NASDAQ:SOHO Sotherly Hotels Q1 2024 Earnings Report $0.74 +0.01 (+1.08%) Closing price 03:34 PM EasternExtended Trading$0.74 +0.00 (+0.27%) As of 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Sotherly Hotels EPS ResultsActual EPS-$0.03Consensus EPS $0.21Beat/MissMissed by -$0.24One Year Ago EPS$0.24Sotherly Hotels Revenue ResultsActual Revenue$46.55 millionExpected Revenue$45.80 millionBeat/MissBeat by +$750.00 thousandYoY Revenue GrowthN/ASotherly Hotels Announcement DetailsQuarterQ1 2024Date5/9/2024TimeBefore Market OpensConference Call DateThursday, May 9, 2024Conference Call Time10:00AM ETUpcoming EarningsSotherly Hotels' Q1 2025 earnings is scheduled for Tuesday, May 13, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Sotherly Hotels Q1 2024 Earnings Call TranscriptProvided by QuartrMay 9, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Welcome to the Sotherly Hotels Q1 2024 Earnings Call and Webcast. My name is Lauren, and I will be coordinating your call today. There will be an opportunity for questions at the end of the presentation. I will now hand you over to your host Maxim, Vice President, Operations to begin. Please go ahead. Speaker 100:00:24Thank you and good morning everyone. If you did not receive a copy of the earnings release, you may access it on our website at sotherlyhotels.com. In the release, the company has reconciled all non GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Any statements made during this conference call, which are not historical, may constitute forward looking statements. Although we believe the expectations reflected in any forward looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained. Speaker 100:00:56Factors and risks that can cause actual results to differ materially from those expressed or implied by forward looking statements are detailed in today's press release and from time to time in the company's filings with the SEC. The company does not undertake a duty to update or revise any forward looking statements. With that, I'll turn the call over to Scott. Speaker 200:01:15Thanks, Mac. Good morning, everyone. I'll start off today's call through a review of our portfolio's key operating metrics for the Q1. Looking at the Q1 results for the composite portfolio compared to 2023, RevPAR increased 3.8%, driven by a 7.5% increase in occupancy and a 3.3% decrease in ADR. Looking at the Q1 results for the composite portfolio relative to 2019, Q1 RevPAR was up 1.4% driven by ADR growth of 9.3% and occupancy down 7.2%. Speaker 200:01:49This occupancy gap to pre pandemic levels reflects the significant upside for the portfolio moving forward. Overall, our portfolio's 1st quarter results, which were driven by strong occupancy growth, outperformed both top and bottom line budget expectations. The notable growth in occupancy indicates lodging fundamentals across our portfolio are nearing normalization following the uneven post pandemic recovery period. Although the impressive occupancy gains were partially offset by a 3.3% decline in ADR, this drop in rate was almost entirely isolated to our South Florida properties. Our group focused properties continue to be a key catalyst of growth for our portfolio as our Wilmington Savannah Hotels, both of which easily outperformed prior year RevPAR, led the segment during the quarter. Speaker 200:02:34The DeSoto Savannah was particularly noteworthy with 1st quarter RevPAR outperforming prior year by 11% and outperforming Q1 2019 by nearly 32%. The Hyatt Centric Arlington driven by strong year over year growth in the group and corporate segments, continued to fire on all cylinders during the Q1. The property outpaced the prior periods RevPAR by 6.7%, driven by a 3.8% increase in occupancy and a 2.7% increase in rate. First the comparable period in 2019, RevPAR improved by 12.7% with occupancy flat and ADR up 12.7%. The property continues to be the leader in its competitive set, achieving a RevPAR index of over 124% during the Q1. Speaker 200:03:18The continued strength of our group focused hotels was coupled with a long awaited breakthrough and business transient performance at our slow to recover urban hotels in Atlanta and Houston during the Q1. The Georgian Terrace in Atlanta has management team's efforts to drive increased corporate and association business to the hotel proved successful during the quarter as occupancy improved more than 25% over prior year. In addition, the potential for recovery in the film industry business segment presents additional growth prospects moving forward. The Whitehall and Houston improved its RevPAR by nearly 21% over prior year, which was fueled by nearly 22% gain in occupancy. The Whitehall's occupancy improvement was predominantly driven by growth in the transient business segment, which was up the prior year by nearly 30%, an encouraging sign of recovery for the hotel in the downtown Houston submarket. Speaker 200:04:09We are optimistic the recent momentum in Atlanta and Houston will carry forward as the pre pandemic occupancy gap that remains at these hotels present significant upside opportunity. Looking at profitability metrics for the portfolio. Although hotel EBITDA margins for the Q1 2024 were 120 basis points below prior year, the decline was solely tied to increased property insurance costs in Q1 2024 versus prior year. With our insurance renewal that occurred April 1, we are pleased to say the insurance markets have