SOHO - Earnings call transcript Q1 2019

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Operator

Good morning everyone and welcome to the Sotherly Hotels Inc.'s First Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Scott Kucinski, Vice President. Please go ahead.

Scott Kucinski

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

We will then take questions.

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

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

David Folsom

an portfolios Scott. for Thank quarter our for everyone. operating key call to exceptional of I'll Good review metrics be morning turned with you, start off the a today's what company. out

participating at and Hyatt hotel the represents company's rooms resort Looking the wholly-owned properties, composite the condominium and the results for which portfolio, residences. from

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

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

in of quarter, a occupancy in to X.X% prior a increase increased $XXX.XX the year ADR. For and reflecting report X.X% portfolio increase X.X%

fueled which and $XXX.X in RevPAR in of a to highlights by performance, market, Super after RevPAR increase grew of XX.X% continued the driven captured increase the a level a its in by increase improve XX.X% its and during during during in competitive Looking and the continues repositioning, Centric and competitive $XXX.XX by increase a conversion achieving from the property its XX.X% by a activity to RevPAR rate. XX.X% gaining in Atlanta, to at steadily the by DeSoto in in continues the XX.X%. in driven and X.X% competition to its following bid February. share in XX.X% the share RevPAR its XX.X% increase performance and and exceptional Dallas Georgian from outperform year Terrace rate, its quarter, for individual a quarter in a continued quarter, a its property Bowl The In the taking occupancy Arlington fair a quarter, quarter The XXXX X.X% while to Savannah an $XXX.XX Wilmington hotel market index was Hyatt X.X% RevPAR’s XX.X% it up increased the set, share. rate its to strong share, a as XX.X% increasing an from for concept a RevPAR efforts occupancy competitive set. ramp increase increase gaining RevPAR occupancy and share against in X.X% boutique with

$X additional Issuance potential proceeds million. on partnership's the unsecured a intends general Series a quarter of properties. corporate option in quarter to remaining senior purposes there net the closed our gross in percent eight proceeds seven including extent to with permanent offering at mechanism while five April, for company acquisitions D shares and preferred our Perpetual are on capital, a to activity, recent corporate of of reduces Preferred desired. any $XX bonds underwriters short Stock the due that in the call proceeds a flexibility Redeemable and the week, total XXX,XXX Preferred net and XXXX, full proceeds redeem by to if Last the operating providing of for million. company their term future replacing source notes the and percent The exercised shares provides Cumulative XX,XXX million for hotel Strategically, Looking same a risk so of gross of we use years

April, secured its Bank. In with existing million Third that original mortgage announced the $XX addition, Fifth company amended lender, Plaza, the we Westshore during by Tampa the Crowne

the a achieves the term equal with certain extension million at remain interest hurdles. on amortizes LIBOR the periods. will to rate basis the two, performance year one a XXX year loan plus if amount XX-year LIBOR will principal to mortgages remains With approximately with $XX.X XXX property XX-day and loans reduce points day plus XX amendment, new schedule. three The The

increase dividend XX with representing announced we dividend share XXth increase X.X% $X.XX an I'll turn closing to quarters. to of the This annualized of Chief Officer, marks call the month, yield per $X.XX an a dividend that, over share our over on the yesterday's and Financial price. per our quarterly last Tony to And based Damascus. Finally last

Anthony Domalski

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

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

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

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

ratio quarter. to million as on was on in of our end asset quarter, the $XXX approximately of X.X million limited first interest bearing balance which the the agreement defined partnership the of million As At the by end stock approximately debt end total quarter, were XXX,XXX our value Also to owned senior company's adventure was of common value of approximately of were based at shares the outstanding. ownership plan were employee shares units approximately XX% the outstanding room. of the asset principal debt XX.X notes $XXX,XXX the total and approximately the there per there unsecured the

recent we of this unsecured the preferred the anticipated Turning guidance are issuance later stock of our month. notes redemption solely for for to guidance; partnership's operating the revising and account XXXX to

