# EDGAR Filing Document

**Accession Number:** 0001301236
**File Stem:** 0000950170-23-005686
**Filing Date:** 2023-3
**Character Count:** 53457
**Document Hash:** 55e2f8d32a68b1684d23f1d0730a6df5
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-005686.hdr.sgml**: 20230302

**ACCESSION NUMBER**: 0000950170-23-005686

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230302

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230302

**DATE AS OF CHANGE**: 20230302

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Sotherly Hotels Inc.
- **CENTRAL INDEX KEY:** 0001301236
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-32379
- **FILM NUMBER:** 23696286

**BUSINESS ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185
- **BUSINESS PHONE:** 757-229-5648

**MAIL ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Sotherly Hotel Inc.
- **DATE OF NAME CHANGE:** 20130416

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MHI Hospitality CORP
- **DATE OF NAME CHANGE:** 20040823
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SOTHERLY HOTELS LP
- **CENTRAL INDEX KEY:** 0001313536
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOTELS & MOTELS [7011]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** DE

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36091
- **FILM NUMBER:** 23696287

**BUSINESS ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185
- **BUSINESS PHONE:** 757-229-5648

**MAIL ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MHI HOSPITALITY LP
- **DATE OF NAME CHANGE:** 20050106

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549** 

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**FORM** 8-K

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**CURRENT REPORT** 

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

**Date of Report (Date of earliest event reported):** March 2, 2023

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SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

**(Exact name of Registrant as Specified in Its Charter)** 

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---

| | | |
|:---|:---|:---|
| Maryland **(Sotherly Hotels Inc.)**<br>Delaware **(Sotherly Hotels LP)** | 001-32379 **(Sotherly Hotels Inc.)**<br>001-36091 **(Sotherly Hotels LP)** | 20-1531029 **(Sotherly Hotels Inc.)**<br>20-1965427 **(Sotherly Hotels LP)** |
| **(State or Other Jurisdiction**<br>**of Incorporation)** | **(Commission File Number)** | **(IRS Employer**<br>**Identification No.)** |
| 306 South Henry Street, Suite 100<br>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)** 

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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)) 

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** ☐

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Securities registered or to be registered pursuant to Section 12(b) of the Act.

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| | | |
|:---|:---|:---|
| <u>Title of each class</u> | <u>Trading Symbol(s)</u> | <u>Name of each exchange on which registered</u> |
| 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 |

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**Item 2.02 Results of Operations and Financial Condition.**

On March 2, 2023, Sotherly Hotels Inc., a Maryland corporation (the "Company") and the sole general partner of Sotherly Hotels LP, a Delaware limited partnership, issued a press release (the "Press Release") announcing the results of operations and financial condition of the Company for the quarter and year ended December 31, 2022. A copy of the Press Release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

The Press Release contains "non-GAAP financial measures" as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In the Press Release, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States.

In accordance with General Instruction B.2 and B.6 of Form 8-K, the information included in this Item 2.02 (including Exhibit 99.1 hereto), shall not be deemed "filed" for the purposes of Section 18 of 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.

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| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description** |
| 99.1 | [<u>Press Release of Sotherly Hotels Inc. dated March 2, 2023, reporting financial results for the quarter and year ended December 31, 2022.</u>](soho-ex99_1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

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**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.

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| | | |
|:---|:---|:---|
| Date: March 2, 2023 | **SOTHERLY HOTELS INC.** | **SOTHERLY HOTELS INC.** |
|  | By: | /s/ Anthony E. Domalski |
|  |  | **Anthony E. Domalski** |
|  |  | **Chief Financial Officer** |
|  | **SOTHERLY HOTELS LP** | **SOTHERLY HOTELS LP** |
|  |  | **by its General Partner,** |
|  |  | **SOTHERLY HOTELS INC.** |
|  | By: | /s/ Anthony E. Domalski |
|  |  | **Anthony E. Domalski** |
|  |  | **Chief Financial Officer** |

---

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## Ex-99

**Exhibit 99.1**

![img42542370_0.jpg](img42542370_0.jpg)

FOR IMMEDIATE RELEASE

THURSDAY, MARCH 2, 2023

**SOTHERLY HOTELS INC. REPORTS FINANCIAL RESULTS**

**FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2022**

**Williamsburg, Virginia – March 2, 2023 – Sotherly Hotels Inc. (NASDAQ: SOHO)**, ("Sotherly" or the "Company"), a self-managed and self-administered lodging real estate investment trust (a "REIT"), today reported its consolidated results for the fourth quarter and year ended December 31, 2022. The Company's results include the following\*:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2022** | **December 31, 2021** | **December 31, 2019** | **December 31, 2022** | **December 31, 2021** | **December 31, 2019** |
|  | ($ in thousands except per share data) | ($ in thousands except per share data) | ($ in thousands except per share data) | ($ in thousands except per share data) | ($ in thousands except per share data) | ($ in thousands except per share data) |
| Total revenue | $41342 | $35076 | $44305 | $166077 | $127588 | $185788 |
| Net income (loss) attributable to common stockholders | 3092 | (17209) | (3419) | 24967 | (33402) | (5911) |
| EBITDA | 14982 | 5871 | 7836 | 43298 | 25980 | 42011 |
| Hotel EBITDA | 11893 | 8102 | 9280 | 46463 | 30895 | 46938 |
| FFO attributable to common stockholders and unitholders | 7800 | (1571) | 1754 | 13738 | (4789) | 14763 |
| Adjusted FFO attributable to common stockholders and unitholders | 7991 | (1334) | 1026 | 17820 | (4890) | 17549 |
| Net income (loss) per common share | $0.17 | $(1.06) | $(0.25) | $1.40 | $(2.15) | $(0.43) |
| FFO per common share and unit | $0.40 | $(0.09) | $0.11 | $0.73 | $(0.29) | $0.96 |
| Adjusted FFO per common share and unit | $0.41 | $(0.08) | $0.07 | $0.95 | $(0.29) | $1.14 |