softened a bit and our costs have been reduced. With our Amendi offerings now fully open, staffing and wages stabilized and reduction in insurance costs, we expect margins to normalize going forward. Speaker 200:04:52Turning to corporate activity. Last week, we announced the company executing an extension on its first mortgage loan for the Double Street Philadelphia Airport Hotel. The interest only loan, which has been reduced by $3,000,000 to 35,900,000 matures in April 2026 and carries a floating interest rate based on SOFR plus 3.5%. As part of this transaction, we purchased an interest rate cap capping sulfur for a portion of the loan at 3%. In addition, we announced that the company entered into a 10 year franchise agreement with Hilton Worldwide to relicense the hotel under the DoubleTree by Hilton flag. Speaker 200:05:26As part of the new agreement with Hilton, the company will undertake a renovation of the property with an estimated cost of approximately $11,500,000 and estimated completion date of April 2026. Renovation plans for the property will include upgrades to guest rooms, public spaces, food and beverage spaces and the building's exterior. Lastly, in April, we announced the company executed a $35,000,000 secured loan with city real estate funding on the Hotel Alba in Tampa, Florida. The interest only loan matures March of 2029 and carries a fixed interest rate of 8.49%. This refinancing represents a combination of our repositioning strategy, which created substantial value for the hotel and resulted in cash proceeds of over $10,000,000 to the company. Speaker 200:06:09With that, I'll turn the call over to Tony. Speaker 300:06:11Thank you, Scott. Reviewing performance for the period ended March 31, 2024. For the Q1, total revenue was approximately $46,500,000 representing an increase of 7% over the same quarter last year. Hotel EBITDA for the quarter was approximately $12,400,000 representing an increase of 2.3% over the same quarter last year. And for the quarter adjusted FFO was approximately $4,500,000 representing an increase of approximately 11.2% over the same quarter in the prior year. Speaker 300:06:46Please note that our adjusted FFO excludes charges related to the early extinguishment of debt, unrealized gains and losses on derivative instruments, charges related to aborted or abandoned securities offerings, ESOP and stock compensation expense as well as other items. Hotel EBITDA excludes these charges as well as interest expense, interest income, corporate G and A expenses, realized gains and losses on derivative instruments and our income tax provision and other items as well. Please refer to our earnings release for additional detail. Looking at our balance sheet as of March 31, 2024, the company had total cash of approximately $39,600,000 consisting of unrestricted cash and cash equivalents of approximately $29,300,000 as well as approximately $10,300,000 which was reserved for real estate taxes, capital improvements and certain other items. At the end of the quarter, we had principal balances of approximately $328,000,000 in outstanding debt at a weighted average interest rate of 5.8%. Speaker 300:07:53Approximately 83.9 percent of the company's debt carried a fixed rate of interest. As we enter a more normalized operating environment, we anticipate routine capital expenditures for the replacement and refurbishment of furniture fixtures and equipment to be more in line with historical norms And we estimate these capital expenditures will amount to approximately $7,000,000 for calendar year 2024. As announced last week, we anticipate beginning a product improvement plan at the DoubleTree by Hilton Philadelphia Airport. We anticipate capital expenditures related to this project to total approximately $3,000,000 this fiscal year. We are reiterating guidance with a forecast of anticipated results for the full year previously disclosed in March. Speaker 300:08:39Our guidance considers market conditions and accounts for current and expected performance within the portfolio. We're projecting total revenue in the guidance, this represents a 4% increase over the prior year. Hotel EBITDA is projected in the range of $46,100,000 to $46,900,000 Speaker 200:09:04and at the midpoint of Speaker 300:09:05the guidance, this represents a 3.8% increase over prior year. Adjusted FFO is projected in the range of 12 point dollars to $13,800,000 or $0.64 to $0.69 a share. At the midpoint of the guidance, this represents an 8.7% decrease over prior year. The year over year decrease in adjusted FFO is mainly due to increased interest expense in 2024 and one time benefits in the prior year for successful real estate tax appeals at our properties in Savannah and Hollywood. I will now turn the call over to Dave. Speaker 300:09:40Thank you, Tony and good morning everyone. Speaker 400:09:42We were pleased with the Q1 results for our composite portfolio, which achieved 3.8% RevPAR growth over prior year. These strong year over year results were especially encouraging given the timing of the Easter holiday weekend shifting from the Q2 to the Q1 this year. Occupancy was the driver of RevPAR growth as we experienced continued strength in group travel at our properties in Savannah, Arlington and Wilmington, which performed historically well during the quarter. The excellent performance of these hotels was coupled with significant improvements at 2 of our hotels in slower to