SOHO - Earnings call transcript Q1 2018

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Operator

Good morning and welcome to the Sotherly Hotels First Quarter Earnings Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please also note that today’s event is being recorded. At this time, I would like to turn the conference call over to Mr. Mack Sims. ahead. go please Sir,

Mack Sims

of the good CFO call Welcome our and begin performance. a COO, and a activities first of unable review President our Sotherly provide Kucinski, Operations and quarter will of guidance. portfolio review with join call call earnings webcast. Domalski, our financial today’s company’s morning our you CEO to quarterly key President Chairman to the review and our with an our everyone. will Tony Hotels’ and Vice the us. is objectives. quarter Thank results Sims, Dave Folsom, Drew conclude for Relations XXXX update Therefore, will and strategic Scott and Investor of with

will We questions. take then

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

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

Dave Folsom

metrics call of key off I our will Mack you, morning operating and quarter. a review Thank the the with portfolio’s start good in everyone.

and at participating hotel results Resort condominium from the properties the portfolio, wholly-owned & for the Residences. represents Hyde Looking rooms which company’s composite the

ADR. On the Residences increased Hyatt decreased the a occupancy excludes which an a with Hampton in the portfolio X.X% rate. and X.X% in Resort year, Plaza X.X% Marina year same-store prior occupancy Centric prior quarter, and decrease a in and increase & the XX.X% Crowne decrease in with RevPAR RevPAR basis, X.X% increase For a over over Arlington, to $XXX.XX, X.X% Hyde

quarter our events hotel, one-time first April. in to a as comparisons January the impact DC the Houston which of included at Wilmington, results Super portfolio well that namely Bowl XXXX converted inauguration The February for impacted Ballast President’s few in market, North the year-over-year distribute XXXX the Carolina Hotel as or renovation our conversion to the

RevPAR a increased decrease X.X%, a in these rate. occupancy with properties, same-store in Excluding and X.X% three X.X% increase

leader. the continues in RevPAR sharing XX Looking XX.X% quarter, while the DoubleTree set a in and at while X% market taking following its thus another stellar points share. property up up Jacksonville XX.X% remaining XXXX, rebounded the the up with with as difficult level In Riverfront Philadelphia, our a activity and XX.X% comp position was in the fair up hotel in basis XX.X%, market Hotel its taking quarter, was highlights strong the the market performance,

a this Ballast, thus balance we conversion year million $XX the our now Ballast offering the southern and track. Hotel the completed strong North the that the and of Wilmington, conversions. product guests to other hospitality is the are Collection month curated member market for food and last confident Forecast flair similar In collection, two been new well patches looks includes outlets, Hotel’s to Hilton. by renovation far. new Carolina and local on received Tapestry art and of Hotel market has beverage by we Sotherly back a

Hyatt a On million proceeds February, of of in Centric March $XX Arlington additional funded on for senior issuance completed million acquired Drew was located of The sale million an mortgage aggregate of combination our of corporate this operating notes. X.XX% Rosslyn, price the purchase acquisition will Virginia the and the recent for to aggregate net call. partnership a an activity portfolio $XX new Hotel at unsecured $XX.X Looking Key. details from color $XXX,XXX our X, in and unsecured financing. new the the approximately provide our later or through addition note recently offering on we closed

is and X% who announced over represents I would the on Tony Finally, our to yesterday’s of based for I turn an in per the closing Scott per – which last yield call month $X.XX today. increase now share, to an $X.XX annualized to of quarterly filling dividend dividend price. we share will

Scott Kucinski

Reviewing XX, increase quarter of March same an $XX.X Thank for X.X% performance approximately representing revenue total quarter a ended you, Dave. the XXXX ago. million year for the over the was period

For EBITDA same was million hotel the an the a approximately ago. of $XX.X quarter year over increase representing quarter X.X%