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

Sims. can the be Section the details Outlook earnings call I and Drew will in now of found over turn our Additional to release

Andrew Sims

Tony. you, Thank

business at see as quarter to first solid and second be during growth corporate has and experienced stable the of life continue While New growing reasons In the of volatile X.X% This our be a economic Year for we the industry the profits balance forecast macro a end brought the trend. quarter. environment with steady for economy to many the U.S. view XXXX optimistic promising the environment our appears translated cautiously XXXX the to a portfolio.

modest the during X.X% quarter outpaces first a grew experienced We growth from which X.X% drop portfolio occupancy driven gaining RevPAR U.S. primarily in set X.X% our by competitive at in RevPAR. lodging share composite growth. Our industry

in And Amazon, and grew Savannah markets benefiting the including on steady experienced strong Arlington repositioning the their set and strong Savannah following traction solid Centric Arlington, continue boutique market. quarter The quarter from successful to in by opportunities for during relocations outperformed Wilmington and number Nestle Georgian quarter Gerber. Northern core Hyatt competitive market Atlanta growth the during our an the first portfolio Hotel mentioned which its gain corporate performances by Dave the assets. in in and capitalizing extremely As DeSoto its Terrace finally and Wilmington continued Atlanta to performance to a growth the Virginia in at of highlighted The our rate RevPAR, Ballast the concepts. XX.X%

of the interests impactful in in sheet activity we building many expected a in Beach hotel glad Residences. in we a or Hollywood resort approaching operations balance The through the fourth construction beach interests end and to through Resort condo term. and open XX-storey both in either portfolio, will with and the Looking DoubleTree two the as are Hyde come in to our of provide the property. house of and Hyde see has quarter fee to House program at our the the to hotel our the are of rental market near as Beach Hollywood a Hyde year of This that Hyde our process year House conclusion been DoubleTree our adjacent half XXX the is this simple rooms the

initiatives forward. property We and renovation. XX major period $XX.X strengthening of guest on next at Tapestry four the across the culmination assets market disruption during are the project portfolio without Hilton's Alba planned and Collection schedule renovation are months outperform were renovated. hotel of which part only remaining of relaunch marks to our pleased an project of following for significant the to progress million to of completion company. moving with portfolio portfolio is look forward an Tampa rooms in for is the our the XX% The our We believe approximately the wholly-owned the renovation its this years June which extended This poised

and issuance improving focus balance stock on earlier. loan modification sheet bond well evidenced Dave Tampa as to mentioned recent redemption, the continue as the We our by as preferred

We with disciplined we wherever will consistent take rates as possible endeavor and last And capital of the maturities maintain extend fix markets we'll a and advantage by dividend become a strategy when interest opportunities week. announced and lastly to towards evidenced increased bias prudent growth the available.

now open call up the questions. for We will

Operator

question Our with from go [Operator ahead. comes Batory first Instructions] Markets. Capital Tyler Janney Please

Tyler Batory

nice Good Congratulations on morning, thank of a year. quarter you. the

a from Just me. of couple questions

highlighted number remarks prepared city and markets you the On on market properties of outperforming a share. that are

gains? when you little those some of look assets, a share can some know, about you what's generally more exactly bit You those driving talk at of

Andrew Sims

taken that include Sure, hotels I get they're include would our like hold. having include would to there. think us Savannah. we're Atlanta, a boutique experienced continues these finding that It And concept taken of over growth for task I the and would for that Atlanta that to And grow. Wilmington topline probably has the little think and as that longer in tackle as overall us guests, really experience think I time they that result that a concepts is

Tyler Batory

too, then, group That's for another on bookings for portfolio Okay, got question XXXX? it. just general helpful. comments the And any

Andrew Sims

on on while think the of balance we We're taking kind of down seeing while group good for year kind us us is and of the your of our got why drill softer I when grip there. little a part-and-parcel a that's a bookings previous bookings strong. is question

our I of properties group a customers are who they until it about think the was our projects completed saw apprehensive booking project. lot or little

thought we product And warm so, up to than our them it's longer to taken a little bit offering. for