recover urban markets, Houston and Atlanta. The return of group and transient corporate travel at these hotels is a positive sign that we have reached a more normalized operating environment driven by a diverse range of demand generators. Speaker 400:10:35Despite the strong year over year occupancy improvement for our portfolio during the quarter, we believe there is still significant opportunity for organic growth, especially given our exposure to several urban markets that have been slower to recover. More than half of our portfolio is still tracking below pre pandemic occupancy levels with our hotels in Atlanta, Houston and Philadelphia having the most opportunity for improvement moving forward. As mentioned, 2 of these hotels, the Georgian Terrace and the Whitehall in Houston are making significant headway penetrating their respective markets during the quarter by driving corporate transient, group and association business. As one of our largest assets by historical EBITDA contribution, the Georgian Terraces improvement is an encouraging sign for the company. After significant challenges coming out of COVID in terms of market headwinds, staffing challenges and property casualties, we believe this hotel is on the right track with a sustainable strategy that will produce future success. Speaker 400:11:38Similar to the Whitehall, which is located in the downtown Houston market is demonstrating signs of progress following a slow growth trajectory coming out of the pandemic. Our Philadelphia DoubleTree Hotel is competing well against its competitive set in the Philadelphia airport submarket, but that market continues to be challenged with lower air traffic and less citywide events than anticipated at the start of this year. Although taking longer than expected, we believe lodging demand in this market supported by improved business travel will make a gradual recovery. Group business continued to drive significant growth for our portfolio during the Q1 with especially strong performances from our Savannah, Wilmington and Arlington Hotels, all of which achieved historical highs in group revenue for the Q1. Our sales team at the Hyatt Centric in Arlington produced 108% year over year growth and 81% growth over 2019 for the group segment during the Q1. Speaker 400:12:43The DeSoto and Savannah meanwhile grew its group by 34% over prior year and 38% over 2019. Looking at the total portfolio, group business improved by 19% during the quarter, a testament to the successful sales strategy by our management team. The current lending environment characterized by tight underwriting standards continues to present challenges for borrowers in the logic sector. As each loan maturity presents unique obstacles, are conservatively approaching upcoming debt maturities in our portfolio. After several months of negotiations with the existing lender for the loan on our Philadelphia hotel, last week we successfully executed an extension on that loan. Speaker 400:13:31Given the current lending environment and market related headwinds in Philadelphia, we view the loan terms as a positive outcome for the company. As Scott mentioned, in tandem with this loan extension we entered into a new 10 year DoubleTree franchise agreement with Hilton, aligning ourselves with a strong brand and positioning the hotel for success for the foreseeable future. Looking ahead, the loan maturity schedule for our portfolio is spread evenly Speaker 500:13:58over Speaker 400:13:58the next several years with only the loan maturity for our Jacksonville Hotel upcoming in 2024. Despite the changing expectations regarding the timing of rate cuts as well as continued economic uncertainty related to persistent inflation, lodging fundamentals for the upscale and upper upscale segments that represent our portfolio have demonstrated resilience with additional growth anticipated for the balance of the year. Urban Hotels driven by positive corporate and group travel trends are expected to outperform the broader lodging market. Looking specifically at our portfolio as of May 1, our group bookings for the Q2 and for the full year are pacing approximately 7% ahead of last year. Full year 2024 RevPAR is forecasted to range between 104% 106% of full year 2023 RevPAR. Speaker 400:14:57We remain cautiously optimistic that our portfolio of well positioned hotels fueled by growth trends in the group and business transient segments will continue to deliver strong results for our shareholders. And with that, we'll open the call for questions, operator. Thank Operator00:15:34Our first question comes from Connor Mitchell from Piper Sandler. Connor, please go ahead. Speaker 500:15:41Hey, good morning. Thanks for taking my question. You guys mentioned the urban markets maybe taking a little bit longer to recover the pre pandemic levels, occupancy, ADR, etcetera. I think you touched on a couple of specific markets and how they're improving. But I'm just wondering, is there any specific catalyst for the urban markets in general or maybe more specific catalyst or you just think it takes a bit more time for them to fully recapture the activity from pre pandemic levels? Speaker 300:16:15Yes, I think the latter part Speaker 400:16:17of your comment is probably true. It's just taking a little bit of longer time in some of these markets and each one of these markets is simply got a different set of dynamics going on, whether it's Atlanta or Philadelphia or