SOHO - Earnings call transcript Q3 2024

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Operator

Good morning, all, and thank you for joining us at the Sotherly Hotels' Q3 2024 Conference Call and Webcast. My name is Carly and I'll be coordinating your call today. [Operator Instructions]. I'd now like to hand over to your host Mack Sims, Vice President of Operations.

Mack 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 which comparable has to company Any statements. statements with release, non-GAAP this requirements. historical, In measures conference may during financial forward-looking call, Reg reconciled G the not measure GAAP all directly made in are accordance most the constitute

these expectations based give believe the reflected will that on no assumptions, we forward-looking are in Although statements obtained. can reasonable we assurance expectations be any

Factors that any undertake from filings today's company's to risks duty a statements. are by can and time to cause or the not in differ those forward-looking with to update actual the materially press detailed forward-looking implied from in results release SEC. and expressed revise The or time does statements company

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

Scott Kucinski

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

portfolio for ADR. increase Looking in in a decrease at X.X% the X.X% RevPAR Composite occupancy a results third and the X.X%, compared by XXXX, quarter driven increased to

third -- the represents increase to XX.X%, occupancy driven in period of a increase occupancy a Composite over by of X.X% portfolio rate. X.X%. ADR results RevPAR performance in increased and at Looking X.X%, for XXXX, decrease by down was same the while Year-to-date, growth quarter RevPAR The the relative X.X% an in XXXX, driven X.X%

to ADR composite the -- decline relative growth X.X%. occupancy for XXXX. and driven was XX.X% of results year-to-date portfolio the at of up RevPAR Moving X.X%, by The

expectations. were driven occupancy our in with third portfolio's results quarter growth our strong Overall, line by

decline has encouraging is signs ADR fundamentals our as gains to travelers for that to price continued partially notable a occupancy portfolio's demonstrated leisure growth, Our quarter's The growth. lodging slower X% due by by our offset sign slowing stabilized. sensitivity were of occupancy in recover economic markets, urban an highlighted portfolio

physical Hurricane Georgia. Florida third impacted operations The in Helene August, affecting our impact which our Hurricane September, Tampa, third Savannah. as asset well The to Jacksonville quarter. last asset during Debby, will caused as the substantial of of recovery financial process our our in early operations the fourth this detail to damage later and our as Two the week I hotel, no damage moderately well in and occurred impact quarter, Tampa Savannah the during but storms the during Tampa significant in bulk quarter, Jacksonville. my caused which storm Tampa, Hurricane during major in occurred hotels, occurred impactful Helen's more occur operational our will on and as impact remarks.

Looking a the well-balanced over its at third the highlights year-over-year, gain continued with XX% quarter results, Alba Alba growth Hotel by growing and RevPAR Despite during year. a of posted fueled prior the XX.X% during with and along the impact travel group, occupancy by across contract. approach mix hurricane-related which Tampa commendable Hotel XX.X%, high-rated portfolio. grew quarter, business by third some impressive an from

quarter. the during Hotel the increase at occupancy noted, by its our year as locations The set XX.X%. RevPAR the easily performance -- XX.X% a improved by share, urban the growing quarter, outperformed during Driven competitive in of half during its continued first Alba index third the

third and growth quarter. XXX Our calendar, a to citywide business DoubleTree occupancy. in Hotel in during XX.X% hotel's the travel XX% by The Philadelphia increased quarter, point a RevPAR gain driven grew a share robust by more RevPAR during occupancy the by gain driven basis strong led

the predominantly Whitehall's the as business growth improvement segment prior built year. occupancy results, Houston The transient competitive the share. second continued property's well RevPAR was a share occupancy driven XX.X%, a sign easily quarter, by outperformed in occupancy its strong encouraging index increase by an improving growth XX%, by Whitehall XX.X% The demand, set XX.X% growing nearly as growth in in the on resulting driven during for in citywide Whitehall a The by quarter in improved RevPAR prospects. the over

to by despite Arlington and a high X.X% diverse hotel in drawing in level, at Centric budgeted perform number group quarter. decline a travelers. expectations transient RevPAR market, achieved strong outperforming growing X.X% continues and a slight business the drivers from during the a business demand occupancy Hyatt especially gain, The The rate of

