SOHO - Earnings call transcript Q2 2022

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Operator

Hello, everyone and welcome to the Sotherly Hotels Second Quarter 2022 Earnings Call and Webcast. My name is Victoria and I will be coordinating your call today. [Operator Instructions] I’ll now pass over to your host, Mack Sims, Vice President of Operations to begin. Please go ahead.

Andrew Sims

Thank you and good morning, everyone.

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

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

Scott Kucinski

through off Thanks, Mack. quarter. Good call for metrics key morning, of start the everyone. today's portfolio's operating our a I'll review

at an the XXXX. for Second composite RevPAR $XXX.XX, represents RevPAR was of XX.X% of occupancy the by in and quarter second results an Looking portfolio, driven $XXX.XX of performance same-store same XX.X% quarter period over increase the ADR

occupancy the for Year-to-date Looking same-store of XX.X% was second occupancy RevPAR $XXX.XX at increasing in an RevPAR increase same composite these with quarter figures portfolio versus period XXXX. performance RevPAR XX% only the with down ADR ADR and Year-to-date, the of an X.X%. X.X% of over of XXXX, represents down but was and X.X% $XXX.XX.

RevPAR was June's ADR X.X%. XXXX, basis, May's pleased of occupancy RevPAR rates nearly across versus performance pre-pandemic in Overall, XXXX April down throughout nearly we figures strong segments. strong same-store more portfolio's period April RevPAR. and a business by XX.X% quarter which with of demand these was which benchmark second than highlights our XXX% XXXX XXXX, Examining RevPAR at RevPAR. very on while levels May results results the was were RevPAR increased down hovered Looking all near XX% monthly comparable portfolio of quarter. RevPAR are XXXX's XX.X% composite against with increasing fueled and was the portfolio's a June XX%

build by Our quarter March recovery faster-than-expected lease a results quarter, improvement strong for portfolio second markets impacted occupancies business midweek forecast. fueled highest portfolio's in and outperforming the in of continue travel of in group-based to was sustained began levels the corporate posted travel, with where performance group highly on our both year. urban in during combined that demand, upside provide the and prior pandemic. transient the improvement A The strength in resulting most start our our this since their

of as the markets demand In return addition, urban by citywide boosted a in weekend and leisure festivals was drivers, such interruption. shows following events, these traditional X-year

experienced surge While is trends, markets exhibited for and across hotels recent was the market results is believe rates during continued The hotels Meanwhile, positively. which many outstanding in extraordinary as of located and ideally produce the forward these period during group attracted key return coupled steady upside markets, power results improved quarter. the Tampa, Savannah, drive profitability travel in markets as during we demand with unprecedented bookings leisure to leisure our to a during maintaining portfolio second quarter. of for these Wilmington still trend such demand leisure Florida. the our urban the continue significant coastal continued potential quarter, to portfolio Hollywood, especially Pricing there

basis among The quarter the to our layered leisure highlights group hotel. return profound from at first be gaining performance portfolio during property a XXX at increase portfolio. points the gain across of with gaining improved business DeSoto of RevPAR travel The the continued portfolio's Looking in period XX.X% far over standing The the the seller some than as with ADR standout Savanna share property the fueled was competitors in fueled the rate DoubleTree by RevPAR in quarter in easily results during and a RevPAR a XXXX. exceed quarter during growth occupancy outpaced excellent in X.X% of XX.X% Resort XXXX and XXXX quarter. in of The the in saw occupancy. significant by increase metrics second growth over Hollywood its XX.X% in exhibited set, as also RevPAR with year. the gain more X.X% its XX.X%, improvement Centric its with a the an among competitive same The XXX% Arlington most Hyatt of its quarter-over-quarter

continues While the direction property to from right trend its competitive XXXX RevPAR while XX% was in the still outperforming the levels, set. off

highlights business quarter, and its RevPAR points recent nearly the as our achieved hotels. index the basis RevPAR During further solidifying position and XXX% a hotel in acceleration market share steady travel trends X,XXX of a group of leader. Examining portfolio's gained booking at our the

of the more over second travel the XXXX, strong to travel XX% in XX% During demand while while during group with quarter, business quarter approximately group XXXX. trajectory improved, of the second nicely business the quarter, travel segment segment We shaping producing in recorded business XXXX, which group produced increased booking continue is than anticipate of trends. of business the quarter. the this XXX% first the coming second business over up as XXXX, recovery and quarter the XX% quarter the of the improvement was group to much this second produced first Comparing fall

to indicator to Our close promising company. gap forecast are XXXX segments these for the continue for which the

excellent -- properties. despite offset revenue are goods further quarter. costs, and labor flow-through control cost in variable of rate increases and on To managers achieve driving to at operating during faced heavily costs the able our Our rising the focused able we're our managers

