Sotherly Hotels Inc.

Good day and welcome to the Southerly Hotel's fourth quarter 2020 earnings call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Max Sims. Please go ahead.

Max Sims Thank you, and good morning, everyone. If you did not receive a copy of the earnings release, you may access it on our website at southerlyhotels.com. In the release, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Any statements made during the conference call, which are not historical, may constitute poor-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained. Factors and risks that can cause actual results to differ materially from those expressed or implied by forward-looking statements are detailed in today's press release and from time to time in the company's filings with the SEC. The company does not undertake a duty to update or revise any forward-looking statements. With that, I'll turn the call over to Scott. Thanks, Mac.

Good morning, everyone. I'll start off today's call with a review of our portfolio's key operating metrics in the quarter and the year. Looking at results for the composite portfolio, which remained fully open during the quarter, REVPAR decreased 62.3% over prior year, reflecting a 52.6% decrease in occupancy and a 20.4% decrease in ADR. For the year, portfolio REVPAR decreased 60.8% over prior year, with a 56.4% decrease in occupancy and a 10.1% decrease in ADR. These metrics were generally in line with our market competitors and ahead of the upper upscale U.S. lodging segment for the quarter and for the year. The lodging industry's fourth quarter performance continued to be firmly influenced by COVID's impact on travel demand, as well as macroeconomic factors. While the third quarter showed gradual improvement, the fourth quarter is choppier. October results were relatively strong, driven by leisure travel and a modest recovery in business and group travel. However, we experienced a decline in demand in November and December as a third wave of COVID led to a record number of cases, hospitalizations, and the reimplementation of travel restrictions in some municipalities. Examining REVPAR results on an absolute basis for the portfolio highlights the Corps' uneven performance. As REVPAR was $43.78 in October, then $35.67 in November and $36.56 in December. Despite the challenges faced during the quarter, in December our staff's strong sales efforts resulted in the highest level of group bookings since the outset of the pandemic, highlighted by the return of film industry crews to the Georgian Terrace in Atlanta. We were also able to close out the year on a high note as our warm weather leisure destinations, including Savannah and our Florida properties in Jacksonville, Tampa, and Hollywood, all experienced strong pickup leading up to the New Year's holiday. The improved group and leisure performance has carried through to the new year, as green shoots in these segments suggest that the beginning of a sustained recovery is on the horizon. Looking at more detailed property highlights for the quarter, our Doubletree and Jacksonville continue to outperform the market, achieving a REVPAR index of 146 for the quarter, gaining 2,700 basis points in share in a quarter. The outperformance was due to a small group business, an uptick in transient business travel, and weekend leisure business. Hotel Alba in Tampa continued to ramp up following its renovation and conversion, achieving a REVPAR index of 125 for the quarter, gaining 4,900 basis points in share from its competitors. We are optimistic this hotel has even more room to grow share and firmly position itself as the market leader. During the quarter, the Georgian Terrace and Atlanta outperformed its new competitive set, which consists exclusively of luxury properties, achieving a red par index of 121%, a gain of 1,700 basis points in share. The outperformance was due to the return of the film groups we mentioned, as well as weekend leisure business, both of which have been severely disrupted during the pandemic. Turning to corporate activity, in November, we successfully transitioned the management of the Hyatt Centric Arlington to our town hospitality. With that transition, our town now manages 100% of our portfolio, which should continue to improve the efficiency and effectiveness of our day-to-day managerial effort. We have continued to work with our lenders and to date have successfully completed a variety of modification and forbearance agreements across the majority of the portfolio, which generally allows us to defer payments of principal and or interest for periods that began back in April 2020 and that extends through various dates ending between February of 2021 and December of 2021. They also waive or modify covenants in order to keep the loans in compliance. To date, the only loan not in compliance with its covenants is the mortgage loan secured by the Doubletree Resort, Hollywood Beach. However, we are in active negotiations with that special servicer to finalize a forbearance agreement. During our last earnings call, we referenced our monthly cash burn rate and the need to address the company's shrinking liquidity pool. At the end of the year, we announce that we enter into a loan agreement with affiliates of Kemmons Wilson Hospitality, LP, and a co-investor in an aggregate amount of $20 million with additional $10 million available to draw by year-end 2021. The loan matures in three years and will be payable on or before the maturity date at the rate of 1.47X, the principal amount borrowed during the initial three-year term, with a one-year extension at the company's option. The loan also carries a 6% current interest rate, payable quarterly during the initial three-year term, and includes certain covenants such as borrower liquidity thresholds. We believe the loan satisfies our immediate need for liquidity that will provide us the bridge to a sustained recovery for the industry. I will now turn the call over to Tony.