Sotherly Hotels Inc. (SOHO): History, Ownership, Mission, How It Works & Makes Money

As a seasoned investor, how should you view Sotherly Hotels Inc. (SOHO), a lodging Real Estate Investment Trust (REIT) focused on upscale properties in the Southern US, especially with its recent news? This is a small-cap story, with a current market capitalization of just over $44.36 million as of late November 2025, yet it generated a trailing twelve-month (TTM) revenue of approximately $180.26 million, showing its operational scale against a modest valuation. You need to understand the underlying value of its portfolio-which includes properties like The DeSoto and The Georgian Terrace-because the company is currently set to be acquired for $2.25 per share, a major near-term catalyst you defintely can't ignore. We'll map out how this REIT works, where its revenue comes from, and what that acquisition means for shareholders right now.

Sotherly Hotels Inc. (SOHO) History

You need to understand Sotherly Hotels Inc.'s history not just as a 2004 REIT, but as a continuation of a decades-long family hospitality business. The company's trajectory, from its Southern U.S. focus to its recent, transformative acquisition in late 2025, shows a firm navigating the high-stakes, capital-intensive world of upscale lodging.

The core takeaway is this: Sotherly Hotels Inc. was a self-managed lodging Real Estate Investment Trust (REIT) that, after years of strategic acquisitions and debt management, agreed in October 2025 to be acquired for $2.25 per share, marking the end of its public chapter and a significant premium for shareholders. This is the single most important event in its recent history.

Given Company's Founding Timeline

Year established

Sotherly Hotels Inc. was formally organized in August 2004 as a self-managed and self-administered lodging REIT.

Original location

The company is headquartered in Williamsburg, Virginia.

Founding team members

The company is the 'next generation' of a hospitality business founded by Edgar Sims over 60 years ago. The REIT itself was formed by the subsequent generation of leadership, including Andrew M. Sims, who served as Chairman of the Board and CEO, and David R. Folsom, who currently serves as President and CEO.

Initial capital/funding

As a REIT, the company's initial funding was structured to own, acquire, and reposition full-service hotels, primarily in the Mid-Atlantic and Southern United States. The focus was on upscale and upper-upscale properties. What this estimate hides is the value of the initial portfolio of properties contributed to the REIT structure, which provided the starting equity.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The company's history is defined by two major pivots: a shift toward self-management and the final, decisive sale of the company.

The 2019 decision to create Our Town Hospitality LLC was a deep strategic commitment. Instead of relying on third-party managers, they built a dedicated, in-house management solution for a majority of their portfolio. This was meant to give them better control over operations and execute their specific strategy of maximizing revenue per available room (RevPAR) through careful cost management.

But the most recent, defintely transformative moment came in October 2025 with the merger agreement. Here's the quick math on the deal:

• The joint venture, led by Kemmons Wilson Hospitality Partners, agreed to acquire all outstanding common stock for $2.25 per share in cash.
• This price represented a massive 152.7% premium over the closing share price on October 24, 2025.
• The deal was unanimously approved by the Board of Directors, providing stockholders with the 'highest premium paid for a public, exchange-traded REIT in the past five years'.

This acquisition came as the company faced financial headwinds in 2025, including a Notice of Default on a key hotel mortgage and a second-quarter revenue of $48.8 million, which missed analyst projections. The merger provides a clean, high-premium exit for shareholders, solving the challenge of weak gross profit margins and significant debt obligations that the company had struggled with. To be fair, the full-year 2025 revenue guidance was still projected to be robust, between $183.4 million and $188.2 million.

If you want to dig into the numbers that led to this decision, you should check out Breaking Down Sotherly Hotels Inc. (SOHO) Financial Health: Key Insights for Investors.

Sotherly Hotels Inc. (SOHO) Ownership Structure

Sotherly Hotels Inc. (SOHO) is a self-managed and self-administered lodging Real Estate Investment Trust (REIT) with a distinct ownership structure dominated by retail investors, but its future governance is set to change following a recent acquisition agreement.

The company is currently controlled by a dispersed group of shareholders, with a significant portion held by individual retail investors, but the board has already approved a definitive merger agreement to be acquired by a joint venture backed by Kemmons Wilson Hospitality Partners and Ascendant Capital Partners for $2.25 per share in cash, a deal announced in October 2025.

Given Company's Current Status

Sotherly Hotels Inc. is a publicly traded REIT, with its common stock listed on the NASDAQ exchange under the ticker symbol SOHO.

As of November 2025, the company's market capitalization is approximately $44.36 million, reflecting its focus on upscale to upper-upscale full-service hotels primarily in the Southern United States.