Tyler Batory

guys is And then performed D.C. bit Laurel about both first the quarter got Okay, ask at you well. Centric mean, first the quarter. as it. and obviously Hyatt soft wanted to also in properties I those little in well the in of a I quite and

about too? you more if a about So, of two assets the those talk can what's it bit driving strength

Andrew Sims

a got on know a didn’t were going travel they a lot right been is locations. just has Virginia result it's across extremely sub-market Virginia and in And river generally northern Rosslyn the have of the free Well, strong. market. now fire and forward it's the and I several Rosslyn large they northern been But business In in a beneficiary market quarter. great as has

the great terms that a of of heavily of It's we that And feel made government Laurel on on and conversion done we little value so delivering we're we like levels in our have good double the offering. acclimated guests now of what our top again and service service offers at Laurel, get groups ranked the They our just a guests it one very they're properties. In particular for years rely our X.X we system terms to product and to there. think ago. in excellent getting that longer job guests. that it's experiencing That's about in we pricing taking repeat its trees us an to the

Tyler Batory

want ask perfect. Then about acquisitions, as Okay, I also to well. dispositions

pricing guys there right, any you which respect potential seeing comments deals in on bids to for with out you're the Now any acquisitions? first potential put on out and any are quarter, the

Andrew Sims

portfolio. in were underwrote four we property but that disciplined get as one towards over will we'll think we're That's name or and we're its But markets our of any we facilities win pay what missions of the not I they not to hard it's so quarter, in certainly will going where we our didn’t here. to work heated four them. our doing properties tower I'm I pretty tell to growing and continue going top it's you to what value. you

Tyler Batory

That's me. And it. question got the from helpful. Okay, then, just last

dividend priorities you which capital as great. recently we guys thoughts through allocation the XXXX? move as You're Any far obviously is increased general as

Andrew Sims

renovation in on our coming of we kind most the cycle portfolio. end as to our said we're our Well, of remarks, of

of So, of a money in going. that's capital spend terms allocation, a where lot

to underwrite to then event the we something, and the long-term quarter find just applying that We if don’t acquisition will than think keep doing our meets continue is we better I doing. we've Because a little had we'll thought. right going be we find in deals like and we goals. XXXX what we're And will and feel we're try what a we great capital, originally bit

Tyler Batory

helpful. it. That's from Thank all very got Okay, you. me,

Operator

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

Alexander Goldfarb

Hey, good morning down there.

questions. quick Just a few

have your First whether insurance I'll where insurance or are assets. not you just guys just sure talking you but your as on renewals costs noticed yes stand last not in insurance, given you changes years across about that you had, any

Just may curious guidance? to or what be what our then you're helpful hearing

Andrew Sims

at our liability X% line. it negligible a and had general talked We real I managed about I'll an just maybe the especially for because comp tackle overall workman's no looked you renewed that we Yes, process. cash, and let question mean we'll Dave I on other increase. line there we our that insurance he and pleased our increase where property that be think Alex,

So, about thing here some on did our substantial events what usually that portfolio. maybe mean, managed your pretty decent X%. I have overall pricing. carriers we is and our is claims the the above I those The I happy we weather market I through increases that all comment the good large the say see understand think we policy pretty weather saw. basis, at at are will insurance reflected and macro company pretty we in well a well are against don’t which in

renewal. So, we on did I the well think pretty

Anthony Domalski

want might So, you changed you mention to that. carrier,

Andrew Sims

reasons better the changed just of for pricing. we that a We get carrier namely Yes. couple

could. as shut we maintain and their a we mean throughout increase that we account smaller I yes, and So

Alexander Goldfarb

Okay. guys to freebies, or when fewer have the weekend. see than any there meaning, year more the you this was more we're hotel whether And whatever. going is, were report other there more bookings, is numbers past a this is freight, than better question your know then, Kentucky quarter bookings, but as obviously We won't it Derby Kentucky talk or that Derby normal another a far about impact. second there to that you outcome is Was it as concerned, something was worse

Just Kentucky you huge been in a it's Super trying Atlanta because the initiated. said Bowl understand Derby but past obviously to better you know I was for in impact

should for? if curious just So, anything look we

Andrew Sims

We quite give can't really information yet. you that

earnings glad call you will be we'll ahead next We that share to get with all but can't myself Alex here.