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(\*) Earnings before interest, taxes, depreciation and amortization ("EBITDA"), hotel EBITDA, funds from operations ("FFO") attributable to common stockholders and unitholders, adjusted FFO attributable to common stockholders and unitholders, FFO per common share and unit and adjusted FFO per common share and unit are non-GAAP financial measures. See further discussion of these non-GAAP measures, including definitions related thereto, and reconciliations to net income (loss) later in this press release. The Company is the sole general partner of Sotherly Hotels LP, a Delaware limited partnership (the "Operating Partnership"), and all references in this release to the "Company", "Sotherly", "we", "us" and "our" refer to Sotherly Hotels Inc., its Operating Partnership and its subsidiaries and predecessors, unless the context otherwise requires or it is otherwise indicated.

**HIGHLIGHTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**RevPAR**. Room revenue per available room ("RevPAR") for the Company's composite portfolio, which includes the rooms participating in our rental programs at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, increased to $101.73, for the three months ended December 31, 2022, from $85.80 in the comparable period in 2021 and was 0.5% below RevPAR of $102.27 for the comparable period in 2019. Changes in RevPAR were driven by an increase in the average daily rate ("ADR") to $180.05 for the three months ended December 31, 2022, from $162.00 for the comparable period in 2021 and by an increase in occupancy to 56.5% from 53.0% in the comparable 2021 period. However, while ADR for the three months ended December 31, 2022, was 15.7% higher than ADR for the comparable period in 2019, occupancy for the three months ended December 31, 2022, was still 9.2% below the 65.7% occupancy achieved during the comparable 2019 period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Revenue.** Total revenue increased to approximately $41.3 million for the three months ended December 31, 2022 from approximately $35.1 million during the comparable period in 2021. Total revenue for the three months ended December 31, 2022 was 6.7% below total revenue of approximately $44.3 million during the comparable 2019 period. Total revenue increased to approximately $166.1 million for the year ended December 31, 2022 from approximately $127.6 million during the

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comparable period in 2021. Total revenue for the year ended December 31, 2022 was 10.6% below total revenue of approximately $185.8 million during the comparable 2019 period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Net income (loss) attributable to common stockholders**. For the three-month period ending December 31, 2022, net income attributable to common stockholders increased 118.0%, or approximately $20.3 million, over the three months ended December 31, 2021, from a loss of approximately $17.2 million to income of approximately $3.1 million. For the twelve-month period ending December 31, 2022, net income attributable to common stockholders increased 174.7% or approximately $58.4 million over the twelve months ended December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Hotel EBITDA**. The Company increased production of hotel EBITDA to approximately $11.9 million for the three months ended December 31, 2022, from approximately $8.1 million during the comparable period in 2021. Hotel EBITDA for the three months ended December 31, 2022, was approximately $2.6 million above the hotel EBITDA generated in the comparable 2019 period. For the twelve-month period ending December 31, 2022, hotel EBITDA increased 50.4% or approximately $15.6 million over the twelve months ended December 31, 2021. Hotel EBITDA for the twelve months ended December 31, 2022, was approximately $0.5 million below the approximately $46.9 million hotel EBITDA produced during the comparable 2019 period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Adjusted FFO attributable to common stockholders and unitholders**. For the three-month period ending December 31, 2022, adjusted FFO attributable to common stockholders and unitholders increased 698.9%, or approximately $9.3 million, over the three months ended December 31, 2021, from approximately (1.3) million to approximately $8.0 million. For the twelve-month period ending December 31, 2022, adjusted FFO attributable to common stockholders and unitholders increased 464.4% or approximately $22.7 million over the twelve months ended December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Preferred Dividends**. The Company has reinstated payment of quarterly dividends on its preferred stock. On January 24, 2023 the Company announced a quarterly cash dividend of $0.50 per share of beneficial interest of the Company's 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock; a quarterly cash dividend of $0.4921875 per share of beneficial interest of the Company's 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock; and a quarterly cash dividend of $0.515625 per share of beneficial interest of the Company's 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock. Each of the Series B, Series C and Series D preferred dividends will be paid on March 15, 2023 to shareholders of record as of February 28, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Common Dividends**. As approved by its Board of Directors, the Company has suspended its regular quarterly cash dividend in order to preserve liquidity. Accordingly, the Company did not pay a dividend on its common stock and common units for the quarter ended December 31, 2022. The Board of Directors will continue to monitor the situation and assess future quarterly common dividend declarations. Per the terms of the Company's preferred stock, the Company cannot make any common dividend payments unless full cumulative distributions have been declared and paid for past distribution periods for each series of preferred stock.

