Terms

Series

8.25% Series D Cumulative Redeemable Perpetual Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

8.25%

Rate Type

Fixed

Annual Dividend

$2.06

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

April 18, 2024

First Call Price

$25.00

Capital Stack Ranking

Junior To: Existing And Future Indebtedness, Any Future Capital Stock Expressly Designated As Senior To Series D Preferred Stock; Pari Passu With: Series B Preferred Stock (8.0%), Series C Preferred Stock (7.875%), Any Other Parity Stock; Senior To: Common Stock, Junior Stock (Any Class Or Series Expressly Designated As Junior)

Regulatory (Basel III) Call

Yes

Tax Classification

Reit Passthrough

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

1,080,000

Prospectus Summary

Sotherly Hotels Inc., a self-advised hotel REIT, is offering 1,080,000 shares of its Series D Cumulative Redeemable Perpetual Preferred Stock at a $25.00 liquidation preference per share, carrying a fixed 8.25% annual distribution rate equivalent to $2.0625 per share per year. The stock is perpetual with no stated maturity and becomes optionally redeemable by the issuer at par on or after April 18, 2024. Being cumulative, any missed quarterly distributions accrue and must be paid in full before any dividends can be paid on common stock or junior securities — providing holders meaningful protection against distribution interruptions. The Series D Preferred Stock sits above Sotherly's common stock and all junior-designated capital stock in the liquidation and distribution priority waterfall, and ranks on parity with the existing Series B (8.0%) and Series C (7.875%) perpetual preferred stocks. It is junior to all existing and future debt obligations of the company and to any future capital stock expressly designated as senior (which would require a two-thirds supermajority vote of Series D and parity holders). Because Sotherly Hotels Inc. is a holding company whose hotels are owned by subsidiaries of its operating partnership, preferred holders face structural subordination — claims at the holding-company level are effectively subordinate to all liabilities at the operating-partnership and subsidiary levels. There is also a limited REIT-preservation redemption right allowing early redemption to protect tax status, and a special optional redemption right triggered by a Change of Control. At the $25.00 offering price, the Series D Preferred Stock yields 8.25% annually, with quarterly payments of approximately $0.5156 per share on January 15, April 15, July 15, and October 15. As a REIT issuer, distributions will generally be taxed at ordinary income rates rather than the preferential 15%/20% qualified dividend rate, meaning they do not qualify for the QDI rate or the corporate dividends-received deduction. However, individual holders receiving ordinary REIT dividends may deduct up to 20% of such dividends through December 31, 2025 under current tax law. Dividend payments could be interrupted or deferred if Sotherly lacks legally available funds, though the cumulative feature ensures all arrearages must be satisfied before any junior distributions are made.

Summarized from the SEC prospectus filing.

Distribution History

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If distributions on the Series D Preferred Stock are not paid in full, the issuer is generally restricted from paying dividends on common stock or any junior securities until all accrued and unpaid cumulative distributions on the Series D Preferred Stock have been paid.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 40 (Weak)