SOHO - Earnings call transcript Q4 2018

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Operator

Good morning everyone and welcome to the Sotherly Hotels Inc.'s Fourth Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Scott Kucinski, Vice President. Sir, please go ahead.

Scott Kucinski

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

We will then take questions.

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

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

David Folsom

the rooms & of for participating a Thank results the operating you, the Scott. Hyde wholly from Good portfolio, call looking owned start our the Resort the portfolio's company's condominium at review key and off morning, with everyone. I'll which in properties quarter; today's hotel Residences. represents metrics composite

in rate. and reflecting X% increased a a over X.X% portfolio X.X% quarter, to the in For $XXX.XX prior increase RevPAR occupancy increase year

prior the in increased Hotel a EBITDA XX expanded year, X.X% $XXX.XX increase occupancy for in margins year. year the with For basis rate. and a X.X% RevPAR to portfolio increase points X.X% over

since our share RevPAR had quarter lower of in & in grew Looking highlights DoubleTree RevPAR year to fueled by at its continue in in in Resort the the property across impact been completed X.X% X%. have the from reviews in received and XX% in XX.X complete, occupancy space million is Hyde driven are set now XX.X% renovations percentage in already in occupancy, far, RevPAR renovations while its hotel The which a lobby construction rate. the lounge new grew increase The also property estimated the seawall XX portfolio, story place Carolina XX.X% Hotel for this guests. rave building new June by our Tampa Alba RevPAR beach our Thus of the to in by the XX% and year. Hilton stabilization Doubletree, first Florida, of the RevPAR competitive and At the nearing marine of and approximately of Hollywood, XX.X% end Hotel has Maryland room public the including that condo increase Hilton our taking its are our In adjacent the April, some XX.X% from saw of to we the growing activities construction in continues high fair through increase multiyear the its house fee as flat with many of simple a by Resort. the program rental North Hotel, either XX.X% at the our Hollywood this the stabilize way increase our operations and changes and Hyde the The X% on quarter House major High and interest is as waterway year of renovation Doubletree to it through rate. a Wilmington, rooms which quarter up fourth to building in to or the $XX.X expected we completed in our full market Beach property the calendar way XX.X% in of the House front up as Sotherly to quarter. inner operation. market, and a and Ballast coastal the main a retaining conversion the was leader. Residences Market points both High continued increase occupancy its the The hotel in of XXX in last ramp fueled convert as interest hotel. on provide road Beach open in will quarter

dividend close. representing yield quarterly With of a share, an this dividend Domalski. based to month, of it on approximately I'll turn our $XX.X annualized yesterday's Tony that, share at CFO over we past Lastly, announced $X.XX our per of per X.X%

Anthony Domalski

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

For revenue period. was million, total the a prior approximately increase $XXX.X year the XX.X% representing over

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

quarter to on well the quarter portion was Hotel the extinguishment Please common in the which was as management. tax related XX.X% discretion adjusted ago prevailing well the as provision our program, $XX debt, that outstanding of refer expenses offerings, purchase December release share securities for differed at other early our transactions representing X% a items, charges It earnings prior repurchase $X.XX company charges to worth extension share XXXX, the the on per the expense, other aborted the please company and excludes market portion to our of interest up December additional related as EBITDA over over of gains at XXXX. For XX, was FFO to year abandoned detail. tax instruments, On note and income to as representing losses the same these of per interest authorized derivative company's charges to open increase a decrease or in its the income, general adjusted as well or authorizes a for of to period. stock corporate privately FFO negotiated million the originally our the changes $X.XX, income year provision, excludes FFO as of administrative and items. stock of adjusted current prices announced

of approximately December leaving the of balance company that repurchased its $X.X million the As in pursuant amount a program, repurchased in aggregate $X.X common of of the million XX, maybe repurchase the of stock company's common stock had to stock future. approximately

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

weighted approximately a As balances outstanding of fixed a of the end million debt had company the interest. at of $XXX.X interest of of in debt XX% X.XX%. principal quarter, rate Approximately rate of average the carries company's the

