EX-99.1 2 soho-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

Overview

 

On February 10, 2022 and June 10, 2022, we closed on the sales of the Sheraton Louisville Riverside hotel and the DoubleTree by Hilton Raleigh-Brownstone University hotel, respectively. The following table presents the audited consolidated balance sheet and consolidated statement of operations as of December 31, 2021 of the Company, unaudited pro forma financial adjustments of the Sheraton Louisville Riverside hotel and the DoubleTree by Hilton Raleigh-Brownstone University hotel, unaudited pro forma balance sheet, as if the hotels had been disposed on December 31, 2021 and unaudited pro forma statement of income, as if the Sheraton Louisville Riverside hotel and the DoubleTree by Hilton Raleigh-Brownstone University hotel had been disposed on January 1, 2021. Accordingly, the unaudited pro forma balance sheet and unaudited pro forma income statement are not necessarily indicative of future consolidated financial position or results of operations.

 

The following pro forma information has been prepared for comparative purposes only and are based upon the historical financial statements and operating results for the Company, adjusted to reflect the sales:

 

 

 

 

 

 

 

SOTHERLY HOTELS INC.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2021

 

 

 

Sotherly Hotels, Inc.

 

 

Pro Forma Adjustments

 

 

Proforma Adjustments

 

 

 

 

 

 

Balance Sheet

 

 

of Sheraton Louisville

 

 

of DoubleTree Raleigh

 

 

Pro Forma

 

 

 

December 31, 2021 (a)

 

 

Riverside Sale

 

 

Brownstone Sale

 

 

Balance Sheet

 

 

 

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Investment in hotel properties, net

 

$

375,885,224

 

 

$

-

 

 

$

-

 

 

$

375,885,224

 

Investment in hotel properties held for sale, net

 

 

22,870,487

 

 

 

(11,063,952

)

(c)

 

(11,806,535

)

(c)

 

—

 

Cash and cash equivalents

 

 

13,166,883

 

 

 

161,816

 

(j)

 

22,659,907

 

(j)

 

35,988,606

 

Restricted cash

 

 

12,411,654

 

 

 

—

 

 

 

(318,562

)

(c)

 

12,093,092

 

Accounts receivable, net

 

 

4,822,187

 

 

 

(697,877

)

(c)

 

(143,762

)

(c)

 

3,980,548

 

Prepaid expenses, inventory and other assets

 

 

6,894,228

 

 

 

(150,471

)

(c)

 

(107,697

)

(c)

 

6,636,060

 

TOTAL ASSETS

 

$

436,050,663

 

 

$

(11,750,484

)

 

$

10,283,351

 

 

$

434,583,530

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loans, net

 

$

351,170,883

 

 

$

(10,860,762

)

(c)

$

(18,147,658

)

(c)

$

322,162,463

 

Secured notes, net

 

 

19,128,330

 

 

 

—

 

 

 

—

 

 

 

19,128,330

 

Unsecured notes, net

 

 

7,609,934

 

 

 

—

 

 

 

—

 

 

 

7,609,934

 

Accounts payable and accrued liabilities

 

 

35,960,293

 

 

 

(975,770

)

(c)

 

(1,432,415

)

(c)

 

33,552,108

 

Advance deposits

 

 

1,552,942

 

 

 

—

 

 

 

(28,759

)

(c)

 

1,524,183

 

Dividends and distributions payable

 

 

4,125,351

 

 

 

—

 

 

 

—

 

 

 

4,125,351

 

TOTAL LIABILITIES

 

$

419,547,733

 

 

$

(11,836,532

)

 

$

(19,608,832

)

 

$

388,102,369

 

Commitments and contingencies (See Note 6)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Sotherly Hotels Inc. stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 11,000,000 shares authorized:

 

 

 

 

 

 

 

 

 

 

 

 

8.0% Series B cumulative redeemable perpetual preferred stock, 1,510,000 shares issued and outstanding; aggregate liquidation preference $43,035,000, at December 31, 2021.

 

 

15,100

 

 

 

—

 

 

 

—

 

 

 

15,100

 

7.875% Series C cumulative redeemable perpetual preferred stock, 1,384,610 shares issued and outstanding; aggregate liquidation preference $39,385,669, at December 31, 2021.

 

 

13,846

 

 

 

—

 

 

 

—

 

 

 

13,846

 

8.25% Series D cumulative redeemable perpetual preferred stock, 1,165,000 shares issued and outstanding; aggregate liquidation preference $33,329,922, at December 31, 2021.

