemed in 2013. None of the remaining authorized shares have been issued. Common Stock – The Company is authorized to issue up to 49,000,000 shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Holders of the Company’s common stock are entitled to receive distributions when authorized by the Company’s board of directors out of assets legally available for the payment of distributions. The following is a schedule of issuances, since January 1, 2014, of the Company’s common stock: During June 2015, the Company sold 98,682 shares of common stock for net proceeds of approximately $0.7 million, which it contributed to the Operating Partnership for an equivalent number of units. On May 1, 2015, one holder of units in the Operating Partnership redeemed a total of 50,000 units for an equivalent number of shares of the Company’s common stock. On April 1, 2015, one holder of units in the Operating Partnership redeemed 100,000 units for an equivalent number of shares of the Company’s common stock. On January 23, 2015, the Company was issued 36,100 units in the Operating Partnership and awarded an aggregate of 26,350 shares of unrestricted stock to certain executives and employees as well as 9,750 shares of restricted stock to certain of its independent directors. On October 1, 2014, one holder of units in the Operating Partnership redeemed 200,000 units for an equivalent number of shares of the Company’s common stock. During September 2014, the Company sold 16,979 shares of common stock for net proceeds of $122,793, which it contributed to the Operating Partnership for an equivalent number of units. During August 2014, the Company sold 276 shares of common stock for net proceeds of $2,118, which it contributed to the Operating Partnership for an equivalent number of units. On April 1, 2014, two holders of units in the Operating Partnership redeemed 110,000 units for an equivalent number of shares of the Company’s common stock. On February 14, 2014, the Company was issued 36,750 units in the Operating Partnership and awarded an aggregate of 24,000 shares of unrestricted stock to certain executives as well as 12,000 shares of restricted stock and 750 share of unrestricted stock to certain of its independent directors. As of June 30, 2015 and December 31, 2014, the Company had 10,855,714 and 10,570,932 shares of common stock outstanding, respectively. Operating Partnership Units – Holders of Operating Partnership units, other than the Company as general partner, have certain redemption rights, which enable them to cause the Operating Partnership to redeem their units in exchange for shares of the Company’s common stock on a one-for-one basis or, at the option of the Company, cash per unit equal to the average of the market price of the Company’s common stock for the 10 trading days immediately preceding the notice date of such redemption. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the limited partners or the stockholders of the Company. The following is a schedule of issuances and redemptions, since January 1, 2014, of units in the Operating Partnership in addition to the issuances of units in the Operating Partnership to the Company described above: On November 1, 2014, the Operating Partnership redeemed 3,300 units held by a trust controlled by two members of the Board of Directors for a total of $25,621, pursuant to the terms of the partnership agreement. As of June 30, 2015 and December 31, 2014, the total number of Operating Partnership units outstanding was 13,256,541 and 13,121,759, respectively. As of June 30, 2015 and December 31, 2014, the total number of outstanding Operating Partnership units not owned by the Company was 2,400,827 and 2,550,827, respectively, with a fair market value of approximately $17.0 million and $19.1 million, based on the price per share of the common stock on such respective dates. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. Related Party Transactions Chesapeake Hospitality . As of June 30, 2015, the members of Chesapeake Hospitality (a company that is majority-owned and controlled by the Company’s chief executive officer, its former chief financial officer, a member of its Board of Directors and a former member of its Board of Directors) owned 1,064,404 shares, approximately 9.8%, of the Company’s outstanding common stock as well as 1,642,958 Operating Partnership units. The indirect equity owners of Chesapeake Hospitality include the Company’s chief executive officer, Andrew M. Sims, and a member of the Company’s board of directors, Kim E. Sims. The following is a summary of the transactions between Chesapeake Hospitality and us: Accounts Receivable – At June 30, 2015 and December 31, 2014, we were due $74,816 and $50,838, respectively, from Chesapeake Hospitality. Shell Island Sublease – We had a sublease arrangement with Chesapeake Hospitality on our expired leasehold interests in the property at Shell Island. Leasehold revenue was $0 and $87,500 for the three month periods ended June 30, 2015 and 2014, respectively and was $0 and $175,000 for the six month periods ended June 30, 2015 and 2014. The underlying leases at Shell Island expired on December 31, 2011. Strategic Alliance Agreement – On December 21, 2004, we entered into a ten-year strategic alliance agreement with Chesapeake Hospitality that provides in part for the referral of acquisition opportunities to the Company and the management of its hotels by Chesapeake Hospitality. The agreement expired on December 15, 2014, in conjunction with the execution of the new management agreements. Management Agreements – Each of the hotels that we wholly-owned at June 30, 2015 were operated by Chesapeake Hospitality under various management agreements that were to expire between December 2014 and March 2019. Under those agreements, Chesapeake Hospitality received a base management fee of 2.0% of gross revenues for the first full fiscal year and partial fiscal year from the commencement date through December 31 of that year, 2.5% of gross revenues the second full fiscal year, and 3.0% of gross revenues for every year thereafter. The agreements also provided for an incentive management fee due annually in arrears within 90 days of the end of the fiscal year equal to 10.0% of the amount by which the gross operating profit of the hotels, on an aggregate basis for eight hotels and on an individual basis for two other hotels, for a given year exceeds the gross operating profit for the same hotel(s), for the prior year. The incentive management fee may not exceed 0.25% of gross revenues of all of the hotel(s) included in the incentive fee calculation. The management agreement for the Crowne Plaza Houston Downtown did not provide for any incentive management fee. Additionally, the management agreement for the Georgian Terrace provided for an administrative fee of $30,000 per year for as long as the adjacent parking garage is managed by a third party. On December 15, 2014, we entered into a new master agreement and a series of individual hotel management agreements that became effective on January 1, 2015. The master agreement has a five-year term, but may be extended for such additional periods as long as an individual management agreement remains in effect. The base management fee for the Crowne Plaza Houston Downtown and the Georgian Terrace will remain at 2.00% through 2015, increases to 2.25% in 2016 and increases to 2.50% thereafter. The base management fees for the remaining properties in the current portfolio will be 2.65% through 2017 and decreases to 2.50% thereafter. For new individual hotel management agreements, Chesapeake Hospitality will receive a base management fee of 2.00% of gross revenues for the first full year from the commencement date through the anniversary date, 2.25% of gross revenues the second full year, and 2.50% of gross revenues for every year thereafter. Base management and administrative fees earned by Chesapeake Hospitality for our wholly owned properties totaled $912,540 and $1,666,437 for the three months and six months ended June 30, 2015, respectively, and $1,086,379 and $1,781,212 for the three months and six months ended June 30, 2014, respectively. In addition, estimated incentive management fees of $59,460 and $94,808 were accrued for the three months and six months ended June 30, 2015, respectively, and estimated incentive management fees of $92,621 and $99,893 were accrued for the three months and six months ended June 30, 2014, respectively. Employee Medical Benefits – We purchase employee medical benefits through Maryland Hospitality, Inc. (d/b/a MHI Health), an affiliate of Chesapeake Hospitality for our employees as well as those employees that are employed by Chesapeake Hospitality that work exclusively for our hotel properties. Gross premiums for employee medical benefits paid by the Company (before offset of employee co-payments) were approximately $1,123,117 million and $2,241,674 million for the three and six months ended June 30, 2015, respectively and $996,746 and $1,811,547 for the three and six months ended June 30, 2014, respectively. Crowne Plaza Hollywood Beach Resort . As of June 30, 2015, we owned a 25.0% indirect interest in (i) the entity that owns the Crowne Plaza Hollywood Beach Resort and (ii) the entity that leases the hotel and has engaged Chesapeake Hospitality to operate the hotel under a management contract. The following is a summary of the transactions between Crowne Plaza Hollywood Beach Resort and us: Accounts Receivable – At June 30, 2015 and December 31, 2014, we were due $73,435 and $146,836, respectively, from Crowne Plaza Hollywood Beach Resort. Management Agreement – Crowne Plaza Hollywood Beach Resort is operated by Chesapeake Hospitality under a management agreement that was set to expire August 2017. Under this agreement Chesapeake Hospitality received a base management fee of 3.0% of gross revenues. Base management fees earned by Chesapeake Hospitality totaled $146,869 and $358,128 for the three and six months ended June 30, 2015, respectively, and totaled $138,259 and $331,044 for the three and six months ended June 30, 2014, respectively (see Note 14). Asset Management Fee – Also, under an asset management agreement, MHI Hospitality TRS II, LLC, an indirect subsidiary of the Company, receives a fee of 1.50% of total revenue which is due on a quarterly basis for services rendered. Asset management fees totaled $73,435 and $179,064 for the three and six months ended June 30, 2015, respectively, and totaled $69,130 and $165,569 for three and six months ended June 30, 2014, respectively. Unpaid asset management fees included in accounts payable and accrued liabilities at June 30, 2015 and December 31, 2014 totaled $73,435 and $73,278, respectively. Redemption of Units in Operating Partnership – During 2014, we redeemed a total of 3,300 units in our Operating Partnership held by a trust controlled by two current members and one former member of the Company’s Board of Directors for a total of $25,621 pursuant to the terms of the partnership agreement. Bridge Lenders . A former member of the Company’s board of directors holds executive positions in Essex Equity Capital Management, LLC, an affiliate of Essex Equity Joint Investment Vehicle, LLC as well as Richmond Hill Capital Partners, LP. On March 26, 2014, we entered into a Note Agreement, Guaranty, and Pledge Agreement to secure a $19.0 million secured Bridge Loan with the Richmond Hill Capital Partners, LP and Essex Equity Joint Investment Vehicle, LLC. The Bridge Loan had a maturity date of March 26, 2015; carried a fixed interest rate of 10.0% per annum; was subject to a prepayment premium if the loan was prepaid in full or in part prior to March 26, 2015; required mandatory prepayment upon certain events; contained limited financial covenants; and was secured by a lien on 100% of the limited partnership interests in the subsidiary that owns the DoubleTree by Hilton Philadelphia Airport hotel. The Bridge Loan was repaid in full in November 2014. Others. On June 24, 2013 we hired Ashley S. Kirkland, the daughter of our Chief Executive Officer as a legal analyst and Robert E. Kirkland IV, her husband, as our compliance officer. On October 2, 2014, we hired Andrew M. Sims Jr., the son of our Chief Executive Officer, as a brand manager. Compensation for the three and six months ended June 30, 2015 totaled approximately $67,596 and $133,840, respectively, for all individuals. Compensation for the three and six months ended June 30, 2014 totaled $33,287 and $65,617, respectively, for all individuals. During June 2015, the Company reimbursed $25,302 to a partnership controlled by the Chief Executive Officer for business-related air travel pursuant to the Company’s travel reimbursement policy. |
