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1. Company Snapshot

1.a. Company Description

Sotherly Hotels Inc.is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States.Currently, the Company's portfolio consists of investments in twelve hotel properties, comprising 3,156 rooms, as well as interests in two condominium hotels and their associated rental programs.


The Company owns hotels that operate under the Hilton Worldwide, Hyatt Hotels Corporation, and Marriott International, Inc.brands, as well as independent hotels.Sotherly Hotels Inc.


was organized in 2004 and is headquartered in Williamsburg, Virginia.

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1.b. Last Insights on SOHO

Sotherly Hotels Inc.'s recent performance was driven by the announcement of a definitive merger agreement with a joint venture led by Kemmons Wilson Hospitality Partners and Ascendant Capital Partners. The acquisition, valued at $2.25 per share, has sparked investigations into the fairness of the sale to shareholders. Additionally, the company's Q2 2025 earnings conference call and financial results revealed a challenging operating environment. The refinancing of its Savannah hotel with a $42 million secured loan also contributed to recent developments.

1.c. Company Highlights

2. Sotherly Hotels' Q2 2025 Earnings: A Resilient Upscale Lodging Strategy Amidst Macroeconomic Headwinds

Sotherly Hotels reported a 3.7% decrease in total revenue to $48.8 million for the second quarter of 2025, compared to the same period in 2024. Year-to-date revenue was also down 0.1% to $97.1 million. Hotel EBITDA declined by 11.5% to $13.9 million for the second quarter and 4.4% to $26.8 million year-to-date. The company's actual EPS came out at $0.21, missing estimates of $0.34.

Publication Date: Aug -31

📋 Highlights
  • Q2 Revenue Decline:: Total revenue fell 3.7% to $48.8M, with YTD revenue down 0.1% to $97.1M.
  • Hotel EBITDA Drop:: Q2 EBITDA declined 11.5% to $13.9M, and YTD fell 4.4% to $26.8M.
  • Full-Year Revenue Guidance:: Projects $185.2M–$188.2M (+2.6%) but EBITDA at $45.3M–$45.8M (−2.6%).
  • Adjusted FFO Forecast:: Anticipates $6.9M–$7.5M ($0.34–$0.37/share) for 2025.
  • Asset Sales & Liquidity:: Pursuing sales of parking garages and hotels amid high debt yields and cautious lending.

Operational Challenges and Macroeconomic Headwinds

The company attributed the lower performance to RevPAR softness, particularly in Savannah, Atlanta, and Jacksonville, due to macroeconomic headwinds such as DOGE-related spending cuts and tariff policies. Despite these challenges, Sotherly highlighted the resilience of its higher-end travelers and maintained rate discipline, as evident from its year-to-date revenue performance.

Guidance and Outlook

For the full year 2025, Sotherly projects total revenue in the range of $185.2 million to $188.2 million, representing a 2.6% increase. Hotel EBITDA is projected to be between $45.3 million and $45.8 million, a 2.6% decrease. Adjusted FFO is expected to be $6.9 million to $7.5 million, or $0.34 to $0.37 per share. The company's guidance reduction reflects their current forecast for the year, taking into account trends in both group and leisure travel.

Valuation and Key Metrics

With a P/E Ratio of 9.04 and an EV/EBITDA of 8.18, the market appears to be pricing in a moderate level of growth for Sotherly Hotels. The company's ROE stands at 3.6%, while its Net Debt / EBITDA ratio is relatively high at 7.84. Analysts estimate next year's revenue growth at 2.4%, indicating a slow but steady recovery.

Liquidity and Capital Management

Sotherly is actively exploring asset sales, including parking garages and potentially hotels, to raise liquidity. The company is navigating a challenging mortgage market for hotels, attributed to high debt yields, stricter covenants, and lenders' cautiousness following the pandemic. Despite these challenges, Sotherly sees signs of improvement in the lending environment, with debt yields stabilizing and interest rates decreasing.