The company operates a portfolio of investments in ten hotel properties, comprising 2,786 rooms, and also holds interests in two condominium hotels. This is a critical time for the company, as its full-year 2025 guidance for Total Revenue is projected to be between $183.4 million and $188.2 million, with Adjusted Funds From Operations (FFO) expected to be in the range of $11.5 million to $12.3 million. For a deeper dive into the company's strategic direction, you can review its Mission Statement, Vision, & Core Values of Sotherly Hotels Inc. (SOHO).

Given Company's Ownership Breakdown

The ownership structure of Sotherly Hotels Inc. is unusual for a publicly traded company of its size, showing a high concentration of shares in the hands of retail investors. This means individual investors, not large funds, hold the majority of the voting power, which can lead to different stock price dynamics.

Here's the quick math on who owns the shares as of the 2025 fiscal year data, based on the most recent filings:

The high insider ownership, at over one-fifth of the company, suggests strong alignment between management's interests and shareholder value, but it also creates a powerful, centralized voting bloc. You defintely need to watch this dynamic closely, especially during the acquisition process.

Given Company's Leadership

The company is steered by a seasoned executive team and a Board of Directors, many of whom have deep roots in the hospitality industry and significant personal stakes in the company.

The key executive leaders responsible for the company's operations and financial performance as of November 2025 include:

• Andrew M. Sims: Chairman
• David R. Folsom: President & Chief Executive Officer (CEO)
• Anthony E. Domalski: Chief Financial Officer (CFO) & Secretary
• Scott M. Kucinski: Executive Vice President & Chief Operating Officer (COO)
• Robert Kirkland IV: General Counsel

The Board of Directors, which was elected at the 2025 Annual Meeting of Stockholders on November 17, 2025, provides strategic oversight.

• Andrew M. Sims
• David R. Folsom
• Maria L. Caldwell
• G. Scott Gibson IV
• Walter S. Robertson III
• Gen. Anthony C. Zinni (USMC Ret.)

This leadership structure, with Andrew Sims serving as Chairman and David Folsom as President & CEO, maintains a clear division of strategic and operational responsibilities, a common best practice in corporate governance.

Sotherly Hotels Inc. (SOHO) Mission and Values

Sotherly Hotels Inc. (SOHO) anchors its corporate identity in delivering authentic Southern Hospitality, translating this guest-centric focus into superior shareholder returns through strategic real estate investment.

This commitment to a distinctive guest experience is the bedrock of their strategy, especially as they navigate a challenging 2025 market, projecting total revenue between $185.2 million and $188.2 million, a midpoint increase of 2.6% over the prior year.

Sotherly Hotels Inc.'s Core Purpose

The company's purpose goes beyond just being a lodging Real Estate Investment Trust (REIT); it is about making their properties feel like a natural extension of the city they are in, weaving Southern charm into the entire guest experience. This focus on localized, memorable moments is what drives their operational excellence across their portfolio of ten hotel properties, comprising 2,786 rooms.

• Guest-Centricity: Understanding and serving guests better than anyone else, believing guests are the heart of every hotel.
• Authenticity: Delivering true Southern Hospitality, which they see as an authentic experience, not a regional curiosity.
• Shareholder Value: Believing that happy guests defintely lead to happy shareholders.

The company also extends this value through the Sotherly Foundation, their community outreach arm, which provides aid to American veterans in the communities surrounding their hotels.

Official Mission Statement

While Sotherly Hotels Inc. does not publish a single, concise mission statement like a product company might, their actions and public statements point to a dual focus on hospitality and financial performance. The core purpose is to deliver exceptional hospitality experiences while generating superior returns for investors.

• Deliver exceptional hospitality experiences and memorable moments for all guests.
• Achieve superior returns for shareholders through strategic investments and operational excellence.
• Maintain a portfolio of upscale to upper-upscale full-service hotels in the Southern United States.

For a detailed breakdown of their guiding principles, you can explore Mission Statement, Vision, & Core Values of Sotherly Hotels Inc. (SOHO).

Vision Statement

The company's vision is to solidify its position as a premier provider of upscale hospitality experiences in its target market. This means continually enhancing the guest experience to drive profitability, which is critical when Hotel EBITDA is projected to be in the range of $45.3 million to $45.8 million for full year 2025.

• Be a leading provider of upscale hospitality experiences in the Southern United States.
• Expand the portfolio of distinctive hotels in key Southern markets.
• Maximize shareholder value by driving long-term profitability.

Sotherly Hotels Inc. Slogan/Tagline

The essence of the Sotherly Hotels Inc. brand is often captured in simple phrases that emphasize the local connection and the feeling of home, reflecting their commitment to authenticity.

• Our Town. Your Home.
• Southern Hospitality Hotel Collection.

Sotherly Hotels Inc. (SOHO) How It Works

Sotherly Hotels Inc. operates as a self-managed lodging Real Estate Investment Trust (REIT), meaning it owns the physical hotel properties and is responsible for their strategic management, generating revenue primarily from room rentals, food, and beverage services at its upscale and upper-upscale assets.