 

 

11,650

 

 

 

—

 

 

 

—

 

 

 

11,650

 

Common stock, par value $0.01, 69,000,000 shares authorized, 17,441,058 shares issued and outstanding at December 31, 2021.

 

 

174,410

 

 

 

—

 

 

 

—

 

 

 

174,410

 

Additional paid-in capital

 

 

177,651,954

 

 

 

—

 

 

 

—

 

 

 

177,651,954

 

Unearned ESOP shares

 

 

(3,083,398

)

 

 

—

 

 

 

—

 

 

 

(3,083,398

)

Distributions in excess of retained earnings

 

 

(153,521,704

)

 

 

80,455

 

(d)

 

28,067,700

 

(d)

 

(125,373,549

)

Total Sotherly Hotels Inc. stockholders’ equity

 

 

21,261,858

 

 

 

80,455

 

 

 

28,067,700

 

 

 

49,410,013

 

Noncontrolling interest

 

 

(4,758,928

)

 

 

5,593

 

(k)

 

1,824,483

 

(k)

 

(2,928,852

)

TOTAL EQUITY

 

 

16,502,930

 

 

 

86,048

 

 

 

29,892,183

 

 

 

46,481,161

 

TOTAL LIABILITIES AND EQUITY

 

$

436,050,663

 

 

$

(11,750,484

)

 

$

10,283,351

 

 

$

434,583,530

 

 

 

 

SOTHERLY HOTELS INC.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

CONSOLIDATED STATEMENT OF OPERATIONS

DECEMBER 31, 2021

 

 

 

Sotherly Hotels, Inc.

 

 

Pro Forma Adjustments

 

 

Proforma Adjustments

 

 

Pro Forma

 

 

 

Twelve Months Ended

 

 

of Sheraton Louisville

 

 

of DoubleTree Raleigh

 

 

Statement of

 

 

 

December 31, 2021 (b)

 

 

Riverside Sale

 

 

Brownstone Sale

 

 

Operations

 

 

 

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Rooms department

 

$

88,625,659

 

 

$

(3,972,310

)

(e)

$

(3,492,052

)

(e)

$

81,161,297

 

Food and beverage department

 

 

15,829,487

 

 

 

(284,317

)

(e)

 

(360,004

)

(e)

 

15,185,166

 

Other operating departments

 

 

23,132,778

 

 

 

(281,162

)

(e)

 

(358,706

)

(e)

 

22,492,910

 

Total revenue

 

 

127,587,924

 

 

 

(4,537,789

)

 

 

(4,210,762

)

 

 

118,839,373

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Hotel operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Rooms department

 

 

22,688,063

 

 

 

(1,714,831

)

(f)

 

(829,885

)

(f)

 

20,143,347

 

Food and beverage department

 

 

10,297,461

 

 

 

(222,930

)

(f)

 

(294,421

)

(f)

 

9,780,110

 

Other operating departments

 

 

8,607,594

 

 

 

(41,171

)

(f)

 

(11,725

)

(f)

 

8,554,698

 

Indirect

 

 

55,100,245

 

 

 

(2,587,696

)

(f)

 

(2,359,353

)

(f)

 

50,153,196

 

Total hotel operating expenses

 

 

96,693,363

 

 

 

(4,566,628

)

 

 

(3,495,384

)

 

 

88,631,351

 

Depreciation and amortization

 

 

19,909,226

 

 

 

(797,617

)

(g)

 

(680,613

)

(g)

 

18,430,996

 

Impairment of investment in hotel properties, net

 

 

12,201,461

 

 

 

(4,329,028

)

(g)

 

—

 

 

 

7,872,433

 

(Gain) loss on disposal of assets

 

 

(158,286

)

 

 

200,763

 

(g)

 

—

 

 

 

42,477

 

Corporate general and administrative

 

 

6,997,166

 

 

 

—

 

 

 

—

 

 

 

6,997,166

 

Total operating expenses

 

 

135,642,930

 

 

 

(9,492,510

)

 

 

(4,175,997

)

 

 

121,974,423

 

NET OPERATING (LOSS) INCOME

 

 

(8,055,006

)

 

 

4,954,721

 

 

 

(34,765

)

 

 

(3,135,050

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(22,686,694

)

 

 

479,319

 

(h)

 

(1,031,167

)

(h)

