SoTHERLY Hotels Inc. Announces Acquisition of Houston Property

  SoTHERLY Hotels Inc. Announces Acquisition of Houston Property

Business Wire

WILLIAMSBURG, Va. -- November 14, 2013

S^oTHERLY Hotels Inc. (NASDAQ: SOHO) (the“Company”)  today announced that the
Company has acquired the entity which owns the Crowne Plaza Houston Downtown
Hotel (the “Hotel”) for $30.65 million in cash and 32,929 units of limited
partnership interests in Sotherly Hotels LP, plus an additional cash amount
for the Hotel’s working capital as of the closing date. The 259-room, upscale,
full-service hotel is located in downtown Houston, Texas. The property will be
managed by Chesapeake Hospitality.

Crowne Plaza Houston Downtown Hotel (Photo: Business Wire)

Crowne Plaza Houston Downtown Hotel (Photo: Business Wire)

As a part of the transaction, the Company closed on a $21.5 million loan with
Mutual of Omaha Bank collateralized by a first mortgage on the Hotel. The loan
carries a fixed interest rate of 4.50% and amortizes on a 25-year schedule.
The balance of the cash portion of the purchase price was funded by the
Company with available cash.

Drew Sims, Chief Executive Officer of the Company, commented, “We’re pleased
to acquire the Crowne Plaza Houston Downtown. Houston is the largest MSA in
the Southern United States and is one of the top performing hotel markets in
the country with a healthy economy and tremendous growth prospects.” Sims
added, “Our predecessor company was involved in the redevelopment of this
hotel over a decade ago and we have always hoped to be able to transfer it
into the REIT. We believe the Houston asset will be immediately accretive to
the Company’s earnings.”

For year-end 2013, the Company currently forecasts that the Hotel will operate
at approximately 72.0 percent occupancy, with an average daily rate (“ADR”) of
approximately $134.50, room revenue per available room (“RevPAR”) of
approximately $96.80, hotel earnings before interest, taxes, depreciation, and
amortization (“Hotel EBITDA”) of approximately $3.2 million, and net operating
income after capital reserves (“NOI”) of $2.7 million.

Built in 1963 as The Whitehall, the Hotel was known as Houston’s iconic
business hotel. In the late 1990’s the Hotel underwent a $25.0 million
redevelopment project and reopened in 2001 as the Crowne Plaza Houston
Downtown Hotel. The Hotel is ideally located in the downtown central business
district and is connected via skywalk to over 2.0 million square feet of
Class-A office space with major tenants such as KBR, Chevron, and United
Airlines. In addition, Chevron is planning a new 50-story, 1.7 million square
foot tower adjacent to the Hotel that is scheduled for completion in the
fourth quarter of 2016.

About S^oTHERLY Hotels Inc.

S^oTHERLY Hotels Inc., formerly MHI Hospitality Corporation, is a self-managed
and self-administered lodging REIT focused on the acquisition, renovation,
upbranding and repositioning of upscale and upper upscale full-service hotels
in the Southern United States. Currently, the Company’s portfolio consists of
investments in eleven hotel properties, ten of which are wholly-owned and
comprise 2,372 rooms. The Company also has a 25.0 percent interest in the
Crowne Plaza Hollywood Beach Resort. All of the Company’s properties operate
under the Hilton Worldwide, InterContinental Hotels Group and Starwood Hotels
and Resorts brands. S^oTHERLY Hotels Inc.  was organized in 2004 and is
headquartered in Williamsburg, Virginia. For more information, please visit

Forward-Looking Statements

This news release includes “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the Company believes that the expectations and
assumptions reflected in the forward-looking statements are reasonable, these
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions which are difficult to predict and many of which
are beyond the Company’s control. Therefore, actual outcomes and results may
differ materially from what is expressed, forecasted or implied in such
forward-looking statements. Factors which could have a material adverse effect
on the Company’s future results, performance and achievements, include, but
are not limited to: national and local economic and business conditions that
affect occupancy rates and revenues at the Company’s hotels and the demand for
hotel products and services; risks associated with the hotel industry,
including competition, increases in wages and other labor costs, energy costs
and other operating costs; the magnitude and sustainability of the economic
recovery in the hospitality industry and in the markets in which the Company
operates; the availability and terms of financing and capital and the general
volatility of the securities markets; risks associated with the level of the
Company’s indebtedness and its ability to meet covenants in its debt
agreements and, if necessary, to refinance or seek an extension of the
maturity of such indebtedness or modify such debt agreements; management and
performance of the Company’s hotels; risks associated with the conflicts of
interest of the Company’s officers and directors; risks associated with
redevelopment and repositioning projects, including delays and cost overruns;
supply and demand for hotel rooms in the Company’s current and proposed market
areas; the Company’s ability to acquire additional properties and the risk
that potential acquisitions may not perform in accordance with expectations;
the Company’s ability to successfully expand into new markets;
legislative/regulatory changes, including changes to laws governing taxation
of REITs; the Company’s ability to maintain its qualification as a REIT; and
the Company’s ability to maintain adequate insurance coverage. These risks and
uncertainties are described in greater detail under “Risk Factors” in the
Company’s Annual Report on Form 10-K and subsequent reports filed with the
Securities and Exchange Commission. The Company undertakes no obligation to
and does not intend to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
Although the Company believes its current expectations to be based upon
reasonable assumptions, it can give no assurance that its expectations will be
attained or that actual results will not differ materially.

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S^oTHERLY Hotels Inc.
Scott Kucinski
Director - Investor Relations
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