SOHO - Earnings call transcript Q3 2017

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Operator

Good morning. And welcome to the Sotherly Hotels Incorporated Third Quarter Earnings Call and Webcast. All participants will be in a listen-only mode [Operator Instructions]. After today's presentation, there'll be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded. to conference like Kucinski. to now would turn over the Scott I go Please ahead.

Scott Kucinski

good conclude to President everyone. quarter you, activities a morning, Thank and Company's the Welcome begin call and quarterly Dave review of the on our Domalski, will a our XXXX update earnings webcast. Sotherly Folsom, strategic Tony performance. provide Chairman portfolio and CEO CFO COO, will update our review and our Drew quarter and Sims, today's with with key objectives. of our financial our and call will results third an Hotels' for guidance.

We then questions. will take

all If access financial most the comparable copy it conference a sotherlyhotels.com. statements measures of GAAP may Web directly accordance are with this forward-looking during measures our Any release, call, reconciled statements. site historical, requirements. at you which the you've Reg not non-GAAP not on constitute made release, G In to the received the in earnings has may Company

forward-looking time to reflected attained. Although, be press on differ With and over today's those assurance implied any will in we expectations results SEC. believe the detailed cause that that these actual are forward-looking that, give statements expressed Company's call from in in time any I'll assumptions, can from the we Dave. reasonable by to statements filings Company not statements. release and update no undertake revise to or risks based to does the turn Factors The materially the with a duty are forward-looking or expectations

Dave Folsom

good you, and Scott Thank morning everyone.

strongest storms. that much part, hit most States. we the well storms, as the lost quarter. and physical hurricanes that our affected any portfolio were immediate power We The the at on excluding the the damage on of our the expense suffer the in estimates to our record, hurricane Hurricanes U.S. hotels Irma fortunate ill of by serious Harvey we Preliminary and and want Katrina functioning as for our severe and damage our in significant the was did Caribbean very Irma of did United was to for classified the duration not portfolio I damage majority review cleanup was that for First, in effects and these Southern hotels experience Harvey and and eastern to windstorm the seaboard. damage where not in some since physical caused affected remained costliest and was the We storms later Katrina XXXX. eclipsing the incurred open recovery. Florida periods were long the these lost. inventories hotels, storms. from term Luckily, electrical as impacted

significant directly path experience at the other uncertainty over storms, but the of the the business at where hotels due not hurricanes, interruption that in did path, we only to severity. However, were duration travel and hotels the guest of cancelled storm's was

Irma hurricane For the though of instance, Carolina did Hilton state cancellations, in region. at following form Wilmington threaten interruption in the not the declaring of ultimately emergency, North witnessed significant our governor we business group even

said, With recovered may insurance in taken and not next first the this of to operating financial partners date; quarter but will experienced in guidance. potentially our quarter year. later will now our the the shortly. resulting the turn in they that until quarter currently Drew event review metrics. impact key discuss and reflected losses the be, working earnings on Tony claim a of I'll at of hopefully, fourth ultimately portfolios our Unfortunately, will We we claims Insurance are hurricanes. these be whatever proceeds, with and from the revised be

Residences, prior of occupancy. in RevPAR decrease year period rooms an Looking over Company's occupancy. decrease represents RevPAR wholly-owned Year-to-date, over participating with in hotel Resort prior was an and increase $XXX.XX, and a of X.X% with properties $XX.XX, ADR X.X% condominium in and in X.X% the which portfolio, was ADR X.X% X.X% the increase increase in & composite increase results at quarterly the for X.X% the Hyde

which X.X% for Excluding occupancy under quarter, in X.X% XX% Savannah by to X.X primarily slight impact hotels Hotel decreased and increase renovation occupancy. occupancy. increase particularly degree portfolio. results, million out and and the RevPAR negatively a in increase being both with composite for period approximately rooms result of our to in in Hollywood, the quarter lesser a X.X% RevPAR service, the and and the to were portfolio increased Wilmington, a all hurricanes impacted increased Year-to-date, our in ADR X.X%, increase in renovation due % EBITDA of X.X% within driven for to ADR $X the the