Dave Folsom, President and Chief Executive Officer of Sotherly Hotels Inc., commented, "The results of Sotherly's fourth quarter helped cap a very good year for the Company. Fourth quarter hotel EBITDA finished at $11.9 million, which was a 46.8% increase over Q4 2021 and eclipsed Q4 2019 by 28.2%. Adjusted FFO for Q4 2022 finished at $0.41 per share, compared to the prior year's deficit of $0.08 per share. As we saw throughout 2022, ADR continued to outperform the prior year and 2019: Q4 ADR for our wholly owned hotels exceeded prior year by 15.4% and exceeded Q4 2019 by 16.5%. Occupancy increased from 54.1% in Q4 2021 to 58.0% in Q4 2022 but lagged occupancy of 67.5% in Q4 2019. Our group booking pace continues to improve. Our current pace is 46.9% ahead of the same time last year, and group ADR continues to grow. Business travel continues to layer into our revenues, especially in our urban markets. The strength of our booking pace has yet to be impacted by any material slow down or evidence of an impending recession. Further, we recently announced the resumption of dividends on our preferred stock, which demonstrates the Company's ongoing recovery. We were very happy with 2022 results."

**Balance Sheet/Liquidity**

As of December 31, 2022, the Company had approximately $27.3 million of available cash and cash equivalents, of which approximately $5.4 million was reserved for real estate taxes, insurance, capital improvements and certain other expenses or otherwise restricted. The Company had principal balances of approximately $324.4 million in outstanding debt, including mortgage and unsecured principal balances, at a weighted average interest rate of approximately 5.00%.

**Other Events**

On February 26, 2023, affiliates of the Company entered into amended loan documents to modify the existing mortgage loan on The Whitehall hotel located in Houston, TX with the existing lender, International Bank of Commerce. The amended loan documents extend the maturity date to February 26, 2028; maintain a floating interest rate of New York Prime Rate plus 1.25%; and subject the interest rate to a floor rate of 7.50%. The amended loan continues to be guaranteed by the Operating Partnership.

Between April 16 and May 6, 2020, the Operating Partnership and certain of its subsidiaries received proceeds of three separate PPP Loans administered by the U.S. Small Business Administration pursuant to the CARES Act totaling approximately $10.7 million. On December 9, 2022, the Company was notified it had received forgiveness for one its PPP Loans in the principal amount of approximately

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$4.6 million. On January 11, 2023, the Company was notified it has received forgiveness for another one of its PPP Loans in the principal amount of approximately $0.3 million.

**Q1 2023 Outlook**

Set forth below is the Company's guidance for Q1 2023. The table below reflects the Company's projections, within a range, of various financial measures for Q1 2023, in thousands of dollars, except per share and RevPAR data:

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| | | |
|:---|:---|:---|
|  | **Q1 2023 Guidance** | **Q1 2023 Guidance** |
|  | **Low Range** | **High Range** |
| Total revenue | $42309 | $44349 |
| Net income | 1290 | 1865 |
| Net loss available to common stockholders and unitholders | (705) | (130) |
| EBITDA | 10026 | 10601 |
| Hotel EBITDA | 11926 | 12501 |
| FFO available to common stockholders and unitholders | 3890 | 4465 |
| Adjusted FFO available to common stockholders and unitholders | 4155 | 4730 |
| Net loss per share available to common stockholders | $(0.04) | $(0.01) |
| FFO per common share and unit | $0.20 | $0.23 |
| Adjusted FFO per common share and unit | $0.21 | $0.24 |
| Rev PAR | $111.77 | $117.16 |
| Hotel EBITDA margin | 28.2% | 28.2% |

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**Earnings Call/Webcast**

The Company will conduct its fourth quarter 2022 conference call for investors and other interested parties at 10:00 a.m. Eastern Time on Thursday, March 2, 2023. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 844-200-6205 (United States) or +1 929-526-1599 (International) and enter access code 847511. To participate on the webcast, log on to <u>www.sotherlyhotels.com</u> at least 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning one hour after completion of the live call on March 2, 2023 through March 16, 2023. To access the rebroadcast, dial 866-813-9403 or +44 204-525-0658 and enter access code 753517.

**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 <u>www.sotherlyhotels.com</u>.

Contact at the Company:

Mack Sims

Vice President – Operations & Investor Relations

Sotherly Hotels Inc.

306 South Henry Street, Suite 100

Williamsburg, Virginia 23185

757.229.5648 **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,"

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"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. All statements regarding our expected financial position, business and financing plans are forward-looking statements.

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 our recently negotiated forbearance agreements and 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 report and subsequent reports filed with the Securities and Exchange Commission. 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.