Retirement Plan
Retirement Plan | 6 Months Ended |
Jun. 30, 2015 | |
Compensation And Retirement Disclosure [Abstract] | |
Retirement Plan | 9. Retirement Plan We maintain a 401(k) plan for qualified employees which is subject to “safe harbor” provisions and which requires that we match 100.0% of the first 3.0% of employee contributions and 50.0% of the next 2.0% of employee contributions. All employer matching funds vest immediately in accordance with the “safe harbor” provision. Contributions to the plan totaled $14,934 and $27,610 for the three and six months ended June 30, 2015, respectively, and $17,106 and $31,553 for the three and six months ended June 30, 2014, respectively. |
Unconsolidated Joint Venture
Unconsolidated Joint Venture | 6 Months Ended |
Jun. 30, 2015 | |
Unconsolidated Joint Venture [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Unconsolidated Joint Venture | 10. Unconsolidated Joint Venture As of June 30, 2015, we owned a 25.0% indirect interest in (i) the entity that owns the Crowne Plaza Hollywood Beach Resort (“JV Owner”) and (ii) the entity that leases the hotel and has engaged Chesapeake Hospitality to operate the hotel under a management contract (“JV Lessee”). Carlyle owns a 75.0% indirect controlling interest in all these entities (see Note 14). The joint venture purchased the property on August 8, 2007 and began operations on September 18, 2007. Summarized financial information for this investment, which is accounted for under the equity method, is as follows: June 30, 2015 (unaudited) December 31, 2014 ASSETS Investment in hotel property, net $ 61,987,961 $ 62,823,142 Cash and cash equivalents 2,542,130 2,153,906 Restricted cash 1,033,814 874,111 Accounts receivable 251,946 328,755 Prepaid expenses, inventory and other assets 1,869,150 1,489,479 TOTAL ASSETS $ 67,685,001 $ 67,669,393 LIABILITIES Mortgage loan, net $ 57,000,000 $ 57,000,000 Accounts payable and other accrued liabilities 2,673,151 2,195,613 Accounts payable and other accrued liabilities, member 71,764 146,836 Advance deposits 416,968 398,695 TOTAL LIABILITIES 60,161,883 59,741,144 TOTAL MEMBERS’ EQUITY 7,523,118 7,928,249 TOTAL LIABILITIES AND MEMBERS’ EQUITY $ 67,685,001 $ 67,669,393 Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Revenue Rooms department $ 3,777,455 $ 3,524,406 $ 9,521,784 $ 8,732,252 Food and beverage department $ 801,452 725,125 1,672,739 1,603,337 Other operating departments $ 316,738 359,121 743,081 702,368 Total revenue 4,895,645 4,608,652 11,937,604 11,037,957 Expenses Hotel operating expenses Rooms department 856,768 814,657 1,809,365 1,682,480 Food and beverage department 618,440 547,570 1,256,169 1,179,587 Other operating departments 153,988 163,879 320,897 326,446 Indirect 1,981,234 1,727,825 4,150,980 3,606,910 Total hotel operating expenses 3,610,430 3,253,931 7,537,411 6,795,423 Depreciation and amortization 444,403 555,272 888,979 1,110,008 General and administrative 88,806 96,884 215,951 233,596 Total operating expenses 4,143,639 3,906,087 8,642,341 8,139,027 Operating income 752,006 702,565 3,295,263 2,898,930 Interest expense (654,534 ) (649,687 ) (1,300,394 ) (1,295,850 ) Net income $ 97,472 $ 52,878 $ 1,994,869 $ 1,603,080 |
Indirect Hotel Operating Expens
Indirect Hotel Operating Expenses | 6 Months Ended |
Jun. 30, 2015 | |
Other Income And Expenses [Abstract] | |
Indirect Hotel Operating Expenses | 11. Indirect Hotel Operating Expenses Indirect hotel operating expenses consists of the following expenses incurred by the hotels: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) General and administrative $ 2,762,342 $ 2,772,076 $ 5,336,446 $ 4,793,073 Sales and marketing 2,877,233 2,648,968 5,522,296 4,740,190 Repairs and maintenance 1,650,878 1,647,141 3,257,548 2,975,656 Utilities 1,419,032 1,493,491 2,841,811 2,694,508 Franchise fees 1,122,728 1,105,391 2,007,492 1,989,697 Management fees, including incentive 912,540 1,086,379 1,761,246 1,781,212 Insurance 479,948 490,986 1,023,333 960,175 Property taxes 977,617 893,202 1,930,258 1,634,547 Other 130,551 52,276 120,782 104,726 Total indirect hotel operating expenses $ 12,332,869 $ 12,189,910 $ 23,801,212 $ 21,673,784 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes The components of the income tax benefit for the three and six months ended June 30, 2015 and 2014 are as follows: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Current: Federal $ - $ — $ - $ 23,000 State 50,277 115,489 107,956 115,489 50,277 115,489 107,956 138,489 Deferred: Federal 775,255 474,327 350,096 (257,862 ) State 130,003 (26,034 ) 58,708 (52,164 ) 905,258 448,293 408,804 (310,026 ) $ 955,535 $ 563,782 $ 516,760 $ (171,537 ) A reconciliation of the statutory federal income tax benefit to the Company’s income tax benefit is as follows: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Statutory federal income tax expense $ 922,979 $ 1,127,555 $ 1,016,507 $ 1,218,333 Effect of non-taxable REIT income (147,724 ) (630,228 ) (666,411 ) (1,453,195 ) State income tax benefit 180,280 66,455 166,664 63,325 $ 955,535 $ 563,782 $ 516,760 $ (171,537 ) As of June 30, 2015 and December 31, 2014, we had a net deferred tax asset of approximately $3.1 million and $3.5 million, respectively, of which, approximately $2.4 million and $2.7 million, respectively, are due to accumulated net operating losses. These loss carryforwards will begin to expire in 2028 if not utilized by such time. As of both June 30, 2015 and December 31, 2014, approximately $0.2 million of the net deferred tax asset is attributable to our share of start-up expenses related to the Crowne Plaza Hollywood Beach Resort, start-up expenses related to the opening of the Sheraton Louisville Riverside and the Crowne Plaza Tampa Westshore that were not deductible in the year incurred, but are being amortized over 15 years. The remainder of the net deferred tax asset is attributable to year-to-year timing differences including accrued, but not deductible, employee performance awards, vacation and sick pay, bad debt allowance and depreciation. We believe that it is more likely than not that the deferred tax asset will be realized and that no valuation allowance is required. |
Income Per Share and Per Unit
Income Per Share and Per Unit | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Income Per Share and Per Unit | 13. Income Per Share and Per Unit Income per Share . The limited partners’ outstanding limited partnership units in the Operating Partnership (which may be redeemed for common stock upon notice from the limited partners and following our election to redeem the units for stock rather than cash) have been excluded from the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners’ share of income would also be added back to net income. The computation of basic and diluted earnings per share is presented below. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Numerator Net income attributable to the Company for basic computation $ 1,431,110 $ 2,166,689 $ 2,006,444 $ 2,949,691 Denominator Weighted average number of common shares outstanding for basic computation 10,768,730 10,353,677 10,682,743 10,290,047 Basic and diluted net income per share $ 0.13 $ 0.21 $ 0.19 $ 0.29 Income Per Unit – The computation of basic and diluted earnings per unit is presented below. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Numerator Net income $ 1,759,109 $ 2,752,555 $ 2,472,967 $ 3,754,869 Denominator Weighted average number of units outstanding 13,052,524 13,107,804 13,099,316 13,098,870 Basic and diluted net income per unit $ 0.13 $ 0.21 $ 0.19 $ 0.29 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events On July 1, 2015, the Company closed an equity sale and issuance of 3,000,000 shares of common stock (the “Offering”), for net proceeds of approximately $19.8 million, after deducting offering-related expenses. On July 17, 2015, the Company closed an additional equity sale and issuance of 435,000 shares of common stock in the amount of approximately $2.9 million, net, from the exercise of an option of the underwriter to purchase additional shares from the Offering. The Company contributed the approximately $22.7 million net proceeds of this Offering, including the proceeds from the exercise of the underwriters’ option, to the Operating Partnership in exchange for common units of partnership interest in the Operating Partnership. The Operating Partnership used the net proceeds from the Offering to partially fund the cash portion of the purchase price for the acquisition of Carlyle’s 75.0% indirect interest in the Crowne Plaza Hollywood Beach Resort and related transaction expenses. On July 7, 2015, the Company obtained an $18.5 million mortgage with Bank of the Ozarks collateralized by a first mortgage on the Crowne Plaza Jacksonville Riverfront. The mortgage carries a four-year term, bears interest at a floating rate of the 30-day LIBOR plus 3.5%, subject to a floor rate of 4.0% and provides for level payments of principal and interest on a monthly basis under a 25-year amortization schedule. The maturity date is July 7, 2019, with a possible one year extension. The Company used the proceeds of the mortgage to repay the existing first mortgage on the Crowne Plaza Jacksonville Riverfront and to pay closing costs, and will use the balance of the proceeds to partially fund ongoing renovations at the Crowne Plaza Jacksonville Riverfront and for general corporate purposes. On July 10, 2015, we paid a quarterly dividend (distribution) of $0.075 per common share (and unit) to those stockholders (and unitholders of the Operating Partnership) of record on June 15, 2015. On July 27, 2015, we authorized payment of a quarterly dividend (distribution) of $0.08 per common share (and unit) to the stockholders (and unitholders of the Operating Partnership) of record as of September 15, 2015. The dividend (distribution) is to be paid on October 9, 2015. On July 31, 2015, the transaction with Carlyle closed and indirect subsidiaries of the Operating Partnership acquired the remaining 75.0% interest in the entities that own the JV Owner and the JV Lessee previously owned by Carlyle. As a result, the Operating Partnership now has a 100% indirect ownership interest in the entities that own the Crowne Plaza Hollywood Beach Resort. The purchase price for the remaining 75.0% interest in the Crowne Plaza Hollywood Beach Resort was a cash payment in the aggregate amount of approximately $26.3 million, subject to customary pro-rations. The existing mortgage loan secured by the Crowne Plaza Hollywood Beach Resort in the amount of $57.0 million issued by Bank of America, N.A. (the “Hollywood Mortgage Loan”) remains in place. The Hollywood Mortgage Loan matures in January 2017 and requires monthly payments of interest at a rate of LIBOR plus 3.95%. Pursuant to the purchase and sale agreement, the Operating Partnership was substituted for, and affiliates of Carlyle were released from, a guaranty and certain indemnification obligations relating to the Hollywood Mortgage Loan. Concurrently with the closing of the purchase and sale of the 75.0% interest in the Crowne Plaza Hollywood Beach Resort, the Company entered into a new management agreement with Chesapeake Hospitality. The new agreement has a 5-year term, but may be extended for two additional five-year periods. Chesapeake Hospitality will receive a base management fee of 2.0% of gross revenues for the first full year from the commencement date through the anniversary date, 2.25% of gross revenues for the second full year, and 2.50% of gross revenues for every year thereafter. In addition, Chesapeake Hospitality will be eligible to receive an incentive management fee equal to 10.0% of the amount by which the gross operating profit of the property exceeds the budgeted gross operating profit, up to a maximum incentive management fee of 0.25% of gross revenues. