Terms

Series

7.875% Series C Cumulative Redeemable Perpetual Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

7.875%

Rate Type

Fixed

Annual Dividend

$1.97

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

October 15, 2022

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness, Any Future Capital Stock Expressly Designated As Senior To Series C Preferred Stock; Pari Passu With: Series B 8.0% Cumulative Redeemable Perpetual Preferred Stock, Any Other Capital Stock Expressly Designated As Parity Stock; Senior To: Common Stock, Any Capital Stock Expressly Designated As Junior To Series C Preferred Stock

Regulatory (Basel III) Call

No

Tax Classification

Reit Passthrough

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

1,200,000

Prospectus Summary

Sotherly Hotels Inc., a self-advised REIT focused on upscale and upper-upscale full-service hotels in the Mid-Atlantic and Southern U.S., is offering 1,200,000 shares of its 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock with a $25.00 liquidation preference per share. The fixed annual dividend of $1.96875 per share ($0.4921875 quarterly) is paid on January 15, April 15, July 15, and October 15. The stock is callable at par on or after October 15, 2022 and has no maturity date. Critically, it is cumulative — meaning any missed distributions accrue and must be paid in full before the company can resume dividends on common stock or other junior securities. The Series C Preferred Stock ranks senior to Sotherly's common stock and any junior-designated capital stock, and on parity with the existing 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock. It is junior to all existing and future debt obligations of Sotherly Hotels Inc. Because this is a holding company, investors are also structurally subordinated to creditors of the operating partnership (Sotherly Hotels LP) and its hotel-owning subsidiaries. There is no traditional bank regulatory capital call; however, the issuer retains the right to redeem in limited circumstances to preserve REIT status, and may also redeem within 120 days following a Change of Control at $25.00 plus accrued distributions. At the $25.00 offering price, the stock yields exactly 7.875% annually. However, because Sotherly is a REIT, distributions generally do not qualify for the preferential 15%/20% qualified dividend income (QDI) rate available to individual investors in C-corporation dividends, nor for the dividends-received deduction (DRD) available to corporate holders; instead, distributions are typically taxed as ordinary income. Payment dates are the 15th of January, April, July, and October (or next business day). Dividend stopper mechanics mean that if Sotherly falls into arrears on Series C distributions, no dividends may be paid on common stock or junior securities until all accumulated arrears are satisfied.

Summarized from the SEC prospectus filing.

Distribution History

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Sotherly Hotels fails to pay cumulative distributions on the Series C Preferred Stock, it is blocked from paying dividends on its common stock and any other junior-ranking securities until all accumulated and unpaid Series C distributions are paid in full.

Div Score Breakdown

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