Good morning, all, and thank you for joining us for the Sutherly Hotels Q4 2024 conference call and webcast. My name is Carly, and I'll be coordinating the call today. If you'd like to register a question during the call, you can do so pressing star flow by 1 on your telephone keypad, and to remove your self-adline questioning, we'll be star flowed by 2. I'll now turn it over to your host, Max Sims, Vice President of Operations. The floor is yours.

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 SutherlyHotels.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 that 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 through a review of our portfolio's key operating metrics for the fourth quarter. Looking at the fourth quarter results for the actual portfolio compared to 2023, RevPAR increased 2.9%, driven by a 7% increase in occupancy and a 3.7% decrease in ADR. Stripping out Tampa from the results due to hurricane impact, the fourth quarter's actual portfolio RevPAR increased a healthy 5.8% compared to prior year. Looking at the fourth quarter results for the actual same-store portfolio relative to 2019, 2019, REVPAR increased 3.8 percent, driven by ADR growth of 7.9 percent, while occupancy was down 3 percent. For the full year 2024, REVPAR performance represents an increase of 3.5 percent over the same period in 2023, driven by a 6.1 percent increase in occupancy and a 2.5 percent decrease in rate. Again, stripping out Tampa from the results due to hurricane impact, the annual actual portfolio REVPAR increased 3.9% compared to 2023 levels. Looking at the annual results for the same-store actual portfolio relative to 2019, REVPAR was up 1.3%, driven by ADR growth of 8.6% and occupancy decline of 6.8%. Overall, our portfolio's fourth quarter results, driven by strong year-over-year occupancy growth, were ahead of our budget expectations. Occupancy growth was especially strong and are slower to recover urban markets, a positive indicator that lodging fundamentals have normalized following the uneven recovery period following the pandemic. As part of this normalization of lodging fundamentals, rates have settled down a bit following the revenge travel trends of the prior two years, with an ADR decline of 2.5%, partially offsetting the quarter's 6.1% gain in occupancy. Hurricane Helene, which struck during the third quarter contributed to significant operational impact during the fourth quarter of 2024. As a result of the hurricane storm surge, Hotel Alba sustained water intrusion on the first floor of the hotel, causing damage to furniture, finishes, and equipment in public areas and guest rooms, as well as some building systems. Due to our operating team's expeditious restoration efforts following the storm, the hotel remained fully operational. To date, the work associated with this fully insured casualty has been efficiently executed, and only final FF&E replacements and elevator work remain to be accomplished. We anticipate the impact of operations at Hotel Alba as a result of Hurricane Helene to continue through the second quarter of this year. From an accounting perspective, the company's headline quarterly operating metrics, including occupancy, ADR, and RevPAR, reflect the impact of Hurricane Helene on Hotel Alba's operations prior to business interruption insurance proceeds, while the company's revenue and profitability metrics include business interruption insurance credits. Looking at some highlights across the portfolio, the Doubletree Resort in Hollywood, Florida posted strong year over year results during the quarter, improving RevFAR by 13.8%, fueled by a 13.4% increase in occupancy and a slight increase in rate. The hotel's improvement in occupancy, which led to greater ancillary revenue capture, was a result of stronger than expected weekend demand, as well as improved through bookings. Driven by a 13% increase in occupancy share, the Doubletree easily outperformed its competitive set during the quarter, growing its RevPAR index by 8.5%. The Whitehall in Houston continued to build momentum during the fourth quarter, growing RevPAR by nearly 50%, driven by occupancy growth of 46.1% and rate growth of 2.7%. The hotel's improved performance was predominantly driven by growth in the leisure transient segment. The Whitehall easily outperformed its competitive set during the quarter, gaining more than 30% in REVFAR share, fueled by strong occupancy share improvement of nearly 34%. Our Doubletree Hotel in Philadelphia continued its streak of improved performance during the fourth quarter, posting a 9.4% increase in REVFAR, driven by a 16.2% increase in occupancy. The hotel sub-market continues to trend positively during the quarter, benefiting from increased demand from special events as well as improved airport traffic. Meanwhile, the hotel's strong occupancy growth, which is driven by increased business and group travel, contributed to a 5.2% REVFAR share gain during the fourth quarter. Hotel Ballast in Wilmington posted strong year-over-year results, growing REVFAR by 7.1%, which was fueled by a 1.9% increase in occupancy and a 5% increase in rate. Hotel Ballast's well-balanced approach highlighted by group with strong banquet and catering contribution continues to drive the hotel's revenue picture. Looking at profitability metrics for the portfolio, while hotel EBITDA margin experienced a slight year-over-year decline, the prior year included a $700,000 grant payment at the Georgia Terrace. Stripping out this one-time event, fourth quarter hotel EBITDA margin improved by 150 basis points over prior year, a commendable effort considering the portfolio's moderate rate decline during the quarter. The portfolio's occupancy growth trend has allowed our managers to drive additional ancillary revenue while also taking advantage of economies of scale, especially in our slower-to-recover markets, in order to drive flow-through. Moving forward, we expect normalized staffing and amenity levels, along with stabilized wage costs, to result in relatively stable margins for the portfolio. Turning to corporate activity, the company continues planning and preparation for two upcoming PIP renovations. In Philadelphia, we have executed a new 10-year franchise agreement with Hilton for the Doubletree flag. The required PIP renovation has an $11.5 million budget with an expected completion date of May 1, 2026. In Jacksonville, the company executed a new 10-year franchise agreement with Hilton to convert the hotel to a soft-branded concept under the name Hotel Bellamy. This $14.6 million renovation has an expected completion date of January 1, 2027.