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Basis of Presentation | Basis of Presentation – The consolidated financial statements of the Company presented herein include all of the accounts of Sotherly Hotels Inc., the Operating Partnership, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated financial statements of the Operating Partnership presented herein include all of the accounts of Sotherly Hotels LP, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. Additionally, all administrative expenses of the Company and those expenditures made by the Company on behalf of the Operating Partnership are reflected as the administrative expenses, expenditures and obligations thereto of the Operating Partnership, pursuant to the terms of the Partnership Agreement. |
Investment in Hotel Properties | Investment in Hotel Properties – Investments in hotel properties include investments in operating properties which are recorded at acquisition cost and allocated to land, property and equipment and identifiable intangible assets. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is included in the statements of operations. Expenditures under a renovation project, which constitute additions or improvements that extend the life of the property, are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 7 to 39 years for buildings and building improvements and 3 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets. We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceed its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property’s estimated fair market value would be recorded and an impairment loss recognized. Our review of possible impairment at one of our hotel properties revealed an excess of current carrying cost over the estimated undiscounted future cash flows, which was triggered by a combination of a change in anticipated use and future branding of the property; and a re-evaluation of future revenues based on anticipated market conditions, market penetration and costs necessary to achieve such market penetration, resulting in an impairment of approximately $3.2 million, as of December 31, 2014. |
Assets Held For Sale | Assets Held For Sale – The Company records assets as held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year. |
Cash and Cash Equivalents | Cash and Cash Equivalents – We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Concentration of Credit Risk | Concentration of Credit Risk – We hold cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) protection limits of $ 250,000. Our exposure to credit loss in the event of the failure of these institutions is represented by the difference between the FDIC protection limit and the total amounts on deposit. Management monitors, on a regular basis, the financial condition of the financial institutions along with the balances there on deposit to minimize our potential risk. |
Restricted Cash | Restricted Cash – Restricted cash includes real estate tax escrows, insurance escrows and reserves for replacements of furniture, fixtures and equipment pursuant to certain requirements in our various mortgage agreements. |
Accounts Receivable | Accounts Receivable – Accounts receivable consists primarily of hotel guest and banqueting receivables. Ongoing evaluations of collectability are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible |
Inventories | Inventories – Inventories, consisting primarily of food and beverages, are stated at the lower of cost or market, with cost determined on a method that approximates first-in, first-out basis. |
Franchise License Fees | Franchise License Fees – Fees expended to obtain or renew a franchise license are amortized over the life of the license or renewal. The unamortized franchise fees as of June 30, 2015 and December 31, 2014 were approximately $368,639 and $394,139, respectively. Amortization expense for the three month periods ended June 30, 2015 and 2014 totaled $12,750 and $10,875, respectively, and for the six month periods ended June 30, 2015 and 2014 totaled $25,500 and $21,750, respectively. |
Deferred Financing and Offering Costs | Deferred Financing and Offering Costs – Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt. Deferred offering costs are recorded at cost and consist of offering fees and other costs incurred in issuing equity and are reflected in prepaid expenses, inventory and other assets on the consolidated balance sheets. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statements of operations. Amortization of deferred offering costs occurs when the equity offering is complete, whereby the costs are offset against the equity funds raised in the future and included in additional paid in capital on the consolidated balance sheets, or if the offering expires and the offering costs exceed the funds raised in the offering then the excess will be included in corporate general and administrative expenses in the consolidated statements of operations. |
Derivative Instruments | Derivative Instruments – Our derivative instruments are reflected as assets or liabilities on the balance sheet and measured at fair value. Derivative instruments used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as an interest rate risk, are considered fair value hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For a derivative instrument designated as a cash flow hedge, the change in fair value each period is reported in accumulated other comprehensive income in stockholders’ equity and partners’ capital to the extent the hedge is effective. For a derivative instrument designated as a fair value hedge, the change in fair value each period is reported in earnings along with the change in fair value of the hedged item attributable to the risk being hedged. For a derivative instrument that does not qualify for hedge accounting or is not designated as a hedge, the change in fair value each period is reported in earnings. We use derivative instruments to add stability to interest expense and to manage our exposure to interest-rate movements. To accomplish this objective, we primarily used an interest-rate swap, which was required under our then-existing credit agreement and acted as a cash flow hedge involving the receipts of variable-rate amounts from a counterparty in exchange for our making fixed-rate payments without exchange of the underlying principal amount. We valued our interest-rate swap at fair value, which we define as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We also use derivative instruments in the Company’s stock to obtain more favorable terms on our financing. We do not enter into contracts to purchase or sell derivative instruments for speculative trading purposes. |
Fair Value Measurements | Fair Value Measurements – We classify the inputs used to measure fair value into the following hierarchy: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or Inputs other than quoted prices that are observable for the asset or liability. Level 3 Unobservable inputs for the asset or liability. We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table represents our mortgage loans and unsecured notes measured at fair value and the basis for that measurement: Level 1 Level 2 Level 3 December 31, 2014 Investment in hotel property, net (1) $ — $ — $ 6,396,787 Mortgage loans (2) $ — $ (209,994,659 ) $ — Unsecured notes (3) $ (53,816,320 ) $ — $ — June 30, 2015 (unaudited) Mortgage loans (2) $ — $ (212,379,506 ) $ — Unsecured notes (3) $ (55,181,600 ) $ — $ — (1) A non-recurring fair value measurement was conducted in 2014 for our investment in hotel property, which resulted in impairment charges for the year ended December 31, 2014, which represent the amount by which the carrying value of the asset group exceeded its fair value. (2) Mortgage loans are reflected at outstanding principal balance on our Consolidated Balance Sheet as of June 30, 2015 and December 31, 2014. (3) Unsecured notes are recorded at outstanding principal balance on our Consolidated Balance Sheet as of June 30, 2015 and December 31, 2014. |
Noncontrolling Interest in Operating Partnership | Noncontrolling Interest in Operating Partnership – Certain hotel properties have been acquired, in part, by the Operating Partnership through the issuance of limited partnership units of the Operating Partnership. The noncontrolling interest in the Operating Partnership is: (i) increased or decreased by the limited partners’ pro-rata share of the Operating Partnership’s net income or net loss, respectively; (ii) decreased by distributions; (iii) decreased by redemption of partnership units for the Company’s common stock; and (iv) adjusted to equal the net equity of the Operating Partnership multiplied by the limited partners’ ownership percentage immediately after each issuance of units of the Operating Partnership and/or the Company’s common stock through an adjustment to additional paid-in capital. Net income or net loss is allocated to the noncontrolling interest in the Operating Partnership based on the weighted average percentage ownership throughout the period. |
Revenue Recognition | Revenue Recognition – Revenues from operations of the hotels are recognized when the services are provided. Revenues consist of room sales, food and beverage sales, and other hotel department revenues, such as telephone, parking, gift shop sales and rentals from restaurant tenants, rooftop leases and gift shop operators. Revenues are reported net of occupancy and other taxes collected from customers and remitted to governmental authorities. Receivables for amounts earned under various contracts are subject to audit, including a receivable for approximately $1.6 million from Starwood Resorts and Hotels. |
Lease Revenue | Lease Revenue – Several of our properties generate revenue from leasing commercial space adjacent to the hotel, the restaurant space within the hotel, apartment units and space on the roofs of our hotels for antennas and satellite dishes. We account for the lease income as revenue from other operating departments within the statement of consolidated operations pursuant to the terms of each lease. Lease revenue was approximately $ 0.4 million and $0.4 million, for the three months ended June 30, 2015 and 2014, respectively, and approximately $0.9 million and $0.8 million, for the six months ended June 30, 2015 and 2014, respectively. A schedule of minimum future lease payments receivable for the following twelve-month periods is as follows: Remaining six months ending December 31, 2015 $ 755,417 December 31, 2016 1,321,344 December 31, 2017 867,447 December 31, 2018 356,179 December 31, 2019 236,372 December 31, 2020 and thereafter 1,086,188 Total $ 4,622,947 |