Houston. But eventually I think what we're seeing is kind of a return to work dynamic in place at some of these markets and at the same time just a general recovery in business travel that is impacting some of these larger markets. I mean Atlanta and Houston and Philadelphia are all fairly large markets. And what we've seen at the urban size, there's no individual catalyst, but at the same time, just the basic blocking and tackling of the hotel business, we're just getting more business travelers and group business coming back to the hotels. Speaker 400:17:10You got anything to add, Scott? Speaker 200:17:11Yes. I'll just say besides BT coming back to the market and return to office, the citywide events is a key catalyst for those larger urban markets just to create compression in the marketplace. And I think that's what we're starting to see in Houston and Atlanta. We're seeing a lot less of it in Philadelphia and also us being out the airport in Philly. We need a lot of compression in downtown to push out to the airport. Speaker 200:17:34But again, we're seeing the citywide events start to come back in larger format in these markets, which really helps the overall market dynamics. Speaker 500:17:46Okay. Yes. And then maybe sticking with Philly, you just talked about the improvements that are going to take place. Is that going to be kind of a refresh on just some of the rooms and some other external items? Or is it going to be more of like a whole repositioning in the market for a more broad transformation? Speaker 500:18:10Just kind of trying to get a better sense of, what that process is going to look like? Speaker 200:18:16Yes. So it's a relicense of DoubleTree. We're not changing the flag. So it's more of a refresh than a whole scale repositioning. But it is a paid full renovation. Speaker 200:18:26Pretty much every bit of FF and E in the building will be replaced over the course of the 24 month period. And I will say that the hotel in need of it. So it will be a fairly dramatic transformation once we get the new FF and E in there. The product has been fairly dated. It's certainly written out the life cycle. Speaker 200:18:46So it will be transformative in that sense, but there's not going to be a major repositioning asset. It's going to be kind of a newly refreshed DoubleTree product once we're done. Speaker 500:19:02Okay. Appreciate that. And then earlier in the comments, I think you guys mentioned that the drop in ADR was mostly due to the South Florida properties. Correct me if I'm wrong, but I was just wondering if you could go into a little bit more detail on what may have occurred there or what you see going forward regarding those properties or whether there's going to be some more fluctuation in the ADR along with maybe some expected increase in occupancy? Speaker 200:19:33Yes, it really was solely tied in South Florida and I think we're not alone in that commentary. I think a lot of our peers are seeing the same thing in South Florida. And it really ties to the leisure traveler and what occurred in that market, those markets coming out of COVID, right? I mean, South Florida was essentially the 1st market lodging market in the U. S. Speaker 200:19:54To recover coming out of COVID very quickly. Obviously, the government in Florida did a good job of opening the doors. And as soon as people were ready to travel, we just saw a massive influx of leisure travel to that market. So we had a period of very high demand, very high rates, and now that's starting to taper off. You're seeing people not travel quite as much on leisure. Speaker 200:20:16You're seeing people predominantly start traveling, taking the opportunity to make their leisure travel go overseas or somewhere else. So we're just seeing a bit of a cooling off in demand in that marketplace compared to where we have been for the past 2 plus years coming out of COVID. So rates are we're starting to see some pricing sensitivity from those leisure consumers. That's just the nuts and bolts of it. But we don't see it declining substantially from here. Speaker 200:20:45We're seeing it's fairly stabilized, but it's certainly taking a step back from a rate perspective compared to where we were coming out of COVID. Speaker 500:20:57Okay. I think that covers it for me. Thank you. Speaker 400:21:01Thanks, Operator00:21:16Okay. We have no further questions registered. So I'll now hand back over to Dave Folsom, Chief Executive Officer for closing remarks. Speaker 400:21:24Thank you everyone for joining us on our call today and we look forward to speaking with everyone in the next quarter. Thank you, operator.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSotherly Hotels Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Sotherly Hotels Earnings HeadlinesSotherly Hotels (NASDAQ:SOHO) Coverage Initiated by Analysts at StockNews.comMay 7 at 2:36 AM | americanbankingnews.comSotherly Hotels (NASDAQ:SOHO) Now Covered by StockNews.comApril 30, 2025 | americanbankingnews.comURGENT: Someone's Moving Gold Out of London...People who don’t understand the gold market are about to lose a lot of money. Unfortunately, most so-called “gold analysts” have it all wrong… They tell you to invest in gold ETFs - because the popular mining ETFs will someday catch fire and close the price gap with spot gold. May 7, 2025 | Golden Portfolio (Ad)Sotherly Hotels Inc. Announces Quarterly Preferred DividendsApril 29, 2025 | globenewswire.comSotherly Hotels Inc. Schedules First Quarter 2025 Earnings Release and Conference CallApril 3, 2025 | globenewswire.comSotherly Hotels Inc. (NASDAQ:SOHO) Q4 2024 Earnings Call TranscriptMarch 14, 2025 | msn.comSee More Sotherly Hotels Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Sotherly Hotels? