Sotherly Hotels (SOHO) AI Stock Analysis

• Market Cap: $44.12M
• Dividend Yield: N/A
• Average Volume (3M): 336.68K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.68
• Revenue Growth: -0.57%
• EPS Growth: -24.28%
• Country: US
• Employees: 9
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Hotel & Motel
• EPS (TTM): -0.37
• Shares Outstanding: 20,490,501
• 10 Day Avg. Volume: 86,021
• 30 Day Avg. Volume: 336,677
• PEG Ratio: 0.25
• Price to Book (P/B): 0.42
• Price to Sales (P/S): 0.10
• P/FCF Ratio: 0.70
• Enterprise Value/Market Cap: 7.61
• Enterprise Value/Revenue: 1.87
• Enterprise Value/Gross Profit: 8.96
• Enterprise Value/Ebitda: 8.07
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 54 Neutral
• Price Target: $2.00 ▼(-7.41% Downside)

Sotherly Hotels' overall stock score reflects a mix of positive and negative factors. The most significant strength is the positive technical analysis, indicating bullish momentum. However, financial performance is weak, with high leverage and declining profitability. Corporate events present a mixed picture, with a promising merger offset by financial challenges. The valuation is unattractive due to negative earnings and lack of dividends.

Positive Factors

Merger Agreement

The merger with KW Kingfisher LLC is expected to enhance Sotherly's hotel portfolio and provide significant value to stockholders, leveraging additional resources and expertise for future growth.

Strategic Partnerships

Strategic partnerships with global hotel brands and loyalty programs help drive occupancy rates and enhance customer retention, supporting long-term revenue stability.

Operational Efficiency

Stable EBIT and EBITDA margins indicate operational efficiency, suggesting the company can maintain profitability despite revenue challenges.

Negative Factors

High Leverage

High leverage poses financial risks, limiting financial flexibility and increasing vulnerability to economic downturns, which could impact long-term stability.

Declining Free Cash Flow

Declining free cash flow growth reduces the company's ability to reinvest in its business and meet financial obligations, impacting long-term financial health.

Deferred Dividends

Deferring preferred stock dividends can strain investor relations and signal financial distress, potentially affecting the company's market reputation and access to capital.

Sotherly Hotels Business Overview & Revenue Model

Company Description

Sotherly Hotels (SOHO) is a real estate investment trust (REIT) that specializes in the acquisition, ownership, and operation of upscale, full-service hotels in the United States. The company focuses on markets with strong demand dynamics and high barriers to entry, primarily targeting properties in urban and resort locations. Core services include hotel management, hospitality operations, and asset management, catering to both leisure and business travelers.

How the Company Makes Money

Sotherly Hotels generates revenue primarily through hotel room bookings, food and beverage services, and ancillary services offered at its properties. The company earns income from its owned and managed hotel portfolio, which includes room revenues from guests, event spaces, and restaurants within the hotels. Additionally, Sotherly Hotels may receive management fees from properties it manages on behalf of third-party owners. The company benefits from strategic partnerships within the hospitality industry, including affiliations with global hotel brands and loyalty programs, which help drive occupancy rates and enhance customer retention. Overall, its revenue model is bolstered by a focus on operational efficiency and the ability to adapt to market trends.

Sotherly Hotels Financial Statement Overview

Summary

Sotherly Hotels faces challenges across its financial statements. The income statement shows weak revenue growth and profitability. The balance sheet is burdened with high leverage, posing financial risks. Cash flow analysis indicates declining free cash flow growth, although cash flow efficiency remains moderate. The company needs to address its debt levels and improve profitability to enhance financial stability.

Income Statement

Sotherly Hotels shows a mixed performance in its income statement. The TTM data indicates a slight decline in revenue growth at -1.04%, which is concerning. Gross profit margin is moderate at 22.31%, but the net profit margin is low at 0.89%, indicating limited profitability. The EBIT and EBITDA margins are relatively stable at 12.71% and 23.56%, respectively, suggesting operational efficiency. However, the overall growth trajectory is weak, with declining revenue and profit margins.

Balance Sheet

The balance sheet reveals high leverage with a debt-to-equity ratio of 8.18, indicating significant reliance on debt financing. The return on equity is low at 3.60%, reflecting limited returns for shareholders. The equity ratio stands at 10.77%, suggesting a low proportion of equity financing relative to total assets. Overall, the balance sheet shows financial instability with high debt levels and low equity returns.