Income Taxes | Income Taxes – The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. MHI TRS, our wholly owned taxable REIT subsidiary which leases our hotels from subsidiaries of the Operating Partnership, is subject to federal and state income taxes. We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. As of June 30, 2015 and December 31, 2014, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2015, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2010 through 2014. In addition, as of June 30, 2015, the tax years that remain subject to examination by the major tax jurisdictions to which MHI TRS is subject generally include 2004 through 2014. The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership’s taxable income. |
Stock-Based Compensation | Stock-based Compensation – The Company’s 2004 Long Term Incentive Plan (the “2004 Plan”) and its 2013 Long-Term Incentive Plan (the “2013 Plan”), which the Company’s stockholders approved in April 2013, permit the grant of stock options, restricted stock and performance share compensation awards to its employees for up to 350,000 and 750,000 shares of common stock, respectively. The Company believes that such awards better align the interests of its employees with those of its stockholders. Under the 2004 Plan, the Company has made restricted stock and deferred stock awards totaling 337,438 shares including 255,938 shares issued to certain executives and employees and 81,500 restricted shares issued to its independent directors. Of the 255,938 shares issued to certain of our executives and employees, all have vested except 18,000 shares issued to the Chief Financial Officer upon execution of his employment contract which will vest pro rata on each of the next three anniversaries of the effective date of his employment agreement. All of the 81,500 restricted shares issued to the Company’s independent directors have vested. The 2004 plan was terminated in 2013. Under the 2013 Plan, the Company has made stock awards totaling 72,850 shares, including 50,350 non-restricted shares to certain executives and employees and 22,500 restricted shares issued to its independent directors. All awards have vested except for 9,000 shares issued to the Company’s independent directors in January 2015, which will vest on December 31, 2015. Previously, under the 2004 Plan, and currently, under the 2013 Plan, the Company may issue a variety of performance-based stock awards, including nonqualified stock options. The value of the awards is charged to compensation expense on a straight-line basis over the vesting or service period based on the value of the award as determined by the Company’s stock price on the date of grant or issuance. As of June 30, 2015, no performance-based stock awards have been granted. Consequently, stock-based compensation as determined under the fair-value method would be the same under the intrinsic-value method. Total compensation cost recognized under the 2004 Plan and 2013 Plan for the three months ended June 30, 2015 and 2014 was $276,016 and $235,605, respectively. The 2004 Plan was terminated in April 2013. |
Advertising | Advertising – Advertising costs were $ 56,799 and $69,293 for the three months ended June 30, 2015 and 2014, respectively, and were $109,655 and $113,153 for the six months ended June 30, 2015 and 2014, respectively. Advertising costs are expensed as incurred. |
Comprehensive Income | Comprehensive Income – Comprehensive income as defined, includes all changes in equity during a period from non-owner sources. We do not have any items of comprehensive income other than net income. |
Segment Information | Segment Information – We have determined that our business is conducted in one reportable segment: hotel ownership. |
Use of Estimates | Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications – Certain reclassifications in the amount of $69,130, from accounts receivable to accounts receivable – affiliate on the consolidated statements of cash flows, have been made to the prior period balances to conform to the current period presentation. |
New Accounting Pronouncements | New Accounting Pronouncements – In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03 related to . To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. This guidance will be effective for annual reporting periods beginning after December 15, 2015. Other than the change in presentation of deferred financing costs from an asset to a liability, we do not expect this ASU to have an impact on the Company’s consolidated financial position, results of operations or cash flows. In February 2015, the FASB issued ASU 2015-02 related to ASC Topic 810, Consolidation In May 2014, the FASB issued ASU 2014-09 related to ASC Topic 606, Revenue from Contracts with Customers. Revenue Recognition Revenue Recognition—Construction-Type and Production-Type Contracts Property, Plant, and Equipment Intangibles—Goodwill and Other |
Investment in Joint Venture [Member] | |
Investment in Joint Venture | Investment in Joint Venture – Investment in joint venture represents our noncontrolling indirect 25.0% equity interest in (i) the entity that owns the Crowne Plaza Hollywood Beach Resort and (ii) the entity that leases the hotel and has engaged Chesapeake Hospitality to operate the hotel under a management contract. Carlyle owns a 75.0% controlling indirect interest in these entities. We account for our investment in the joint venture under the equity method of accounting and are entitled to receive our pro rata share of annual cash flow. We also have the opportunity to earn an incentive participation in the net sale proceeds based upon the achievement of certain overall investment returns, in addition to our pro rata share of net sale proceeds. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Derivative Instruments and Mortgage Debt Measured at Fair Value | We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table represents our mortgage loans and unsecured notes measured at fair value and the basis for that measurement: Level 1 Level 2 Level 3 December 31, 2014 Investment in hotel property, net (1) $ — $ — $ 6,396,787 Mortgage loans (2) $ — $ (209,994,659 ) $ — Unsecured notes (3) $ (53,816,320 ) $ — $ — June 30, 2015 (unaudited) Mortgage loans (2) $ — $ (212,379,506 ) $ — Unsecured notes (3) $ (55,181,600 ) $ — $ — |
Schedule of Minimum Future Lease Payments Receivable | A schedule of minimum future lease payments receivable for the following twelve-month periods is as follows: Remaining six months ending December 31, 2015 $ 755,417 December 31, 2016 1,321,344 December 31, 2017 867,447 December 31, 2018 356,179 December 31, 2019 236,372 December 31, 2020 and thereafter 1,086,188 Total $ 4,622,947 |
Acquisition of Hotel Properti24
Acquisition of Hotel Properties (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Allocation of Purchase Price Based on Fair Values | The allocation of the purchase price based on fair values is as follows: Georgian Terrace Land and land improvements $ 10,127,687 Buildings and improvements 45,385,939 Furniture, fixtures and equipment 5,163,135 Investment in hotel properties 60,676,761 Restricted cash 124,658 Accounts receivable 465,287 Prepaid expenses, inventory and other assets 430,997 Accounts payable and accrued liabilities (591,618 ) Net cash $ 61,106,085 |
Pro Forma Results Prepared for Comparative Purposes | The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually occurred had the transaction taken place on January 1, 2014, or of future results of operations: Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 (unaudited) (unaudited) Pro forma revenues $ 36,339,701 $ 66,120,754 Pro forma operating expenses 29,120,620 58,222,109 Pro forma operating income 7,219,081 7,898,645 Pro forma net income (loss) 2,166,689 615,372 Pro forma earnings (loss) per basic share and unit 0.21 0.06 Pro forma earnings (loss) per diluted share and unit 0.21 0.06 Pro forma basic common shares 10,353,677 10,290,047 Pro forma diluted common shares 10,353,677 10,290,047 |
Investment in Hotel Properties
Investment in Hotel Properties (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Real Estate [Abstract] | |
Schedule of Hotel Properties | Investment in hotel properties as of June 30, 2015 and December 31, 2014 consisted of the following: June 30, 2015 December 31, 2014 (unaudited) Land and land improvements $ 37,550,809 $ 37,483,400 Buildings and improvements 262,674,458 257,343,516 Furniture, fixtures and equipment 41,129,789 38,762,997 341,355,056 333,589,913 Less: accumulated depreciation and impairment (77,523,617 ) (73,397,760 ) $ 263,831,439 $ 260,192,153 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Mortgage Debt Obligations on Hotels | The following table sets forth our mortgage debt obligations on our hotels. Balance Outstanding as of June 30, 2015 December 31, Prepayment Maturity Amortization Interest Property (unaudited) 2014 Penalties Date Provisions Rate Crowne Plaza Hampton Marina $ 4,011,500 $ 4,509,500 None 6/30/2016 $ 83,000 (1) 5.00% (2) Crowne Plaza Houston Downtown $ 20,708,585 20,954,867 Yes (3) 4/12/2016 (4) 25 years 4.50% Crowne Plaza Jacksonville Riverfront $ 16,198,315 16,358,706 None 7/10/2015 (5) 25 years LIBOR plus 3.00 % Crowne Plaza Tampa Westshore $ 13,167,978 13,317,684 None 6/18/2017 25 years 5.60% DoubleTree by Hilton Raleigh Brownstone – University $ 15,171,384 15,274,284 (6) 8/1/2018 30 years 4.78% DoubleTree by Hilton Philadelphia Airport $ 32,880,282 33,378,102 None 4/1/2019 25 years LIBOR plus 3.00 % (7) Georgian Terrace $ 47,000,000 41,500,000 None 6/1/2025 (8) 30 years 4.42% Hilton Savannah DeSoto $ 20,834,269 21,050,093 Yes (9) 9/1/2017 25 years 6.06% Hilton Wilmington Riverside $ 20,111,911 20,389,325 Yes (9) 4/1/2017 25 years 6.21% Holiday Inn Laurel West $ 6,884,563 6,974,458 Yes (10) 8/5/2021 25 years 5.25 % (11) Sheraton Louisville Riverside $ 11,466,140 11,584,638 (6) 1/6/2017 25 years 6.24% Total $ 208,434,927 $ 205,291,657 (1) The Operating Partnership is required to make monthly principal payments of $83,000. (2) The note rate was changed to a fixed rate of 5.00%, effective June 27, 2014. (3) The note is subject to a prepayment penalty if the loan is prepaid in full or in part prior to November 13, 2015. (4) The note provides that the mortgage can be extended until November 2018 if certain conditions have been satisfied. (5) The note provides that the mortgage can be extended until July 2016 if certain conditions have been satisfied. (6) With limited exception, the note may not be prepaid until two months before maturity. (7) The note bears a minimum interest rate of 3.50%. (8) The note may not be prepaid on or prior to February 2025. Prepayment can be made without penalty thereafter with not less than 30 days and not more than 90 days, prior written notice. (9) The notes may not be prepaid during the first six years of the terms. Prepayment can be made with penalty thereafter until 90 days before maturity. (1 0 ) Pre-payment can be made with penalty until 180 days before the fifth anniversary of the commencement date of the loan or from such date until 180 days before the maturity. (11 ) The note provides that after five years, the rate of interest will adjust to a rate of 3.00% per annum plus the then-current five-year U.S. Treasury rate of interest, with a floor of 5.25%. |
Schedule of Future Mortgage Debt Maturities | Total future mortgage debt maturities, without respect to any extension of loan maturity, as of June 30, 2015 were as follows: The remaining six month period ending December 31, 2015 $ 18,971,364 December 31, 2016 $ 27,887,107 December 31, 2017 $ 65,365,256 December 31, 2018 $ 16,678,581 December 31, 2019 $ 30,242,785 December 31, 2020 and thereafter $ 49,289,834 Total future maturities $ 208,434,927 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Minimum Future Lease Payments | A schedule of minimum future lease payments for the following twelve-month periods is as follows: The remaining six month period ending December 31, 2015 $ 202,195 December 31, 2016 $ 358,204 December 31, 2017 $ 241,609 December 31, 2018 $ 176,740 December 31, 2019 $ 100,480 December 31, 2020 and thereafter $ 636,547 Total $ 1,715,775 |
