Sotherly Hotels Inc. Announces Notice of Default on Mortgage Loan Secured by the Georgian Terrace Hotel in Atlanta
Sotherly Hotels (NASDAQ: SOHO) has received a Notice of Default from the special servicer for its mortgage loan secured by the Georgian Terrace hotel in Atlanta. The default stems from the company's subsidiary, SOHO Atlanta LLC, failing to make required payments, with the current financial obligation estimated at $38.0 million as of July 2, 2025.
The company has engaged a consultant to negotiate a loan extension with the special servicer and continues to make interest payments, real estate tax escrow, and required reserve payments. Management clarified that this is a maturity default, not reflecting inability to service ongoing interest requirements, and attributes the situation to tighter underwriting standards and higher interest rates affecting commercial real estate refinancing.
Sotherly Hotels (NASDAQ: SOHO) ha ricevuto un Avviso di Inadempienza dal servicer speciale per il suo prestito ipotecario garantito dall'hotel Georgian Terrace ad Atlanta. Il mancato pagamento deriva dalla controllata dell'azienda, SOHO Atlanta LLC, che non ha effettuato i pagamenti richiesti, con un debito attuale stimato in 38,0 milioni di dollari al 2 luglio 2025.
L'azienda ha incaricato un consulente per negoziare un'estensione del prestito con il servicer speciale e continua a effettuare pagamenti di interessi, deposito per tasse immobiliari e riserve obbligatorie. La direzione ha chiarito che si tratta di un default per scadenza, che non riflette l'incapacità di pagare gli interessi correnti, attribuendo la situazione a criteri di valutazione più severi e tassi di interesse più elevati che influenzano il rifinanziamento degli immobili commerciali.
Sotherly Hotels (NASDAQ: SOHO) ha recibido un Aviso de Incumplimiento por parte del administrador especial de su préstamo hipotecario garantizado por el hotel Georgian Terrace en Atlanta. El incumplimiento se debe a que la subsidiaria de la compañía, SOHO Atlanta LLC, no realizó los pagos requeridos, con una obligación financiera actual estimada en 38,0 millones de dólares al 2 de julio de 2025.
La empresa ha contratado a un consultor para negociar una extensión del préstamo con el administrador especial y continúa realizando pagos de intereses, depósito para impuestos inmobiliarios y reservas requeridas. La dirección aclaró que se trata de un incumplimiento por vencimiento, que no refleja la incapacidad para cubrir los intereses corrientes, y atribuye la situación a estándares de evaluación más estrictos y tasas de interés más altas que afectan la refinanciación de bienes raíces comerciales.
Sotherly Hotels (NASDAQ: SOHO)는 애틀랜타의 조지안 테라스 호텔을 담보로 한 모기지 대출에 대해 스페셜 서비서로부터 채무불이행 통지를 받았습니다. 이번 채무불이행은 자회사인 SOHO Atlanta LLC가 필수 납부금을 지불하지 않아 발생했으며, 2025년 7월 2일 기준 현재 재정 의무는 3,800만 달러로 추산됩니다.
회사는 스페셜 서비서와 대출 연장 협상을 위해 컨설턴트를 고용했으며, 계속해서 이자 납부, 부동산세 에스크로, 필수 준비금 납부를 진행 중입니다. 경영진은 이번 사태가 만기 불이행이며, 지속적인 이자 납부 능력 부족과는 무관하다고 밝혔으며, 상업용 부동산 재융자에 영향을 미치는 강화된 심사 기준과 높은 금리 때문이라고 설명했습니다.
Sotherly Hotels (NASDAQ: SOHO) a reçu un Avis de Défaut de la part du gestionnaire spécial concernant son prêt hypothécaire garanti par l'hôtel Georgian Terrace à Atlanta. Le défaut résulte du fait que la filiale de la société, SOHO Atlanta LLC, n'a pas effectué les paiements requis, avec une obligation financière actuelle estimée à 38,0 millions de dollars au 2 juillet 2025.
L'entreprise a engagé un consultant pour négocier une prolongation du prêt avec le gestionnaire spécial et continue d'effectuer les paiements d'intérêts, de dépôt pour les taxes foncières et les réserves obligatoires. La direction a précisé qu'il s'agit d'un défaut à l'échéance, ne reflétant pas une incapacité à honorer les intérêts courants, et attribue cette situation à des critères d'octroi plus stricts et à des taux d'intérêt plus élevés affectant le refinancement de l'immobilier commercial.
Sotherly Hotels (NASDAQ: SOHO) hat von dem Special Servicer eine Zahlungsaufforderung wegen eines Ausfalls bei seinem Hypothekendarlehen erhalten, das durch das Georgian Terrace Hotel in Atlanta besichert ist. Der Ausfall resultiert daraus, dass die Tochtergesellschaft SOHO Atlanta LLC die erforderlichen Zahlungen nicht geleistet hat, wobei die aktuelle finanzielle Verpflichtung zum 2. Juli 2025 auf 38,0 Millionen US-Dollar geschätzt wird.
Das Unternehmen hat einen Berater beauftragt, um eine Darlehensverlängerung mit dem Special Servicer zu verhandeln, und leistet weiterhin Zinszahlungen, Immobiliensteuer-Escrow sowie erforderliche Rücklagenzahlungen. Das Management stellte klar, dass es sich um einen Fälligkeitsausfall handelt, der nicht auf eine Unfähigkeit zur Bedienung der laufenden Zinszahlungen hinweist, und führt die Situation auf strengere Kreditvergabestandards und höhere Zinssätze zurück, die die Refinanzierung von Gewerbeimmobilien erschweren.
