Sotherly Hotels Inc. Reports Second Quarter Results
Sotherly Hotels Inc. (NASDAQ: SOHO), a self-managed lodging real estate investment trust, has announced its financial performance for the second quarter. The results highlight the continued impact of the current economic climate on the hospitality industry. For the three months ended June 30, 2025, Sotherly's total revenue fell to approximately $48.8 million from about $50.7 million for the same period last year. Additionally, net income attributable to common stockholders reported a loss of approximately $416,000, compared to a net income of about $2.6 million in the prior year.
Operational Highlights
RevPAR Trends
Room revenue per available room (RevPAR) for Sotherly's portfolio decreased by 5.4% to $130.20 compared to $137.67 last year. This decline was primarily driven by a decrease in occupancy rates, which slipped to 70.8%, down from 73.4% during the same quarter of 2024. The average daily rate (ADR) also saw a slight decline to $183.88.
Financial Metrics Overview
For the first six months ending June 30, 2025, total revenue was about $97.1 million, just shy of the $97.2 million recorded last year. The company noted that net income attributable to common stockholders for this period increased slightly to approximately $2.3 million, marking a 15.9% growth over the $2.0 million reported the prior year.
EBITDA Performance
The company's EBITDA is another area of focus, with figures dropping to approximately $12.0 million in Q2 2025, compared to $14.3 million during the same period last year. For the year's first half, EBITDA reached around $25.1 million, reflecting the ongoing challenges faced by the hospitality sector.
Preferred Dividends and Cash Flow Management
On July 24, the company announced its quarterly cash dividends for its preferred shares. A payment of $0.50 per share is scheduled for November 2025. Despite the losses reported, Sotherly Hotels is working diligently to address its financial commitments, including extending certain mortgage obligations and exploring refinancing options for properties with significant equity.
Comments from Leadership
Dave Folsom, President and CEO, remarked, "During the second quarter, we have experienced a general slowdown in hotel demand across our portfolio, reflecting broader economic uncertainties and changes in market dynamics. However, we did note some resilience in our business transient segments and group bookings, which remained relatively stable compared to previous years."
Balance Sheet and Liquidity Overview
As of June 30, 2025, Sotherly Hotels held around $26.5 million in cash and cash equivalents, with $16.0 million of that reserved for various operating expenses and capital improvements. The company’s debt stood at approximately $315.8 million at a weighted average interest rate of 5.89%.
Future Outlook
Looking ahead, Sotherly Hotels has revised its financial guidance for 2025, estimating total revenues within the range of $183 to $188 million. The company aims to navigate the uncertainties in the macroeconomic environment while maintaining operational efficiency within its assets.
Frequently Asked Questions
What were Sotherly Hotels' revenues in Q2 2025?
The reported revenues fell to approximately $48.8 million, down from $50.7 million in Q2 2024.
How did the company's net income perform in the recent quarter?
Net income attributable to common stockholders was a loss of approximately $416,000 in Q2 2025.
What factors contributed to the decline in RevPAR?
A decrease in occupancy rates and a slight reduction in the average daily rate were the main drivers behind the decline in RevPAR.
How is Sotherly Hotels managing its debt?
The company is exploring options to extend mortgage maturities and refinance properties with significant equity.
When are the next preferred dividends scheduled for payment?
The next preferred dividend payments are scheduled for November 2025.