Unconsolidated Joint Venture (T
Unconsolidated Joint Venture (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Investment in Joint Venture [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Summarized Financial Information of Investment | Summarized financial information for this investment, which is accounted for under the equity method, is as follows: June 30, 2015 (unaudited) December 31, 2014 ASSETS Investment in hotel property, net $ 61,987,961 $ 62,823,142 Cash and cash equivalents 2,542,130 2,153,906 Restricted cash 1,033,814 874,111 Accounts receivable 251,946 328,755 Prepaid expenses, inventory and other assets 1,869,150 1,489,479 TOTAL ASSETS $ 67,685,001 $ 67,669,393 LIABILITIES Mortgage loan, net $ 57,000,000 $ 57,000,000 Accounts payable and other accrued liabilities 2,673,151 2,195,613 Accounts payable and other accrued liabilities, member 71,764 146,836 Advance deposits 416,968 398,695 TOTAL LIABILITIES 60,161,883 59,741,144 TOTAL MEMBERS’ EQUITY 7,523,118 7,928,249 TOTAL LIABILITIES AND MEMBERS’ EQUITY $ 67,685,001 $ 67,669,393 Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Revenue Rooms department $ 3,777,455 $ 3,524,406 $ 9,521,784 $ 8,732,252 Food and beverage department $ 801,452 725,125 1,672,739 1,603,337 Other operating departments $ 316,738 359,121 743,081 702,368 Total revenue 4,895,645 4,608,652 11,937,604 11,037,957 Expenses Hotel operating expenses Rooms department 856,768 814,657 1,809,365 1,682,480 Food and beverage department 618,440 547,570 1,256,169 1,179,587 Other operating departments 153,988 163,879 320,897 326,446 Indirect 1,981,234 1,727,825 4,150,980 3,606,910 Total hotel operating expenses 3,610,430 3,253,931 7,537,411 6,795,423 Depreciation and amortization 444,403 555,272 888,979 1,110,008 General and administrative 88,806 96,884 215,951 233,596 Total operating expenses 4,143,639 3,906,087 8,642,341 8,139,027 Operating income 752,006 702,565 3,295,263 2,898,930 Interest expense (654,534 ) (649,687 ) (1,300,394 ) (1,295,850 ) Net income $ 97,472 $ 52,878 $ 1,994,869 $ 1,603,080 |
Indirect Hotel Operating Expe29
Indirect Hotel Operating Expenses (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Other Income And Expenses [Abstract] | |
Summary of Indirect Hotel Operating Expenses | Indirect hotel operating expenses consists of the following expenses incurred by the hotels: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) General and administrative $ 2,762,342 $ 2,772,076 $ 5,336,446 $ 4,793,073 Sales and marketing 2,877,233 2,648,968 5,522,296 4,740,190 Repairs and maintenance 1,650,878 1,647,141 3,257,548 2,975,656 Utilities 1,419,032 1,493,491 2,841,811 2,694,508 Franchise fees 1,122,728 1,105,391 2,007,492 1,989,697 Management fees, including incentive 912,540 1,086,379 1,761,246 1,781,212 Insurance 479,948 490,986 1,023,333 960,175 Property taxes 977,617 893,202 1,930,258 1,634,547 Other 130,551 52,276 120,782 104,726 Total indirect hotel operating expenses $ 12,332,869 $ 12,189,910 $ 23,801,212 $ 21,673,784 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Benefit | The components of the income tax benefit for the three and six months ended June 30, 2015 and 2014 are as follows: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Current: Federal $ - $ — $ - $ 23,000 State 50,277 115,489 107,956 115,489 50,277 115,489 107,956 138,489 Deferred: Federal 775,255 474,327 350,096 (257,862 ) State 130,003 (26,034 ) 58,708 (52,164 ) 905,258 448,293 408,804 (310,026 ) $ 955,535 $ 563,782 $ 516,760 $ (171,537 ) |
Reconciliation of Statutory Federal Income Tax Benefit | A reconciliation of the statutory federal income tax benefit to the Company’s income tax benefit is as follows: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Statutory federal income tax expense $ 922,979 $ 1,127,555 $ 1,016,507 $ 1,218,333 Effect of non-taxable REIT income (147,724 ) (630,228 ) (666,411 ) (1,453,195 ) State income tax benefit 180,280 66,455 166,664 63,325 $ 955,535 $ 563,782 $ 516,760 $ (171,537 ) |
Income Per Share and Per Unit (
Income Per Share and Per Unit (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The computation of basic and diluted earnings per share is presented below. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Numerator Net income attributable to the Company for basic computation $ 1,431,110 $ 2,166,689 $ 2,006,444 $ 2,949,691 Denominator Weighted average number of common shares outstanding for basic computation 10,768,730 10,353,677 10,682,743 10,290,047 Basic and diluted net income per share $ 0.13 $ 0.21 $ 0.19 $ 0.29 |
Computation of Basic and Diluted Earnings Per Unit | Income Per Unit – The computation of basic and diluted earnings per unit is presented below. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (unaudited) (unaudited) (unaudited) (unaudited) Numerator Net income $ 1,759,109 $ 2,752,555 $ 2,472,967 $ 3,754,869 Denominator Weighted average number of units outstanding 13,052,524 13,107,804 13,099,316 13,098,870 Basic and diluted net income per unit $ 0.13 $ 0.21 $ 0.19 $ 0.29 |
Organization and Description 32
Organization and Description of Business - Additional Information (Detail) | Jul. 17, 2015USD ($) | Jul. 07, 2015 | Jul. 01, 2015USD ($) | Jun. 25, 2015$ / sharesshares | Dec. 19, 2014USD ($) | Nov. 24, 2014USD ($) | Nov. 21, 2014USD ($) | Jun. 27, 2014USD ($) | Mar. 31, 2014USD ($) | Mar. 27, 2014USD ($)aRoomParkingSpaces | Sep. 30, 2014USD ($) | Aug. 31, 2014USD ($) | Jun. 30, 2015USD ($)Hotel$ / shares | Jun. 30, 2014USD ($) | Jul. 31, 2015 | May. 05, 2015USD ($) | Dec. 31, 2014$ / shares | Mar. 26, 2014USD ($) |
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Date of incorporation | Aug. 20, 2004 | |||||||||||||||||
Date of commencement of business | Dec. 21, 2004 | |||||||||||||||||
Number of hotels acquired before commencement of business | Hotel | 6 | |||||||||||||||||
Purchase price | $ 61,106,085 | |||||||||||||||||
Duration of franchise agreement | 10 years | |||||||||||||||||
Agreement date | 2014-11 | |||||||||||||||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | ||||||||||||||||
Proceeds from the sale of common stock | $ 122,793 | $ 2,118 | $ 682,210 | |||||||||||||||
Subsequent Event | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Percentage of noncontrolling interest | 100.00% | |||||||||||||||||
Debt instrument maturity date | Jul. 7, 2019 | |||||||||||||||||
Floating rate of interest rate | 3.50% | |||||||||||||||||
Period subject to certain terms and conditions | 1 year | |||||||||||||||||
Proceeds from the sale of common stock | $ 2,900,000 | $ 19,800,000 | ||||||||||||||||
Crowne Plaza Jacksonville Riverfront [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Additional proceeds on mortgage loan | $ 3,000,000 | |||||||||||||||||
TD Bank [Member] | Double Tree By Hilton Philadelphia Airport [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Debt instrument maturity date | Apr. 1, 2019 | |||||||||||||||||
Floating rate of interest rate | 3.00% | |||||||||||||||||
Amortization schedule | 25 years | |||||||||||||||||
Additional mortgage loan | $ 5,600,000 | |||||||||||||||||
Amount of mortgage loan | $ 30,000,000 | |||||||||||||||||
Interest floor rate | 3.50% | |||||||||||||||||
7.0% Senior Unsecured Notes [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Interest rate | 7.00% | |||||||||||||||||
Debt instrument maturity date | Nov. 15, 2019 | |||||||||||||||||
Amount of mortgage loan | $ 25,300,000 | |||||||||||||||||
Proceeds of unsecured notes | $ 25,300,000 | |||||||||||||||||
Georgian Terrace [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Rooms in hotel | Room | 326 | |||||||||||||||||
Purchase price | $ 61,106,085 | |||||||||||||||||
Parking space | ParkingSpaces | 698 | |||||||||||||||||
Development parcel | a | 0.6 | |||||||||||||||||
Bank Of Ozarks [Member] | First Mortgage Loans [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Debt instrument maturity date | Mar. 27, 2017 | |||||||||||||||||
Mortgage from Bank of the Ozarks | $ 41,500,000 | |||||||||||||||||
Restricted cash reserve | $ 1,500,000 | |||||||||||||||||
Floating rate of interest rate | 3.75% | |||||||||||||||||
Floating rate of interest rate | 4.00% | |||||||||||||||||
Amortization schedule | 25 years | |||||||||||||||||
Period subject to certain terms and conditions | 1 year | |||||||||||||||||
Towne Bank [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||
Extended maturity date of mortgage loan | Jun. 30, 2016 | |||||||||||||||||
Principal payment of loan under extension agreement | $ 800,000 | |||||||||||||||||
Principal payment on extended maturity agreement - monthly | $ 83,000 | |||||||||||||||||
Bridge Loan [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Repayment of Bridge Loan | $ 19,000,000 | |||||||||||||||||
Richmond Hill Capital Partners Lp [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Agreement taken to secured loan | $ 19,000,000 | |||||||||||||||||
Richmond Hill Capital Partners Lp [Member] | Bridge Loan [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||||||||
Debt instrument maturity date | Mar. 26, 2015 | |||||||||||||||||
Bank Of America [Member] | Georgian Terrace [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Carrying amount | $ 47,000,000 | |||||||||||||||||
Sandler O’Neill & Partners, L.P. [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Equity sale and issuance of common stock | shares | 3,000,000 | |||||||||||||||||
Common stock, par value | $ / shares | $ 0.01 | |||||||||||||||||
Sandler O’Neill & Partners, L.P. [Member] | Underwriter [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Number of days for option to purchase additional shares | 30 days | |||||||||||||||||
Sandler O’Neill & Partners, L.P. [Member] | Maximum [Member] | Underwriter [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Additional common stock shares offered | shares | 450,000 | |||||||||||||||||
Sandler O’Neill & Partners, L.P. [Member] | Subsequent Event | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Proceeds from the sale of common stock | $ 22,700,000 | |||||||||||||||||
Operating Partnership [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Percentage owned by the Company of the Operating Partnership | 81.90% | |||||||||||||||||
Crowne Plaza Hollywood Beach Resort [Member] | ||||||||||||||||||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||||||||||||||||||
Percentage of noncontrolling interest | 25.00% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015USD ($)shares | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)Segmentshares | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Impairment of hotel properties | $ | $ 3,200,000 | ||||
Federal Deposit Insurance Corporation protection limits | $ | $ 250,000 | $ 250,000 | |||
Un-amortized franchise fees | $ | 368,639 | 368,639 | $ 394,139 | ||
Amortization expense | $ | 12,750 | $ 10,875 | 25,500 | $ 21,750 | |
Lease revenue | $ | 400,000 | 400,000 | $ 900,000 | 800,000 | |
Shares issued under plan | 72,850 | ||||
Compensation cost recognized | $ | $ 276,016 | 235,605 | |||
Advertising cost | $ | 56,799 | 69,293 | $ 109,655 | $ 113,153 | |
Number of reportable segment | Segment | 1 | ||||
Accounts receivable reclassifications | $ | $ 69,130 | ||||
Executives and Employees [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Shares issued under plan | 50,350 | ||||
Director [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Shares issued under plan | 22,500 | ||||