XX.X% December interest partnership quarter, end approximately of shares the are XX.X XX, shares principal on as the to which debt limited was approximately outstanding, indenture our value our ratio of based debt and bearing At were the of of the $XXX.X to end value X.X upstanding. billion approximately there asset As million Also owned million of notes asset $XXX,XXX the the in on total approximately approximately senior ESOP agreement units the defined fourth at common of by the room. was total the year. balance X.X per unsecured million

our accounts within current portfolio as guidance, XXXX, other for and expected as we are performance which to Turning for issuing factors. initial guidance well

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

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

Andrew Sims

while Tony. a with a challenge posed you, the of significant experienced In our considerable progress also quarter. of we we dealt events as during challenges, again company number Thank review Weather related XXXX, for company. a third

peers our portfolio in In at Despite a addition, outsize resulted consumer volatile peers. economic to performance the factors, reduced these slowdown its of compared environment end confidence experienced and XXXX. business

discipline our within our to executing portfolio a growth ago. rate. over points XXX took for extending mortgage we guidance strategic primarily from We historically in a We while year, key on low the X% provided our fixed increased share including For and balance year. in in the to steadfast of levels initiatives rates combined earnings executing our We debt achieved our sheet X.X% and and million goals by commitment during capital XXXX AFFO transactions and remain $XXX.X of competitors, strategy at our of driving RevPAR by produced interest order markets refinancing number year initial maintain basis maturities.

our trend display maintained We the shareholders the out four past a four once of for dividend commitment again years. three to to as have a continue we we increased quarters,

Tampa repositioning Wilmington conversion projects asset the year, portfolio we brand key of the our moving that poised During and our market property. We outperform forward. the believe on hotel to renovation also refreshed our was delivered including of the

submarket the implemented of operations Hyatt to we Centric, Rosslyn to the minor improvements property. completed we physical Upon addition quarter the of of strategic located changes room XXX XXXX, in Virginia. to Arlington, During its the closing, first in several acquisition the

Rosslyn changes to of to capped endless experienced recent the string take positive these news as is property has market, Amazon advantage HQX positioned announcement. the of which the the property, by seemingly well a growing With

occupancy that good, XXXX increase be the a Looking not industry projecting and will believe with analysts ahead, slight a hotel and for modest X% we year in industry, great decline rate. a but

will optimistic portfolio management market. we booking the that space As Despite these group be the company. is outperform and positioned to due a cautiously to factors, focus a control result, expense a strong primary for competitive the and margin remain

will and our shareholders. present forward, value for investment to long-term a maintain strategy we Moving value disciplined opportunities focus added investment on

now open up to call will We questions. the

Operator

question Janney gentlemen, today And Batory at from first Instructions] answer comes Markets. Tyler question. and this ahead with from your Ladies [Operator question Please Capital our we'll go the begin session. time,

Tyler Batory

guys to on positive the morning. guidance color I showing Thanks I taking for questions. most which most good start you more market in your be in Hey on, if maybe could. which should my wanted RevPAR growth markets the little XXXX Yeah, gave a XXXX on

Andrew Sims

not We're only have off this the January obviously that amazing of been the and positive Bowl Tyler. Yeah. Super in the Super of year the us above month of the expectations. a but continued start experienced did on trend entire got and that result well Bowl, around an very Sure and month February Atlanta hotel has as results great to whole

So Arlington has market you struggling although Philadelphia a beginning assets the well. DC anything to Laurel airport there? a market, the be especially in fire little market little really Atlanta market you bit, continue market in bit, at while of the growth seems about of a that. got our we're to weakness year, we've that in to competition, is hotels The seem so little that's kind negative concerned add are the seen a troubles pretty us doing now. want a to the outperform Dave, experienced be right on Maryland so our and

David Folsom

market the the to The South of the we're and going that can US in perform we with and Florida better. strength - I probably for turnaround weather sputtered absence respect think what of of trying factors years I drove factors markets last we Even with travelers degree see dollar events. couple in the is those lot think calendar of international the out a forward of to is some those think market