I will now turn the call over thank you scott reviewing performance for the period ended december 31st 2024. the fourth quarter total revenue was approximately 44 million dollars representing an increase of 4.3 percent over the same quarter 2023 year to date total revenue was approximately 182 million dollars representing an increase of 4.6 percent over full year 2023 hotel even for the quarter was approximately $10.7 million, representing an increase of 3.6 percent from the same quarter last year. Year-to-date, Hotel EBITDA was approximately $46.8 million, representing an increase of 4.5 percent over full year 2023. For the quarter, adjusted FFO was approximately $2 million, representing a decrease of about $850,000 from the same quarter in 2023. Year-to-date, adjusted FFO was approximately $14.3 million, representing a decrease of approximately $250,000 from the prior year. Please note that our adjusted FFO excludes charges related to the early extinguishment of debt, unrelated gains and losses on derivative instruments, charges related to aborted or abandoned securities offerings, ESOP and stock compensation expense, as well as other items. HOTEL EBITDA excludes these charges, as well as interest expense, interest income, corporate general and administrative expenses, realized gains and losses on derivative instruments, and the current portion of our tax provision as well. Please refer to the earnings release for additional detail. Looking at our balance sheet as of December 31, 2024, the company had total cash of approximately $28.7 million, consisting of unrestricted cash and cash equivalents of approximately $7.3 million, as well as approximately $21.4 million, which was reserved for real estate taxes, insurance, capital improvements, and certain other items. At the end of the quarter, we had principal balances of approximately $319.3 million in outstanding debt at a weighted average interest rate of 5.88%. Approximately 84.5% of the company's debt carried a fixed rate of interest when taking into account the company's interest rate hedges. We anticipate routine capital expenditures for the replacement and refurbishment of furniture, fixtures, and equipment will amount to approximately $7.2 million for calendar year 2025. Significant portion of our product improvement plans at the Doubletree by Hilton Philadelphia Airport and the Doubletree by Hilton Jacksonville will occur during the year. We anticipate capital expenditures related to these projects to total approximately $11.6 Turning to guidance. We're publishing full-year guidance for 2025, accounting for current and expected performance within the portfolio, and taking into account market conditions. We're projecting total revenue in the range of $183.4 to $188.2 million for full-year 2025. At the midpoint of this guidance, this represents a 2.1% increase over the prior year. Hotel EBITDA is projected in the range of $48.8 to $49.6 million. And at the midpoint of the guidance, this represents a 5.2% increase over the prior year. Adjusted FFO is projected in the range of $11.5 to $12.3 million, or 57 to 61 cents per share. And at the midpoint of the guidance, this represents a 16.4% increase compared to the prior year. Now I'll turn the call over to Dave.