Alexander Goldfarb

But ago a don’t some you a it And more to to sort intent seemed been, from of do I just still to buy? dialing just seem buy get few you maybe A back where dial guys years maybe recycle right responded analyst that from prior then way back analyst. different the the being more the hotels assets, it assets prior of just trade, but Okay. final so know like that back desired ones, matter etcetera. you're boutique to question, about and And bit to vocal wanting assets that. your try to have your able to going comments the just recycle find to that it's but you sell was was or the looking

Andrew Sims

Well, didn’t thought the clear I get on length that and we selling about hotel made at prior us we I pricing and wanted. that know Philadelphia we think about it that I marketed we talked calls

that the Arlington that asset, reinvested asset then asset result So, out bought as the and the we to we it. equity of when a take proceeds we and that debt the take those decided refinance those into of

rush at to square are Right so with now Philadelphia any hotels we’re and I assets in well, happy performance so doing portfolio reasonably the doing future. in opportunity not seen sell we point we in consider we’re now we’ll and the pretty we don’t out, and there reason marketing we’re the certainly right mean, selling it. that. couple get we’re what So terms other actively There look at any assets. that would some When of an of

Alexander Goldfarb

you. Thank Okay.

Operator

comes from next go College Mike Please Street with Davis Advisors. The question ahead.

Mike Davis

Thank you need the But my Advisors. is that flat. EBITDA going up. metrics and is is, why available improving, going very guidance Cottage income for It’s be on funds but seem I the operating very I greater much fact much. Street question like down clarity to net shareholders

So you bit me? that little could for define

Andrew Sims

still had -- have hedging non-cash adjustment in that. on have we Sure. activity which had -- our some one but Mike, thing, to we a we to based quarter FFO the is make to we an for charge,

didn't interest hedge, rates had increase to and because a So, have we we mark-to-market.

have almost charge about so, we And of this non-cash $XXX,XXX. about

Anthony Domalski

About half a million dollars.

Andrew Sims

about of half that to take. million Yes, dollars have we a

So that's the first side.

other The it's but line bottom top sales yes, the going to looks item not are appreciably, that, flowing it up line. through like

We have that the acquisition issues March seasonal in January February because Xst Arlington on some Arlington We with and didn't own in XXXX. bought we hotel our XXXX.

sales, So of will the are February on RevPAR very and positive very D.C. it's hotel but January has that line worst the submarket. two the Washington a the a for it -- year top high Hotel, influence but months

create flow So of doesn't those lot a cash the months. during hotel two excess

apples-to-apples we an we're really here. – because not comparison don’t So have

the negative on So on our a positive revenue. Arlington line hotel has actually line, has influence EBITDA a it our influence top but

and a that and got million. significant some revised we've about also charges we have that I out Tony that's the And change minutes ago, extinguishment in the would repayment $X.X That's the of to metrics. basis our more then non-cash baby put book the on just related a finally, to that So bonds. fairly guidance go few a forward say

million. add you almost when the have So things non-cash for year of charges $X.X these we up all

then FFO. that's $X.XX got issue It's pretty in Arlington. the in us like a big seasonal For number. And we've

I brings that some clarity. So hope

don't we've the cash I they got flow, our think of affect the but is short special that affect presentation financials. events these our really answer

Mike Davis

I very you it. Thank appreciate much.

Andrew Sims

Thank you.

Operator

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

Andrew Sims

you you. today. positive in thank forward Look us July. Thank all for report to joining And

Operator

for is attending presentation. today's now Thank you concluded. conference This

now disconnect. may You

Sotherly Hotels (SOHO) 7 May 192019 Q1 Earnings call transcript