Little lodging REIT Sotherly Hotels (NASDAQ:SOHO) has a debt issue outstanding with a coupon of 7.25% and a maturity date in 2021.
The issue which came public on 2/8/2018 was eagerly bought at the time of the IPO was floated is an excellent holding for those looking for a pretty darned good return with modest volatility. The share price of $25.33 represent an excellent holding. The issue just went ex-dividend on October 31 and has a yield to maturity of about 7% for holding the issue to maturity in 2/2021–just a short 27 months from now.
The issue trades thinly with only 800-1000 shares traded per day so one should be patient if interested in the issue.
The issues ticker is SOHOK and further details and charts are here.
An interesting and helpful feature of this baby bond is that even though it has an early redemption available to the company starting 2/1/2019–but if it is called between 2/1/2019 and 2/15/2021 it is at 101% of liquidation preference ($25) thus eliminating the call risk for the most part.
The baby bonds are unrated (thus we consider them junk rated).
SOHO recently released earnings which were a bit soft because of storms in the areas where they have some hotels, but for the 9 month period ending 9/30 FFO was strong at 83 cents/share–the common dividend is easily covered as they are paying just 12.5 cents per quarter (thus their payout ratio is less than 50%). Earnings can be reviewed here.
Here is the chart of the SOHOK issue.
DISCLOSURE–we have held some of these baby bonds since the IPO and may buy just a little more.