SOHO - Earnings call transcript Q3 2019

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Operator

Hello, and welcome to the Sotherly Hotels Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. Please note that today's event is being recorded.

At this time, I would like to turn the conference over to Max Sims.

You may proceed, sir.

Unidentified Company Representative

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

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 did the has Reg made which of comparable in not the requirements. the In financial forward-looking measures GAAP during constitute the receive Any statements call, all accordance it on company G a most conference access with measure statements.

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

I'll the With Dave. that, turn call to over

David Folsom

I'll Mac, the quarter. in metrics off you, review morning, today's portfolio's everyone. and operating key of start Thank good call our with a

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

ADR. a in year increase with X.X% and a X.X% with in $XXX.XX, over Year-to-date, year in $XXX.XX occupancy X.X% ADR. RevPAR a occupancy a increase X.X% increased the decrease increased to in increase and over portfolio RevPAR portfolio X.X% prior quarter, For prior X.X% to

Virginia. governments the to declaring from Georgia, threat, with a in emergency of from a substantial August Hurricane During Florida, to portion the X disruption North struck that region our South exposed category late East September. Dorian, the and The early storm portfolio Carolina, resulting states weather-related Coast of Carolina was quarter, storm

was press portfolio the remained impact in September Southeast across during regional minimal Florida of from we to substantial business our on all track for business more leading experienced result. the and properties much physical significant damage demand interruption lack of the large, was interruption The our Unfortunately, to recover the coast, was and slow-moving damage, hotels impact and storm. we pickup compensation and/or uncertain storm landfall. meaningful orders. as was release many we'll do up at our its able As along to Dorian, X, to The open Arlington, mentioned middle standpoint. of however, the resounding the believe cancellations throughout days only our a minimal lack revenue a disrupted Travel our sustained and Hollywood, due ranging from evacuation portfolio. policies August of of mandatory not be had late from region a September, until Virginia, We from

are we those evaluating claims. still However,

increased performance was Hurricane our ramp in fueled from market Hotel Dorian, RevPAR up X.X% Virginia At other the headwinds decrease in XX.X% up X,XXX X.X% our down in reflecting taking in a which The the occupancy the the its hotel in the in quarter, XX.X% driven in increase North hotel increase XX.X% ADR. in by Houston with and its The Despite over in continued set basis RevPAR by time, an and comp X.X% a increase Hyatt X.X% X% stellar Wilmington was a the X.X% in in the a decrease quarter, a occupancy and to occupancy Centric following in grew Wilmington, in the At across in some at share. same increase Looking points rate. Carolina, with market RevPAR rate. portfolio. Whitehall RevPAR quarter, the X.X%. Arlington, in X.X% conversion continues growing highlights XXXX, the Ballast quarter,

corporate Looking announced Our the the entered XXXX. Hospitality for activity. we company's management Hospitality, of at hotels, LLC Town our January Newport XX In Inc. that master September, recent X, Group we and agreement into with of a effective

Our Williamsburg, Town, will hotels. on which and is of be formed subsidiary the solely dedicated a this of more Newport call. will to in the Hospitality, newly color later company's headquartered management wholly-owned change in Drew Virginia the provide

look to the operations We our the completed company newly foot the space Beach Resort the September, In second of connection a Residences in on we to consists million, Hyde commercial the of and meeting commercial designated $X.XX significant in in unit, property increased acquired Hyde of parking owner the the group existing the we poolside prefunction new Also XXX hotel for The in was an also House located commercial required as in with existing closing, and unit high lobby unit, potential to in hotel resort operate the manage the of and a X the and cabanas Association. Hollywood, well condominium the announced the of on closing development for dedicated ballroom of vehicles part to parking as adjacent Florida. XX-year unit offices area, condominium's agreement the parking company a realizing which the garage Condominium Coincident acquired as the company forward ballroom this season. the a that commercial entered desk with acquired the an X-story units Beach upcoming front and incorporating for pursuant square which into the and bookings well Conveyance facilities. for commercial management obligation includes new the as and agreement X,XXX as ballroom House. garage. condition

a yesterday's yield annualized of dividend announced $X.XX quarterly $X.XX per we a month, last per an based representing price. Finally, of share share on closing X.X% and of dividend

will With turn CFO, our Tony that, to Demosky. over I it

Anthony Domalski

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

total an months, period. X million, $XXX.X prior representing first the of was revenue over increase X% the For