Chief Financial Officer [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Shares issued to the Vice President and General Counsel | 9,000 | ||||
2004 Plan [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Shares issued under plan | 337,438 | ||||
Termination year of stock based compensation plan | 2,013 | ||||
Performance-based stock awards granted | 0 | ||||
Compensation cost recognized | $ | 276,016 | 235,605 | |||
Stock based compensation plan termination date | Apr. 30, 2013 | ||||
2004 Plan [Member] | Executives and Employees [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Shares issued under plan | 255,938 | ||||
Vesting period of employment contract | 3 years | ||||
2004 Plan [Member] | Director [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Shares issued under plan | 81,500 | ||||
2004 Plan [Member] | Chief Financial Officer [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Shares issued to the Vice President and General Counsel | 18,000 | ||||
2013 Plan [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Performance-based stock awards granted | 0 | ||||
Compensation cost recognized | $ | $ 276,016 | $ 235,605 | |||
Crowne Plaza Hollywood Beach Resort [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of operating partnership owned | 25.00% | 25.00% | |||
Carlyle [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of indirect controlling interest owned | 75.00% | 75.00% | |||
Starwood Resorts and Hotels | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Receivables for amounts earned under various contracts | $ | $ 1,600,000 | ||||
Minimum [Member] | Furniture, Fixtures and Equipment [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful lives of the assets | 3 years | ||||
Minimum [Member] | Buildings and Improvements [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful lives of the assets | 7 years | ||||
Maximum [Member] | 2004 Plan [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Restricted and performance stock awards permitted to grant to employees | 350,000 | 350,000 | |||
Maximum [Member] | 2013 Plan [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Restricted and performance stock awards permitted to grant to employees | 750,000 | 750,000 | |||
Maximum [Member] | Furniture, Fixtures and Equipment [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful lives of the assets | 10 years | ||||
Maximum [Member] | Buildings and Improvements [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful lives of the assets | 39 years |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Derivative Instruments and Mortgage Debt Measured at Fair Value (Detail) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Level 1 [Member] | Unsecured Notes [Member] | ||
Derivatives Fair Value [Line Items] | ||
Debt instruments measured at fair value | $ (55,181,600) | $ (53,816,320) |
Level 2 [Member] | Mortgage Loans [Member] | ||
Derivatives Fair Value [Line Items] | ||
Debt instruments measured at fair value | $ (212,379,506) | (209,994,659) |
Investment In Hotel Property, Net [Member] | Level 3 [Member] | ||
Derivatives Fair Value [Line Items] | ||
Investment in hotel property, net | $ 6,396,787 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies - Schedule of Minimum Future Lease Payments Receivable (Detail) | Jun. 30, 2015USD ($) |
Leases [Abstract] | |
Remaining six months ending December 31, 2015 | $ 755,417 |
December 31, 2016 | 1,321,344 |
December 31, 2017 | 867,447 |
December 31, 2018 | 356,179 |
December 31, 2019 | 236,372 |
December 31, 2020 and thereafter | 1,086,188 |
Total | $ 4,622,947 |
Acquisition of Hotel Properti36
Acquisition of Hotel Properties - Additional Information (Detail) | Mar. 31, 2014USD ($) | Mar. 27, 2014USD ($)Room | Jun. 30, 2014USD ($) |
Business Acquisition [Line Items] | |||
Purchase price | $ 61,106,085 | ||
Georgian Terrace [Member] | |||
Business Acquisition [Line Items] | |||
Rooms in hotel | Room | 326 | ||
Purchase price | $ 61,106,085 | ||
Total revenue from acquisitions | $ 333,000 | ||
Net loss from acquisitions | $ (172,000) |
Acquisition of Hotel Properti37
Acquisition of Hotel Properties - Allocation of Purchase Price Based on Fair Values (Detail) - USD ($) | Mar. 27, 2014 | Jun. 30, 2014 |
Business Acquisition [Line Items] | ||
Net cash | $ 61,106,085 | |
Georgian Terrace [Member] | ||
Business Acquisition [Line Items] | ||
Land and land improvements | $ 10,127,687 | |
Buildings and improvements | 45,385,939 | |
Furniture, fixtures and equipment | 5,163,135 | |
Investment in hotel properties | 60,676,761 | |
Restricted cash | 124,658 | |
Accounts receivable | 465,287 | |
Prepaid expenses, inventory and other assets | 430,997 | |
Accounts payable and accrued liabilities | (591,618) | |
Net cash | $ 61,106,085 |
Acquisition of Hotel Properti38
Acquisition of Hotel Properties - Pro Forma Results Prepared for Comparative Purposes (Detail) - Jun. 30, 2014 - USD ($) | Total | Total |
Business Combinations [Abstract] | ||
Pro forma revenues | $ 36,339,701 | $ 66,120,754 |
Pro forma operating expenses | 29,120,620 | 58,222,109 |
Pro forma operating income | 7,219,081 | 7,898,645 |
Pro forma net income (loss) | $ 2,166,689 | $ 615,372 |
Pro forma earnings (loss) per basic share and unit | $ 0.21 | $ 0.06 |
Pro forma earnings (loss) per diluted share and unit | $ 0.21 | $ 0.06 |
Pro forma basic common shares | 10,353,677 | 10,290,047 |
Pro forma diluted common shares | 10,353,677 | 10,290,047 |
Investment in Hotel Propertie39
Investment in Hotel Properties - Schedule of Hotel Properties (Detail) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total Gross | $ 341,355,056 | $ 333,589,913 |
Less: accumulated depreciation and impairment | (77,523,617) | (73,397,760) |
Total Net | 263,831,439 | 260,192,153 |
Land and Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Gross | 37,550,809 | 37,483,400 |
Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Gross | 262,674,458 | 257,343,516 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Gross | $ 41,129,789 | $ 38,762,997 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Millions | Nov. 21, 2014 | Sep. 30, 2013 | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||||
Mortgage loan outstanding balance | $ 208.4 | $ 205.3 | ||
7.0% Senior Unsecured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Company issued senior unsecured notes | 7.00% | |||
Borrowed amount | $ 25.3 | |||
Debt instrument maturity date | Nov. 15, 2019 | |||
Notes face value | 101.00% | |||
8.0% Senior Unsecured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Company issued senior unsecured notes | 8.00% | |||
Borrowed amount | $ 27.6 | |||
Debt instrument maturity date | Sep. 30, 2018 | |||
Notes face value | 101.00% |
Debt - Schedule of Mortgage Deb
Debt - Schedule of Mortgage Debt Obligations on Hotels (Detail) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||
Mortgage loans | $ 208,434,927 | $ 205,291,657 |
Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | 208,434,927 | 205,291,657 |
Crowne Plaza Hampton Marina [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 4,011,500 | 4,509,500 |
Prepayment Penalties | None | |
Maturity Date | Jun. 30, 2016 | |
Amortization Provisions | $ 83,000 | |
Excess Interest rate over LIBOR on mortgage debt | 5.00% | |
Crowne Plaza Houston Downtown [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 20,708,585 | 20,954,867 |
Prepayment Penalties | Yes | |
Maturity Date | Apr. 12, 2016 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Interest rate applicable to the mortgage loan | 4.50% | |
Crowne Plaza Jacksonville Riverfront [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 16,198,315 | 16,358,706 |
Prepayment Penalties | None | |
Maturity Date | Jul. 10, 2015 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Excess Interest rate over LIBOR on mortgage debt | 3.00% | |
Crowne Plaza Tampa Westshore [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 13,167,978 | 13,317,684 |
Prepayment Penalties | None | |
Maturity Date | Jun. 18, 2017 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Interest rate applicable to the mortgage loan | 5.60% | |
Doubletree By Hilton Raleigh Brownstone - University [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 15,171,384 | 15,274,284 |
Maturity Date | Aug. 1, 2018 | |
Amortization schedule for level payments of principal and interest | 30 years | |
Interest rate applicable to the mortgage loan | 4.78% | |
Double Tree By Hilton Philadelphia Airport [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 32,880,282 | 33,378,102 |
Prepayment Penalties | None | |
Maturity Date | Apr. 1, 2019 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Excess Interest rate over LIBOR on mortgage debt | 3.00% | |
Georgian Terrace [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 47,000,000 | 41,500,000 |
Prepayment Penalties | None | |
Maturity Date | Jun. 1, 2025 | |
Amortization schedule for level payments of principal and interest | 30 years | |
Interest rate applicable to the mortgage loan | 4.42% | |
Hilton Savannah DeSoto [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 20,834,269 | 21,050,093 |
Prepayment Penalties | Yes | |
Maturity Date | Sep. 1, 2017 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Interest rate applicable to the mortgage loan | 6.06% | |
Hilton Wilmington Riverside [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 20,111,911 | 20,389,325 |
Prepayment Penalties | Yes | |
Maturity Date | Apr. 1, 2017 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Interest rate applicable to the mortgage loan | 6.21% | |
Holiday Inn Laurel West [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 6,884,563 | 6,974,458 |
Prepayment Penalties | Yes | |
Maturity Date | Aug. 5, 2021 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Interest rate applicable to the mortgage loan | 5.25% | |
Sheraton Louisville Riverside [Member] | Mortgage Loans [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage loans | $ 11,466,140 | $ 11,584,638 |
Maturity Date | Jan. 6, 2017 | |
Amortization schedule for level payments of principal and interest | 25 years | |
Interest rate applicable to the mortgage loan | 6.24% |
Debt - Schedule of Mortgage D42
Debt - Schedule of Mortgage Debt Obligations on Hotels (Parenthetical) (Detail) - Mortgage Loans [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 27, 2014 | |
Crowne Plaza Hampton Marina [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument periodic payment | $ 83,000 | |
Interest rate | 5.00% | |
Crowne Plaza Houston Downtown [Member] | ||
Debt Instrument [Line Items] | ||
Duration of loan prepaid | Nov. 13, 2015 | |
Extended maturity date | Nov. 30, 2018 | |
Crowne Plaza Jacksonville Riverfront [Member] | ||
Debt Instrument [Line Items] | ||
Extended maturity date | Jul. 31, 2016 | |
Doubletree By Hilton Raleigh Brownstone - University [Member] | ||
Debt Instrument [Line Items] | ||
Number of months for prepayment before maturity | 2 months | |
Double Tree By Hilton Philadelphia Airport [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 3.50% | |
Georgian Terrace [Member] | ||
Debt Instrument [Line Items] | ||
Prior to date in which prepayment not allowed | Feb. 28, 2025 | |
Georgian Terrace [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Period in which prepayment is allowed without penalty prior to written notice | 30 days | |
Georgian Terrace [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Period in which prepayment is allowed without penalty prior to written notice | 90 days | |
Hilton Savannah DeSoto [Member] | ||
Debt Instrument [Line Items] | ||
Period in which prepayment not allowed | 6 years | |
Period before maturity in which prepayment is allowed with penalty | 90 days | |
Hilton Wilmington Riverside [Member] | ||
Debt Instrument [Line Items] | ||