associated new Looking The of of renovation an million Savannah on beverage we which and at includes our with Double $X.X and highlights, the been resort roof of particularly at the renovation August, to property million we our three our renovation activity. completed XXth. received and Plaza sundeck, with the and and in and Tree hotels some boutique product well In preferred In converted new pool guests. Crown individual it's reimage completed a Hilton outlets October the marketplace by $X.X top resorts. food converted Hollywood Flag to Florida, DeSoto, our the offering, independent hotel

million While the is with ramp-up a month, which issuance series ramp-up stabilized December the as booking in continued for floors through and this In with near-future high proceeds and impact anticipate there our redeemable partnerships’ use We to The activity, slower and South rental option. of million Ballast. net in Residence of Hilton pool are nearing million, to net into X% into corporate typical in the completed maturing completion season. includes engine the transitions of renovation Florida’s work asset approximately approximately of in heading the space as months believe to of our And redeem looking we operations scheduled outstanding to the to sale hotel We our $XX.X we C of to the at inventory intend the Hilton proceeds season. cumulative lastly, preferred full benefit & with we the senior to some Hotel last our operating head the overallotment Resort the and Carolina, is units stock we will ramp-up for the period Wilmington, Hyde of program. continue guest including February. of that North a XXXX rebranding room X.XXX% XXXX. high now March be notes operations public during be X.X unsecured completed And we hotel, our in XXX scheduled from progress will hotel shares $X.X system, continue

replace as transactions equity. We the results are balance perpetual Thus, pleased near term the our preferred turnable these with debt of from corporate with sheet. maturity eliminating combined they risk

annualized announced quarterly I per of representing per And $X.XX to yesterday's with closing call of based an dividend we our Domalski. and months, of share Tony will our the turn yield the that, price. share, over dividend last Finally, $X.XX approximately X.X% on CFO,

Tony Domalski

Total total year-to-date, period was the X.X% same for a Thank quarter million, same was as $X period $XX approximately you, ago. Dave. quarter EBITDA period period decrease X.X% over $XX.X over And ago. same the Reviewing the revenue million the over And the year year hotel million said slight or representing quarter, a year ago. hotel or a approximately performance Dave EBITDA ago. a was the ended revenue for Year-to-date, September decrease X% over XX% XX, year approximately approximately decrease a million, same was for decrease the $XXX.X XXXX. a

aborted gains X.X% decrease XX.X% our charges refer portion And additional to as the EBITDA administrative million, current provision, income the excludes other as general charges, ago. as deferred costs, in period provision related For our the release extinguishment the quarter, a for well of over FFO note Please year-to-date, to and corporate, our losses other of income $XX.X income, interest on of as FFO year and instruments, adjusted expense, a a items. same year quarter as expenses million, Please offering items. detail. was these as FFO a of was decrease well same earnings early the abandoned the derivative related representing of excludes Hotel to $X.X approximately portion well charges tax that and or adjusted our interest tax adjusted over ago. debt, changes

our balance sheet. at Looking

well the book of cash of hotel taxes, equivalents properties cash XXXX, total total was million, our $XX.X of which as was million, which million. value approximately XX, and had September $XXX.X investment $XX.X of real unrestricted estate net reserved of $X.X assets expenses. as certain The other $XXX.X for Company approximately capital of As in includes approximately million, cash improvements consisting and million,