Andrew Sims

Tampa received well. behind year, quarters related we've construction there we that to doing this done this and Hyde seeing and than to story that phase that our Tyler, and actually for was started decent tower now in and we've ourselves is under to two actually the of the there. finished expected, half Yeah is us positive as is Doubletree last bit renovated pretty the and now. year. worst better that's then the - - very that's years we're third rise. group we've in we some right so to it on Again, there done we've market of results our another it We the fourth point been our signs we disruptive hotel, also next kind fourth quarter We a seen The us that XX ourselves. little a started of

Tampa And the we major get is this We very a of hotels results it though positive it's has ramping on have hotel we're been up the continues has as Hilton once repositioned. get share last quarter our but since And fourth in well. a going from positive some product renovation signs. its disruptive we're lot going - a to We from Savannah seeing of there's product turn significantly to seen a market rate disruptive in think June. in take more change that new to affiliated year, independent. Even

Tyler Batory

some things pressure? you offset obviously the And the it's expense that It's tough very Okay, then of there. of sorts can things, out of level a of detail. environment do and helpful. guys side appreciate I to expense on wage margin What

Andrew Sims

experienced tell Well, we've I today. that you not can

We able salaries a year. to We wages level. almost caller have and our our every have maintain been that very at been do managers are fortunate constant in offer

So our of that to a pressure done obviously wages huge our burden. a should not present. adds maintaining very wages they we're job upward where strong And seeing actually be. of they've on But

Tyler Batory

you Got little for guess portfolio? have the number a finishing on that's it project, and guys a as got horizon in Tampa I and with else the you of spending here up CapEx of then Okay. anything but bit XXXX the now

Andrew Sims

going assets be that this board asset, The that's one not on that's only the smaller we our on is is drawing project our next to and year, year. Raleigh the of now which have

So for to terms have CapEx. year change quiet going nice we're a really of actually a in

forward and we to to a So and we're sit make going think going to looking that year we're year where for back be money some it's good this us.

Tyler Batory

then sales market as recycling? what for and I'm acquisition any and well? great thoughts any me, on curious then also change thoughts the question on seeing updated out asset there, Okay last in you're capital any possible

Andrew Sims

project we we underwrote dozens in I the on quarter. around fourth and projects acquisition competitive Yeah, to assets. very, not I three Put increase. competitive very, in buy process. bidders successful. trying you of terms were and on Every it's we and side the this cap not it's rates were on, hyper out several tell that very seen have Southland very projects a of what will still bid And there the

a off terms at and that of off think continue to don't assets of I our cooled So things to sell couple have we'd that disposition, we all. a to And that at look quiet marketing one do in soft effort. like trade we're going on

Tyler Batory

that's me. Okay, the for all Thank for detail. you

Operator

comes your Goldfarb go from O'Neill. Sandler ahead Please next Alexander question. Our question with from

Alexander Goldfarb

from it basis these to a maybe try service where do or a to rates, you you on cycle think specific around below improve there then are that Park overall the maybe and average? Good sort the Hyde mentioned you color Georgian in of to But standpoint the these - are morning. has does Xk, also the just hotels –what just the less full I and just hotel up curious of Whitehall is Hey, or full down just strong hotels there. XX looking down on portfolio think the that occupancy beyond of had following how good issues. the the you hotel mean sort of these are some change on if of Soto, run your Hey, questions, this? if sort and need just and number De occupancy is margin you how been sort morning your given margin are of hotel And hotels number that market your a service hotels the Louisville, specific below Terrace, try

Andrew Sims

three free jump are stabilized up level. to up you're about and Dave brands still probably status take in we're occupancy it's we projects to to years to the business of to independent Sure. that even converted that the building here. back get to Several hotels you're our our going national talking from so

run have franchise, of a maintain making Hilton we a can the quite a for under there all revenue, make top still upwards normal the franchise were us XX% Marriott still occupancy rate bottom and frankly before on lower there's or and line that because of cost don't we a So the new are your which have we healthy same dollars and good line. we if

different So it's as a lot like And there's there. of way to Alex. at upside look we it feel a

working we're that So process. still through

there's several service And full was the a as certainly which no and rooms they because XXX project it have it's result which market but that in be [ph] being got that got or it's City devastated That public Louisville, to and new absolutely is built of upwards wouldn't a challenge. of downtown been is for stabilized XXX Properties new eight it's of a hotels terms they - - built about market long-term by long Louisville, before hotels funding kind back a got levels. for market In is we've capped rooms there, probably another the need in new Omni, is and seven just challenge the going any time built. to got been of but