Period in which prepayment not allowed | 6 years | |
Period before maturity in which prepayment is allowed with penalty | 90 days | |
Holiday Inn Laurel West [Member] | ||
Debt Instrument [Line Items] | ||
Period before maturity in which prepayment is allowed with penalty | 180 days | |
Number of days for penalty before original maturity | 180 days | |
Interest rate | 3.00% | |
Treasury floor rate of interest | 5.25% | |
Sheraton Louisville Riverside [Member] | ||
Debt Instrument [Line Items] | ||
Number of months for prepayment before maturity | 2 months |
Debt - Schedule of Future Mortg
Debt - Schedule of Future Mortgage Debt Maturities (Detail) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
The remaining six month period ending December 31, 2015 | $ 18,971,364 | |
December 31, 2016 | 27,887,107 | |
December 31, 2017 | 65,365,256 | |
December 31, 2018 | 16,678,581 | |
December 31, 2019 | 30,242,785 | |
December 31, 2020 and thereafter | 49,289,834 | |
Total future maturities | $ 208,434,927 | $ 205,291,657 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)ft² | Jun. 30, 2014USD ($) | Aug. 07, 2014USD ($) | |
Operating Leased Assets [Line Items] | |||||
Annual payment for second year | $ 358,204 | $ 358,204 | |||
Franchise termination fee recognized | $ 351,800 | ||||
Minimum [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Franchise fees of room revenues | 2.50% | ||||
Additional fees of room revenues | 2.50% | ||||
Franchise agreement expiry date | September 2,015 | ||||
Maximum [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Franchise fees of room revenues | 5.00% | ||||
Additional fees of room revenues | 6.00% | ||||
Franchise agreement expiry date | October 2,024 | ||||
Williamsburg Virginia [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Area of commercial space leased | ft² | 5,216 | ||||
Rent expense | 22,222 | $ 20,398 | $ 41,369 | $ 40,796 | |
Commencement date of agreement | Sep. 1, 2009 | ||||
Lease renewable expiration date | Aug. 31, 2018 | ||||
Maryland [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Area of commercial space leased | ft² | 1,632 | ||||
Operating lease, expiring date | Feb. 28, 2017 | ||||
Rent expense | 12,584 | 11,046 | $ 25,168 | 22,091 | |
Annual payment for first year | 22,848 | 22,848 | |||
Annual payment for second year | 45,696 | $ 45,696 | |||
Percentage increment | 2.75% | ||||
Crowne Plaza Tampa Westshore [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Operating lease, expiring date | Jul. 31, 2019 | ||||
Rent expense | 651 | 651 | $ 1,301 | 1,301 | |
Lease agreement | 5 years | ||||
Commencement date of agreement | Jul. 31, 2009 | ||||
Annual payment | $ 2,432 | ||||
Additional renewal of agreement | 5 years | ||||
Crowne Plaza Jacksonville Riverfront [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Operating lease, expiring date | Sep. 18, 2012 | ||||
Rent expense | 1,505 | 1,505 | $ 3,010 | 3,010 | |
Lease agreement | 5 years | ||||
Annual payment | $ 4,961 | ||||
New operating lease annual payment | $ 6,020 | ||||
Lease renewable expiration date | Sep. 18, 2017 | ||||
Hilton Wilmington Riverside, Hilton Savannah DeSoto, Double Tree by Hilton Brownstone-University, Sheraton Louisville Riverside and Georgian Terrace Hotel [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Restricted cash reserve | Amount equal to 1/12 of the annual real estate taxes due for the properties | ||||
Hilton Savannah DeSoto [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
Hilton Wilmington Riverside [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
Sheraton Louisville Riverside [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
DoubleTree by Hilton Brownstone-University [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
Crowne Plaza Houston Downtown [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
Crowne Plaza Hampton Marina [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
Georgian Terrace [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
Double Tree By Hilton Philadelphia Airport [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Monthly contribution of room revenues | 4.00% | ||||
Savannah Hotel Property [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Area of commercial space leased | ft² | 2,086 | ||||
Operating lease, expiring date | Oct. 31, 2006 | ||||
Duration period under renewal option second | 5 years | ||||
Expiration date one under renewal option second | Oct. 31, 2011 | ||||
Expiration date two under renewal option second | Oct. 31, 2016 | ||||
Expiration date three under renewal option second | Oct. 31, 2021 | ||||
Rent expense | 15,866 | 15,866 | $ 31,734 | 31,734 | |
DoubleTree by Hilton Brownstone-University [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Duration of operating lease term | 50 years | ||||
Operating lease, expiring date | Aug. 31, 2016 | ||||
Duration period under renewal option second | 10 years | ||||
Expiration date one under renewal option second | Aug. 31, 2026 | ||||
Expiration date two under renewal option second | Aug. 31, 2036 | ||||
Expiration date three under renewal option second | Aug. 31, 2046 | ||||
Rent expense | $ 23,871 | $ 23,871 | $ 47,741 | $ 47,741 | |
Land leased under second amendment dated | Apr. 28, 1998 | ||||
Land lease originally dated | May 25, 1966 | ||||
Purchase of leased land at fair market value subject to annual fee payment | $ 9,000 | ||||
Six Year Operating Lease Property [Member] | Savannah Hotel Property [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Duration of operating lease term | 6 years | ||||
Ninety Nine Year Operating Lease Property [Member] | Savannah Hotel Property [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Duration of operating lease term | 99 years | ||||
Operating lease, expiring date | Jul. 31, 2086 | ||||
Rental income recognized during period | $ 0 | ||||
Original lump sum rent payment received | $ 990 | ||||
Finance Leases [Member] | Furniture, Fixtures and Equipment [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Financing arrangement expiration date | 2015-08 | ||||
Financing arrangement expiration date | 2018-02 |
Commitments and Contingencies45
Commitments and Contingencies - Schedule of Minimum Future Lease Payments (Detail) | Jun. 30, 2015USD ($) |
Operating Leases Future Minimum Payments Due [Abstract] | |
The remaining six month period ending December 31, 2015 | $ 202,195 |
December 31, 2016 | 358,204 |
December 31, 2017 | 241,609 |
December 31, 2018 | 176,740 |
December 31, 2019 | 100,480 |
December 31, 2020 and thereafter | 636,547 |
Total | $ 1,715,775 |
Equity - Additional Information
Equity - Additional Information (Detail) | May. 01, 2015shares | Apr. 01, 2015shares | Jan. 23, 2015shares | Nov. 01, 2014USD ($)Directorshares | Oct. 01, 2014shares | Apr. 01, 2014shares | Feb. 14, 2014shares | Sep. 30, 2014USD ($)shares | Aug. 31, 2014USD ($)shares | Jun. 30, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares |
Class of Stock [Line Items] | |||||||||||
Preferred stock, shares authorized | 972,350 | 972,350 | |||||||||
Common stock, shares authorized | 49,000,000 | 49,000,000 | |||||||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |||||||||
Voting right | Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. | ||||||||||
Proceeds from sale of common stock | $ | $ 122,793 | $ 2,118 | $ 682,210 | ||||||||
Common stock, shares outstanding | 10,855,714 | 10,570,932 | |||||||||
Common stock exchange ratio | 1 | ||||||||||
Number of board of director | Director | 2 | ||||||||||
Operating Partnership stock redemption value | $ | $ 25,621 | ||||||||||
Operating Partnership units not owned | 2,400,827 | 2,550,827 | |||||||||
Sotherly Hotels LP [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Proceeds from sale of common stock | $ | $ 682,210 | ||||||||||
Operating Partnership units outstanding | 13,256,541 | 13,121,759 | |||||||||
Fair market value | $ | $ 17,000,000 | $ 19,100,000 | |||||||||
Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares issued | 16,979 | 276 | 98,682 | ||||||||
Conversion of units in Operating Partnership to shares of common stock, shares | 50,000 | 100,000 | 200,000 | 110,000 | 150,000 | ||||||
Restricted shares issued | 9,750 | ||||||||||
Redemption of units in operating partnership | 3,300 | ||||||||||
Common Stock [Member] | Sotherly Hotels LP [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of issued unit in Operating Partnership | 36,100 | 36,750 | |||||||||
Common Stock [Member] | Executive Officer [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Non-restricted shares issued | 26,350 | 24,000 | |||||||||
Common Stock [Member] | Director [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Non-restricted shares issued | 750 | ||||||||||
Restricted shares issued | 9,750 | 12,000 | |||||||||
Series A Cumulative Redeemable Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred stock, shares authorized | 27,650 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) | Nov. 01, 2014USD ($) | Dec. 21, 2004 | Jun. 30, 2015USD ($)Hotelshares | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)Hotelshares | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($)Membersshares | Mar. 26, 2014USD ($) |
Related Party Transaction [Line Items] | ||||||||
Due from Chesapeake Hospitality | $ 156,940 | $ 156,940 | $ 197,674 | |||||
Operating Partnership stock redemption value | $ 25,621 | |||||||
Bridge Loan [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percentage of limited partnership interest in subsidiary | 100.00% | |||||||
Bridge loan, payment terms | The Bridge Loan had a maturity date of March 26, 2015; carried a fixed interest rate of 10.0% per annum; was subject to a prepayment premium if the loan was prepaid in full or in part prior to March 26, 2015; required mandatory prepayment upon certain events; contained limited financial covenants; and was secured by a lien on 100% of the limited partnership interests in the subsidiary that owns the DoubleTree by Hilton Philadelphia Airport hotel. The Bridge Loan was repaid in full in November 2014. | |||||||
Richmond Hill Capital Partners Lp [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Agreement taken to secured loan | $ 19,000,000 | |||||||
Richmond Hill Capital Partners Lp [Member] | Bridge Loan [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Interest rate | 10.00% | 10.00% | 10.00% | |||||
Debt instrument maturity date | Mar. 26, 2015 | |||||||
Crowne Plaza Hollywood Beach Resort [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percentage of operating partnership owned | 25.00% | 25.00% | ||||||
Chesapeake Hospitality [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Company's outstanding common stock owned by members of Chesapeake Hospitality | 9.80% | 9.80% | ||||||
Operating Partnership units owned by members of Chesapeake Hospitality | shares | 1,642,958 | 1,642,958 | ||||||
Company's common stock shares owned by members of Chesapeake Hospitality | shares | 1,064,404 | 1,064,404 | ||||||
Due from Chesapeake Hospitality | $ 74,816 | $ 74,816 | 50,838 | |||||
Leasehold revenue | $ 0 | $ 87,500 | $ 0 | $ 175,000 | ||||
Expiry date of leasehold interests | Dec. 31, 2011 | |||||||
Strategic alliance agreement term | 10 years | |||||||
Agreement expire date | Dec. 15, 2014 | |||||||
Expiry date of master management agreement | Between December 2014 and March 2019 | |||||||
Management fee of gross revenues for first full fiscal year | 2.00% | 2.00% | ||||||
Management fee of gross revenues for second full fiscal year | 2.50% | 2.50% | ||||||
Management fee of gross revenues for every year thereafter | 3.00% | 3.00% | ||||||
Period of incentive management fee due within end of the fiscal year | 90 days | |||||||
Incentive management of increase in gross operating profit | 10.00% | 10.00% | ||||||