Financial Tables Follow…

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**SOTHERLY HOTELS INC.**

**CONSOLIDATED BALANCE SHEETS**

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| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in hotel properties, net | $365070725 | $375885224 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in hotel properties held for sale, net |  | 22870487 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 21918680 | 13166883 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | 5422950 | 12411654 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 5844904 | 4822187 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses, inventory and other assets | 6754956 | 6894228 |
| **TOTAL ASSETS** | $**405012215** | $**436050663** |
| **LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans, net | $320482103 | $351170883 |
| &nbsp;&nbsp;&nbsp;&nbsp;Secured notes, net |  | 19128330 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured notes | 2545975 | 7609934 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 24147929 | 35960293 |
| &nbsp;&nbsp;&nbsp;&nbsp;Advance deposits | 2233013 | 1552942 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends and distributions payable | 4082472 | 4125351 |
| **TOTAL LIABILITIES** | $**353491492** | $**419547733** |
| &nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies |  |  |
| **EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Sotherly Hotels Inc. stockholders' equity |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $0.01 par value, 11,000,000 shares authorized: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.0% Series B cumulative redeemable perpetual preferred stock, <br> 1,464,100 and 1,510,000 shares issued and outstanding; aggregate liquidation<br>&nbsp;&nbsp;&nbsp;&nbsp;preference $44,655,050 and $43,035,000, at December 31, 2022 and <br>&nbsp;&nbsp;&nbsp;&nbsp;2021, respectively. | 14641 | 15100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.875% Series C cumulative redeemable perpetual preferred stock, <br>&nbsp;&nbsp;&nbsp;&nbsp;1,346,110 and 1,384,610 shares issued and outstanding; aggregate liquidation <br>&nbsp;&nbsp;&nbsp;&nbsp;preference $40,940,681 and $39,385,669, at December 31, 2022 and <br>&nbsp;&nbsp;&nbsp;&nbsp;2021, respectively. | 13461 | 13846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.25% Series D cumulative redeemable perpetual preferred stock, <br> 1,163,100 and 1,165,000 shares issued and outstanding; aggregate liquidation <br> preference $35,674,458 and $33,329,922, at December 31, 2022 and<br> 2021, respectively. | 11631 | 11650 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value $0.01, 69,000,000 shares authorized, 18,951,525<br> shares issued and outstanding at December 31, 2022 and 17,441,058 <br> shares issued and outstanding at December 31, 2021. | 189515 | 174410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 175611370 | 177651954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unearned ESOP shares | (2601134) | (3083398) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions in excess of retained earnings | (120985183) | (153521704) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Sotherly Hotels Inc. stockholders' equity | 52254301 | 21261858 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interest | (733578) | (4758928) |
| **TOTAL EQUITY** | **51520723** | **16502930** |
| **TOTAL LIABILITIES AND EQUITY** | $**405012215** | $**436050663** |

---

------

**SOTHERLY HOTELS INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(unaudited)**

------

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** |
|  | **December 31, 2022** | **December 31, 2021** | **December 31, 2022** | **December 31, 2021** |
| **REVENUE** |  |  |  |  |
| &nbsp;&nbsp; Rooms department | $26044903 | $23854036 | $109553906 | $88625659 |
| &nbsp;&nbsp; Food and beverage department | 9409840 | 5961822 | 29556213 | 15829487 |
| &nbsp;&nbsp; Other operating departments | 5887004 | 5260100 | 26967185 | 23132778 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | 41341747 | 35075958 | 166077304 | 127587924 |
| **EXPENSES** |  |  |  |  |
| Hotel operating expenses |  |  |  |  |
| &nbsp;&nbsp; Rooms department | 6088239 | 6275085 | 25782888 | 22688063 |
| &nbsp;&nbsp; Food and beverage department | 5855658 | 4069497 | 19724225 | 10297461 |
| &nbsp;&nbsp; Other operating departments | 1825675 | 1988348 | 9296056 | 8607594 |
| &nbsp;&nbsp; Indirect | 15678683 | 14640575 | 64811567 | 55100245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total hotel operating expenses | 29448255 | 26973505 | 119614736 | 96693363 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 4760715 | 4952338 | 18650336 | 19909226 |
| &nbsp;&nbsp;Impairment of investment in hotel properties, net |  | 12201461 |  | 12201461 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on disposal of assets | 144370 | 792 | 636198 | (158286) |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate general and administrative | 1847081 | 2850345 | 6621221 | 6997166 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total hotel operating expenses | 36200421 | 46978441 | 145522491 | 135642930 |
| **NET OPERATING INCOME (LOSS)** | 5141326 | (11902483) | 20554813 | (8055006) |
| Other income (expense) |  |  |  |  |
| &nbsp;&nbsp; Interest expense | (4492271) | (5622931) | (19772802) | (22686694) |
| &nbsp;&nbsp; Interest income | 96776 | 35726 | 189291 | 147025 |
| &nbsp;&nbsp; Loss on early extinguishment of debt |  |  | (5944881) |  |
| &nbsp;&nbsp; Unrealized gain (loss) on hedging activities | (74104) | 538281 | 2918207 | 1493841 |
| &nbsp;&nbsp; PPP debt forgiveness | 4720278 |  | 4720278 |  |
| &nbsp;&nbsp; Gain on sale of hotel properties |  |  | 30053977 |  |
| &nbsp;&nbsp; Gain on involuntary conversion of assets | 289479 | 80847 | 1763320 | 588586 |
| Net income (loss) before income taxes | 5681484 | (16870560) | 34482203 | (28512248) |
| &nbsp;&nbsp; Income tax provision | (488611) | (11267) | (522355) | (27392) |
| Net income (loss) | 5192873 | (16881827) | 33959848 | (28539640) |
| &nbsp;&nbsp; Less: Net (income) loss attributable to noncontrolling interest | (106102) | 1148822 | (1423327) | 2318166 |
| Net income (loss) attributable to the Company | 5086771 | (15733005) | 32536521 | (26221474) |
| &nbsp;&nbsp; Undeclared distributions to preferred stockholders | (1994313) | (1744340) | (7634219) | (7541891) |
| &nbsp;&nbsp; Gain on extinguishment of preferred stock |  | 268134 | 64518 | 361476 |
| Net income (loss) attributable to common stockholders | $3092458 | $(17209211) | $24966820 | $(33401889) |
| Net income (loss) per share attributable to common stockholders |  |  |  |  |
| &nbsp;&nbsp; Basic | $0.17 | $(1.06) | $1.40 | $(2.15) |
| &nbsp;&nbsp; Diluted | $0.16 | $(1.06) | $1.35 | $(2.15) |
| Weighted average number of common shares outstanding |  |  |  |  |