3. NewsRoom

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3 REITs That Big Money Might Snap Up Soon

Dec -04

Source: seekingalpha.com

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The State Of REITs: November 2025 Edition

Nov -18

Source: seekingalpha.com

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Sotherly Hotels Inc. (NASDAQ:SOHON) Sees Large Growth in Short Interest

Oct -30

Source: defenseworld.net

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SHAREHOLDER ALERT: The M&A Class Action Firm Announces An Investigation of Sotherly Hotels Inc. (NASDAQ: SOHO)

Oct -27

Source: prnewswire.com

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SOHO Stock Alert: Halper Sadeh LLC Is Investigating Whether the Sale of Sotherly Hotels Inc. Is Fair to Shareholders

Oct -27

Source: businesswire.com

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Sotherly Hotels Inc. Announces Deferral of Payment of Preferred Dividends

Oct -27

Source: globenewswire.com

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SOHO Stock Alert: Halper Sadeh LLC is Investigating Whether the Sale of Sotherly Hotels Inc. is Fair to Shareholders

Oct -27

Source: globenewswire.com

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Sotherly Hotels Inc. to be Acquired by Joint Venture Backed by Kemmons Wilson Hospitality Partners and Ascendant Capital Partners

Oct -27

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Rooms

Expected Growth: 4.5%

Growing demand for luxurious accommodations, increasing business travel, and rising disposable income drive the growth of Sotherly Hotels' rooms segment, offering modern amenities and exceptional service.

Food and Beverage

Expected Growth: 4.5%

Growing demand for unique culinary experiences, increasing focus on experiential travel, and rising disposable incomes drive growth in Sotherly Hotels' Food and Beverage segment.

Other

Expected Growth: 4.5%

The 'Other' segment of Sotherly Hotels Inc. is expected to grow driven by increasing demand for ancillary services such as parking, laundry, and other amenities. This growth is fueled by rising occupancy rates, growing tourism, and the company's strategic efforts to enhance the guest experience.

7. Detailed Products

Hotel Rooms

Sotherly Hotels Inc. offers a range of hotel rooms, from standard rooms to suites, equipped with modern amenities and comfortable furnishings.

Meeting and Event Spaces

The company provides meeting and event spaces, including conference rooms, ballrooms, and outdoor spaces, equipped with state-of-the-art audiovisual equipment and catering services.

Food and Beverage Services

Sotherly Hotels Inc. offers a range of dining options, including restaurants, bars, and room service, serving a variety of cuisines and beverages.

Recreational Facilities

The company provides recreational facilities, including fitness centers, swimming pools, and spas, for guests to relax and unwind.

Wedding and Social Event Planning

Sotherly Hotels Inc. offers wedding and social event planning services, including customized packages and dedicated event coordinators.

Business Center Services

The company provides business center services, including computers, printers, and office supplies, for guests to stay productive during their stay.

8. Sotherly Hotels Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Sotherly Hotels Inc. is medium due to the presence of alternative accommodations such as Airbnb and vacation rentals.

Bargaining Power Of Customers

The bargaining power of customers is high due to the high demand for hotel rooms and the ability of customers to easily compare prices and amenities online.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the availability of multiple suppliers for goods and services, giving Sotherly Hotels Inc. the upper hand in negotiations.

Threat Of New Entrants

The threat of new entrants is medium due to the significant capital requirements and regulatory hurdles involved in entering the hotel industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the hotel industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 86.58%
Debt Cost 5.10%
Equity Weight 13.42%
Equity Cost 12.02%
WACC 6.03%
Leverage 644.98%

11. Quality Control: Sotherly Hotels Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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RLJ Lodging

A-Score: 6.1/10

Value: 8.3

Growth: 4.7

Quality: 6.1

Yield: 8.0

Momentum: 2.5

Volatility: 7.0

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Chatham Lodging

A-Score: 5.5/10

Value: 6.2

Growth: 5.3

Quality: 4.7

Yield: 6.0

Momentum: 2.5

Volatility: 8.0

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Braemar Hotels & Resorts

A-Score: 5.1/10

Value: 9.1

Growth: 3.0

Quality: 3.7

Yield: 9.0

Momentum: 3.0

Volatility: 2.7

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SVC

A-Score: 4.9/10

Value: 9.8

Growth: 3.2

Quality: 5.2

Yield: 6.0

Momentum: 1.5

Volatility: 3.3

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Pebblebrook Hotel

A-Score: 4.1/10

Value: 8.2

Growth: 4.4

Quality: 3.3

Yield: 0.0

Momentum: 3.5

Volatility: 5.0

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Sotherly Hotels

A-Score: 2.6/10

Value: 7.2

Growth: 4.0

Quality: 3.2

Yield: 0.0

Momentum: 1.0

Volatility: 0.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.17$

Current Price

2.17$

Potential

-0.00%

Expected Cash-Flows