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

$X.X increase For ago. was the XXX% $X.X approximately same of almost year representing quarter, million adjusted an or a million, FFO over the quarter

related the other portion the note of well FFO items. For losses increase excludes the the was an prior adjusted adjusted our XX.X% FFO months, that to instruments, and extinguishment income tax period. $XX.X on X first of over deferred million, representing debt, charges approximately as gains early changes Please as of to our provision derivative

as as as expense, income, corporate to of interest G&A, refer provision, as these items. well Please our excludes release on additional development EBITDA right tax of gain interest current our the earnings the other well exercise Hotel the detail. the portion charges income for

Condominium at of Dave quarter, a resulted title based dedicated their to As House Ballroom $X.X approximately Hyde upon the unit of during on these parking Doubletree date and value took estimated we assets onetime adjacent of transfer. Beach to our the in million gain the mentioned, the asset. Receipt fair

proceeds Redeemable its shares approximately aftermarket the Series program aggregate of million. During net of approximately Cumulative C sold X.XXX% company Preferred through $X.X Perpetual its XXX,XXX Stock the for quarter,

balance Looking at sheet. our

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

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

approximately the stockholder approximately XXX,XXX the by our million common outstanding, $XXX.X ESOP the approximately room. X.X approximately was Total balances outstanding quarter, approximately principal equity was the the $XXX,XXX was there are a are million stockholder and end and as $XXX.X $X.X of of At partnership the million At quarter, which of of shares per and the approximately of unitholder interest-bearing was million owned unitholder XX.X quarter, limited the were deficit well. end approximately units equity on end shares million. at debt of which equity

FFO. our no portfolio, EBITDA, weather-related X performance units combined almost effect events, conditions, updating Beach in expected the We're adjusted commercial House previous for change RevPAR, including guidance income in and accounting forecast and the of a current guidance. decrease increase Resort an the into total acquisition is Hyde hotel small increase in the net in the and market for to at Dorian. account Hurricane within The taking a Turning FFO decrease & in XXXX, and Residences, revenue,

revenue. Hotel this $XX.X this range For range, million year's represents midpoint to is the total X.X% in of million expected hotel increase $XXX.X total and last X.X% million midpoint the in range projecting at to over we're year's million. of the At the $XXX.X of over the $XX.X range, EBITDA. a revenue represents last a decrease year, the the EBITDA of

XX.X% range FFO midpoint the range million is of $X.XX represents adjusted the in FFO Lastly, At last $XX.X to over $X.XX $XX adjusted share. million to of year's increase per projected or this per the an share.

release. be of our in Additional details section found the earnings outlook can

Drew. I over call the will to turn now And

Andrew Sims

Thank you, Tony.

the Dave As were of our number quarter. mentioned, challenged in a markets

a in The number While had weather company's resulting and declaration continuously, the on a Hurricane profitability. destruction minimal damage the survived negative of large our Atlantic a effect group states hotels demand Southern significant Dorian emergency caused with operated the cancellations. of

unknown Day On traditionally the travelers storm's Labor the side, path over caused weekend. transient among profitable the leisure hesitancy

are quarter to we a produce of XXXX $X.XX of generally for line adjusted in on caused track quantify loss share until portion positive note exact of While portfolio the and operationally. difficult We having our believe significant with to a we revenue per quarter X guidance. an weeks our Dorian revised FFO a arrived. estimate decline quarter. weak third successful Regardless, results we of in for up revenue The on the were wrap a relatively nearly Dorian, impact

acquisition We of the pleased the quarter close resort effort. the of months were in XX on Hyde Beach after to House

benefit ballroom. previously of along addition premier challenges waterfront transaction which presented and way, of space. part the but signifies completion provides DoubleTree also a mentioned, construction-related great sufficient this going includes from The the a The the of complex has Dave the acquisition culmination lacked As event development, space meeting upside this long-term hotel new forward. of now should significantly

entered master into that Group September, Hospitality As and Newport a we in with we Town agreement Dave Our Hospitality. announced mentioned,

management and the out contracts we develop solution could that the structure on expiring executing our dedicated at our majority a to management customized a offer to portfolio that and solely for formulate portfolio of year-end, strategy. set be our With would

for value to collection. hotel opportunity We is boutique shareholders. Our is believe and solution. Town future with expertise challenge success and uniquely for implement expanding create enhance experience our that the our this of our the team The equipped Hospitality will vision

