Sotherly Hotels Inc.

Today, during the presentation, you can register a question by pressing star followed by one on your telephone keypad and to move yourself that line of questioning is star followed by two. I'll now hand over to Maxim's Vice President of Operations to begin. Please go ahead.

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 this conference call, which are not historical, may constitute forward-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 today's 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 for the second quarter. Looking at the second quarter results for the composite portfolio compared to 2021.3, REVPAR increased 4.3%, driven by a 5.8% increase in occupancy and a 1.4% decrease in ADR. Looking at the second quarter results of a composite portfolio relative to 2019, REVPAR increased 7.5%, driven by ADR growth of 11.7%, while occupancy declined 3.8%. Year-to-date REVPAR performance represents an increase of 4.1% over the same period in 2023, driven by a 6.6% increase in occupancy and a 2.3% decrease in rate. Looking at the year-to-date results for the composite portfolio relative to 2019, REVPAR was up 4.5%, driven by ADR growth of 10.5%, and occupancy decline of 5.3%. This occupancy gap to pre-pandemic levels reflects the additional upside for the portfolio moving forward. Overall, our portfolio's second quarter results, characterized by strong occupancy growth, were in line with our expectations. The continued occupancy growth signals lodging fundamentals for our portfolio have normalized with a more well-balanced revenue picture. While the quarter's notable occupancy gains were partially offset by a 1.4% decline in ADR, this decline in rate was isolated to our South Florida, Atlanta, and Houston properties where travelers showed increased price sensitivity. Looking at some highlights across the portfolio, The DeSoto in Savannah, Georgia continues to be a standout performer for our portfolio, growing rev par 6.8% over prior year and more than 33% over 2019. The DeSoto's well-balanced mix of group and leisure business helped it outperform its competitive set, gaining 440 basis points and fair share during the quarter. The hotel was able to easily outperform its budgeted profitability metrics for the quarter due to well-managed expense controls and profitable catering revenues. Hotel Alba in Tampa posted commendable results during the quarter, growing REVPAR by 7.8% over prior year and nearly 63% over 2019. The property was able to gain significant REVPAR share of nearly 800 basis points over its competitive set during the quarter. While the Tampa market appears to be softening a bit from a rate perspective, Hotel Alba's mix of leisure, business travel, and contract business led to excellent top and bottom line results for the hotel during the quarter. The breakthrough in performance during Q1 at our urban locations continued during the second quarter. The Georgian Terrace in Atlanta grew rev par by 8.5% despite a 7.1% decrease in rate. The decline in rate is predominantly attributed to a more robust citywide calendar last year, which included multiple nights of Taylor Swift concerts. The hotel's strong occupancy growth of 16.9% during the quarter was driven by increased corporate and association business at the hotel. while the potential for recovery in the film industry business segment presents additional growth prospects moving forward. The White Hall in Houston, fueled by strong occupancy growth of 18.4%, grew rev par by 9.4% over the prior year. The White Hall's occupancy improvement was predominantly driven by growth in the transient business segment, with increased demand from the adjacent Chevron headquarters building due to its recent relocation from California, an encouraging sign for the property's growth prospects moving forward. Whitehall outperformance competitive set during the quarter, gaining 620 basis points in REVPAR share. Looking at profitability metrics for the portfolio, hotel EBITDA margins have stabilized, with second quarter hotel EBITDA margin improving 69 basis points over prior year on a clean comparative, despite a slight decline in rate for the quarter. The increased occupancy rate in our hotels during the quarter allowed our management teams to take advantage of economies of scale, and drive additional high-margin non-room revenue in order to improve flow-through. With fully open and staffed amenity offerings at our hotels, along with the stabilization of wage costs, we expect margins to remain relatively stable going forward. Turning to corporate activity, in July, we announced that the company executed a secure loan on the Doubletree by Hilton Jacksonville Riverfront Hotel in Jacksonville, Florida. The loan, which carries a floating interest rate based on SOFR plus 3%, has an initial principal balance of $26.25 million, with an additional $9.5 million available to fund a product improvement plan at the hotel. The company also announced that it entered into a new 10-year franchise agreement with Hilton Worldwide to re-license our Jacksonville Hotel with a soft-branded double tree by Hilton under the name Hotel Bellamy. As part of its relaunch efforts for the hotel, the company will undertake a complete renovation of the property with a cost of approximately $14.6 million, and an estimated completion date of January, 2027. Renovation plans for the property will include a complete transformation of its guest rooms, public spaces, building exterior, pool and sun deck, existing food and beverage offerings, as well as the addition of a new riverfront dining concept. Also during the second quarter, we announced the company executing an extension on its first mortgage loan for the Doubletree Philadelphia Airport Hotel. The interest-only loan, which has been reduced by $3 million to $35.9 million, Mattures in April 2026 and carries a floating interest rate based on SOFR plus 3.5%. As part of the transaction, we purchased an interest rate cap, capping SOFR for a portion of a loan at 3%. In addition, we announced that the company has entered into a new 10-year franchise agreement with Hilton Worldwide to re-license the hotel under the Doubletree by Hilton flag. As part of the new agreement with Hilton, the company will undertake a renovation of the property with a cost of approximately $11.5 million and an estimated completion date of April of 2026. Renovation plans for the property will include upgrades to guest rooms, public spaces, food and beverage offerings, and buildings exterior. I will now turn the call over to Tony.