 

(23,238,542

)

Interest income

 

 

147,025

 

 

 

—

 

 

 

—

 

 

 

147,025

 

Unrealized gain on hedging activities

 

 

1,493,841

 

 

 

—

 

 

 

—

 

 

 

1,493,841

 

Gain on sale of assets

 

 

—

 

 

 

—

 

 

 

—

 

 

 

-

 

Gain on involuntary conversion of assets

 

 

588,586

 

 

 

—

 

 

 

—

 

 

 

588,586

 

Net (loss) income before income taxes

 

 

(28,512,248

)

 

 

5,434,040

 

 

 

(1,065,932

)

 

 

(24,144,140

)

Income tax provision

 

 

(27,392

)

 

 

—

 

 

 

—

 

 

 

(27,392

)

Net (loss) income

 

 

(28,539,640

)

 

 

5,434,040

 

 

 

(1,065,932

)

 

 

(24,171,532

)

Less: Net loss attributable to noncontrolling interest

 

 

2,318,166

 

 

 

(441,386

)

(k)

 

86,582

 

(k)

 

1,963,362

 

Net (loss) income attributable to the Company

 

 

(26,221,474

)

 

 

4,992,654

 

 

 

(979,350

)

 

 

(22,208,170

)

Declared and undeclared distributions to preferred stockholders

 

 

(7,541,891

)

 

 

—

 

 

 

—

 

 

 

(7,541,891

)

Gain on extinguishment of preferred stock

 

 

361,476

 

 

 

—

 

 

 

—

 

 

 

361,476

 

Net (loss) income attributable to common stockholders

 

$

(33,401,889

)

 

$

4,992,654

 

(d)

$

(979,350

)

(l)

$

(29,388,585

)

Net (loss) income per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(2.15

)

 

$

0.32

 

(i)

$

(0.06

)

(i)

$

(1.89

)

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

15,531,684

 

 

 

15,531,684

 

 

 

15,531,684

 

 

 

15,531,684

 

 

 

SOTHERLY HOTELS INC.

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

 

 

 

1) Basis of Presentation

 

The unaudited pro forma financial information is presented to reflect the sales of the Sheraton Louisville Riverside hotel and the DoubleTree by Hilton Raleigh-Brownstone University, as if the hotels assets and liabilities had been disposed on December 31, 2021 and unaudited pro forma statement of income, as if the hotels had been disposed on January 1, 2021 and the proforma adjustments are reflected in the unaudited pro forma balance sheet and unaudited pro forma statement of operations. The unaudited pro forma adjustments are included only to the extent that they are directly attributable and factually supportable assets and liabilities of the hotel as of December 31, 2021 and results of operations of the hotel, for the year ending December 31, 2021.

 

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported if the sale was completed as of the date presented, and should not be taken as representation of our future consolidated results of operations or financial position.

 

2) Pro Forma Adjustments

 

(a) Reflects the Company's consolidated balance as of December 31, 2021.

(b) Reflects the Company's consolidated statement of operations for the year ended December 31, 2021.

(c) Reflects the elimination of assets and liabilities of the Sheraton Louisville Riverside and the DoubleTree by Hilton Raleigh-Brownstone University hotels as of December 31, 2021.

(d) Reflects an adjustment of the net assets realized on the sale of the hotels offset by the gains resulting from the sale of the operations of the hotels.

(e) Reflects the elimination of revenues from: rooms department, food and beverage department and other operating departments of the hotels.

(f) Reflects the elimination of expenses from: rooms department, food and beverage department and other operating departments and indirect expenses of the hotels.

(g) Reflects the elimination of depreciation and amortization, impairment of the investment in hotel properties, net, loss on disposal of assets of the hotels and forfeiture of deposit on an earlier failed sale of hotels.

(h) Reflects the elimination of mortgage interest expense on the hotels' mortgages.

(i) Reflects the pro forma net income per share attributable to common shareholders, as if the sales had taken place on January 1, 2021, accordingly is not necessarily indicative of future results of operations.

(j) Reflects net change in cash arising from the close on the sales of the hotels, including closing costs, the repayment of all outstanding mortgage debt, the realization of all hotel accounts receivable, prepaid expenses and deposits, as well as the settlement of all other hotel obligations.

(k) Reflects the effect of pro forma net income attributable to non-controlling interests, as if the sales had taken place on January 1, 2021, accordingly is not necessarily indicative of future results of operations.