$XXX.X approximately of principal As quarter, of the interest debt average million outstanding a had end of weighted at the rate balances in Company X.XX%. of the

of of the $XXX,XXX per X.X to third balance units debt carries of was refinance on mortgage was quarter, Company's our approximately At interest-bearing back asset in a of stockholder rate approximately the property debt interest. million in on Total asset million approximately the the the principal at approximately $XXX.X ratio senior of fixed June, With equity and XX% to as unitholder $XX.X unsecured end Jacksonville of the end quarter, our the of was approximately room. the were the shares and there $X.X million on unitholder based outstanding. common the approximately quarter. indenture the approximately million. the limited XX.X% our defined the total At of agreement was was at million value, outstanding equity total the partnership notes, $XX.X million which stockholder debt of a end equity approximately of Also, quarter, value and end XX.X

Turning as other current XXXX, accounts to performance and portfolio, well guidance. guidance within which our expected factors. previous as We're updating for for our

million to the in $X.XX FFO of the million share. Hotel $XX.X to For $XX.X is range projected million. or million. $X.XX of of range projected $XX.X the $XX.X million in total to per in range projecting year, to we're million $XXX.X the $XXX EBITDA And is revenue adjusted

outlook Drew. can section will details the now found And to of over call Additional I the in our earnings turn be release.

Drew Sims

you, Thank Tony.

in this non-recurring would additional Tony start by financial like Dave there call, providing outlined that to have quarter. are several I As factors our details. impacted and throughout results the

First, in hurricanes that quarter. we the estimate $X.XX by earnings approximately the impacted

after ensure properties. to some the comfort transient our and insurance to cancellations preserve and and revenue our of on recoup our beverage revenue, tremendous but We protect hurricanes in There room While as and weathering many most with result catering not where advance to our group be these we’re our known of of up bookings impacted service came us. was negatively losses impact the as to time. staffed as significant food expense guest that impacted, during some that was claims, hope will assets order and in for storm at also also we and through impact sources were well were margins other

QX are impact we was these as we as storms While earnings not to to well welcome, did. survive fortunate

Second, scheduled preferred rate result the believe price preferred and the eliminate difference our higher and We the as month in order and is earnings XX with bond of preferred. approximately coupon pay for as burden preferred the issuance and by will payment result a bonds having in a debt impact a bond to small the the half, between combined replacing well the as maturity basis on point a to $X.XX of perpetual risk equity. acceptable redemption

were to We’re this of able we opportunity. take pleased that advantage market

XX.X% quarter had Convention comparable down when where Another Philadelphia we took XXXX to relates in place. non-recurring in National market quarter. property against the in negative The Democratic tough was Philadelphia a the a our

XX.X% down still took a was large RevPar hotel’s share, Our setback. and suffered but

anticipated factors this a weak and RevPar the by inbound year, citywide to has decline that believe airport. than the X% comps in down impact XX.X% is than for driven the calendar, supply of been year-to-date forecasted new due our We with ADR. includes a combination travel softer at For market lower decrease

activity. our ramp-up operational and and marketing for to complete we weighing underway. renovation reopen We in from We have the now is incurred and public to quarter, our we impact negative the and experience continued term. The with DeSoto resulting continue renovation behind the operating number occupancy. standard more the In us, down ramp-up the with week months. conversion new all renovation impact renovation renovation back quarter, and to concepts significant food impacting we the chef new expenses the outlets near a beverage do the Therefore, we as other with quarter we the convert of forced Hollywood, were in driven any to profitability cost training, shutdown home hotel associated for hurricane the when out push In the were the rooms took activity of during nearly stretch. service highly as on-schedule, increase in resumed, in in impacted the final to this will not few complete and impact The a than October. was anticipate negatively get

rush the flag this and now temporarily we rooms benefit expenses back as addition, forward and and Tree the cleaned, to we In operational appointed pain Dave said, service. mentioned, increased were to us is Hilton seeing our as of Double System. That look in get the behind

convergence hotel the and even of coinciding. properties the is With in the on in quarter was that Having into Hollywood the unavoidable Wilmington and due rooms XX% encompass year renovation and focused complete, all hotels solely a of revenue renewal of the three year to EBITDA. note we under cycles our and portfolio, It Savannah for each portion of three the the XXXX. larger these balance franchise important of renovation portfolio's same first our to the are

