Lodging REIT Sotherly Hotels (SOHO) has withdrawn their registration for a new issue of exchange traded debt (baby bonds).
The reason given is due to ‘market conditions’.
In this issue the company was going to ‘escrow’ 4 quarters worth of interest payments–a sign of the credit worthiness (or lack thereof) of the company.
The original registration statement is here.
The cancellation notice is here.
J stumbled across this cancellation earlier today.
8 thoughts on “Sotherly Hotels Withdraws Debt Offering”
Anything in the hotel business that’s not Las Vegas (part of a casino) or the Drury Inn (that dinner buffet is always packed) is pretty untouchable these days….
Just took a look at their prospectus. They were not well run even before COVID. They are full service hotel, but RevPAR in 2019 was lower than limited service hotel like CLDT. Occupancy rate in 2017-2019 hovered around 61-67%. Hotel REIT is a tough business and sensitive to the economy anyway…
You’re right Walden—very small REIT which has never had stellar finances.
Is bankruptcy in their near future?
SOHO stopped paying dividends on common and preferred stocks in 2020 to cut costs. The last quarterly report was an improvement in performance but not stellar. If this Covid19 problem ever goes away hotels will benefit from pent up demand. I betting no bankruptcy in the immediate future but that depends on the economy. I own a small amount of SOHON.
SOHO has several high end full-service up-scale properties which perhaps another major chain (e.g. Marriott) would be interested in owning. Value of their assets most likely understated as these properties are not marked to market and have depreciation recorded against their book value. Never say never, but seems SOHO has value in properties and could sell off one or more of their high end properties to avoid BK. Preferred shares currently have $2+ in dividend arrears and trading at $14-16 (par $25), so could be an interesting risk/reward investment/gamble. Earnings coming up and will be interesting to see their RevPar.
Interesting. How often does this happen? I wish Eagle Point would crap or get off the pot already, too.
DCO–I agree–this (Eagle Point Income) is the last one announced but not yet priced–almost a month ago.
This is the 3rd cancelled issue I can remember from the last couple of years so it doesn’t happen too often.