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Sotherly Hotels and other key companies, straight to your email. Email Address About Sotherly HotelsSotherly Hotels (NASDAQ:SOHO) 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. Sotherly may also opportunistically acquire hotels throughout the United States. Currently, the Company's portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. The Company owns hotels that operate under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia.View Sotherly Hotels ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Disney Stock Jumps on Earnings—Is the Magic Sustainable?Archer Stock Eyes Q1 Earnings After UAE UpdatesFord Motor Stock Rises After Earnings, But Momentum May Not Last Broadcom Stock Gets a Lift on Hyperscaler Earnings & CapEx BoostPalantir Stock Drops Despite Stellar Earnings: What's Next?Is Eli Lilly a Buy After Weak Earnings and CVS-Novo Partnership?Is Reddit Stock a Buy, Sell, or Hold After Earnings Release? Upcoming Earnings Monster Beverage (5/8/2025)Brookfield (5/8/2025)Anheuser-Busch InBev SA/NV (5/8/2025)ConocoPhillips (5/8/2025)Cheniere Energy (5/8/2025)McKesson (5/8/2025)Shopify (5/8/2025)Enbridge (5/9/2025)Petróleo Brasileiro S.A. - Petrobras (5/12/2025)Simon Property Group (5/12/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 6 speakers on the call. Operator00:00:00Welcome to the Sotherly Hotels Q1 2024 Earnings Call and Webcast. My name is Lauren, and I will be coordinating your call today. There will be an opportunity for questions at the end of the presentation. I will now hand you over to your host Maxim, Vice President, Operations to begin. Please go ahead. Speaker 100:00:24Thank you and good morning everyone. If you did not receive a copy of the earnings release, you may access it on our website at sotherlyhotels.com. In the release, the company has reconciled all non GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Any statements made during this conference call, which are not historical, may constitute forward looking statements. Although we believe the expectations reflected in any forward looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained. Speaker 100:00:56Factors and risks that can cause actual results to differ materially from those expressed or implied by forward looking statements are detailed in today's press release and from time to time in the company's filings with the SEC. The company does not undertake a duty to update or revise any forward looking statements. With that, I'll turn the call over to Scott. Speaker 200:01:15Thanks, Mac. Good morning, everyone. I'll start off today's call through a review of our portfolio's key operating metrics for the Q1. Looking at the Q1 results for the composite portfolio compared to 2023, RevPAR increased 3.8%, driven by a 7.5% increase in occupancy and a 3.3% decrease in ADR. Looking at the Q1 results for the composite portfolio relative to 2019, Q1 RevPAR was up 1.4% driven by ADR growth of 9.3% and occupancy down 7.2%. Speaker 200:01:49This occupancy gap to pre pandemic levels reflects the significant upside for the portfolio moving forward. Overall, our portfolio's 1st quarter results, which were driven by strong occupancy growth, outperformed both top and bottom line budget expectations. The notable growth in occupancy indicates lodging fundamentals across our portfolio are nearing normalization following the uneven post pandemic recovery period. Although the impressive occupancy gains were partially offset by a 3.3% decline in ADR, this drop in rate was almost entirely isolated to our South Florida properties. Our group focused properties continue to be a key catalyst of growth for our portfolio as our Wilmington Savannah Hotels, both of which easily outperformed prior year RevPAR, led the segment during the quarter. Speaker 200:02:34The DeSoto Savannah was particularly noteworthy with 1st quarter RevPAR outperforming prior year by 11% and outperforming Q1 2019 by nearly 32%. The Hyatt Centric Arlington driven by strong year over year growth in the group and corporate segments, continued to fire on all cylinders during the Q1. The property outpaced the prior periods RevPAR by 6.7%, driven by a 3.8% increase in occupancy and a 2.7% increase in rate. First the comparable period in 2019, RevPAR improved by 12.7% with occupancy flat and ADR up 12.7%. The property continues to be the leader in its competitive set, achieving a RevPAR index of over 124% during the Q1. Speaker 200:03:18The continued strength of our group focused hotels was coupled with a long awaited breakthrough and business transient performance at our slow to recover urban hotels in Atlanta and Houston during the Q1. The Georgian Terrace in Atlanta has management team's efforts to drive increased corporate and association business to the hotel proved successful during the quarter as occupancy improved more than 25% over prior year. In addition, the potential for recovery in the film industry business segment presents additional growth prospects moving forward. The Whitehall and Houston improved its RevPAR by nearly 21% over prior year, which was fueled