A joint venture of investment firms will acquire the hotel real estate investment trust Sotherly Hotels in an all-cash deal.
Under the deal, the joint venture of affiliates of hospitality-focused investment management firm Kemmons Wilson Hospitality Partners and real estate investment and operating platform Ascendant Capital Partners will purchase the outstanding shares of Sotherly’s common stock for $2.25 per share in cash, according to the news release.
This represents a 152.7% premium to the REIT’s closing share price on Oct. 24, the last trading day before the announcement of the deal, and a 126.4% premium to the volume weighted-average share price over the past 30 days. At closing on Oct. 24, Sotherly reported it had a market cap of $18.24 million.
Sotherly is not the first hotel REIT this year to experience a major change. In August, luxury hotel-focused Braemar Hotels & Resorts announced plans to sell off its entire portfolio. Company officials cited ongoing frustrating over the contrast in its high-quality portfolio of hotels and resorts with the company's relatively low stock price.
Sotherly’s board of directors, along with the special committee that evaluated the deal, unanimously supported the acquisition, and the deal is expected to close during the first quarter of 2026 subject to approval by shareholders and customary closing conditions.
“This transaction provides our stockholders with a significant premium over Sotherly’s current share price and represents the highest premium paid for a public, exchange-traded REIT in the past five years,” Sotherly Board Chairman Andrew Sims said in the release. “The special committee, in consultation with our highly qualified outside financial and legal advisors, carefully evaluated this proposal and concluded it delivers compelling, immediate and certain cash value to our stockholders.”
Williamsburg, Virginia-based Sotherly formed in 2004 with the purpose of owning, buying, renovating and repositioning full-service upscale and upper-upscale hotels in the mid-Atlantic and southern U.S. It has a portfolio of 10 full-service properties in seven states with an aggregate 2,786 rooms. It also has interest in two condos and their associated rental programs.
In September, Sotherly refinanced the DeSoto Hotel in Savannah, Georgia, with a $42 million secured loan with Citi Real Estate Funding. The interest-only loan matures Oct. 6, 2030, with a fixed interest rate of 7.13%. It used proceeds from the loan to repay the existing first mortgage and general corporate purposes.
For the second quarter of 2025, Sotherly reported total revenue of $48.8 million, down from $50.7 million the year prior, according to its earnings release. It also reported net income of $1.5 million, down from $4.6 million. Hotel earnings before interest, taxes, depreciation and amortization was $13.8 million, down from $15.7 million the year before.
The company reported RevPAR for the portfolio, which included rooms participating in its rental programs at the Lyfe Resort & Residences and Hyde Beach House Resort & Residences, dropped by 5.4% year over year to $130.20. The decrease was the result of a 3.5% decrease in occupancy to 70.8% and a 1.9% decrease in average daily rate to $183.88.
At the end of the quarter, Sotherly reported it had about $26.5 million in available cash and cash equivalents, of which approximately $16 million was reserved for real estate taxes, insurance, capital improvements and other expenses. It had principal balances of approximately $315.8 million in outstanding debt, including mortgage and unsecured principal balances at a weighted average interest rate of about 5.89%.