Maximum incentive management fee of gross revenues | 0.25% | 0.25% | ||||||
Agreement term | 5 years | |||||||
Percentage of management fees due thereafter | 2.50% | 2.50% | ||||||
Percentage of management fee due through 2017 | 2.65% | 2.65% | ||||||
Base management and administrative fees earned by related party | $ 912,540 | 1,086,379 | $ 1,666,437 | 1,781,212 | ||||
Incentive management fees earned by related party | 59,460 | 92,621 | 94,808 | 99,893 | ||||
Employee medical benefits paid | 1,123,117 | 996,746 | $ 2,241,674 | 1,811,547 | ||||
Expiry date of management agreement | August 2,017 | |||||||
Management fee | 3.00% | |||||||
Base management fees | $ 146,869 | 138,259 | $ 358,128 | 331,044 | ||||
Chesapeake Hospitality [Member] | Georgian Terrace [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Administrative fee per year | $ 30,000 | |||||||
Chesapeake Hospitality [Member] | Crowne Plaza Houston Downtown and Georgian Terrace Hotel [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percentage of management fee due through 2015 | 2.00% | 2.00% | ||||||
Percentage of management fee due in 2016 | 2.25% | 2.25% | ||||||
Percentage of management fees due thereafter | 2.50% | 2.50% | ||||||
Chesapeake Hospitality [Member] | Aggregate Basis [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of hotels | Hotel | 8 | 8 | ||||||
Chesapeake Hospitality [Member] | Individual Basis [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of hotels | Hotel | 2 | 2 | ||||||
Chesapeake Hospitality [Member] | Individual Hotel Management Agreements [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Management fee of gross revenues for first full fiscal year | 2.00% | 2.00% | ||||||
Management fee of gross revenues for second full fiscal year | 2.25% | 2.25% | ||||||
Management fee of gross revenues for every year thereafter | 2.50% | 2.50% | ||||||
Affiliated Entity [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Asset management fee payable | $ 73,435 | $ 73,435 | 73,278 | |||||
Affiliated Entity [Member] | Crowne Plaza Hollywood Beach Resort [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Due from Chesapeake Hospitality | $ 73,435 | $ 73,435 | $ 146,836 | |||||
Percentage of operating partnership owned | 25.00% | 25.00% | ||||||
MHI Hospitality TRS II, LLC [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Asset management fee as percentage of revenue | 1.50% | |||||||
Asset management fee paid | $ 73,435 | 69,130 | $ 179,064 | 165,569 | ||||
Board of Directors [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Redemption of units in operating partnership | shares | 3,300 | |||||||
Number of former members controlled by related party | Members | 1 | |||||||
Number of members controlled by related party | Members | 2 | |||||||
Operating Partnership stock redemption value | $ 25,621 | |||||||
Daughter of Chief Executive Officer and Her Husband [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Total compensation for related parties | 67,596 | $ 33,287 | $ 133,840 | $ 65,617 | ||||
Partnership controlled by Chief Executive Officer | ||||||||
Related Party Transaction [Line Items] | ||||||||
Business-related air travel expense reimbursed to partnership | $ 25,302 |
Retirement Plans - Additional I
Retirement Plans - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Compensation And Retirement Disclosure [Abstract] | ||||
Employer contribution for first 3% of employee contributions | 100.00% | |||
Employer contribution for next 2% of employee contributions | 50.00% | |||
Percentage of first specified employee contributions | 3.00% | |||
Percentage of next specified employee contributions | 2.00% | |||
Contribution for retirement plan | $ 14,934 | $ 17,106 | $ 27,610 | $ 31,553 |
Unconsolidated Joint Venture -
Unconsolidated Joint Venture - Additional Information (Detail) | Jun. 30, 2015 |
Crowne Plaza Hollywood Beach Resort [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Percentage of indirect interest owned | 25.00% |
Carlyle [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Percentage of indirect interest owned | 75.00% |
Unconsolidated Joint Venture 50
Unconsolidated Joint Venture - Summarized Financial Information of Investment (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
ASSETS | |||||
Investment in hotel property, net | $ 61,987,961 | $ 61,987,961 | $ 62,823,142 | ||
Cash and cash equivalents | 2,542,130 | 2,542,130 | 2,153,906 | ||
Restricted cash | 1,033,814 | 1,033,814 | 874,111 | ||
Accounts receivable | 251,946 | 251,946 | 328,755 | ||
Prepaid expenses, inventory and other assets | 1,869,150 | 1,869,150 | 1,489,479 | ||
TOTAL ASSETS | 67,685,001 | 67,685,001 | 67,669,393 | ||
LIABILITIES | |||||
Mortgage loan, net | 57,000,000 | 57,000,000 | 57,000,000 | ||
Accounts payable and other accrued liabilities | 2,673,151 | 2,673,151 | 2,195,613 | ||
Accounts payable and other accrued liabilities, member | 71,764 | 71,764 | 146,836 | ||
Advance deposits | 416,968 | 416,968 | 398,695 | ||
TOTAL LIABILITIES | 60,161,883 | 60,161,883 | 59,741,144 | ||
TOTAL MEMBERS’ EQUITY | 7,523,118 | 7,523,118 | 7,928,249 | ||
TOTAL LIABILITIES AND MEMBERS’ EQUITY | 67,685,001 | 67,685,001 | $ 67,669,393 | ||
Revenue | |||||
Rooms department | 3,777,455 | $ 3,524,406 | 9,521,784 | $ 8,732,252 | |
Food and beverage department | 801,452 | 725,125 | 1,672,739 | 1,603,337 | |
Other operating departments | 316,738 | 359,121 | 743,081 | 702,368 | |
Total revenue | 4,895,645 | 4,608,652 | 11,937,604 | 11,037,957 | |
Hotel operating expenses | |||||
Rooms department | 856,768 | 814,657 | 1,809,365 | 1,682,480 | |
Food and beverage department | 618,440 | 547,570 | 1,256,169 | 1,179,587 | |
Other operating departments | 153,988 | 163,879 | 320,897 | 326,446 | |
Indirect | 1,981,234 | 1,727,825 | 4,150,980 | 3,606,910 | |
Total hotel operating expenses | 3,610,430 | 3,253,931 | 7,537,411 | 6,795,423 | |
Depreciation and amortization | 444,403 | 555,272 | 888,979 | 1,110,008 | |
General and administrative | 88,806 | 96,884 | 215,951 | 233,596 | |
Total operating expenses | 4,143,639 | 3,906,087 | 8,642,341 | 8,139,027 | |
Operating income | 752,006 | 702,565 | 3,295,263 | 2,898,930 | |
Interest expense | (654,534) | (649,687) | (1,300,394) | (1,295,850) | |
Net income | $ 97,472 | $ 52,878 | $ 1,994,869 | $ 1,603,080 |
Indirect Hotel Operating Expe51
Indirect Hotel Operating Expenses - Summary of Indirect Hotel Operating Expenses (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | $ 12,332,869 | $ 12,189,910 | $ 23,801,212 | $ 21,673,784 |
General and Administrative [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 2,762,342 | 2,772,076 | 5,336,446 | 4,793,073 |
Sales and Marketing [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 2,877,233 | 2,648,968 | 5,522,296 | 4,740,190 |
Repairs and Maintenance [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 1,650,878 | 1,647,141 | 3,257,548 | 2,975,656 |
Utilities [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 1,419,032 | 1,493,491 | 2,841,811 | 2,694,508 |
Franchise Fees [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 1,122,728 | 1,105,391 | 2,007,492 | 1,989,697 |
Management Fees, Including Incentive [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 912,540 | 1,086,379 | 1,761,246 | 1,781,212 |
Insurance [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 479,948 | 490,986 | 1,023,333 | 960,175 |
Property Taxes [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | 977,617 | 893,202 | 1,930,258 | 1,634,547 |
Other [Member] | ||||
Component Of Operating Cost And Expense [Line Items] | ||||
Total indirect hotel operating expenses | $ 130,551 | $ 52,276 | $ 120,782 | $ 104,726 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Benefit (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Current: | ||||
Federal | $ 23,000 | |||
State | $ 50,277 | $ 115,489 | $ 107,956 | 115,489 |
Total | 50,277 | 115,489 | 107,956 | 138,489 |
Deferred: | ||||
Federal | 775,255 | 474,327 | 350,096 | (257,862) |
State | 130,003 | (26,034) | 58,708 | (52,164) |
Total | 905,258 | 448,293 | 408,804 | (310,026) |
Income tax benefit | $ 955,535 | $ 563,782 | $ 516,760 | $ (171,537) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Federal Income Tax Benefit (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||
Statutory federal income tax expense | $ 922,979 | $ 1,127,555 | $ 1,016,507 | $ 1,218,333 |
Effect of non-taxable REIT income | (147,724) | (630,228) | (666,411) | (1,453,195) |
State income tax benefit | 180,280 | 66,455 | 166,664 | 63,325 |
Income tax benefit | $ 955,535 | $ 563,782 | $ 516,760 | $ (171,537) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax asset | $ 3,134,491 | $ 3,543,295 |
Accumulated net operating losses | 2,400,000 | 2,700,000 |
Start-up expense related to company | $ 200,000 | $ 200,000 |
Amortized period | 15 years | |
Loss carryforwards, expired | 2,028 | |
Valuation allowance | $ 0 |
Income Per Share and Per Unit -
Income Per Share and Per Unit - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator | ||||
Net income attributable to the Company for basic computation | $ 1,431,110 | $ 2,166,689 | $ 2,006,444 | $ 2,949,691 |
Denominator | ||||
Weighted average number of common shares outstanding for basic computation | 10,768,730 | 10,353,677 | 10,682,743 | 10,290,047 |
Basic and diluted net income per share | $ 0.13 | $ 0.21 | $ 0.19 | $ 0.29 |
Income Per Share and Per Unit56
Income Per Share and Per Unit - Computation of Basic and Diluted Earnings Per Unit (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 1,759,109 | $ 2,752,555 | $ 2,472,967 | $ 3,754,869 |
Weighted average number of units outstanding | 13,052,524 | 13,107,804 | 13,099,316 | 13,098,870 |
Basic and diluted net income per unit | $ 0.13 | $ 0.21 | $ 0.19 | $ 0.29 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - USD ($) | Jul. 31, 2015 | Jul. 27, 2015 | Jul. 17, 2015 | Jul. 10, 2015 | Jul. 07, 2015 | Jul. 01, 2015 | Sep. 30, 2014 | Aug. 31, 2014 | Jun. 30, 2015 | Dec. 31, 2014 |
Subsequent Event [Line Items] | ||||||||||
Common stock, shares issued | 10,855,714 | 10,570,932 | ||||||||
Proceeds from the sale of common stock | $ 122,793 | $ 2,118 | $ 682,210 | |||||||
Mortgage loans | $ 208,434,927 | $ 205,291,657 | ||||||||
Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Common stock, shares issued | 435,000 | 3,000,000 | ||||||||
Proceeds from the sale of common stock | $ 2,900,000 | $ 19,800,000 | ||||||||
Issuance of partnership units | $ 22,700,000 | |||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 75.00% | |||||||||
Mortgage loans | $ 18,500,000 | $ 57,000,000 | ||||||||
Mortgage loan term period | 4 years | |||||||||
Excess Interest rate over LIBOR on mortgage debt | 3.50% | |||||||||
Fixed interest rate | 4.00% | 3.95% | ||||||||
Amortization Period | 25 years | |||||||||
Debt instrument maturity date | Jul. 7, 2019 | |||||||||
Period subject to certain terms and conditions | 1 year | |||||||||
Floating interest rate period | 30 days | |||||||||
Dividend distributed | $ 0.08 | $ 0.075 | ||||||||
Dividend record date | Sep. 15, 2015 | Jun. 15, 2015 | ||||||||
Dividend payment date | Oct. 9, 2015 | |||||||||
Percentage of indirect interest owned | 100.00% | |||||||||
Acquisition cash payment | $ 26,300,000 | |||||||||
Mortgage loan maturity period | 2017-01 | |||||||||
Agreement term | 5 years | |||||||||
Extended two additional management agreement term | 5 years | |||||||||
Management fee of gross revenues for first full fiscal year | 2.00% | |||||||||
Management fee of gross revenues for second full fiscal year | 2.25% | |||||||||
Management fee of gross revenues for every year thereafter | 2.50% | |||||||||
Incentive management of increase in gross operating profit | 10.00% | |||||||||
Maximum incentive management fee of gross revenues | 0.25% |