Atlanta average EBITDA Philadelphia cost additional portfolio. margin revenue. the as moderate points metrics the prior Hotel at stabilized down XX occupancy occupied rate per the declined, and The profitability basis quarter. our in quarter in third in portfolio room, at EBITDA driving for margins decline over hotels the high-margin year non-room rates improving out Looking have improvement despite with by while for hotel balance portfolio's Houston, the allowing for

normalized amenity forward, Going stable and by impacted decline we a wage labor expect along positively to with stabilized are costs, staffing result levels in relatively contract which margins. in

take record storm the its will of on impact, did job keeping commendable team fourth hurricane during Despite to over surge from seeking during a Bay occurred X largest impact shelter property year. residents the previous feet. majority storm. category of the operating the by X quarter, our eclipsing record, the open While quarter sizable the third storm's the Tampa operational area's place The the this Hurricane caused Helene

this good clean due Despite to furniture, areas systems. floor surge, to the currently has at expeditious the of well hotel first As intrusion full damage hotel, an Hotel the building as equipment damage remained effort a damage, is and open guest mitigate and and the restoration up and a some pace. Alba as to progressing storm causing sustained rooms and on finishes result of the water public

as business Hotel the the first to Alba Helene the of to events. physical XXXX. expect result impact We result through quarter operations as as a interruption of insurable at well fully impact hotel are Hurricane in

major Milton X major the second Helene, storm, Florida just damage A area. in Tampa after Hurricane wind causing weeks struck Bay

hours approximately result before of welcoming the for back evacuation, a mandatory first Hotel property. and XX residents closed As to Alba the places responders to city's is

did additional note. any Milton, Hurricane to damage sustain during not Hotel Fortunately, Alba

corporate in loan, Hilton an $X.X at additional hotel floating initial Jacksonville, now a the the on we hotels. carried based to activity. The a July, an of Turning to announced Riverfront on principal balance plus as DoubleTree executed million fund with product interest SOFR available plan million $XX.XX X%, Jacksonville Florida. loan company In that secured the rate by which improvement the

The company soft-branded Bellamy. name franchise also XX-year into the announced that a Hotel, our under Jacksonville Worldwide new to by Hotel with it's relicense Hilton entered Hilton DoubleTree agreement

part relaunch January XXXX. As and million of the date for company hotel, complete property approximately a estimated completion undertake of with $XX.X a the cost its will the renovation of efforts of an

a a for include its guest as Renovation rooms, food Riverfront property concept. complete pooling transformation offerings addition will of existing exterior, beverage of spaces, public the dining new well the and as building plans sundeck,

will to over now the turn Tony. I call

Anthony Domalski

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

an for same of quarter, million, XXXX. period For total representing approximately approximately an $XXX.X over same representing revenue the over the third the quarter was second or of quarter X.X% in increase million, the revenue $XX.X increase X.X% -- last Year-to-date, total was year.

representing X.X% quarter $XX.X in same year. Hotel last the quarter EBITDA the million, hotel -- million, over was for year-to-date, and approximately increase representing from approximately increase of X.X% of XXXX an an same EBITDA and the was period $X.X

$XX.X quarter the adjusted of increase a FFO period approximately over quarter, last was $XXX,XXX, Year-to-date, approximately representing of in FFO of a million, adjusted representing deficit the approximately year. $XXX,XXX X% XXXX. decrease was an the same same For from

and note ESOP charges to the unrealized stock abandoned extinguishment debt, offerings, and to other or securities compensation derivative FFO instruments, early our related adjusted as Please losses as that excludes aborted of expense well related on gains items. charges

income provision as earnings as well general interest current Please corporate, Hotel our well. other and items gains charges for on and expense, of EBITDA refer instruments, excludes the losses interest to expenses, as and our realized additional administrative these detail. income, release derivative portion tax

balance Looking at our sheet.

interest quarter, rate a approximately of weighted of average account the of cash the certain the XX, rate As million debt X.XX% of improvements million, of fixed unrestricted balances total into of insurance, a $XX had had end at $XX.X items. interest the September in and real taking cash well we approximately other approximately debt approximately for cash million of carried At interest $XXX.X as $XX.X of of equivalents company's capital principal which consisting hedges. estate taxes, was and XX.X% company rate reserved as the company's outstanding million, when

to We equipment Airport to $X.X approximately anticipate XXXX. The fixtures million we to routine expenditures with anticipate for improvement capital for year, expenditures this related year $X calendar Hilton, furniture, total be for project Philadelphia the and the approximately and beginning product refurbishment DoubleTree anticipated plan replacement previously by as of announced, this at the year. capital a million --

revenue the range including million DeSoto the year of refinance within Hotel weather-related Hilton the and updating our previous of in year. guidance, Savannah At the and full taking DoubleTree increase We're on for prior total the account into current on the this Hurricane million midpoint guidance. trust $XXX.X performance to conditions, represents 'XX. for in We're for to Jacksonville $XXX.X XXXX, the X% market a of the Turning over accounting the portfolio, mortgage events, Riverfront, second by expected Helene. guidance projecting

represents EBITDA midpoint And guidance, Hotel last at in the increase million. year. this of is projected the million a $XX the of to range X.X% $XX.X over

the it in a decrease $X.XX projected range represents the midpoint million share. is $X.XX of $XX.X and FFO At year. adjusted prior X.X% the guidance, to this or over million Lastly, $XX.X of a