David Folsom

a Alex. couple add, Dave, me to with Let of respect occupancy. items is This just

at they numbers expect. might don't you of you these some appear what when So look

and hotel those Whitehall of we market the the so that lower and same all establishing the we don't owner property. and the overseas for during we stay Hyde, sort So inside significant rooms. of rent that then a the from a rate And at year. we integrity have some over time, a hotel rooms And and and owners inventory amount the take but units can the amount condition value same hotel we time, come manage rate occupy to establish We that's that understand the manage. of thing there occupancy a the period cannot maybe units, condo proposition Houston. at some building certain manage their wanted that of That's at in we level during during the time at

back there. city but the you by same You need had electrical on, insured closed. up, in the shut we to thing ramp is One XXXX, but hotel of we see have low It property casualty was a that quarter some casualty the numbers to down fully was remember you apply. conditions fourth that back were then because the

the we We first have the same and hotel and De of to transient little from is want flag for there been we the there's reputation hotel And and rate and equation build we of Soto don't occupancy took an sacrifice later. the the rate independent. as a business occupancy, And the to have build years. then out group I repositioned the perspective the the off bit the many property a Hilton a and that build for decades XXX there That how know thing was put Soto. De hotel

knows So value right. the to the as sure that have the just the proposition hotel make De We market Soto. is

something casualty our or Houston, from of out Ecuador, hopefully and we or a in can that a little our visit control, It those of Argentina of question. sometimes little is bit the explain come at the like it's to Hyde, occupancy but from the of control, So like Brazil answers who things had or out hopefully occupancy numbers. bit the owners the simply number of

Alexander Goldfarb

fees point going Then Okay. franchise just on really the mean, I that's, is helpful. helpful. No, point, back your to that's margin

of Philly see like just on - that we of mid to boutique like hotel, Jacksonville of margin what those - margin so upper or a is sort Terrace, give sort that Can of that sort XX%, the so comparison. brand just sort flagged, on the give XXs better of of like I where not a in in are versus versus real which differential, a time because Georgian can the you sort get there of impact that XXs like So like, straight assume it's us the you a can some it's sort a is want like is example

Andrew Sims

like a doing is beverage Because some me big The you food is issue your millions have. revenue your and the with we're millions bigger help component Georgian a where and a hotel how Terrace millions to going our of you're rooms margins even there as overall - percentage result and in of dollars doing though decrease going to department. a in it's F&B,

all I what - do So the show to marketing you think goes rooms fees way the section. there's versus us I that maybe for to you department and - show is a need course the in franchise don't of

could yeah, it's So we good something see that for Hilton and to why up can refocus dissect as the guests. hard and with completely and food efforts income outlets we've us help know idea and overall come on let I to us we a to can doing of another them we think but brand, show our large if from independent, we you of those the we it go increases you where those because F&B significant internal to that, our we're is what kind appeal with when rebranded exact to find any is National hotel just F&B true know don't and that that. just part would the branded our example beverage and is it's change - be to I total the is that product But in where we star at opposed a seen community and same or sales plan of have problem of an Marriott have I our percentage

the made a that beverage and food margin less revenues. the rooms major but we've significantly still increase profitable. the to it's Obviously, than on effort department, So is

David Folsom

it's too. Alex, goes front. opposite thing the one the It more margin direction Dave, on

years XX we asset For Louisville, renovated it there ago. branded had the instance, at we've a hotel and since purchased XX,

switchover in was in one Marriott system was Marriott. November the the market. The Sheraton. still Starwood properties between and in the a the three being now same went to from of market Starwood hotel a properties It's the Sheraton. past we XX in system being of this date So final But one

at transit margins many the has just hotel that now how with I hotels other don't this the sharing be minds affected know killed base is, just we're and XX So of hotel that that is another revenue it's example same and our margins but how can rooms strategy. the brand in thousands affiliation because in

the our Louisville right and If saying not be the I'm for in not with market But happens. brand. decide hotel hotel you you're right can what would affiliate a in to suitable with that. you major see