have hotel, XX% to portfolio pleased renovation that repositioning refreshed guest believe XX of completed forward. of now are of have past the going the outperform behind lift months. market, the heavy in is us. our We poised rooms we over Including our the nearly Wilmington to this and terms We portfolio

believe We principles and our We found the opportunities we long to term shareholders strategy. act if and over out have underwriting benefit that continue compelling will to our remain that will new our strict term. and seek a conservative dedicated investment opportunity long fit when we

capacity is our the authorized repurchase of have remaining we Lastly, program year. the under end through that stock

to to evaluate year, with sufficient of we the thus this While continue windows, active primarily program use buying not we been far have the of absence this due program. this

We will for up the open call now questions.

Operator

Instructions] We'll the now Hilliard with session. question [Operator Carol ahead. question-and-answer Kemple go Please first comes Our begin from Lyons.

Carol Kemple

quarter? the from any fourth into Do you expect impact to the over hurricane carry

Drew Sims

were downtown, days folks it were neighbor leased Carol, had I once a we working. would were the basically we to because very the rate, few they to our trying were to most benefit then And they in if in was for want good sleep, quarter, a basically be close a a was Houston. Those for But low they net to XXX% for we reopened rooms hospital fourth Houston that instance, relatively of rate. and because say we local occupancy. working in occupancy reasonable --

we great-great we At up So any have month end we the general and during of the -- sources hotel a revenue public had hotel the didn't of the coming other of we or food into beverage month September, September. October. the opened to just and

hour, was that Houston. a it there very-very positive actually So of a because thing in out were was lot instance the of the rooms service for hotel

it And so to focus got the allowed business downtown.

Additionally, the us. question, your also But Series But net a huge a which in for factor. be I example. positive hurt that strong one we town, actually would that a it very, probably World didn't think We answer had had to it's very was outflow.

back And very an we a that bounce had difficult so we're pleased third quarter. extremely after

Carol Kemple

anything one-time quarter. down good rate going your Was forward? there run was in second is that from a then that, G&A the And expense or

Tony Domalski

They're to quarter-to-quarter. from expenses not do Our flat tend fluctuate. G&A

higher a beginning to So and end year, at year, lot the at beginning that was the little to the that tax of audit they're prep hit not But the and the the hit of ATM the of that about off of G&A seem was the quarter, of the costs our attached also in we that. $X.X offering second to to year. expenses, burn SX had a related million

both go So the and I and rate. $X.X QX think back good million, run if that's two, a you track to QX average in

Operator

Please Daniel next Santos The question Sandler Instructions] O'Neill. go ahead. from with [Operator comes

Daniel Santos

Could business the recovery of interruption us timing you deductibles get? and first might that recoveries a give just any My related insurance question or to you hurricane. sense any on is

Drew Sims

question me were was up make to here. We the I a sure breaking we it that the think -- question let repeat heard just correctly. bit little

asking were also and business you recovery be the So deductibles for might what about interruption? us our

Daniel Santos

Yes.

Tony Domalski

high our carry a deductibles. have very typical of Each hotels, master unfortunately policy, which we

buy and to the London every year. have insurance those We three strategy down a with the carriers,

they’re have hotel. every very for deductibles, we manageable so So different

claim I $XX,XXX claim. have is instance and buy think, eclipses and we is our tell flood, down deductible claim For also I hotel a $XXX,XXX that. down a least we one at we did and a could is you, separate has deductibles total about that have and it which a Jacksonville in those There flood

could it's a at the sits tell depending it's have I our you claims on a, claims So what as equation. complicated is. that it now, hotels we eclipse levels these But right deductible

we we're I now it then to to to carrier. tell from a a going right initial get you think can a with you and property frankly, tell the large really that's for I heard going negotiate within back thoughts. And point these carrier that down I interruption. haven't you, think can't losses loss claims business business to to what I gets interruption because Now, have standpoint, negotiation really make we some recovery. the from still for be