Dave. now I'll the And to call over turn

David Folsom

occupancy period. and which morning, urban Overall, everyone. slower Philadelphia occupancy recover strong portfolio's with markets. fundamentals third was which healthy further stabilize were highlighted during our in with to Tony, good urban nearly our by to X% business the were we prior you, quarter Houston, particularly by characterized Thank year pleased performances hotels, continue results, and The in X, over improvement improvement,

season, markets. offset by at storms, moderation which our summer coastal strong negatively a business of by from impacted drive Despite major leisure this was travel slower-than-expected leisure group was disruptions demand

margins softening rate pleased our quarter, our some to ability and we were gaining RevPAR the from versus competitive experienced While while with solid perspective line sets. very portfolio share managers' achieve growth during our bottom a

Tampa during of of open experiencing the remained Despite a the resulted remediation our hotel Hurricane experienced quarter, and in commenced As casualty hotel a hotel immediately. major Helene. we a Scott and the floor on and result systems week that mentioned, our its flooding at interior last casualty ground spaces in to restoration as material

event this efforts minimized handling impact be in recognized Our to staff a partners and commendable their operations. which for manner, streamlined in should

the hotel the through remains insurance. The while and business a recover lost to remains company revenues target, moving timing interruption open, expects

third at our the improvement quarter urban nearing are period. an stabilization, occupancy that recovery is uneven during The encouraging sign an locations hotels following these

during Philadelphia our validating year, these nearly prior fact, quarter, Houston, in our third of to the and million regarding over recover assumptions assets. hotels in $X Atlanta recovery prior growth delivered bottom X In slow line the

refocused hotel's strategy as the the The a as market. the Whitehall's sales gain year-over-year Houston XX% to of occupancy is testament Downtown improved health well

the to valuable Root Importantly, X Brown are the which hotel, have and hotel's most levels. pre-pandemic clients, & normalized adjacent being Chevron Kellogg to located

showed In tremendous over addition, the improving business growth, by group prior at year. Whitehall XX%

the the quarter the during at XX% to Philadelphia active year-over-year increase DoubleTree more as with strong calendar. was and a -- Whitehall, coupled occupancy a Similar nearly our travel citywide Airport in Hotel experienced business

While progress of real showing will slow follow the trajectory, coming likely is period an to continue uneven City of recovery Philadelphia following the growth pandemic. a out this market

to tracking bottom points an quarter, line in performances the hotel, the Georgian the at the points deliver year. team grew Despite and flow maintain RevPAR. lower-than-expected upside of impressive the XXX the XXXX's Terrace Terrace was behind Philadelphia prior Georgian basis over Houston bottom level during basis able excellent was for there's the Atlanta XXXX's ADR of this which plenty Contributing occupancy solid below experienced segment still opportunity hotel's results solid to these XX% strong hotels, Though tracking results. management line with group and XXX

still Moving of occupancy has below its growth Georgian basis period points believe as XXXX. quarter forward, was that X,XXX more than third Terrace the comparable we opportunities. plenty rate in

picture pacing total for Looking the X.X% group ahead full of bookings balance year. solid of at prior with the the year portfolio, remains year. the

outcome, our hotel properties. allowing terms sheet balance markets the the refinancing encouraged cycle especially of for to We the were conditions meet given with our during favorable the its capital improvement we for us life the mortgage Fifth and challenging lending Jacksonville commercial and successful as Bank in needs funding Third quarter, view On front, the plan. by a refinance

value. Tampa, poised to similar repositioning which hotel We lifestyle competitive the growth strategy will significant believe created over to downtown years. more repositioning become is be recent strategy several employed next Jacksonville in in believe dynamic has This the our to a the market, Alba the allow which significant at hotel strategy we Hotel for will the

continue few will over we to for ahead, portfolio our are which conservatively years. approach next Looking evenly upcoming maturities debt the spread

balance of fundamentals in XXXX, fourth broader indicator year. outperform look for to at operating upper cautiously portfolio. Upscale lodging are encouraging optimistic upscale regarding the an the the near we and expected for the our we are hotels term, As quarter market the of

and RevPAR portfolio returns shows segments our RevPAR. improvement with production coupled for continued of believe XXXX between business X.X% by year portfolio. year, fueled urban for RevPAR of continued portfolio our XXXX the Full October will XXX% prior full XXX% lifted and is growth in across Preliminary strong hotels, range deliver well-positioned We shareholders. a improvement at over year our group hotels to the solid forecasted our that transient by group

call for the any with operator, questions. can And we up that, open

Operator

Instructions]. [Operator

Our first comes from of question Goldfarb Sandler. Alexander Piper

Alexander Goldfarb

sort everything like sounds of Dave, back I to XXXX. it mean, is

said, urban, good in you I improvement everything. think guys group, what business that's

a Do maybe performing that also do you you fair think in or back portfolio XXXX? to So, were exceeding And where is think it's the statement? XXXX? is -- that you overall even