---

------

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; Basic | 18,409,738 | 16,264,306 | 17,802,717 | 15,531,684 |
| &nbsp;&nbsp; Diluted | 18,885,204 | 16,264,306 | 18,380,013 | 15,531,684 |

---

------

**SOTHERLY HOTELS INC.**

**KEY OPERATING METRICS**

**(unaudited)**

The following tables illustrate the key operating metrics for the three and twelve months ended December 31, 2022, 2021 and 2019, respectively, for the Company's wholly-owned properties ("actual" portfolio metrics), accordingly, the actual data does not include the participating condominium hotel rooms of the Hyde Resort & Residences and the Hyde Beach House Resort & Residences. The ten wholly-owned properties in the portfolio that were under the Company's control during the three and twelve months ended December 31, 2022 and the corresponding periods in 2021 and 2019 are considered same-store properties ("same-store" portfolio metrics). Accordingly, the same-store data does not reflect the performances of the Sheraton Louisville Riverside which was sold in February 2022, or the DoubleTree by Hilton Raleigh-Brownstone University which was sold in June 2022. The composite portfolio metrics represent the Company's wholly-owned properties and the participating condominium hotel rooms at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, during the three and twelve months ended December 31, 2022 and the corresponding periods in 2021 and 2019. The same-store (composite) portfolio metrics includes all properties with the exceptions of the Sheraton Louisville Riverside, DoubleTree by Hilton Raleigh-Brownstone University and the Hyde Beach House Resort & Residences, during the three and twelve months ended December 31, 2022 and the corresponding periods in 2021 and 2019.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Three Months Ended | Three Months Ended | Three Months Ended | Year Ended | Year Ended | Year Ended |
|  | December 31, 2022 | December 31, 2021 | December 31, 2019 | December 31, 2022 | December 31, 2021 | December 31, 2019 |
| Actual Portfolio Metrics |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Occupancy % | 58.0% | 54.1% | 67.5% | 60.8% | 52.9% | 71.3% |
| &nbsp;&nbsp;&nbsp;ADR | $175.34 | $151.93 | $150.50 | $171.34 | $145.50 | $155.92 |
| &nbsp;&nbsp;&nbsp;RevPAR | $101.61 | $82.16 | $101.61 | $104.17 | $76.94 | $111.17 |
| Same-Store Portfolio Metrics |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Occupancy % | 58.0% | 54.0% | 67.3% | 61.2% | 53.1% | 71.2% |
| &nbsp;&nbsp;&nbsp;ADR | $175.34 | $156.90 | $153.99 | $172.28 | $150.32 | $159.63 |
| &nbsp;&nbsp;&nbsp;RevPAR | $101.61 | $84.75 | $103.69 | $105.45 | $79.81 | $113.62 |
| Composite Portfolio Metrics |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Occupancy % | 56.5% | 53.0% | 65.7% | 60.0% | 52.5% | 70.1% |
| &nbsp;&nbsp;&nbsp;ADR | $180.05 | $162.00 | $155.57 | $181.34 | $160.51 | $161.17 |
| &nbsp;&nbsp;&nbsp;RevPAR | $101.73 | $85.80 | $102.27 | $108.87 | $84.29 | $112.94 |
| Same-Store (Composite) Portfolio Metrics |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Occupancy % | 57.4% | 53.6% | 66.0% | 61.0% | 53.1% | 70.0% |
| &nbsp;&nbsp;&nbsp;ADR | $178.41 | $163.20 | $159.01 | $178.01 | $160.03 | $165.27 |
| &nbsp;&nbsp;&nbsp;RevPAR | $102.34 | $87.43 | $105.01 | $108.56 | $85.04 | $115.68 |

---

------

**SOTHERLY HOTELS INC.**

**SUPPLEMENTAL DATA**

**(unaudited)**

The following tables illustrate the key operating metrics for the three and twelve months ended December 31, 2022, 2021 and 2019, respectively, for each of the Company's wholly-owned properties during each respective reporting period, irrespective of ownership percentage during any period.