Daniel Santos

And we using just then to you And to your on did related you assets? on money un-encumbering any assets. in versus capital maybe stock could us the thinking just quarter? on that, more refresh Are buyback using the buybacks further acquire shares if

Tony Domalski

We precluded offering the any that. we in there has the after We’ve of got end through We've shares. us mainly closed had year been this to shares a the -- quarter, of I unfortunately, will or us had after opens to this year. the public XX from sale the clear not hours most did the that buy-back out doing say call window call. because buyback

Operator

next go question Investor. Tremba, The ahead. Private comes from Please Mark

Unidentified Analyst

of that think a maybe about properties. thinking capital I disposition up putting you’re to properties last some talked of question bit shareholders? about reward Any little using You've and for

Drew Sims

selling which consider to are assets, would continue we we some Well, investigate.

taxes. because relatively don’t that rate. basis small to shareholders, important grow sell the one order of it that assets to feel time. low the like be a just of mind selling considering And the selling I a execute it's do, for any our for a doing in very very huge measured the event, that’s we us still size, we're terms have in in proceeds to us very, have Company pay we think just them we're within that's rewarding amount to and And of continue and we -- would think long In thing temporary expensive for the in them, the at because exchange strategy of the and wise in a chunk And taxes. asset not asset a

So we going that hotel any for our view think we is has we're asset that traded asset -- an we're that will sell be than more upside that selling. the

Unidentified Analyst

really increases quarter the you near on What's been well, regular base? the do been have you pretty And hotel stock pretty know, at attribute this continue didn't the year. has increasing all for the dividend you their also, much what divergence increase Do your next until a doing high. it between -- basically yesterday, SOHO's prices I languishing? other thoughts to And REITs stock you had that are been

Drew Sims

a I'll couple take those. of

question part So dividend. the to bias increase we only have was the Mark, of first dividend. our

think dividend. important want have annual continue to I we us. grow come a our to We safe that's We and feel you to I to know that. meeting like

three year. last think again this the of increased four, may I we've be four quarters every at done year. out that for we've And least three years

ourselves the next -- Part in something can looking and to that at the And that the we we'll it… past lost future. conducted you will year. like B conduct was we ourselves be I think the that's question I that way in anticipate

Unidentified Analyst

been stock to doing hotel the the of regarding REITs. relatively was had -- well lot It compared

some in this XX, other in also As But than up the like other buyback? you've and do seen a left to I much XXs, and buyback and mean undervalued? wondering over going And roughly moved you the or the only you year still we've in between the and still see But was straighten. left weeks we the know, move the I stock too pretty been term on of shareholder. have seven up year. $X.XX Host it's $X in crank for what's REITs, a languishing $X just I've recently million been Pebblebrook, high like yesterday good long why up whether think, not there,

going intend your rest execute towards been stock year? to buyback? the back do plan of So your Is guys the set that still What's to over buy that that's allocated aside Are regarding that? you plan? money or the you

Drew Sims

that I give trying a to you our earlier that's hint plan. was

say because So that we can't But capacity. SEC stock, we're -- buy we not rank. not certainly the we're permitted that have we so can't really to going -- that and say it's that's come back in out

every that them important compete will We're look at our future the consider what's versus We We competing REITs at very very stock aware a we in to here. us, as of up. we to they our least watch and and happening same that happening price push at. it's that competitive We're what's compete level get to day.

So we end it's the are focused on of that between important. think now we year, the and

Operator

any I to question-and-answer the concludes Sims would back remarks. Drew closing our now to conference for This session. like turn over

Drew Sims

Well, forward us we results reporting We quarter. you all next for thank in Thank look today. much. better very you the to joining

Operator

conference has today's you concluded. presentation. The for Thank attending now

You now disconnect. may

Sotherly Hotels (SOHO) 7 Nov 172017 Q3 Earnings call transcript