Shares of Sotherly Hotels Inc. SOHO dropped 1.37% on Thursday’s trading session in response to lower-than-anticipated second-quarter 2023 results.
Funds from operations (FFO) per share came in at 37 cents, and adjusted FFO per share was 36 cents, which lagged the Zacks Consensus Estimate of 40 cents. Results reflect lower-than-anticipated revenues. Sotherly Hotels generated total revenues of $49 million, missing the Zacks Consensus Estimate of $50 million.
However, on a year-over-year basis, the adjusted FFO per share increased 12.1%. Meanwhile, total revenues climbed up 3.9%.
Per Dave Folsom, the president and chief executive officer of Sotherly Hotels, "Our portfolio delivered solid results for the quarter, highlighted by the continued improvement of fundamentals at our urban hotels, which saw further recovery from the corporate and group segments, as well as weekend leisure travel. The improvement in operating fundamentals for the portfolio was encouraging, especially considering difficult comps for our leisure segment and moderate market-related headwinds faced in Atlanta and South Florida during the quarter.”
Folsom also pointed out that “As of August 1, 2023, overall group booking pace was 24.0% ahead of prior year, while booking pace for business travel increased by 18.0% over prior year. The strength in both group and business traveler bookings reflects the market’s continued demand normalization for these revenue segments.”
For the company’s composite portfolio, which includes rooms participating in its rental programs at the Hyde Resort & Residences and the Hyde Beach House Resort & Residences, the room revenue per available room (RevPAR) increased to $131.94 in the second quarter from $128.63 in the comparable prior-year period.
This increase mainly reflects an uptick in the average daily rate to $190.15 in the second quarter from $189.09 in the year-ago quarter and a rise in occupancy to 69.4% from 68% a year ago.
During the quarter, hotel EBITDA also increased to $14.84 million from approximately $14.77 million in the comparable prior-year period.
For the third quarter, Sotherly Hotels expects total revenues in the band of $39.10-$41.04 million, RevPAR in the range of $105.38-$110.62 and hotel EBITDA in the band of $8.54-$8.98 million. Moreover, SOHO expects adjusted FFO per share in the band of 3-6 cents.
Sotherly Hotels currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sotherly Hotels Inc. Price, Consensus and EPS Surprise
Sotherly Hotels Inc. price-consensus-eps-surprise-chart | Sotherly Hotels Inc. Quote
Performance Of Another Hotel REIT
Host Hotels & Resorts’ HST adjusted AFFO per share of 53 cents lagged the Zacks Consensus Estimate of 56 cents. The figure fell 8.6% from the prior-year quarter.
Results reflected lower-than-anticipated revenues. Although growth in city center markets aided the rise in comparable hotel RevPAR, moderating rates at the company’s resorts hurt it. The company also narrowed its 2023 outlook.
Host Hotels generated total revenues of $1.39 billion, missing the Zacks Consensus Estimate of $1.42 billion. Also, the top line declined nearly 1% on a year-over-year basis.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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