On this page of StockholderLetter.com we present the latest annual shareholder letter from Sotherly Hotels Inc. — ticker symbol SOHO. Reading current and past SOHO letters to shareholders can bring important insights into the investment thesis.

 •  3/27/2024 Letter Continued (Full PDF)
 •  4/4/2023 SOHO Stockholder Letter
 •  More "REITs" Category Stockholder Letters
 •  SOHO Benford's Law Stock Score = 91

SOHO Shareholder/Stockholder Letter Transcript:

2023
2023
2023
ANNUAL
ANNUAL
ANNUAL REPORT
REPORT
REPORT


TO OUR
OUR STOCKHOLDERS
A letter from Sotherly Hotels President & CEO David R. Folsom
To Our Stockholders:
Fiscal year 2023 was an important transitional year for Sotherly Hotels. At the
outset of 2023, we completed repayment of all COVID-related mortgage forbearance
obligations that the Company had incurred over a period of nearly three years.
At the same time, we reinstated payment of dividends on all three series of the
Company   s preferred stock. In the year, we also repaid a portion of the outstanding
balance of accrued and unpaid cumulative dividends owed on our preferred stock.
These positive developments were important milestones and achievements for the
Company in 2023, as we looked to continue to improve our capital structure.
The lodging industry continued to show good growth in 2023, according to analysts    reports, as national Revenue
Per Available Room (RevPAR) grew nearly 5% over 2022. Our markets, which focus mainly on major locations in
the Southeast and Mid-Atlantic, outpaced the broader national averages. According to STR, Sotherly markets
grew RevPAR 11.5% over 2022, more than doubling the national average. Average Daily Rate (ADR) continued to
be the major component of RevPAR growth both nationally and in our respective markets. Nearly all of Sotherly   s
markets witnessed positive RevPAR growth in 2023. In some of our markets, RevPAR growth was substantial. In
Arlington Virgina, which is part to the metropolitan Washington D.C. market, the market grew RevPAR 23.4% and
the Houston market was up 21.8% in RevPAR. While our overall portfolio recovered fairly quickly coming out of
the pandemic, we still have a lot of upside in our portfolio as occupancy is still 730 basis points below 2019. As
the markets in Atlanta, Philadelphia, and Houston continue to recover, we anticipate outsized growth, beyond the
national averages, for the foreseeable future for our portfolio.
Fiscal year 2023 also saw the continuation of solid gains in both business travel and in the booking of group
business. Transient leisure travel remained a strong and important component of lodging demand in 2023, although
transient demand in our Florida markets softened in the second half of the year. We believe this was due to
reduced levels of traditional international travel, and the fact that Florida markets were the    rst to re-open after
the pandemic, leading to signi   cant gains in the second half of 2022 that were not sustained in 2023.
The stubborn e   ects of lingering in   ation have created challenges for hotel owners nationwide. Operating
expenses, labor costs, and increases in taxes and insurance premiums continue to impact hotel margins and
pro   tability. Concurrently, travelers and our franchise partners are once again demanding a return to the high levels
of service that were expected prior to the pandemic. In 2023, Sotherly reinstated all the traditional amenities
found in upper upscale and luxury hotels, including the full array of food and beverage o   erings, amenities, and
daily housekeeping. These challenges and costs created overall pressure on hotel margins, resulting in total Hotel
EBITDA underperforming compared to 2022.
In 2023, in   ation pressures also began to    spill over    into traditional mortgage    nancing and re   nancing. Interest
rates for hotel mortgage debt are now above 8.0%, nearly twice what the industry paid prior to the pandemic.
Banks and lenders came under pressure toward the end of 2023, and the lending environment has proven to be a

negative dynamic for commercial real estate borrowers, including hotel owners. This is an important development
that the lodging industry will face in the near term.
As we move into 2024, we continue to monitor all major macroeconomic issues and are taking proactive steps
to manage and improve our balance sheet, tackle mortgage re   nancings, execute life cycle improvements at our
hotels, and ensure our assets are optimally managed and meet the demands of our traveling guests.
We want to thank our shareholders who continue to invest in and support Sotherly Hotels.
Sincerely,
David R. Folsom
President and Chief Executive O   cer



 3/27/2024 Letter Continued (Full PDF)