Looking at our strategic objectives.

focus to on sheet and sound continue We rate sufficient we procuring balance reserves. debt, extending maturities cash fixed ensuring by maintaining a have

underwriting We to steadfast monitor conservative to the in acquisition overheated continue our is remain opportunities as market believe we terms to of and pricing. approach

We and will find our long-term for shareholders focus identifying creation value opportunities the when and we act fit. if right on

whole. as industry a the at Looking

a Although at we upward U.S. risks, travel in cycle perceive transient pace we Despite and cautiously strong. long the to resilient. year are the trends remains disruption for economy is next are aggregate that booking will these steady group risk evolving, positive least outlook the optimistic as the remain without continue

open the call now for will questions. We up

Operator

from Tyler Today's Janney Markets. question Capital of comes Instructions]. first [Operator Batory

Tyler Batory

you on Hurricane of the in a whole those portfolio color could if impact Tyler. versus given as difficult of was I A group questions. know wondering some provide Dorian, corporate it's sans versus markets? trends the leisure but I couple

David Folsom

I'm of the end question? repeat there. right you your up at Could of end broke sorry, you just the

Tyler Batory

trends impact the group if portfolio? leisure versus on it's corporate could given to Yes, versus the you I in and some the difficult southeast. know provide Dorian color the

Andrew Sims

scheduled I Jacksonville, you Yes, Florida Boise State, declares moves promotes On to of a Boise to out. team. example game give Governor the that. weekend, Town completely team emergency, and group booster is sold state happened good Tallahassee. State In had of We're the for Labor us. the The maybe game. the that what Thursday, State hosting the booster Day - could a we

occupancy from very in hotels X XXX% for no went business, X. rates Our rich to days basically

at still had So But we going group to their manager of folks X in risk. several that's put state repeatedly. week, just that example. happened is states. a emergency following The No

as from up And Wilmington, a canceled to North basically business of group so our all South Carolina. Florida result,

X almost stretch. was it it the of Dorian tough So anticipation a I lasted mean, weeks. arriving. And

ahead that of everyone's think days And the in aware it long of was quite time couple a for paused I scheduled originally South Florida, to Bahamas. a that. be over

the storm. Eastern north of falling that's So in up story of North out then what paused way ended But they the Carolina. And it went at warnings and you coast had same kind going ahead when group our Day of with is out land is the end, can happened travel for No business. imagine the to a is weekend Labor for a one potential transient And story. the there hurricane. to the and

Tyler Batory

Right.

that's the Okay, of kind broader helpful. then industry. And moving to

Some guys are market of experiencing seeing labor the up are you and a other increasing? that issues are your costs to cost What labor lot. peers with that with respect comes

Andrew Sims

it Well, of a somewhat has challenge. been

We are in basically full the at States. employment United

Some fixed the level -- us gives use having which employees, are to we having -- that line markets service, of a we're in, we're an a service for to price. outside

is exactly it cost, to gives a terms can less us more know opine increase our flexibility you here, staffing, but in seen we expensive. been a X% can in is. we staff match But little occupancy we at our costs significant So Tony, and But in think than labor our what haven't I it's what of are, only year. this our it

Anthony Domalski

been We've very Yes. fortunate.

have are recent tight very the supply addition, for have increase and In growth. And that also employees. we're contract are line hotels had to those in. more for to seeing find lot where caused those difficult out markets This a labor particularly huge just go employees markets demand of in are a that markets level our

Andrew Sims

I like bit doing markets little think a being Now Miami, we're Tampa, there.

Anthony Domalski

definitely. Louisville,

Andrew Sims

of they've in Yes, had hotel growth where the Louisville, tremendous rooms. number

Tyler Batory

moving XXXX, think forward. capital into we should wondering about moving how allocation then And okay. Okay, just

David Folsom

Tyler, it's Dave.

what referring -- to you are when So you exactly?