The core business is a value-add real estate strategy: buy well-located hotels, renovate and rebrand them (often called upbranding or repositioning), and then maximize their operating income to deliver superior returns to shareholders. This isn't just a passive landlord model; they actively manage the assets to drive performance.

Sotherly Hotels Inc.'s Product/Service Portfolio

The company's portfolio is strategically concentrated in the Southern United States, focusing on full-service properties that cater to a mixed demand of business and leisure travel. As of November 2025, the portfolio consists of investments in ten hotel properties, totaling 2,786 rooms, plus interests in two condominium hotels.

Sotherly Hotels Inc.'s Operational Framework

Sotherly's operational success hinges on disciplined asset management and cost control, translating property revenue into strong Hotel EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This focus is crucial, especially given the macroeconomic headwinds and increased price sensitivity seen in 2025.

• Acquisition and Repositioning: Identify and acquire properties in high-demand Southern markets, then execute capital improvements to 'upbrand' them, often under a major flag like Hilton or Hyatt.
• Value Creation through Renovation: Allocate capital for targeted renovations to increase rate capture. For example, the company is executing a $11.5 million Property Improvement Plan (PIP) at the DoubleTree Philadelphia Airport and a $14.6 million PIP at the DoubleTree Jacksonville Riverfront.
• Revenue Management: Focus on maximizing the Average Daily Rate (ADR) and occupancy to drive RevPAR. For the six months ended June 30, 2025, the portfolio's occupancy was 69.8%, with an ADR of $186.14.
• Financial Performance: Management's updated full-year 2025 guidance projects total revenue in the range of $185.2 million to $188.2 million, with Hotel EBITDA projected between $45.3 million and $45.8 million.

Here's the quick math: hitting the midpoint of the 2025 guidance means a Hotel EBITDA margin of roughly 24.5%, which is a solid operating return, but still reflects pressure from the current economic environment. You need to look closer at the balance sheet; Breaking Down Sotherly Hotels Inc. (SOHO) Financial Health: Key Insights for Investors.

Sotherly Hotels Inc.'s Strategic Advantages

The company's advantages are rooted in its niche focus and active management approach, allowing it to outperform some peers in its competitive set, even during a period of macroeconomic uncertainty.

• Geographic Concentration: The focus on the Southern United States provides exposure to markets with strong domestic migration and business growth, offering a defintely more stable demand base than some coastal or deeply urban markets.
• Brand Affiliation and Flexibility: Operating under global brands like Hilton and Hyatt provides a powerful distribution system, loyalty program access, and a recognized quality standard, while also maintaining a few independent boutique hotels for market differentiation.
• Active Asset Repositioning: The strategy of acquiring, renovating, and upbranding allows Sotherly Hotels Inc. to capture market share and increase property value, as evidenced by properties like Hotel Ballast in Wilmington, which finished Q2 2025 with a RevPAR index of 119.6% versus its competitive set.
• Acquisition Premium: The recent announcement in October 2025 that the company is set to be acquired by a joint venture at $2.25 per share highlights a strategic advantage for current shareholders, providing a clear exit and a premium over the pre-announcement trading price.

Sotherly Hotels Inc. (SOHO) How It Makes Money

Sotherly Hotels Inc. operates as a lodging real estate investment trust (REIT), meaning it generates the vast majority of its revenue by owning and operating a portfolio of upscale to upper-upscale full-service hotels, primarily in the Southern United States.

The company's financial engine is straightforward: it collects revenue from guest room stays, plus significant income from on-site services like food, beverage, and meeting space rentals, which is a key differentiator from limited-service hotels.

Sotherly Hotels Inc.'s Revenue Breakdown

The company's revenue streams are typical for a full-service hotel REIT, heavily weighted toward room revenue but with a substantial contribution from ancillary services. Based on the first quarter of the 2025 fiscal year, total revenue was approximately $48.31$ million.

The $\mathbf{64.8\%}$ Rooms Revenue share is the primary driver, but the $\mathbf{21.0\%}$ from Food and Beverage shows the value of the full-service model, especially for group and business events. The slight dip in the 'Other' category, which includes things like parking and resort fees, suggests some pricing or demand softness outside of the core hotel experience.

Business Economics

The core economic health of Sotherly Hotels Inc. is measured by three key performance indicators (KPIs) in the hospitality industry: Revenue per Available Room (RevPAR), Average Daily Rate (ADR), and Occupancy. To be fair, the Q2 2025 results showed a deceleration in demand, which is a near-term risk.