**<u>Occupancy</u>**

---

| | | | |
|:---|:---|:---|:---|
|  | **Q4 2022** | **Q4 2021** | **Q4 2019** |
|  | **YTD** | **YTD** | **YTD** |
| The DeSoto<br>Savannah, Georgia | 60.5% | 64.6% | 62.9% |
|  | 65.7% | 59.3% | 65.4% |
| DoubleTree by Hilton Jacksonville Riverfront <br>Jacksonville, Florida | 62.9% | 63.7% | 75.4% |
|  | 68.8% | 65.7% | 78.5% |
| DoubleTree by Hilton Laurel <br>Laurel, Maryland | 57.6% | 49.1% | 65.2% |
|  | 59.7% | 48.0% | 69.9% |
| DoubleTree by Hilton Philadelphia Airport<br>Philadelphia, Pennsylvania | 60.9% | 61.9% | 73.9% |
|  | 64.6% | 58.9% | 76.6% |
| DoubleTree Resort by Hilton Hollywood Beach<br>Hollywood, Florida | 47.9% | 45.3% | 69.5% |
|  | 60.6% | 52.2% | 70.5% |
| Georgian Terrace<br>Atlanta, Georgia | 59.8% | 47.7% | 67.5% |
|  | 51.8% | 48.7% | 70.0% |
| Hotel Alba Tampa, Tapestry Collection by Hilton <br>Tampa, Florida | 72.9% | 73.7% | 61.8% |
|  | 76.3% | 72.8% | 66.2% |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton<br>Wilmington, North Carolina | 57.3% | 60.0% | 60.3% |
|  | 62.2% | 54.3% | 68.5% |
| Hyatt Centric Arlington <br>Arlington, Virginia | 65.7% | 46.3% | 74.8% |
|  | 64.3% | 43.7% | 79.1% |
| The Whitehall<br>Houston, Texas | 34.5% | 31.8% | 56.0% |
|  | 40.0% | 29.5% | 62.2% |
| Hyde Resort & Residences (1)<br>Hollywood Beach, Florida | 34.5% | 40.3% | 44.6% |
|  | 52.8% | 54.2% | 50.5% |
| Hyde Beach House Resort & Residences (1)<br>Hollywood Beach, Florida | 27.0% | 32.3% | 15.0% |
|  | 42.4% | 40.1% | 15.0% |
| All properties weighted average | 57.4% | 53.6% | 66.0% |
|  | 61.0% | 53.1% | 70.0% |

---

(1) Reflects only those condominium units participating in our rental program for the period.

------

**<u>ADR</u>**

---

| | | | |
|:---|:---|:---|:---|
|  | **Q4 2022** | **Q4 2021** | **Q4 2019** |
|  | **YTD** | **YTD** | **YTD** |
| The DeSoto<br>Savannah, Georgia | $213.72 | $193.64 | $169.52 |
|  | $211.49 | $185.06 | $174.75 |
| DoubleTree by Hilton Jacksonville Riverfront <br>Jacksonville, Florida | $160.82 | $145.64 | $137.96 |
|  | $146.53 | $135.34 | $139.53 |
| DoubleTree by Hilton Laurel <br>Laurel, Maryland | $121.18 | $107.37 | $103.73 |
|  | $117.20 | $100.75 | $107.34 |
| DoubleTree by Hilton Philadelphia Airport<br>Philadelphia, Pennsylvania | $150.63 | $132.47 | $145.10 |
|  | $140.94 | $123.41 | $143.95 |
| DoubleTree Resort by Hilton Hollywood Beach <br>Hollywood, Florida | $189.20 | $188.48 | $159.34 |
|  | $206.18 | $186.73 | $173.25 |
| Georgian Terrace<br>Atlanta, Georgia | $200.04 | $196.76 | $193.56 |
|  | $198.90 | $183.53 | $204.60 |
| Hotel Alba Tampa, Tapestry Collection by Hilton <br>Tampa, Florida | $162.40 | $139.56 | $124.16 |
|  | $165.11 | $143.09 | $129.91 |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton<br>Wilmington, North Carolina | $174.23 | $163.37 | $157.48 |
|  | $183.90 | $171.60 | $161.50 |
| Hyatt Centric Arlington <br>Arlington, Virginia | $198.77 | $152.20 | $176.80 |
|  | $187.12 | $125.47 | $188.15 |
| The Whitehall<br>Houston, Texas | $163.23 | $134.44 | $142.79 |
|  | $150.17 | $128.31 | $143.33 |
| Hyde Resort & Residences (1)<br>Hollywood Beach, Florida | $377.71 | $411.79 | $284.03 |
|  | $420.53 | $415.38 | $295.49 |
| Hyde Beach House Resort & Residences (1)<br>Hollywood Beach, Florida | $299.55 | $372.58 | $341.58 |
|  | $381.07 | $408.40 | $341.58 |
| All properties weighted average | $178.41 | $163.20 | $159.01 |
|  | $178.01 | $160.03 | $165.27 |

---

(1) Reflects only those condominium units participating in our rental program for the period.

------

**<u>RevPAR</u>**

---

| | | | |
|:---|:---|:---|:---|
|  | **Q4 2022** | **Q4 2021** | **Q4 2019** |
|  | **YTD** | **YTD** | **YTD** |
| The DeSoto<br>Savannah, Georgia | $129.27 | $125.02 | $106.56 |
|  | $139.00 | $109.76 | $114.34 |
| DoubleTree by Hilton Jacksonville Riverfront <br>Jacksonville, Florida | $101.10 | $92.74 | $104.03 |
|  | $100.79 | $88.96 | $109.53 |
| DoubleTree by Hilton Laurel <br>Laurel, Maryland | $69.81 | $52.67 | $67.67 |
|  | $69.98 | $48.41 | $75.06 |
| DoubleTree by Hilton Philadelphia Airport<br>Philadelphia, Pennsylvania | $91.79 | $82.01 | $107.16 |
|  | $91.01 | $72.71 | $110.20 |
| DoubleTree Resort by Hilton Hollywood Beach<br>Hollywood, Florida | $90.66 | $85.33 | $110.76 |
|  | $124.93 | $97.45 | $122.22 |
| Georgian Terrace<br>Atlanta, Georgia | $119.68 | $93.87 | $130.56 |
|  | $103.09 | $89.35 | $143.15 |
| Hotel Alba Tampa, Tapestry Collection by Hilton <br>Tampa, Florida | $118.38 | $102.84 | $76.79 |
|  | $125.92 | $104.15 | $85.97 |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton<br>Wilmington, North Carolina | $99.88 | $97.95 | $94.93 |
|  | $114.45 | $93.18 | $110.58 |
| Hyatt Centric Arlington <br>Arlington, Virginia | $130.59 | $70.51 | $132.25 |
|  | $120.33 | $54.83 | $148.77 |
| The Whitehall<br>Houston, Texas | $56.32 | $42.72 | $79.96 |
|  | $60.11 | $37.91 | $89.18 |
| Hyde Resort & Residences (1)<br>Hollywood Beach, Florida | $130.25 | $166.12 | $126.79 |
|  | $222.08 | $225.21 | $149.36 |
| Hyde Beach House Resort & Residences (1)<br>Hollywood Beach, Florida | $80.99 | $120.52 | $51.36 |
|  | $161.42 | $163.93 | $51.36 |
| All properties weighted average | $102.34 | $87.43 | $105.01 |
|  | $108.56 | $85.04 | $115.68 |

