Sotherly Hotels Inc. reported a decline in financial performance for the third quarter of 2025, with total revenue decreasing by approximately 6.6% to $38.0 million compared to $40.7 million in the same period of 2024. The decrease was primarily driven by a 7.3% drop in rooms revenue, which fell to $25.2 million, and a 6.7% decline in food and beverage revenue, which totaled $7.2 million. The company's net loss for the quarter was approximately $5.6 million, compared to a net loss of $3.7 million in the prior year. This resulted in a basic and diluted net loss per share of $(0.37), compared to $(0.29) in the previous year.
In terms of operational metrics, the company experienced a decrease in occupancy rates, which fell to 63.0% from 66.9% year-over-year. Average daily rate (ADR) also declined slightly to $156.02 from $158.46. The revenue per available room (RevPAR) decreased to $98.23 from $105.98, reflecting the challenges faced in the current market environment. The company’s total assets as of September 30, 2025, were approximately $411.4 million, a slight decrease from $414.4 million at the end of 2024.
Strategically, Sotherly Hotels has been active in managing its debt and financing arrangements. The company secured a $42.0 million mortgage loan on The DeSoto hotel in Savannah, Georgia, which is set to mature in October 2030. However, it also faces challenges, including a payment default on the mortgage for the Georgian Terrace hotel and an imminent default on the DoubleTree Resort by Hilton Hollywood Beach. The company has requested extensions on these loans and is currently in a "cash trap" situation for certain properties, which restricts cash flow management.
Looking ahead, Sotherly Hotels is navigating a complex landscape, including the announcement of a merger agreement with KW Kingfisher LLC. This merger, expected to close in early 2026, will see the company continue as a wholly-owned subsidiary of the parent entity. The merger is anticipated to provide liquidity and potentially alleviate some of the financial pressures currently faced by the company. However, uncertainties surrounding the merger and ongoing market conditions may impact the company's operational strategies and financial performance in the near term.
About Sotherly Hotels Inc.
Sotherly Hotels Inc. is a self-managed REIT owning and leasing full-service, upscale hotels primarily in the U.S. South and mid-Atlantic. It focuses on acquiring, renovating, and repositioning hotels in prime markets, leveraging franchise brands like Hilton and Hyatt. The company generates income through hotel leases and management agreements, emphasizing strategic location, brand strength, and operational efficiency to deliver long-term value.
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