- Company continues making interest payments, real estate tax escrow, and required reserve payments
- Management has engaged CMBS consultant to negotiate loan extension
- Default is only maturity-related, not due to inability to service ongoing interest payments
- Notice of Default received on $38.0 million mortgage loan for Georgian Terrace hotel
- Risk of foreclosure if negotiations are unsuccessful
- Reflects broader refinancing challenges in commercial real estate sector due to higher interest rates
Insights
Sotherly's $38M mortgage default on Georgian Terrace Hotel signals refinancing challenges amid tight credit markets, threatening potential foreclosure.
Sotherly Hotels' announcement of a mortgage default on its Georgian Terrace property in Atlanta represents a significant financial challenge for the company. The default involves a substantial
This situation highlights the broader distress in commercial real estate financing, particularly in the hotel sector. With interest rates elevated and lending standards tightened considerably, many property owners are finding themselves unable to refinance maturing CMBS (Commercial Mortgage-Backed Securities) loans on acceptable terms.
While management characterizes this as a maturity default rather than an operational failure, the distinction may provide little comfort to investors. The company claims it can continue servicing interest payments, which suggests the property itself remains cash-flow positive, but the principal repayment presents the critical obstacle.
The engagement of a CMBS consultant indicates Sotherly is pursuing a loan extension, following what management describes as a typical process for troubled CMBS loans. However, special servicing negotiations often result in less favorable terms, potentially including higher interest rates, additional reserves, or partial paydowns.
Without successful negotiation, Wilmington Trust could proceed with foreclosure, which would represent a substantial asset loss. The Georgian Terrace is a historic property in Atlanta and losing it would materially impact Sotherly's portfolio and financial position.
This default reflects the company's broader balance sheet challenges. REITs with high leverage ratios face particular vulnerability in the current rising interest rate environment, especially when significant debt matures before rates normalize. The situation warrants close monitoring as it may signal potential issues with other properties in Sotherly's portfolio as additional loans reach maturity.
WILLIAMSBURG, Va., July 02, 2025 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ: SOHO) (the “Company”) today announced the Company received a Notice of Default (the “Notice”) from the special servicer for its mortgage loan secured by the Georgian Terrace in Atlanta. The Notice states that the Company’s subsidiary, SOHO Atlanta LLC, is in default under the note and the loan documents by virtue of, among other things, its failure to pay all amounts when due thereunder, and that the current lender, Wilmington Trust, National Association, as Trustee, will take all such actions as it deems appropriate to protect its interest in the mortgage loan and to collect the debt thereunder, including, without limitation, seeking foreclosure and/or reconveyance of its security under the loan documents without further notice or demand except as required pursuant to state law and the loan documents. The Company estimates that the amount of direct financial obligation, as of July 2, 2025, is approximately
The Company has engaged a consultant to negotiate for an extension of the mortgage loan with the special servicer, and proposed extension terms have been provided to the special servicer. The Company intends to continue making interest payments, as well as real estate tax escrow, and required reserve payments in the interim.
Drew Sims, Chairman commented, “Extensions of CMBS loans typically follow a formal process that includes voluntarily being transferred to special servicing, a formal default notice being issued, and a negotiation process being entered into; we are currently in the negotiation phase and being assisted by our CMBS consultant." Dave Folsom, President and CEO further commented, “Although never welcome, the recently announced default notice at Sotherly’s Georgian Terrace hotel in Atlanta has been anticipated. The default in question is a maturity default and does not reflect the company’s ability to serve ongoing interest requirements of the loan. With tighter underwriting standards and higher interest rates, maturity defaults have unfortunately become far more common in the commercial real estate sector, as borrowers find refinancing assets difficult. Sotherly will endeavor to work diligently with the special servicer to find a solution that may include, but is not limited to, a multi-year extension of the loan.”
Forward-Looking Statements
This news release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our current strategies, expectations, and future plans are generally identified by our use of words, such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions, whether in the negative or affirmative, but the absence of these words does not necessarily mean that a statement is not forward-looking. Factors which could have a material adverse effect on the Company’s future operations, results, performance and prospects, include, but are not limited to: national and local economic and business conditions that affect occupancy rates and revenues at our hotels and the demand for hotel products and services; risks associated with the hotel industry, including competition and new supply of hotel rooms, increases in wages, energy costs and other operating costs; risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements, including loan modifications and, as necessary, to refinance or seek an extension of the maturity of such indebtedness or further modification of such debt agreements; risks associated with adverse weather conditions, including hurricanes; impacts on the travel industry from pandemic diseases, including COVID-19; the availability and terms of financing and capital and the general volatility of the securities markets; management and performance of our hotels; risks associated with maintaining our system of internal controls; risks associated with the conflicts of interest of the Company’s officers and directors; risks associated with redevelopment and repositioning projects, including delays and cost overruns; supply and demand for hotel rooms in our current and proposed market areas; risks associated with our ability to maintain our franchise agreements with our third party franchisors; our ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations; our ability to successfully expand into new markets; legislative/regulatory changes, including changes to laws governing taxation of real estate investment trusts (“REITs”); the Company’s ability to maintain its qualification as a REIT; and our ability to maintain adequate insurance coverage. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or the objectives and plans of the Company will be achieved.
Additional factors that could cause actual results to vary from our forward-looking statements are set forth under the section titled “Risk Factors” in our Annual Report on Form 10-K, in this press release and subsequent reports filed with the Securities and Exchange Commission. Except as required by law, the Company undertakes no obligation to and does not intend to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Although the Company believes its current expectations to be based upon reasonable assumptions, it can give no assurance that its expectations will be attained or that actual results will not differ materially.
About Sotherly Hotels Inc.
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. 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. For more information, please visit www.sotherlyhotels.com.
Contact at the Company: Mack Sims Sotherly Hotels Inc. 306 South Henry Street, Suite 100 Williamsburg, Virginia 23185 (757) 229-5648
FAQ
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