---

(1) Reflects only those condominium units participating in our rental program for the period.

------

**SOTHERLY HOTELS INC.**

**RECONCILIATION OF NET INCOME (LOSS) TO**

**FFO, Adjusted FFO, EBITDA and Hotel EBITDA**

**(unaudited)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2022** | **December 31, 2021** | **December 31, 2022** | **December 31, 2021** |
| **Net income (loss)** | $**5192873** | $**(16881827)** | $**33959848** | $**(28539640)** |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization - real estate | 4746622 | 4933630 | 18593359 | 19838017 |
| &nbsp;&nbsp;&nbsp;Impairment of investment in hotel properties, net |  | 12201461 |  | 12201461 |
| &nbsp;&nbsp;&nbsp;Distributions to preferred stockholders | (1994313) | (1744340) | (7634219) | (7541891) |
| &nbsp;&nbsp;&nbsp;Loss (gain) on disposal of assets | 144370 | 792 | 636198 | (158286) |
| &nbsp;&nbsp;&nbsp;Gain on sale of hotel properties |  |  | (30053977) |  |
| &nbsp;&nbsp;&nbsp;Gain on involuntary conversion of assets | (289479) | (80847) | (1763320) | (588586) |
| **FFO attributable to common stockholders and unitholders** | **7800073** | **(1571131)** | **13737889** | **(4788925)** |
| &nbsp;&nbsp;&nbsp;Amortization | 14093 | 18708 | 56977 | 71209 |
| &nbsp;&nbsp;&nbsp;ESOP and stock - based compensation | 102479 | 124486 | 998424 | 689547 |
| &nbsp;&nbsp;&nbsp;Aborted offering costs |  | 631952 |  | 631952 |
| &nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt |  |  | 5944881 |  |
| &nbsp;&nbsp;&nbsp;Unrealized loss (gain) on hedging activities | 74104 | (538281) | (2918207) | (1493841) |
| **Adjusted FFO attributable to common stockholders and unitholders** | $**7990749** | $**(1334266)** | $**17819964** | $**(4890058)** |
| &nbsp;&nbsp;&nbsp;Weighted average number of shares outstanding, basic | 18409738 | 16264306 | 17802717 | 15531684 |
| &nbsp;&nbsp;&nbsp;Weighted average number of non-controlling units | 898592 | 1160717 | 1045707 | 1164978 |
| &nbsp;&nbsp;&nbsp;Weighted average number of shares and units outstanding, basic | **19308330** | **17425023** | **18848424** | **16696662** |
| &nbsp;&nbsp;&nbsp;FFO per common share and unit | $0.40 | $(0.09) | $0.73 | $(0.29) |
| &nbsp;&nbsp;&nbsp;Adjusted FFO per common share and unit | $0.41 | $(0.08) | $0.95 | $(0.29) |

---

------

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2022** | **December 31, 2021** | **December 31, 2022** | **December 31, 2021** |
| **Net income (loss)** | $**5192873** | $**(16881827)** | $**33959848** | $**(28539640)** |
| &nbsp;&nbsp;&nbsp;Interest expense | 4492271 | 5622931 | 19772802 | 22686694 |
| &nbsp;&nbsp;&nbsp;Interest income | (96776) | (35726) | (189291) | (147025) |
| &nbsp;&nbsp;&nbsp;Income tax provision | 488611 | 11267 | 522355 | 27392 |
| &nbsp;&nbsp;&nbsp;Impairment of investment in hotel properties, net |  | 12201461 |  | 12201461 |
| &nbsp;&nbsp;&nbsp;Gain on sale of hotel properties |  |  | (30053977) |  |
| &nbsp;&nbsp;&nbsp;Loss (gain) on disposal of assets | 144370 | 792 | 636198 | (158286) |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 4760715 | 4952338 | 18650336 | 19909226 |
| **EBITDA** | **14982064** | **5871236** | **43298271** | **25979822** |
| &nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt |  |  | 5944881 |  |
| &nbsp;&nbsp;&nbsp;PPP debt forgiveness | (4720278) |  | (4720278) |  |
| &nbsp;&nbsp;&nbsp;Gain on involuntary conversion of assets | (289479) | (80847) | (1763320) | (588586) |
| **Subtotal** | **9972307** | **5790389** | **42759554** | **25391236** |
| &nbsp;&nbsp;&nbsp;Corporate general and administrative | 1847081 | 2850345 | 6621221 | 6997166 |
| &nbsp;&nbsp;&nbsp;Unrealized loss (gain) on hedging activities | 74104 | (538281) | (2918207) | (1493841) |
| **Hotel EBITDA** | $**11893492** | $**8102453** | $**46462568** | $**30894561** |

