Is it time to buy Sotherly Hotels Inc 8.0% Series B Cumulative Re (SOHOB)
With a recent market price around $11.00, the discounted yield is approximately 18.18%
What are the issues with SOHOB?
SOHOB is the ticker for Sotherly Hotels Inc.'s 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock. Recent news indicates some challenges for the parent company, Sotherly Hotels Inc. (SOHO). These issues include:
- Notice of Default: In early July 2025, Sotherly Hotels Inc. announced it had received a notice of default for a mortgage loan on one of its properties, The Georgian Terrace Hotel in Atlanta.
- Need for Restructuring: The company is engaging a consultant to negotiate a mortgage loan extension, which suggests a need for financial restructuring or a change in its debt obligations.
- Strategic and Operational Challenges: While this is a general statement, the news about the mortgage default and the need for a consultant points to ongoing strategic and operational challenges.
Have they stopped paying their dividend?
No, based on the most recent information, SOHOB has not stopped paying its dividend. The company has declared and paid its quarterly preferred stock dividends as scheduled.
- A dividend of $0.50 per share was declared in April 2025 and paid in June 2025.
- Another quarterly dividend of $0.50 per share was declared in July 2025, with an ex-dividend date of October 31, 2025, and a payment date of November 20, 2025.
It is important to note that dividends for preferred stock like SOHOB are typically prioritized over common stock dividends. However, the ability to pay these dividends is tied to the financial health of the underlying company.
Are the underlying assets generating FCF (Free Cash Flow)?
The available information does not provide a direct and specific calculation of the free cash flow for Sotherly Hotels Inc. (SOHO). However, several news items indicate the company's financial performance.
- Sotherly Hotels Inc. reported strong financial results for the first quarter of 2025, with increased revenue and net income. This suggests a positive operational environment at that time.
- The notice of default on a mortgage loan, however, indicates potential cash flow issues or a strained financial position, as it points to difficulty in meeting debt obligations.
Free cash flow is a crucial metric for a company's ability to pay dividends and manage debt. While the company's Q1 2025 earnings were positive, the subsequent news of a mortgage default suggests that their ability to generate sufficient cash to cover all their obligations may be a concern. |