Thank you, Tony. Good morning, everyone. We were pleased with our portfolio's fourth quarter results, which capped off a productive year characterized by improved operating fundamentals and continued occupancy growth. Our portfolio's 6.1% occupancy improvement during the fourth quarter was particularly impressive given the challenges faced at our Tampa hotel following the major hurricane at the end of the third quarter. Additionally, the sustained recovery at two of our urban hotels in Houston and Philadelphia was an encouraging sign for the portfolio. The noteworthy rebound in demand at our Doubletree Hotel in Hollywood, Florida, which was driven by a balance of strong weekend leisure pickup and weekday group business, was also a positive catalyst for our portfolio during the quarter. Despite some softening in rate during the quarter, we continue to be encouraged with our managers' ability to utilize streamlined revenue management strategies in order to drive strong top-line growth, gain rev par share versus our competitive sets, while delivering solid margins. As a result of these initiatives, we were able to achieve our full-year guidance targets for revenue, hotel EBITDA, and adjusted FFO, which were initiated last March. Occupancy growth continued during the quarter, with many of our hotels delivering double-digit occupancy growth over prior year. The White Hall in Houston was a standout performer as its re-energized sales effort drove 46% occupancy growth over prior year, primarily through weekend leisure and group business, the latter of which improved more than 50% during the quarter. For the year, the White Hall's occupancy improved nearly 35% of a prior year, while its REVPAR share grew more than 20%. Similarly, our Doubletree Hotel at the Atlanta Airport delivered at the Philadelphia Airport, excuse me, delivered excellent occupancy growth of 16% over prior year as the hotel outperformed its comp set during the quarter. Even with rate softness in this market, our manager was able to significantly improve that hotel's profitability relative to prior year, growing hotel EBITDA by 74% for the quarter. We believe there's still significant opportunity for growth at this hotel as its occupancy remains nearly 600 basis points below 2019. As one of the largest revenue contributors in the portfolio, the improved performance at our Doubletree Hotel in Hollywood during the quarter was especially encouraging, with occupancy growth of 13.4% and hotel EBITDA growth of 15% over prior year. Group revenue growth was also strong at this hotel, growing 15% over prior year. Looking at the total portfolio, group continues to be the strongest driver of growth for the portfolio expanding by 5.9 percent for full year 24 with additional upside opportunities for 2025 looking at our balance sheet initiatives throughout 2024 southerly continued to successfully navigate the mortgage markets despite ongoing challenges in the debt markets from a borrower perspective during the year we completed refinancings or extensions at several hotels including the Doubletree at the Philadelphia Airport, Hotel Alba in Tampa, and the Doubletree Hotel in Jacksonville, Florida. Concurrently, the company continues its efforts in executing lifecycle improvements in conjunction with the renewal of Hilton franchises and its Doubletree locations in Philadelphia and Jacksonville. We believe the necessary upgrades to these properties will allow our managers to drive increased profitability through rate capture to deliver long-term value. Looking ahead, we will continue to conservatively approach upcoming debt maturities for our portfolio, which are spread evenly over the near term. Looking at 2025, we continue to be cautiously optimistic on the lodging industry as we believe upscale and upper upscale hotels will outperform the broader market this year, a positive indicator for our portfolio's growth prospects. Despite the uncertain macro environment so far this year, we have been pleasantly surprised by our portfolio's operating fundamentals, with January's results finishing well ahead of expectations. Preliminary January REVPAR, highlighted by continued improvement at our urban hotels, coupled with strong demand at our South Florida hotels, showed a 12.8% improvement over prior Full year 2025 REF PAR for our portfolio is forecasted to range between 103 and 105 percent of full year 2024 REF PAR. Looking ahead, we believe that our portfolio of well-positioned hotels driven by occupancy growth will continue to outperform. And with that, we will open the call up for questions.