by nearly 22% gain in occupancy. The Whitehall's occupancy improvement was predominantly driven by growth in the transient business segment, which was up the prior year by nearly 30%, an encouraging sign of recovery for the hotel in the downtown Houston submarket. Speaker 200:04:09We are optimistic the recent momentum in Atlanta and Houston will carry forward as the pre pandemic occupancy gap that remains at these hotels present significant upside opportunity. Looking at profitability metrics for the portfolio. Although hotel EBITDA margins for the Q1 2024 were 120 basis points below prior year, the decline was solely tied to increased property insurance costs in Q1 2024 versus prior year. With our insurance renewal that occurred April 1, we are pleased to say the insurance markets have softened a bit and our costs have been reduced. With our Amendi offerings now fully open, staffing and wages stabilized and reduction in insurance costs, we expect margins to normalize going forward. Speaker 200:04:52Turning to corporate activity. Last week, we announced the company executing an extension on its first mortgage loan for the Double Street Philadelphia Airport Hotel. The interest only loan, which has been reduced by $3,000,000 to 35,900,000 matures in April 2026 and carries a floating interest rate based on SOFR plus 3.5%. As part of this transaction, we purchased an interest rate cap capping sulfur for a portion of the loan at 3%. In addition, we announced that the company entered into a 10 year franchise agreement with Hilton Worldwide to relicense the hotel under the DoubleTree by Hilton flag. Speaker 200:05:26As part of the new agreement with Hilton, the company will undertake a renovation of the property with an estimated cost of approximately $11,500,000 and estimated completion date of April 2026. Renovation plans for the property will include upgrades to guest rooms, public spaces, food and beverage spaces and the building's exterior. Lastly, in April, we announced the company executed a $35,000,000 secured loan with city real estate funding on the Hotel Alba in Tampa, Florida. The interest only loan matures March of 2029 and carries a fixed interest rate of 8.49%. This refinancing represents a combination of our repositioning strategy, which created substantial value for the hotel and resulted in cash proceeds of over $10,000,000 to the company. Speaker 200:06:09With that, I'll turn the call over to Tony. Speaker 300:06:11Thank you, Scott. Reviewing performance for the period ended March 31, 2024. For the Q1, total revenue was approximately $46,500,000 representing an increase of 7% over the same quarter last year. Hotel EBITDA for the quarter was approximately $12,400,000 representing an increase of 2.3% over the same quarter last year. And for the quarter adjusted FFO was approximately $4,500,000 representing an increase of approximately 11.2% over the same quarter in the prior year. Speaker 300:06:46Please note that our adjusted FFO excludes charges related to the early extinguishment of debt, unrealized gains and losses on derivative instruments, charges related to aborted or abandoned securities offerings, ESOP and stock compensation expense as well as other items. Hotel EBITDA excludes these charges as well as interest expense, interest income, corporate G and A expenses, realized gains and losses on derivative instruments and our income tax provision and other items as well. Please refer to our earnings release for additional detail. Looking at our balance sheet as of March 31, 2024, the company had total cash of approximately $39,600,000 consisting of unrestricted cash and cash equivalents of approximately $29,300,000 as well as approximately $10,300,000 which was reserved for real estate taxes, capital improvements and certain other items. At the end of the quarter, we had principal balances of approximately $328,000,000 in outstanding debt at a weighted average interest rate of 5.8%. Speaker 300:07:53Approximately 83.9 percent of the company's debt carried a fixed rate of interest. As we enter a more normalized operating environment, we anticipate routine capital expenditures for the replacement and refurbishment of furniture fixtures and equipment to be more in line with historical norms And we estimate these capital expenditures will amount to approximately $7,000,000 for calendar year 2024. As announced last week, we anticipate beginning a product improvement plan at the DoubleTree by Hilton Philadelphia Airport. We anticipate capital expenditures related to this project to total approximately $3,000,000 this fiscal year. We are reiterating guidance with a forecast of anticipated results for the full year previously disclosed in March. Speaker 300:08:39Our guidance considers market conditions and accounts for current and expected performance within the portfolio. We're projecting total revenue in the guidance, this represents a 4% increase over the prior year. Hotel EBITDA is projected in the range of $46,100,000 to $46,900,000 Speaker 200:09:04and at the midpoint of Speaker 300:09:05the guidance, this represents a 3.8% increase over prior year. Adjusted FFO is projected in the range of 12 point dollars to $13,800,000 or $0.64 to $0.69 a share. At the midpoint of the guidance, this represents an 8.7% decrease over prior year. The year over year decrease in adjusted FFO is mainly due to increased interest expense in 2024 and one time benefits in the