---

Tables below are reflected in thousands of dollars:

---

| | | |
|:---|:---|:---|
| **Reconciliation of Outlook of Net Income to EBITDA and Hotel EBITDA** | **Reconciliation of Outlook of Net Income to EBITDA and Hotel EBITDA** | **Reconciliation of Outlook of Net Income to EBITDA and Hotel EBITDA** |
|  | **Q1 2023 Guidance** | **Q1 2023 Guidance** |
|  | **Low Range** | **High Range** |
| Net income | $1290 | $1865 |
| Interest expense | 4228 | 4228 |
| Interest income | (130) | (130) |
| Income tax provision | 28 | 28 |
| Depreciation and amortization | 4610 | 4610 |
| EBITDA | 10026 | 10601 |
| Corporate general and administrative | 1900 | 1900 |
| Hotel EBITDA | $11926 | $12501 |
| **Reconciliation of Outlook of Net Income to FFO and Adjusted FFO** | **Reconciliation of Outlook of Net Income to FFO and Adjusted FFO** | **Reconciliation of Outlook of Net Income to FFO and Adjusted FFO** |
|  | **Q1 2023 Guidance** | **Q1 2023 Guidance** |
|  | **Low Range** | **High Range** |
| Net income | $1290 | $1865 |
| Depreciation and amortization | 4595 | 4595 |
| FFO | 5885 | 6460 |
| Distributions to preferred stockholders | (1995) | (1995) |
| FFO attributable to common stockholders and unitholders | 3890 | 4465 |
| Amortization | 15 | 15 |
| ESOP stock based compensation | 250 | 250 |
| Adjusted FFO attributable to common stockholders and unitholders | $4155 | $4730 |

---

------

**Non-GAAP Financial Measures**

The Company considers the non-GAAP financial measures of FFO (including FFO per share), Adjusted FFO (including Adjusted FFO per share), EBITDA and hotel EBITDA to be key supplemental measures of the Company's performance and could be considered along with, not alternatives to, net income (loss) as a measure of the Company's performance. These measures do not represent cash generated from operating activities determined by generally accepted accounting principles ("GAAP") or amounts available for the Company's discretionary use and should not be considered alternative measures of net income, cash flows from operations or any other operating performance measure prescribed by GAAP.

**<u>FFO</u>**

Industry analysts and investors use Funds from Operations ("FFO"), as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). FFO, as defined by NAREIT, represents net income or loss determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, gains or losses from involuntary conversions of assets, plus certain non-cash items such as real estate asset depreciation and amortization or impairment, stock compensation costs and after adjustment for any noncontrolling interest from unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by itself.

The Company considers FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance because we believe FFO is most directly comparable to net income (loss), which remains the primary measure of performance, because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company's real estate between periods or as compared to different companies. Although FFO is intended to be a REIT industry standard, other companies may not calculate FFO in the same manner as we do, and investors should not assume that FFO as reported by us is comparable to FFO as reported by other REITs.

**<u>Adjusted FFO</u>**

The Company presents adjusted FFO, including adjusted FFO per share and unit, which adjusts for certain additional items that are not in NAREIT's definition of FFO including changes in deferred income taxes, any unrealized gain (loss) on hedging instruments or warrant derivatives, loan impairment losses, losses on early extinguishment of debt, gains on extinguishment of preferred stock, aborted offering costs, loan modification fees, franchise termination costs, costs associated with the departure of executive officers, litigation settlement, over-assessed real estate taxes on appeal, management contract termination costs, operating asset depreciation and amortization, change in control gains or losses, ESOP and stock compensation expenses and acquisition transaction costs. We exclude these items as we believe it allows for meaningful comparisons between periods and among other REITs and is more indicative than FFO of the on-going performance of our business and assets. Our calculation of adjusted FFO may be different from similar measures calculated by other REITs.

**<u>EBITDA</u>**

The Company believes that excluding the effect of non-operating expenses and non-cash charges, and the portion of those items related to unconsolidated entities, all of which are also based on historical cost accounting and may be of limited significance in evaluating current performance, can help eliminate the accounting effects of depreciation and financing decisions and facilitate comparisons of core operating profitability between periods and between REITs, even though EBITDA also does not represent an amount that accrued directly to shareholders.

**<u>Hotel EBITDA</u>**

The Company defines hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax provision or benefit, (4) depreciation and amortization, (5) impairment of long-lived assets or investments, (6) gains and losses on disposal and/or sale of assets, (7) gains and losses on involuntary conversions of assets, (8) unrealized gains and losses on derivative instruments not included in other comprehensive income, (9) loss on early debt extinguishment, (10) Paycheck Protection Program (PPP) debt forgiveness, (11) gain on exercise of development right, (12) corporate general and administrative expense, and (13) other operating revenue not related to our wholly-owned portfolio. We believe this provides a more complete understanding of the operating results over which our wholly-owned hotels and its operators have direct control. We believe hotel EBITDA provides investors with supplemental information on the on-going operational performance of our hotels and the effectiveness of third-party

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management companies operating our business on a property-level basis. The Company's calculation of hotel EBITDA may be different from similar measures calculated by other REITs.

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