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ATLANTA - Sotherly Hotels Inc. (NASDAQ:SOHO), currently trading at $0.93 per share with a market capitalization of $19.34 million, announced Wednesday it has received a Notice of Default from the special servicer for its mortgage loan secured by the Georgian Terrace hotel in Atlanta. According to InvestingPro data, the company’s short-term obligations exceed its liquid assets, with a concerning current ratio of 0.31.
The notice states that the company’s subsidiary, SOHO Atlanta LLC, failed to pay all amounts due under the loan documents. The current lender, Wilmington Trust, National Association, as Trustee, indicated it will take actions to protect its interest in the mortgage loan, including potential foreclosure.
The financial obligation in default is approximately $38.0 million as of July 2, according to the company. Sotherly has engaged a consultant to negotiate an extension with the special servicer and has submitted proposed extension terms.
The company stated it intends to continue making interest payments, real estate tax escrow, and required reserve payments while negotiations proceed.
Drew Sims, Chairman of Sotherly Hotels, characterized the situation as part of a "formal process" for CMBS loans that includes "voluntarily being transferred to special servicing, a formal default notice being issued, and a negotiation process."
Dave Folsom, President and CEO, noted that the default is a maturity default rather than an inability to service ongoing interest requirements. He attributed the situation to "tighter underwriting standards and higher interest rates" that have made refinancing difficult across the commercial real estate sector.
Sotherly Hotels is a self-managed lodging REIT focused on upscale to upper-upscale full-service hotels in the Southern United States. The company’s portfolio currently includes investments in ten hotel properties comprising 2,786 rooms.
This article is based on information from a company press release.
In other recent news, Sotherly Hotels Inc. reported its Q1 2025 earnings, which exceeded revenue expectations with $48.3 million, surpassing the forecast of $47.7 million. The company achieved an earnings per share (EPS) of $0.22, reflecting stable performance metrics. Sotherly Hotels also announced new franchise agreements with Hilton, highlighting strategic growth initiatives. The company reported a 3.8% year-over-year increase in revenue, with significant improvements in occupancy and revenue per available room (RevPAR) in key urban markets such as Houston and Philadelphia. Hotel EBITDA rose by 4.5% year-over-year, reaching $12.9 million, while funds from operations (FFO) decreased by $700,000 to $4.5 million. Sotherly Hotels maintained its full-year 2025 revenue guidance, projecting between $183.4 million and $188.2 million. The company is optimistic about continued recovery in urban markets and ongoing strategic renovations. Despite positive earnings, market sentiment remained cautious, potentially due to macroeconomic uncertainties and upcoming loan maturities.
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