Sotherly Hotels (SOHO) discloses $42.0M interest-only mortgage with defeasance lockout

Rhea-AI Filing Summary

Sotherly Hotels Inc. reported a secured mortgage loan related to Sotherly Hotels LP with a principal balance of $42.0 million. The loan carries a fixed interest rate of 7.13% and requires interest-only payments through the term. The debt matures on October 6, 2030 and is guaranteed by the Operating Partnership only for traditional "bad boy" acts. Prepayment is restricted: defeasance-based prepayment is permitted after a lockout that ends on the earlier of three years after closing or two years after any securitization, while non-defeasance prepayment is allowed during the final six months of the term. The loan includes customary representations, warranties, covenants and events of default for a mortgage loan.

Positive

• Fixed interest rate of 7.13% provides predictability for interest expense over the loan term
• Interest-only payments reduce near-term cash outflows for principal repayment
• Clear prepayment mechanics with a defined lockout and defeasance provisions

Negative

• $42.0 million principal balance is a material debt obligation on the balance sheet
• Guarantee limited to 'bad boy' acts means the Operating Partnership does not offer broad recourse
• Prepayment restrictions (defeasance lockout and limited non-defeasance window) limit refinancing flexibility

Insights

Securities Analyst

TL;DR: This filing discloses a $42.0M fixed-rate, interest-only mortgage maturing in 2030 with limited guarantees and standard prepayment mechanics.

The disclosure provides clear loan economics: a fixed coupon of 7.13% and interest-only payments, which define near-term cash interest obligations but do not change principal until maturity. The Operating Partnership's guarantee is narrowly limited to "bad boy" acts, which constrains recourse for lenders to specific improper actions rather than providing full recourse. Prepayment is constrained by a defined lockout and defeasance requirements, with a window for non-defeasance prepayment only in the last six months. These features are typical for commercial mortgage financings and affect refinancing flexibility and lender remedies.

Corporate Finance Specialist

TL;DR: The loan terms are standard for CRE financing: fixed rate, interest-only payments, defeasance lockout, and limited guaranty scope.

The structure—interest-only payments and a fixed 7.13% rate—signals predictable debt service through maturity but defers principal repayment until maturity or prepayment events. The defeasance provision and lockout timing (earlier of three years post-closing or two years after securitization) restrict early refinancing options. The filing states customary covenants and events of default, suggesting no atypical lender protections disclosed. Overall, the document reads as a routine material financing disclosure without additional contingent liabilities or broad recourse guarantees disclosed here.

8-K Event Classification

3 items: 2.03, 7.01, 9.01

3 items

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial

The company incurred a new significant debt or off-balance-sheet obligation.

Item 7.01 Regulation FD Disclosure Disclosure

Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, and exhibit attachments filed with this report.

Understanding 8-K Material Events →

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 12, 2025

SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

(Exact name of Registrant as Specified in Its Charter)

Maryland (Sotherly Hotels Inc.) Delaware (Sotherly Hotels LP)	001-32379 (Sotherly Hotels Inc.) 001-36091 (Sotherly Hotels LP)	20-1531029 (Sotherly Hotels Inc.) 20-1965427 (Sotherly Hotels LP)
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
306 South Henry Street, Suite 100 Williamsburg, Virginia		23185
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (757) 229-5648

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	SOHO	The Nasdaq Stock Market LLC
8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value	SOHOB	The Nasdaq Stock Market LLC
7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value	SOHOO	The Nasdaq Stock Market LLC

8.25% Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value SOHON The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Sotherly Hotels Inc. ☐ Sotherly Hotels LP ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Sotherly Hotels Inc. ☐ Sotherly Hotels LP ☐

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On September 12, 2025, affiliates of Sotherly Hotels Inc. (the “Company”), the sole general partner of Sotherly Hotels LP (the “Operating Partnership”), entered into loan documents to secure a $42.0 million mortgage loan (the “Mortgage Loan”) on The DeSoto hotel (the “Hotel”) located in Savannah, GA with Citi Real Estate Funding Inc. The Company received approximately $5.78 million in net proceeds, after funding of the required lender reserves. Pursuant to the loan documents, the Mortgage Loan:

•has a principal balance of $42.0 million;

•matures on October 6, 2030;

•carries a fixed interest rate of 7.13%;

•requires payments of interest only;

•is guaranteed by the Operating Partnership only for traditional “bad boy” acts;

•can be prepaid with defeasance following a lockout period ending on the earlier of (i) three years after closing, or (ii) two years after the date of securitization, if any, and can be prepaid without defeasance during the last six months of the term; and

•contains customary representations, warranties, covenants and events of default for a mortgage loan.

Item 7.01 Regulation FD Disclosure.

On September 17, 2025, the Company issued a press release announcing the transactions effected pursuant to the debt financing of the Hotel. A copy of the press release is attached to the Current Report on Form 8-K as Exhibit 99.1 and incorporated by reference herein.

In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Item 7.01 (including Exhibit 99.1 hereto), shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
99.1		Press Release of Sotherly Hotels Inc. dated September 17, 2025.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

Date: September 17, 2025		SOTHERLY HOTELS INC.
		By:	/s/ Anthony E. Domalski
			Anthony E. Domalski
			Chief Financial Officer
		SOTHERLY HOTELS LP
			by its General Partner,
			SOTHERLY HOTELS INC.
		By:	/s/ Anthony E. Domalski
			Anthony E. Domalski
			Chief Financial Officer

FAQ

What is the principal amount and maturity of the loan disclosed by SOHO?

The loan has a $42.0 million principal balance and matures on October 6, 2030.

What interest rate and payment structure does the Sotherly loan use?

The loan carries a fixed interest rate of 7.13% and requires interest-only payments.

Who guarantees the loan provided in the 8-K for SOHO?

The loan is guaranteed by the Operating Partnership only for traditional 'bad boy' acts.

When can the loan be prepaid under its terms?

Prepayment with defeasance is allowed after a lockout ending on the earlier of three years after closing or two years after securitization; non-defeasance prepayment is permitted during the last six months of the term.

Does the filing disclose unusual covenants or default provisions?

The filing states the loan contains customary representations, warranties, covenants and events of default; no unusual provisions are specified in the provided text.