travelers not F&B room offerings, basis but rentals, shown the As in a for EBITDA income. hotel have other Overall, also of areas period price than by second parking for the points. sensitivity, strategic margin banker this more result rates same quarter's outpaced and approach, of minimal XXXX XXX only

that options, X principal with cash corporate Hotel SOFR in announced by completed sale tremendous the an million by of $XX a life X in the announced in the to of to modified I rate proceeds quarter. increased X.X% need the valuation of $XX This in the the repay X Bank now X-year a term the interest rate unrestricted cap Dave its we Third Brownstone Turning to secured for Wilson decreased on X.XX% transactions cycle Alba June, company activity floating the Raleigh, company to were and was our Tampa, asset month, The DoubleTree guarantee. loan the represents will major transactions Hilton corporate in for modification will with performance, extension loan a small reduce XXXX extended by In plus in by Carolina price a X% renovation. of note. the provide North balance turn these purchase secured more million. Raleigh existing years call details call. Company's series amount later the Later used Kemmons The Tony. mortgage the with hotel Florida. from on the the Fifth of we over this

Anthony Domalski

Thank you, June XX, Scott. period XXXX. Reviewing performance the ended for

representing hotel XXXX. period quarter, $XX.X an XX% was approximately of $XX.X same approximately on EBITDA year. over same of same was second performance Year-to-date, $XX.X representing revenue million, approximately increase XXXX. increase XX.X% in Comparing levels, total quarter representing over period over EBITDA increase XX.X% EBITDA to an was the an to approximately quarter the XX.X% quarter million Year-to-date, total last million, the EBITDA the of to million, of for Comparing revenue EBITDA of the EBITDA in XX.X% was total hotel prepandemic of last year. representing hotel basis, For current to of of for increased second revenue current performance total the a for XXXX. period increased same for prepandemic for Hotel levels. revenue a XXXX. hotel with total in XX.X% same revenue the over Total XXXX. XX.X% same revenue XX.X% the And an year-to-date period in year-to-date period quarter the hotel XXXX. $XX.X increased on of the period same increased increase the for same And basis,

XX% income, same adjusted G&A expenses, related charges increase adjusted year. $X.X extinguishment XXX% the million, period adjusted levels, Year-to-date, as million portion other over as and items. current $X.X ESOP in or over compensation these XXXX. representing early period excludes for Please to last FFO FFO related the corporate gains securities note well same and in an to EBITDA approximately items provision to additional abandoned adjusted losses interest was the our refer charges our well income performance well. approximately current XXXX XXX% FFO improvement or an as for the of period of about million of XXXX. FFO to derivative the quarter earnings $X.X excludes other tax and prepandemic adjusted Hotel as adjusted on or instruments, was in interest the adjusted XX.X% increased approximately FFO Comparing of debt, increased aborted our stock for almost For FFO same expense release million offerings, $XX to that to Please representing quarter, detail. and year-to-date charges of as same expense, the of FFO

$XX million, estate items. unrestricted cash of balance cash cash had for real as of certain our sheet, of taxes, and total approximately improvements as reserved June and XXXX, million million $X.X capital as well approximately which of at XX, equivalents Looking the $XX.X company approximately consisting was other

the $XX.XX million. the cash ahead million quarter, $XX to the to level Looking at generated company between range the and third estimates hotel

of for are We capital million be expected million the expenses expect approximately and corporate to level quarter. G&A $X.XX expenditures about $X.X

million principal cash million range approximately $XX.X It's to removed company's scheduled for of the asset cash most third $XX.X sales. to portfolio $X.XX Overall, period that $X.X scheduled repayment used the are in interest outlays the relates used of of payments have quarter. the million to we XXXX, the proceeds between for principal approximately by for deferred of quarter. originating debt pandemic. the our to interest be and $X.X forbearance from expecting million we're expected received in using note sheet December and from important approximately during million balance Since in of While

forbearance was also deferred certain during And and -- all through we due to vendors, this interest During various our deferred lenders million. that reduced agreements. by reduced which us fees period, all $X approximately we've of granted to

swap from the rate that pandemic in financial principal date recovery company's taking carried deferred the chapter by such XX% from end At the interest a during $XXX.X We a expect the interest of another important rate XXXX, of account outstanding of the rate granted the pandemic's company's complete repayments end had be impact. into of and of all the in interest interest principal will forbearance of the Approximately we average million quarter, fixed debt agreements. after weighted at approximately balances of X.XX%. company's

on will that environment, million a in the dividend months the As we be normalized capital Dave. anticipate company's XXXX. line our dividends estimate operating turn expenditures prior. the announced approximately to suspension on draw deferral year had of historical I'll more enter announced XXXX, $X.X over of call and common approximately for with more $X.X and And our million March dividends we In cash capital X to of we to payment per amount calendar stock norms we suspension a quarter. expenditures of now on The of reserves

