Sotherly Hotels to be acquired by KWHP-led joint venture for $2.25 per share

WILLIAMSBURG - Sotherly Hotels Inc. (NASDAQ:SOHO), currently valued at $18.24 million in market capitalization with $36.59 million in EBITDA for the last twelve months, announced Monday it has entered into a definitive merger agreement to be acquired by KW Kingfisher LLC, a joint venture led by Kemmons Wilson Hospitality Partners (KWHP) with Ascendant Capital Partners as a strategic partner.

Under the agreement, the joint venture will purchase all outstanding shares of Sotherly common stock for $2.25 per share in cash, representing a 152.7% premium to the company’s closing share price on October 24, the last trading day before the announcement. According to InvestingPro data, this acquisition comes at a crucial time for Sotherly, which has struggled with weak gross profit margins and significant debt obligations. InvestingPro offers detailed analysis of over 1,400 US stocks, including comprehensive valuation metrics and financial health indicators.

The transaction has received unanimous approval from Sotherly’s board of directors following a recommendation from a special committee of independent directors.

"This transaction provides our stockholders with a significant premium over Sotherly’s current share price, and represents the highest premium paid for a public, exchange-traded REIT in the past five years," said Andrew Sims, Sotherly’s Chairman of the Board, in a press release statement.

Holders of Sotherly’s preferred stock will have the option to convert their shares to common stock and receive the merger consideration, subject to terms in the company’s charter, or remain as preferred stockholders unaffected by the merger.

KWHP, established by the Kemmons Wilson family who founded Holiday Inn, manages hospitality funds across the United States. Ascendant is a real estate investment platform with offices in Los Angeles and Dallas.

Affiliates of Apollo (NYSE:APO) and Ascendant provided debt financing commitments for the transaction.

The merger is expected to close in the first quarter of 2026, pending stockholder approval and customary closing conditions. Andrew Sims has agreed to vote all of his shares in favor of the transaction.

Sotherly Hotels owns ten full-service hotels with 2,786 rooms across seven states, plus interests in two condominium hotels. InvestingPro analysis reveals the company has been facing challenges with short-term obligations exceeding liquid assets and negative earnings over the last twelve months. For deeper insights into SOHO’s financial position and peer comparison, access the full Pro Research Report available exclusively on InvestingPro.

In other recent news, Sotherly Hotels Inc. reported its second-quarter earnings for 2025, which showed a revenue shortfall compared to analyst forecasts. The company recorded a revenue of $48.8 million, missing the projected $51.8 million by 5.81%. Additionally, the earnings per share (EPS) were reported at -$0.02, which did not meet expectations. In another development, Sotherly Hotels secured a $42 million loan from Citi Real Estate Funding Inc. for its DeSoto Hotel in Savannah, Georgia. This interest-only loan, with a fixed rate of 7.13%, is collateralized by a first mortgage on the property and matures on October 6, 2030. The funds from this loan were utilized to repay the existing mortgage and for general corporate purposes. These recent developments highlight Sotherly Hotels’ ongoing financial activities and challenges.

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