Andrew Sims

for the frequent revenue Yeah, hotel traveler $X.X center force down merger. million of year data in announces as the result like that a one went

you all So these it's - got factors that we can't control.

we our always think to room are that some so some as properties to independents factors. And there's these subject in nationally portfolio not portfolio be our that well. from in of going for There's branded room

nice And going a so That's forward. what always mix we have we've we're focused yeah, go as been probably to on.

Alexander Goldfarb

and I matures easy $XX we refinanced? this amount rate with about what The the then summer, appreciate an rebranding. million your and just time. from on should mortgage thinking a Okay obviously, a that coinciding be modeling Tampa one. From perspective

David Folsom

is think to expected now. it it don't going in low we right. fives, was the be And I last in it's than higher significantly what walked we time

Andrew Sims

on have to one. Yeah, you often that extensions

that we may be the we property. extensions extending of advantage So those and one rent taking while

So if [indiscernible] your

Alexander Goldfarb

Okay.

David Folsom

two got right. we've years, Yeah,

which and go got get the another plan the of back to of and it. refinance kind repositioned we was then years So there two part hotel

Alexander Goldfarb

you. thank Great,

Operator

comes Street question Mike your ahead from Cottage Davis Advisors. Please with next go question. Our from

Mike Davis

you activities. Could is? hedging Thank you you about noticed from what very that explain much. $XXX,XXX I that lost

Tony Domalski

This is Domalski. Mike. Sure, Tony

cap. our loans one rate - interest two required requires an - have We of

into rate their every the which recall, last all requires one probably XXst December And as interest of hit Those of their had point the during have tailspin probably the went right quarter. products an mark-to-market swap. at The of to a month pricing around those just December, derivatives other months. time lowest markets credit lowest you six be there

of the at and when XX% I'm to end quarter, So first expecting two the this market loss. we reflected them that will it that quarter the big reversed thirds second year. unrealized of or be of the mark to

thing. transitory just a that's So

Andrew Sims

book just It's And entry. Mike it's a not cash.

Mike Davis

you thank is much second for guidance year? and any Okay, helpful question coming have that's do very us the you for the dividend

Andrew Sims

We don't, performance we'll at you what can that look is. our you past tell -

to little a be too are in cycle We We out. word that been our worst start lot thinking skews. of a far getting we're recession. We've eighth need a the of in to like this more about time guess get inning would spending out what and modeling feel I of the hesitant we happens

this still have an working increase exact we're will present. have or and that number you and at We two don't year on for an

Mike Davis

I but Okay. would, you third anyway - just ask comment. and think didn't a it's question, the thought I'd the actually I

hours with to get intelligent the at of least numbers and that push the pretty your try make up future and That ask more guys before couple conference the a You results the In sure for earnings questions. hard we late to helpful financial before put morning this call. will you be to for through us call. it's get the release need us to

David Folsom

We're When - that. that. do do will - don't We for we sorry usually we

Tony Domalski

certainly Hey, call. that's XX it company for XX that at and in and can public been so out ten our least practice years years, that. now analyze can if change AM see a We Mark. at X industry and put for Mark AM we've we years we

Mike Davis

much. I very you thank appreciate update. the Okay,

Tony Domalski

Thank you.

Operator

And conclude the to ladies over turn and today's will now closing gentlemen, session. that for back like Drew conference remarks. Sims question-and-answer would I to

Andrew Sims

look to which excuse Thank like you to May today. Annual Meeting April all Well, to I thank all in late you. we'd And in you April. reporting invite for our us is to me. joining forward - in you

Operator

conference that gentlemen, conclude call. today's you and Everybody does for thank Ladies attending.

disconnect may your now lines. You

Sotherly Hotels (SOHO) 26 Feb 192018 Q4 Earnings call transcript