prior year for successful real estate tax appeals at our properties in Savannah and Hollywood. I will now turn the call over to Dave. Speaker 300:09:40Thank you, Tony and good morning everyone. Speaker 400:09:42We were pleased with the Q1 results for our composite portfolio, which achieved 3.8% RevPAR growth over prior year. These strong year over year results were especially encouraging given the timing of the Easter holiday weekend shifting from the Q2 to the Q1 this year. Occupancy was the driver of RevPAR growth as we experienced continued strength in group travel at our properties in Savannah, Arlington and Wilmington, which performed historically well during the quarter. The excellent performance of these hotels was coupled with significant improvements at 2 of our hotels in slower to recover urban markets, Houston and Atlanta. The return of group and transient corporate travel at these hotels is a positive sign that we have reached a more normalized operating environment driven by a diverse range of demand generators. Speaker 400:10:35Despite the strong year over year occupancy improvement for our portfolio during the quarter, we believe there is still significant opportunity for organic growth, especially given our exposure to several urban markets that have been slower to recover. More than half of our portfolio is still tracking below pre pandemic occupancy levels with our hotels in Atlanta, Houston and Philadelphia having the most opportunity for improvement moving forward. As mentioned, 2 of these hotels, the Georgian Terrace and the Whitehall in Houston are making significant headway penetrating their respective markets during the quarter by driving corporate transient, group and association business. As one of our largest assets by historical EBITDA contribution, the Georgian Terraces improvement is an encouraging sign for the company. After significant challenges coming out of COVID in terms of market headwinds, staffing challenges and property casualties, we believe this hotel is on the right track with a sustainable strategy that will produce future success. Speaker 400:11:38Similar to the Whitehall, which is located in the downtown Houston market is demonstrating signs of progress following a slow growth trajectory coming out of the pandemic. Our Philadelphia DoubleTree Hotel is competing well against its competitive set in the Philadelphia airport submarket, but that market continues to be challenged with lower air traffic and less citywide events than anticipated at the start of this year. Although taking longer than expected, we believe lodging demand in this market supported by improved business travel will make a gradual recovery. Group business continued to drive significant growth for our portfolio during the Q1 with especially strong performances from our Savannah, Wilmington and Arlington Hotels, all of which achieved historical highs in group revenue for the Q1. Our sales team at the Hyatt Centric in Arlington produced 108% year over year growth and 81% growth over 2019 for the group segment during the Q1. Speaker 400:12:43The DeSoto and Savannah meanwhile grew its group by 34% over prior year and 38% over 2019. Looking at the total portfolio, group business improved by 19% during the quarter, a testament to the successful sales strategy by our management team. The current lending environment characterized by tight underwriting standards continues to present challenges for borrowers in the logic sector. As each loan maturity presents unique obstacles, are conservatively approaching upcoming debt maturities in our portfolio. After several months of negotiations with the existing lender for the loan on our Philadelphia hotel, last week we successfully executed an extension on that loan. Speaker 400:13:31Given the current lending environment and market related headwinds in Philadelphia, we view the loan terms as a positive outcome for the company. As Scott mentioned, in tandem with this loan extension we entered into a new 10 year DoubleTree franchise agreement with Hilton, aligning ourselves with a strong brand and positioning the hotel for success for the foreseeable future. Looking ahead, the loan maturity schedule for our portfolio is spread evenly Speaker 500:13:58over Speaker 400:13:58the next several years with only the loan maturity for our Jacksonville Hotel upcoming in 2024. Despite the changing expectations regarding the timing of rate cuts as well as continued economic uncertainty related to persistent inflation, lodging fundamentals for the upscale and upper upscale segments that represent our portfolio have demonstrated resilience with additional growth anticipated for the balance of the year. Urban Hotels driven by positive corporate and group travel trends are expected to outperform the broader lodging market. Looking specifically at our portfolio as of May 1, our group bookings for the Q2 and for the full year are pacing approximately 7% ahead of last year. Full year 2024 RevPAR is forecasted to range between 104% 106% of full year 2023 RevPAR. Speaker 400:14:57We remain cautiously optimistic that our portfolio of well positioned hotels fueled by growth trends in the group and business transient segments will continue to deliver strong results for our shareholders. And with that, we'll open the call for questions, operator. Thank Operator00:15:34Our first question comes from Connor Mitchell from Piper Sandler. Connor, please go