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

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

unit of our and company’s outstanding approximately carries debt at debt rated X.XX%. rate approximately unit $XX.X $XX.X of shares quarter, $X.X partnership was was end of outstanding, first ESOP rate X.X which the fixed end are the bearing common end At approximately Total principal limited the approximately million and a were of and indenture stockholder the debt there end of stockholder to outstanding. average the at holders’ the million $XXX.X ratio approximatelyX.X approximately notes value of Approximately of had our approximately of XX.X balances $XXX,XXX company of balance approximately equity principal was the equity million senior as interest owned in As to defined $XXX.X million per shares quarter, million asset At end the equity debt by quarter. at agreement Also which the and million. of the a was approximately interest. was of million the room. unsecured asset the million total the of the the XX% based holder on of total interest value of the units the quarter XX.X% of quarter

for expected portfolio, other we acquisition to within Turning are Hyatt the of guidance, Arlington our which Centric as the reiterating current our factors. XXXX and as for performance counts guidance well

to total the was midpoint million. over year’s projected million this share. in year’s are midpoint a range $XX per projected increase At $XXX.X represents For million of the increase of $X.XX to range $XXX.X to million million share. we increase range per XX.X% hotel At the the projecting is over the revenue a FFO represents last And of adjusted in this in of a AFFO range, last X% EBITDA. $XX.X the range X.X% revenue. or $XX.X million. of this to year’s the over $X.XX total At midpoint the EBITDA of $XX.X range, Hotel represents last year the

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

Drew Sims

Scott. you, Thank

were The first quarter same-store results lackluster.

into anomalies cautiously mentioned, believe to our forward. to first comparisons. quarter shift from and a reasons and with we skewed had translated be macroeconomic appears one-time significant the many it profits This as is is March performed balance year-over-year the quarter forecast environment the promising and the going look the Easter are understand within the the of portfolio that portfolio. stable our instructive on for for be view, corporate April second the and optimistic we XXXX upswing. prospects for In we to to As Combining how see portfolio holiday this deeper Dave us

XXXX replacing community underutilized $X.X major of garage heart many focus to The capital for cost previously as their National Key Metro new the in XX-minute We Mall said, operational elevators. business-friendly of immediately of in minimal renovation station activity, Hyatt experiencing this an the performer provide to the present. office is location to margin there asset convert improving. and submarket headquarters hotel will the the managerial in acquisition years The to located Grant and believe is hotel outlets was to excellent hotel’s occupants this to Virginia. as $XXX.XX Centric and the renovated the focuses Georgetown. believe to and vacancies to drive savings efficiencies with and re-concepted will Therefore, Centric revenues. RevPAR described is the across local that adjacent hotel executed, traveler. a need believe such the current and nexus opportunity ours hotel’s to has Nestlé and quarter low Virginia, All hotel’s while our expand given add Deloitte be million. a extensive accretive shareholders. profits. goal corporations food required marketed such operational which and the in The growth hotel our been ADR, the biggest the we drive additional pleased We to relocate and great Rosslyn, XXXX the Hyatt price. of substantial located strong beverage their to corporate a We as Thornton history Centric of was of The Rosslyn near the opportunity is We the has to activity of Our SOHO’s generation a be Rosslyn market footprint. experiences are on EBITDA including and brand is retail drive above upside as tremendous Acquiring and parking believe localized walk Hyatt’s been to the with Bridge was being current of The portfolio. next news a growth Gerber has the acquisition hotel X-storey for is

we in repositioned to on projects. recently are Wilmington portfolio, the investment the in focused our at ramping capitalize balance hotels and on our up Savannah, of Hollywood these Looking made

& benefit results Resort from from full the year the also will We Hyde Residences. first

renovation significant Boutique is XXXX. the to portfolio. for and We next the Hotel across first as only Hotel of Tampa half the a destruction forward are extended work months we commencing Alba. for of conversion to concept, scheduled upscale planned This Conversion activity the is look period XX renovation towards our renovation the without next we an month

We an of as sheet continue capital endeavor diligently and to we as rates fixed balance take our focused and will opportunity the to markets whenever advantage if extend on maturities managing well be arises. interest possible

Lastly, we proven X-star a and will dividend maintain consistent strategy with disciplined the growth.

We for will up the now questions. open call

Drew Sims

forward much look the results quarter. We We joining thank to today. you reporting for great you. very us Thank in next

Operator

gentlemen, attending. that conference and do call. for today’s conclude you does Ladies thank We

now disconnect lines. may your You

Sotherly Hotels (SOHO) 8 May 182018 Q1 Earnings call transcript