Cash Flow

Cash flow analysis shows a decline in free cash flow growth by -30.60% in the TTM period, which is a concern. The operating cash flow to net income ratio is 0.68, indicating moderate cash generation relative to net income. The free cash flow to net income ratio is 0.78, suggesting that a significant portion of net income is converted into free cash flow. Despite the decline in free cash flow growth, the company maintains a reasonable level of cash flow efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	179.07M	181.89M	173.84M	166.08M	127.59M	71.50M
Gross Profit	37.48M	46.81M	44.79M	46.46M	30.69M	-3.22M
EBITDA	41.60M	41.58M	39.88M	72.91M	14.08M	-10.45M
Net Income	-310.42K	1.30M	3.94M	32.54M	-26.22M	-49.19M
Balance Sheet
Total Assets	411.38M	414.38M	393.44M	406.57M	436.05M	473.03M
Cash, Cash Equivalents and Short-Term Investments	9.43M	7.33M	17.10M	21.92M	13.17M	25.30M
Total Debt	24.02M	340.38M	322.95M	323.03M	377.91M	397.68M
Total Liabilities	374.63M	372.78M	345.54M	355.05M	419.55M	428.83M
Stockholders Equity	36.76M	43.05M	49.23M	52.25M	21.26M	49.55M
Cash Flow
Free Cash Flow	9.93M	25.89M	21.40M	-1.31M	-854.34K	-15.28M
Operating Cash Flow	14.24M	25.89M	21.40M	6.66M	2.32M	-11.26M
Investing Cash Flow	-11.82M	-14.14M	-6.73M	46.66M	-2.39M	-3.78M
Financing Cash Flow	-5.30M	-9.27M	-15.78M	-51.55M	-9.66M	22.36M

Sotherly Hotels Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 2.16
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOHO, the sentiment is Neutral. The current price of 2.16 is below the 20-day moving average (MA) of 2.17, above the 50-day MA of 1.98, and above the 200-day MA of 1.10, indicating a neutral trend. The MACD of 0.04 indicates Positive momentum. The RSI at 57.56 is Neutral, neither overbought nor oversold. The STOCH value of 22.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SOHO.

Sotherly Hotels Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
INN	59 Neutral	$598.10M	-25.82	0.16%	6.61%	-1.20%	-328.23%
CLDT	59 Neutral	$333.79M	619.82	1.13%	5.00%	-3.79%	―
BHR	57 Neutral	$196.47M	-3.38	-1.09%	7.17%	-2.84%	-11.92%
SOHO	54 Neutral	$44.12M	-5.25	-0.68%	―	-0.57%	-24.28%
IHT	41 Neutral	$16.10M	-8.25	-32.79%	1.52%	-3.23%	-66.23%
AHT	41 Neutral	$24.43M	-0.08	―	―	-7.89%	-833.99%

Sotherly Hotels Corporate Events

Sotherly Hotels Secures Forbearance Agreement Amid Challenges

Sotherly Hotels Inc. announced that its subsidiary, SOHO Atlanta LLC, received a Notice of Default on June 26, 2025, related to a mortgage loan for the Georgian Terrace Hotel. The lender, Wilmington Trust, National Association, pursued measures to protect its interests, including potential foreclosure. However, on December 16, 2025, the company entered a Forbearance Agreement, preventing foreclosure until June 1, 2026, while agreeing to reduce the loan principal by $3.8 million, continue monthly payments of $236,000, and meet specific reserve funding requirements. These measures aim to stabilize the company’s financial standing and mitigate impacts on stakeholders.

Sotherly Hotels Elects Directors at Annual Meeting

On November 17, 2025, Sotherly Hotels Inc. held its Annual Meeting of Stockholders where six directors were elected for the ensuing year. Additionally, the stockholders ratified the appointment of Cherry Bekaert LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025. The meeting also included advisory votes on executive compensation, with a decision to hold such votes annually.

Sotherly Hotels Faces Mortgage Default Notice

Sotherly Hotels Inc. faced two significant financial developments in late 2025. First, on November 13, 2025, the company received a termination notice from Banyan Street Capital LLC regarding the sale of a parking garage associated with the Georgian Terrace hotel in Atlanta, Georgia, initially agreed upon for $17.75 million. Second, on November 12, 2025, the company received a Notice of Default on a mortgage loan for the DoubleTree Resort by Hilton Hollywood Beach hotel, with a debt obligation of approximately $49.3 million. The company is currently negotiating an extension of the mortgage loan while dealing with a ‘cash trap’ situation, where hotel revenues are directed to a lender-controlled account.

Sotherly Hotels Defers Preferred Stock Dividends

On October 27, 2025, Sotherly Hotels Inc. announced the deferral of payment for its Series B, C, and D Cumulative Redeemable Perpetual Preferred Stock dividends, originally scheduled for November 20, 2025, and canceled the record date of October 31, 2025. The company also suspended future preferred stock dividends, which could impact its financial operations and investor relations. Additionally, Sotherly Hotels is involved in a proposed transaction, for which it plans to file relevant materials with the SEC, indicating ongoing strategic maneuvers that may affect its market positioning and stakeholder interests.

Sotherly Hotels Announces Merger with KW Kingfisher LLC

On October 24, 2025, Sotherly Hotels Inc. entered into a merger agreement with KW Kingfisher LLC, a joint venture backed by Kemmons Wilson Hospitality Partners and Ascendant Capital Partners. The merger, unanimously approved by Sotherly’s board, offers stockholders $2.25 per share, marking a 152.7% premium over the closing share price prior to the announcement. This transaction, expected to close in the first quarter of 2026, represents the highest premium paid for a public, exchange-traded REIT in the past five years. The merger is anticipated to enhance Sotherly’s hotel portfolio and provide significant value to its stockholders, while KWHP and Ascendant bring additional resources and expertise to support future growth.

Sotherly Hotels Director Herschel Walker Resigns

On October 17, 2025, Herschel J. Walker resigned from the board of directors of Sotherly Hotels Inc. His resignation was not due to any disagreements with the company’s operations, policies, or practices.