ahead. Speaker 500:15:41Hey, good morning. Thanks for taking my question. You guys mentioned the urban markets maybe taking a little bit longer to recover the pre pandemic levels, occupancy, ADR, etcetera. I think you touched on a couple of specific markets and how they're improving. But I'm just wondering, is there any specific catalyst for the urban markets in general or maybe more specific catalyst or you just think it takes a bit more time for them to fully recapture the activity from pre pandemic levels? Speaker 300:16:15Yes, I think the latter part Speaker 400:16:17of your comment is probably true. It's just taking a little bit of longer time in some of these markets and each one of these markets is simply got a different set of dynamics going on, whether it's Atlanta or Philadelphia or Houston. But eventually I think what we're seeing is kind of a return to work dynamic in place at some of these markets and at the same time just a general recovery in business travel that is impacting some of these larger markets. I mean Atlanta and Houston and Philadelphia are all fairly large markets. And what we've seen at the urban size, there's no individual catalyst, but at the same time, just the basic blocking and tackling of the hotel business, we're just getting more business travelers and group business coming back to the hotels. Speaker 400:17:10You got anything to add, Scott? Speaker 200:17:11Yes. I'll just say besides BT coming back to the market and return to office, the citywide events is a key catalyst for those larger urban markets just to create compression in the marketplace. And I think that's what we're starting to see in Houston and Atlanta. We're seeing a lot less of it in Philadelphia and also us being out the airport in Philly. We need a lot of compression in downtown to push out to the airport. Speaker 200:17:34But again, we're seeing the citywide events start to come back in larger format in these markets, which really helps the overall market dynamics. Speaker 500:17:46Okay. Yes. And then maybe sticking with Philly, you just talked about the improvements that are going to take place. Is that going to be kind of a refresh on just some of the rooms and some other external items? Or is it going to be more of like a whole repositioning in the market for a more broad transformation? Speaker 500:18:10Just kind of trying to get a better sense of, what that process is going to look like? Speaker 200:18:16Yes. So it's a relicense of DoubleTree. We're not changing the flag. So it's more of a refresh than a whole scale repositioning. But it is a paid full renovation. Speaker 200:18:26Pretty much every bit of FF and E in the building will be replaced over the course of the 24 month period. And I will say that the hotel in need of it. So it will be a fairly dramatic transformation once we get the new FF and E in there. The product has been fairly dated. It's certainly written out the life cycle. Speaker 200:18:46So it will be transformative in that sense, but there's not going to be a major repositioning asset. It's going to be kind of a newly refreshed DoubleTree product once we're done. Speaker 500:19:02Okay. Appreciate that. And then earlier in the comments, I think you guys mentioned that the drop in ADR was mostly due to the South Florida properties. Correct me if I'm wrong, but I was just wondering if you could go into a little bit more detail on what may have occurred there or what you see going forward regarding those properties or whether there's going to be some more fluctuation in the ADR along with maybe some expected increase in occupancy? Speaker 200:19:33Yes, it really was solely tied in South Florida and I think we're not alone in that commentary. I think a lot of our peers are seeing the same thing in South Florida. And it really ties to the leisure traveler and what occurred in that market, those markets coming out of COVID, right? I mean, South Florida was essentially the 1st market lodging market in the U. S. Speaker 200:19:54To recover coming out of COVID very quickly. Obviously, the government in Florida did a good job of opening the doors. And as soon as people were ready to travel, we just saw a massive influx of leisure travel to that market. So we had a period of very high demand, very high rates, and now that's starting to taper off. You're seeing people not travel quite as much on leisure. Speaker 200:20:16You're seeing people predominantly start traveling, taking the opportunity to make their leisure travel go overseas or somewhere else. So we're just seeing a bit of a cooling off in demand in that marketplace compared to where we have been for the past 2 plus years coming out of COVID. So rates are we're starting to see some pricing sensitivity from those leisure consumers. That's just the nuts and bolts of it. But we don't see it declining substantially from here. Speaker 200:20:45We're seeing it's fairly stabilized, but it's certainly taking a step back from a rate perspective compared to where we were coming out of COVID. Speaker 500:20:57Okay. I think that covers it for me. Thank you. Speaker 400:21:01Thanks, Operator00:21:16Okay. We have no further questions registered. So I'll now hand back over to Dave Folsom, Chief Executive Officer for closing remarks. Speaker 400:21:24Thank you everyone for joining us on our call today and we look forward to speaking with everyone in the next quarter. Thank you, operator.Read morePowered by