• RevPAR Pressure: For the second quarter of 2025, composite portfolio RevPAR decreased by 5.4% year-over-year to $\mathbf{\$130.20}$, indicating a challenging operating environment.
• ADR and Occupancy: This RevPAR decline was driven by a dual hit: occupancy fell by 3.5% to $\mathbf{70.8\%}$, and the Average Daily Rate (ADR) dropped by 1.9% to $\mathbf{\$183.88}$.
• Pricing Strategy: The company focuses on upscale properties, which allows them to maintain a higher ADR than the broader market, even with the modest Q2 decline. They are essentially targeting the less price-sensitive business transient and group travel segments to defend their rate discipline.
• Revenue Diversification: The full-service model provides a buffer; when room demand softens, the higher-margin Food & Beverage revenue stream helps stabilize Hotel EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Here's the quick math: a drop in occupancy is a volume problem, but a drop in ADR suggests a need to discount to fill those rooms, which is a tougher sign for pricing power.

Sotherly Hotels Inc.'s Financial Performance

As of November 2025, the company's financial outlook for the full year 2025 reflects a cautious stance, with management having lowered guidance due to macroeconomic headwinds and a pullback in government-related travel.

• Total Revenue Guidance: Full-year 2025 total revenue is projected to be in the range of $\mathbf{\$185.2}$ million to $\mathbf{\$188.2}$ million.
• Hotel EBITDA: The projected Hotel EBITDA for 2025 is between $\mathbf{\$45.3}$ million and $\mathbf{\$45.8}$ million.
• Adjusted FFO: Adjusted Funds From Operations (AFFO), a key measure of a REIT's operating cash flow, is projected to be in the range of $\mathbf{\$6.9}$ million to $\mathbf{\$7.5}$ million, or $\mathbf{\$0.34}$ to $\mathbf{\$0.37}$ per share.
• Liquidity and Debt Risk: The company faces significant near-term debt maturities, including a maturity default on the Georgian Terrace mortgage. Total outstanding debt principal was approximately $\mathbf{\$315.8}$ million at the end of Q2 2025, with a weighted average interest rate of $\mathbf{5.89\%}$.
• Q3 2025 Results: The company reported a total revenue of $\mathbf{\$38}$ million and a net loss of $\mathbf{\$7.5}$ million for the third quarter of 2025, with a Funds From Operations (FFO) loss of $\mathbf{\$2.5}$ million.

The most important thing to watch is the debt situation and the ability to refinance in a high-interest-rate environment, especially since a proposed $\mathbf{\$17.75}$ million parking garage sale was terminated in November 2025. This is defintely a capital structure story right now. For a deeper dive into the risks and opportunities, you should read Breaking Down Sotherly Hotels Inc. (SOHO) Financial Health: Key Insights for Investors.

Sotherly Hotels Inc. (SOHO) Market Position & Future Outlook

Sotherly Hotels Inc. is a micro-cap lodging real estate investment trust (REIT) focused on upscale and upper-upscale full-service hotels in the Southern U.S., but its near-term outlook is dominated by a pending acquisition that will define its immediate future. The company is set to be acquired by a joint venture for $2.25 per share, a transaction announced in October 2025 and expected to close in the first quarter of 2026.

This acquisition is the primary event, offering shareholders a significant premium and a clear exit, while the company's underlying operations continue to navigate a challenging debt structure, including $89.71 million in mortgage principal maturities remaining in the second half of 2025.

Competitive Landscape

Sotherly Hotels Inc. operates in a niche of the lodging REIT sector, focusing on high-end, full-service properties in the South. To be fair, its market capitalization of approximately $44.36 million as of November 2025 places it at the micro-cap end of the spectrum, so it competes against companies many times its size. Here's the quick math on its relative standing among comparable lodging REITs, using market cap as a proxy for market share in this segment.

Opportunities & Challenges

Honestly, the biggest opportunity is the acquisition itself, but its underlying business still faces the same headwinds as the broader sector. The company's full-year 2025 revenue is projected to be in the range of $185.2 million to $188.2 million, but that growth comes with a lot of financial complexity. You need to weigh the near-term certainty of the sale against the operational risks that pushed the company toward this strategic move.

Industry Position

Sotherly Hotels Inc. is a small, specialized player in the U.S. lodging REIT space. Its total asset value of $411.12 million as of June 30, 2025, is dwarfed by the multi-billion dollar enterprises that dominate the sector. The company's core strength is its portfolio concentration: a collection of full-service, branded (Hilton, Marriott) and independent hotels in high-demand Southern markets.

• Focus on upscale properties helps maintain a resilient Average Daily Rate (ADR) despite broader macroeconomic slowdowns.
• The company's micro-cap status and high leverage made it a prime target for a take-private deal, which is often a sign of trapped value in its real estate assets.
• The deferral of preferred dividends announced in October 2025 underscores the tight liquidity management required to navigate its debt load prior to the acquisition closing.

For a deeper dive into who holds the stock and why, you should read Exploring Sotherly Hotels Inc. (SOHO) Investor Profile: Who's Buying and Why?