Thank you very much. We're now at open the lines for Q&A.

If you'd like to ask a question, please press star followed by one on your telephone keypad now if you'd like to remove yourself a line of questioning will be star followed by two our first question comes from alexander goldfarb with piper sandler alexander your line is now open hey uh morning down there uh just a few questions uh looking at guidance uh you know revenue is projected to be higher ebitda is expected to be higher you guys spoke about a pretty good outlook you know stable operating costs yet ffo looks to decline so just want to get a bit more color on this is this because of refinancing activities or interest and

also you know what do you think the trajectory of ffo is if you know operations are improving but ffo is going down uh this is tony alex you know we're seeing improvements in revenue and But as you said, but, you know, we have a bevy of loans that we originated five to ten years ago and the four to five percent interest rates that we're now having to refinance. And so we're going to see interest costs creep up. We saw it creep up last year. We're seeing it creep up again in 2025. And I think until we complete these refinances, you're going to, they'll slowly plateau as we complete all these refinances of those legacy mortgages.

Okay. And then just following up on the AK you guys filed last month from NASDAQ on the stock trading below a dollar, it would seem like a reverse split is the easiest thing, but just curious how you guys are thinking about it. I think you have until August to get the stock above a dollar.

That's right, Alex. It's Dave here. We have 180 days upon notice to cure the deficiency. And that's normally accomplished, as you said, by executing a reverse split of some ratio to get above the dollar threshold. Or during that period, if the stock price rises above that dollar, it'll cure itself.

Okay. And then as far as the hotels that you're doing the repairs on, i think the alba is there anything in guidance for insurance recoveries like is any part of ffo uh enhanced by just you know recovering insurance dollars this is scott speaking with you know our guidance assumes normal operations at the hotel where we've you know had business interruption proceeds from our insurance carriers to date we've been you know doing those calculations on a monthly basis.

So as I think I mentioned in my comments, Q4 of last year, you know, our bottom line results, our revenue results and our bottom line hotel event results reflect the collection of those business interruption proceeds to essentially make us whole. And that's our assumption going forward. The business interruption is fairly minimal at this point, since the hotel is, you know, pretty much all put back together. But every month it goes by, any shortfall to, you know, expected operations will be filled with that business interruption proceeds. So the guidance is just assuming, you know, we're fully made whole.

Okay. So basically what you're saying is the number for the guidance for 2025 is a good run rate for the portfolio. It's not being enhanced at all by it. Okay. And then finally, okay, cool. And then just last question, you know, you mentioned about refinancing this year, you know, obviously debt load on the company, you know, every asset encumbered. Given the study rebounding in asset values, as you guys contemplate refinancing debt, especially to try and grow FFO, is there any thought, any of the assets that have a healthy amount of equity that you could see a path to maybe sell one or two, start to unencumber some of the other assets with the excess proceeds and try to get this company in a better spot leverage-wise so that we can talk more about growing the FFO? equity, is that something that you think is feasible or reasonable as you think about refinancing?

Yeah, I mean, we're always looking at options on how to manage cash and manage the portfolio structurally. I don't think we've really looked that hard at selling assets for the purpose you're articulating. I mean, I do believe that as fundamentals continue to go up, hopefully, that we're going to get better results on the refinancing picture. I mean, to date, interest rates have come down since last year. Some of the other structural aspects of refinancing and debt mortgaging as it is are still pretty sticky with debt yields and debt service coverage ratios. But our goal right now is to take each one of these mortgages that are coming due with legacy loan rates and legacy loan structures and get the best outcome we can from the from the from the markets and I think that's the strategy we've we've looked at with the board and that's what we're going to pursue okay listen thank you thank you for your time all right thank you very much thank you very much as a further reminder if you would like to raise a question please press star followed by one in your telephone keypad now we'll allow just a moment for any questions to filter in.

We currently have no further questions so I'd like to hand back to Dave Folsom for any closing remarks.

Thank you everyone for participating today and we look forward to our next earnings call. Thank you operator.

As we conclude today's call we'd like to thank everyone for joining. You may now disconnect your lines.