David Folsom

and Tony you, morning, good everyone. Thank

well models The and compelling for pace to management. marked point lodging to surprise quarter balance to our XXXX, the to the only performance important offset assets management the year-over-year second as operationally of not markets. upside, company, their the to the both position The in and costs. recovery management an rates as sheet milestone improvements continue Room of terms while but of respective strength flexible continue and in relative

in We ADR the same-store a of during continue leading in to momentum month outperformed expect period to XX.X%, XXXX by July as X.X% gain this the composite same RevPAR.

exceed margins a to to expectations. As our hotel result, EBITDA perform continue or

and core off a overall the to originated Additionally, the the a forward stabilizing of balance the business in it in in and and sheet. puts Wilson depths loan position date areas event This was a the X-year in of months. much Kemmons company's of our the our quarter, we step during other company repaid us major marks outstanding address on stronger to health had paid Companies. with the This pandemic loan fully XX maturity focus

was Our combined during trajectory the strength return the of demand. second travel in as quarter portfolio's recovery maintained the positive and corporate leisure its continued with group

portfolio's industry a bookings for Scott trending approximately Currently, the for overall the quarter the which approximately As group XX% XX% and pace XXXX second period the same point sign our ago. XXX boosted promising in levels. at rising locations same basis to witnessed Though of demand demand. in mentioned, return by urban produced in is booking quarter primarily XXXX, of a is improvement, during company. midweek group Arlington group accounts impressive our our XXXX positively, a to the pace the of pre-COVID of corporate demand the demand group as our assets, from all corporate most impacted our near surged driven In quarter, the resurgence sequential the Hyatt returned Centric the increase of

While of our second improvement, business for encouraging, XX% same is below plenty room the transient recovery quarter XXXX. still hotels is was there period urban the the travel in as during of

business further travel for progress We the forecasting transient are during months. fall

booking we The of the in vary initiatives the quarter transformative company. recovery Although are the for this we segment throughout pace the outlook portfolio. our by significantly shift during in we the location, several by seeing key strategic represents are completion to encouraged expect trends a of

the sale that to asset of significant corporate while mortgage Raleigh for near-term hotel. required debt repay our reduce First, us improvements expensive at cycle eliminating allowed life leverage CapEx and

optimism including the Kemmons resulted Tampa the on million our proceeds. additional its fee from payments, the Kemmons room the preferred terms quarter, for million current the balance preferred and the Despite of of approximately the series Wilson can't with for The end the trends with steady hotel, pressures, ongoing inclusive complete and and at booking had note. Wilson post-COVID these the geopolitical portfolio's to loan business. up it the and efforts, interest obligations. loan the significant of result, the the the $XX.X strong reserve. factors in remainder million the and of decrease concentrated as company payable focus allowed in and second prospects covenants leisure And transactions our of Company's believe as of can of for sustained onerous making that well pent-up end continued bring improvements, these loan coastal a operator, we for when interest liabilities, In $XXX debt, demand debt, these will cash end of company At XXXX repayment stock, significance addressing approximately additional locations recovery of dividend fuel continue forbearance-related the We as important XXXX quarter, loan business with exit in beyond. forbearance our a of company ideal of group Secondly, call growth overstated preferred markets for high liabilities, approximately questions. of open we elimination be return Southern had as $XXX our modification accrued and the that, macroeconomic corporate announced improved the sheet stock on a in encouraging rates, can accrued

Operator

[Operator Piper question Instructions] at first And from Alexander our comes Goldfarb Sandler.

Alexander Goldfarb

years Impressive ago. versus solid X pretty the job cool on recovery

So few just a here. questions

go are that your certainly on to people is the cancelled, think, you when airports not First I crowded is airport, the flights. with COVID, flight the sort -- I of, mean, country over assuming

the hotels are You full. around, travel

So metrics of that XXXX you of and that guys were some a still number were ahead behind. listed

spending are to business above that an up spending? view urban You back that but the crimping the or it having you you that’s like issue the your been in What uniformly inflation getting impact? have fallout it sounds sort is Is hotels the still it catching uniformly would COVID XXXX? from still lagging. Or of Is key is what XXXX? above portfolio say do portfolio think getting hurdles mentioned personal crimping back key

David Folsom

and travel see were in demand there's of the sort demand Well, and we're seen of The order. I think group now to waterfall urban first come last business that seeing back a return and return the demand markets kind leisure of we've recovery. that

think back the need business return have we to to I of and demand going the to where holistically to of So we now continued be get XXXX, seeing are to evolution right in travel. you're see group which