Tyler Batory

terms what looking for guys XXXX? In you are into of moving

David Folsom

Yes.

mean, been bit shape spending. in. really good the best it little -- Probably our the probably generally think right shape back our it's on portfolio We'll I are speaking, I in hotels in a now. throttle -- the ever is

think $X in come to this I I to to upwards we're or million, maybe a million. going spend dollars will $X $X high is It -- millions. think couple million our goal close probably down year, of the

Anthony Domalski

Yes. have seen have major We this completed relative for at may next renovation over of past our to the which hotel, nonrecurring any in year. Tampa year we you the don't scheduled summer activity years, what few instance, for

recurring big CapEx CapEx. Drew outlying but shape. as is So portfolio this we don't pretty have But our in mentioned, requirements, decent we have our

So we shouldn't any see major demands. outlying capital

your question? does -- think answer I that

Tyler Batory

helpful. that's In regards to Yes, the...

Andrew Sims

is funded have so small that XXX next is got relatively it's couple hotel pretty And scheduled got the for the existing it cash And position. only on shouldn't years, for an of we've we've keys. us, rebranding we really affect much which the Raleigh, our and a accordion there, loan that

Operator

[Operator Instructions]. O'Neill. comes of Sandler question Santos from The Daniel next

Daniel Santos

a that think the there on But the portfolio what you appreciate for pieces. you from some high the that weather, quarterly reasonable portfolio can with a and you as perspective, I do today moving transaction FFO are is sit today run have, an rate the basis? with

Anthony Domalski

in range for XXXX, that look somewhere XXXX, FFO seasonal, I'd to I'm through FFO. $X say, is we as but -- out $X.XX

Daniel Santos

of in sustainable you've fee then the you income year, just that and this that sort on these all in these Or the as XXXX? expect quarter onetime should fees, in of some specifically away items of that we got some go see onetime the And will the items you do Okay. of future? gotten

Andrew Sims

onetime the to in new AFFO Well, big equivalent event I'll to I nonrecurring the that's million, let second. But ballroom, a Tony was realized due obviously, say pickup the on answer $X in -- basically. would that gain a

Anthony Domalski

Yes.

parcel door, give for ago, Compounds. up hotel set developer bought XX to me here was which years next mean, was had wanted prior he that a Let another the I when Courtyard, on we him check in to the little and us color an sold The building you that opportunity build -- the and the Doubletree, that. there.

a negotiated us -- parking deal, -- us and a for now what which having we a included the them So build XXX with the Doubletree keys. to ballroom is provide structured

the hotel. for quo payment construction our deal had pro gifting a the our of of So of of end parking. ballroom the last the that But lot and that was for at disruption of mess, lot a a day, quid structured years, we've this X.X was with kind to at

long fee finally, all -- really that hotels a now going is located stories, and It's disruption have it's is this. a -- Dave a behind us forward. best is for us. onetime very magnificent said, and -- us characterize Hollywood in almost XX And the complex it. time a and plus to is huge it's But way for to deal, of XX I building. would this as So this a fee taken so It's a it's of X for

Andrew Sims

I thing a year of following underwrite I a for other the the would often nonrecurring add, mentioned There that years. we can't impact we hurricane. really consider when the negative mean, We The is next or are the Daniel, hurricanes. event. hurricane

are none. there Sometimes

I think major there in hurricane before the Miami for nearly hadn't Florence year, market or years. the XX prior been a

So you do a $X.XX other risk And Hopefully, as of that... think year. is that, in but underwrite this a not year, the won't negative hurricane than as probably, there Next down? can I future. bad

Anthony Domalski

we've some noise in got there. other But

rate well. I recurring the value that on same the think don't FFO $X the change bonds. we I we've next million-or-so-dollar year don't think We got extinguishment having see in anything on there dropping, hit baby also as effect the see have swap, like with the And FFO. which of to the that next our debt I interest of that year

I see think, year. don't Daniel, recurring don't those next see I X I those items. So

Operator

closing remarks. queue. in session. this conference At concludes for question-and-answer Drew over like any the turn this time, I'm not to our showing back questions any I And would more Sims the to

Andrew Sims

we numbers to Thank January. all to in you morning, for Thank you. reporting this joining year-end you forward and look us

Operator

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

now may disconnect. You

Sotherly Hotels (SOHO) 12 Nov 192019 Q3 Earnings call transcript