David Folsom

is as portfolio be room the and think on things as that's business and I continue we lot have what to well, we RevPAR. once the Well, was our where maybe of the a additional for left still to and that column, the bookings, get out and additional going of occupancy did so was growth continue to Tony Scott one mentioned, transient round group bookings I

throughout think It's seeing underperforms to opportunity get we're the occupancy far I our back online. portfolio, XXXX. So still the

Alexander Goldfarb

damage. go can And hurricane Okay. just through back the you then

more as end, insurance Scott, reimbursed? it's back works the impact also you in that but of see what's think, be earnings flow mentioned recovery doesn't explain versus earnings? as Can just what in how far you quarter. an that that you'll we'll meaning what's through in fourth on I earnings, And

David Folsom

blow report be quarters to hotel short interruption the by have payment Yes. the true to that months might same is but on also at we're lag X how corporate that as carriers respond the our the the of answer a the for going time, we're give P&L everything you be the will to appear up. I'll earnings at a let Scott business going There the X will into blow, and to depending unfold, level.

recovered you the But insurance the going It's to be short at casualty a to time. to have that transparent see the it because some of XX be from later is at form the will answer be then impairment might and interruption year or hotel impairment quarter, it we're of not in now, same business days. or it XX everybody. all XX going if And happens in will the a

Alexander Goldfarb

we that a... you just like is that $X.XX, can quantify $X.XX, that? a -- But so have Is $X.XX,

Scott Kucinski

try Yes. here. clarify I mean X to different to things

course of in Hurricane the hurricanes So of were Hurricane through for none those were that we hurricanes, blown the just impact as had Tampa, quarter, events. and Southeast. Helene those over lost the mentioned, third had had I insured X operational several on business the properties portfolio. Debby We Besides our time

about probably recoverable, impact that company that $X.XX the third quarter relates just is in lost AFFO to not So in for the from that the storms.

the to to as third from the proceeds book specifically, relates Helene that not guidance end going into quarter. Hurricane that the are Tampa by the because again, in damage and in our quarter that For quarter going interruption -- receive the expectation of to forward, we're we the is quarter it business our forecasting the that for

that right out happen, our report now, whole. and expectation. essentially that's lost the have obviously fully that quarter, expectation there variances and impact So made BI us therefore, our were our a proceeds the If expectations. we'll detail to compensate for doesn't when we But fourth is we'll any

the not that So of hurricane. adjusting on in based seeing as Tampa current a guidance result impact we're we're the

Anthony Domalski

expecting for on picture through you This And good get a for what get is when our profit. the a little reimbursed in then business by you with and late recovery is you first we'll earnings Tony the to carriers of where you have as and bit might because that reimbursed revenue, the gone get the top see February, for net reimbursed I amount the think of quarter. March, fourth report that for we the of we're process line impact was we'll maybe interruption, don't have time

will approximately think do the expect been don't I the we earn. we to And last performance this expected that quarter be what financial it year's would have aberration to property. had for fourth an

that. the for we'll able I So carriers get think to be board on

we see really to adjusted that on Helene resultant Hurricane any as FFO. So on see of to and FFO Scott for the said, the on to loss -- We EBITDA. expect expect see as impact impact hotel don't don't any We don't any -- for expect impact business.

Alexander Goldfarb

final helpful. just Okay. then And That's question. the

mortgage think for on the second Again, leverage improvement I related if But topic the but that? just be DeSoto, would The the this mortgage -- quite has this on or second steadily I it. would while, reduce thinking been just the you million just some walk behind view $X a package curious, through would thoughts can discussed the we've to over a is to time.

Scott Kucinski

of Yes, restoration improvements the related going on it's that that's the for a major facade years the was restoration an had of at couple project. brick facade XXXX replacing for all brick been essentially exterior directly property, to due building the and property. building, the to a now at We project some

a lender leverage up it of point solely low a fund to projects. that increase still has on tied was the ton restoration built with a the bit little leverage on help ultimately, to worked the that project, ultimately So equity that But hotel to asset. that it, in

from a out asset [ ]. financing into pulled the we the So back dollars went

Operator

no questions. have currently further We

remarks. Folsom, any like would hand Dave closing to CEO, for I to So back

David Folsom

listening today, quarter. talk everyone we'll to next Thank you, you for and operator, and thanks to

Operator

you Thank everyone call. joining. for to today's concludes This

disconnect You may lines. now your

Sotherly Hotels (SOHO) 12 Nov 242024 Q3 Earnings call transcript