Alexander Goldfarb

And your… what

Scott Kucinski

vertical. that's mean, D.C., mention come seeing different here I'll made back over in we're urban come quarter. just that Arlington, Anecdotally, and how mean I back differently they thinks the that that And business fall, travel travel strongly trajectory the markets, Alex, they'll mean, be that business had some I strong is at we other to of team continuing a demand urban this that seeing of -- prepandemic. I We're markets. it's pretty similar past of not have recovery little slower. bit the add.

lag direction. surge really markets So in the a the of seeing and and a couple others in of business right you're still but all travel it's few moving

Alexander Goldfarb

inflation travel? telling Is like T&E think the are And what companies holding do just Is business you what dial is back is -- their to Is where it back? it holding it recession? employees back? that

Scott Kucinski

you it's main but at I a travel. areas. only which being business few if back. But the relying have markets is are they're again, business mean, coming think look Philadelphia to certain travel, markets being and an all a behind continuing in market, back I hotels some really we I mean, pick they're that And not held relying on is on Airlift little at still up. airport urban really

So fuller are and as fuller. noted, you airports getting

build. missed. than just a it in recovery. think Arlington, more I noted events past that's It's but year, slow events They dated much aligned they and Houston more holding a increase. years mean So had I on a I don't the few longer anything citywide citywide that's just they've is is back. had this X kind steady a of

more next a that market as So hotel. is similar well. that that and citywide drive we'd of for And recovery Atlanta little year, I look really think events to

and recovery start Houston to as of between Atlanta those So city-wide in back of its is the build we're seeing middle in really well. but D.C. of the events pack kind terms

Alexander Goldfarb

then… Okay. And

Scott Kucinski

go ahead, -- we're But Alex. not

Alexander Goldfarb

Yes, helpful. that’s sorry. No,

lot. went a you through question is and Second guys

So confirming all deferred loans, So to sort end to interest to that sounds caught any going of of and by the payment by like that Is year-end. back the the that course end you all it modifications by being forbearance the year? or of service debt one sort, case? you’re normal principal payment be COVID the this of or anticipate anything fully year, of [ph] up

David Folsom

to the whole we're with the year it's very definitively going we've second you. a forbearance a left the behind in is of the half by Alex. be left and bit now And end got be right, legacy to of us. It's -- lot That's and not little year, that honest

Alexander Goldfarb

much for have to catch much how just how -- off how much So, paid is comparison, remaining you and up?

Anthony Domalski

is This as of go about have off about during numbers. had we left -- year. back There's Tony we We XX, here. million just got my probably and June $X check million million. $X about $X about the paid and I

the first... During

Alexander Goldfarb

then loans with you all need you do -- mean And on Alba Are the of loans? highlighted does obviously, other of then Okay. you terms. do improved Or loans, to outstanding doing any course, refinancing? on normal that refinancings normal the loan back all the that anything

David Folsom

we what just the the like. term that in published is calendar looks It's our structure No. Q

forbearance, is the into refinance one those And but up work there's that's on normal not I next any back Houston. assets think to be be of for some sort we're question. going -- your of that's to a negotiating we're if some done

Alexander Goldfarb

think this the final of -- these positive I then quarter, but And negative that you you’re as cash question doing. that’s you because forecasted last flow payments quarter, is Okay. we it’s had

accruing. which preferred the dividend You a hold still have is on

things of say, XXXX, think paying saying, starting, resumption the of equal, being Or be dividend? company back what But let’s goes, as can start You you’re about to based the is positive common far we we as scenario anticipate a by flow cash that that all aren’t ourselves? dividend. ahead should cash quarter getting right, should first in flow and on

David Folsom

let me one you point. Well, correct on

are -- right again, say, common We not paying not I'd now. we are dividends

Alexander Goldfarb

right. if thought yes, on that Right, I that. yes, spoke spoke if I can -- I

David Folsom

that. you yes, -- So know

paying we're the preferred. common. not So paying not We're

preferred. cure or X last hard said before we some issues at the on our to had, looking of last our call maybe the sheet we I had calls, As start balance we've

looking note give that to intention preferred you going amount Kemmons start Our we've where definitive significant to I But But paying do we how its right of that have the dividends. can't and now penalties, security exited Wilson a and/or at the date is we're preferred. and that. now, paid we're off

soon, normal goal But to for hope, you. I relatively -- the operations can more to So our common answer answer a would more would we be get a is back have paying is where we dividend. definitive

Operator

time, this CEO, there pass I'd questions. to are remarks. [Operator like Instructions] further over no for Folsom, David to final At now

David Folsom

with all you in we next listening today quarter. speaking to everyone look and for forward Thank

Operator

joining you, Thank call. conference today's everyone, for

may You now disconnect.

Sotherly Hotels (SOHO) 11 Aug 222022 Q2 Earnings call transcript