Sotherly Hotels Inc. Announces Refinancing Of Tampa Hotel

Rhea-AI Summary

Sotherly Hotels Inc. (SOHO) announced a $35.0 million secured loan with Citi Real Estate Funding Inc. for Hotel Alba in Tampa, Florida. The interest-only loan matures in 2029 with an 8.49% fixed interest rate, used to repay existing debt and for corporate purposes, generating over $10 million in cash proceeds.

Financial Analyst

The execution of a $35.0 million secured loan by Sotherly Hotels Inc. with Citi Real Estate Funding Inc. is a strategic financial maneuver that merits a closer examination. The use of the loan to repay an existing mortgage indicates a refinancing strategy that could potentially lead to interest expense savings, subject to the terms of the previous mortgage. The fixed interest rate of 8.49% is a critical figure; it is essential to compare this rate with the industry's average cost of debt to assess the competitiveness of the terms secured by Sotherly Hotels. In the current economic climate, where interest rates have been fluctuating, locking in a fixed rate can be a hedge against future rate increases, which could be beneficial for the company's long-term financial planning.

Furthermore, the CEO's statement about the loan resulting in significant cash proceeds of over $10 million to the company suggests an improvement in liquidity. This can enhance the company's ability to invest in other strategic initiatives or to buffer against unforeseen expenses. However, investors should consider the impact of this new debt on the company's leverage ratios and overall financial health. An increase in debt levels can affect a company's risk profile and its ability to raise future capital.

Market Research Analyst

From a market perspective, the refinancing of Hotel Alba's mortgage with a secured loan could signal Sotherly Hotels Inc.'s confidence in the property's value and its commitment to the Tapestry Collection by Hilton. This repositioning strategy mentioned by the CEO implies that the hotel has undergone improvements that have enhanced its value. It is important to analyze the performance and competitive positioning of Hotel Alba within the Tampa, Florida market, as well as the broader hospitality industry trends.

Given that the hospitality sector is highly sensitive to economic cycles, the company's strategy to reposition and refinance its assets could be a proactive measure to strengthen its market position in anticipation of future demand fluctuations. The additional liquidity provided by the loan could also enable Sotherly Hotels to capitalize on potential growth opportunities or to weather downturns. Stakeholders should monitor the company's subsequent investments and operational performance to gauge the effectiveness of this refinancing strategy.

Real Estate Investment Analyst

Collateralizing the loan with a first mortgage on Hotel Alba underscores the asset's perceived value and the company's ability to leverage its real estate holdings effectively. The choice of Citi Real Estate Funding Inc. as the lender also suggests that Sotherly Hotels Inc. is capable of engaging with large, reputable financial institutions, which could reflect positively on the company's creditworthiness.

It is crucial to assess the terms of the mortgage, including the loan-to-value ratio, to understand the risk profile of the loan. The real estate market in Tampa, Florida, where Hotel Alba is located, should be analyzed for trends in property values, occupancy rates and average daily rates to evaluate the potential for the hotel's value appreciation. This analysis can provide insights into whether the refinancing terms are favorable in the context of the property's market potential and the overall health of the real estate market.

WILLIAMSBURG, Va., Feb. 13, 2024 (GLOBE NEWSWIRE) -- Sotherly Hotels Inc. (NASDAQ: SOHO) (the “Company”) today announced that the Company has executed a $35.0 million secured loan with Citi Real Estate Funding Inc., collateralized by a first mortgage on Hotel Alba, Tapestry Collection by Hilton located in Tampa, Florida. The interest-only loan, which has a principal balance of $35.0 million, matures on March 6, 2029, and carries a fixed interest rate of 8.49%. Proceeds from the loan were used to repay the existing first mortgage and for general corporate purposes.

“We are very pleased with the completion of the refinancing of the mortgage loan for the hotel with Citi,” commented Dave Folsom, Chief Executive Officer of the Company. “This refinancing represents the culmination of our repositioning strategy for Hotel Alba which created substantial value for the hotel and resulted in significant cash proceeds of over $10 million to the Company.”

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.

What is the recent announcement made by Sotherly Hotels Inc. (SOHO)?

Sotherly Hotels Inc. (SOHO) announced a $35.0 million secured loan with Citi Real Estate Funding Inc. for Hotel Alba in Tampa, Florida.

What is the maturity date and interest rate of the loan?

The interest-only loan matures on March 6, 2029, with a fixed interest rate of 8.49%.

How were the proceeds from the loan utilized?

The proceeds from the loan were used to repay the existing first mortgage and for general corporate purposes.

Who commented on the refinancing completion?

Dave Folsom, the Chief Executive Officer of Sotherly Hotels Inc. (SOHO), commented on the completion of the refinancing.

What value was created for the hotel through the repositioning strategy?

The repositioning strategy created substantial value for Hotel Alba, generating significant cash proceeds of over $10 million.