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Sotherly Hotels Inc. (NASDAQ:SOHO) ("Sotherly" or the "Company") today announced that it has entered into a definitive merger agreement (the "Merger Agreement") with a joint venture led and sponsored by affiliates of Kemmons Wilson Hospitality Partners, LP ("KWHP"), with Ascendant Capital Partners LP ("Ascendant") serving as a strategic joint venture partner (collectively, the "Joint Venture"), under which the Joint Venture entity, KW Kingfisher LLC, will acquire all outstanding shares of Sotherly common stock for $2.25 per share in cash (the "Merger Consideration").
The Merger Consideration represents a premium of 152.7% to the Company's closing share price on October 24, 2025, the last trading day prior to the announcement of the transaction, and a 126.4% premium to the volume weighted average share price over the previous 30 days. The Merger Agreement has been unanimously approved by Sotherly's full board of directors (the "Board") following a unanimous recommendation from a special committee comprised of independent directors of the Board (the "Special Committee").
Andrew Sims, Sotherly's Chairman of the Board, stated: "This transaction provides our stockholders with a significant premium over Sotherly's current share price, and represents the highest premium paid for a public, exchange-traded REIT in the past five years. The Special Committee, in consultation with our highly qualified outside financial and legal advisors, carefully evaluated this proposal and concluded it delivers compelling, immediate, and certain cash value to our stockholders."
David Folsom, Sotherly's Chief Executive Officer, said: "This transaction is a testament to the high-quality portfolio that Sotherly has built over the past 20+ years as a publicly traded company and we are confident this will pave a path towards future success for our hotels and the associates and guests that enjoy them every day."
Webb Wilson, KWHP's Chief Investment Officer, added: "Sotherly has developed a distinctive portfolio of hotels across the Southeast. KWHP has a long history in investing in hospitality, particularly in the Southeast, and will bring additional resources to Sotherly's unique and compelling portfolio of high-quality hotels to position them for continued success over the long term. We have been fortunate to have known and worked with the Sotherly team previously and look forward to furthering the relationship in our stewardship of these assets."
Alex Halpern, Chief Investment Officer of Ascendant, added: "Ascendant brings significant hotel operating expertise and hybrid financing solutions to bear, and we're excited to work closely with KWHP to invest in and support the operation of these irreplaceable assets across attractive southeastern sub-markets."
Affiliates of Apollo (NYSE:APO) and Ascendant provided debt financing commitments to the Joint Venture in connection with the transaction.
Holders of Sotherly's 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, and 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock (collectively, the "Preferred Stock") issued and outstanding immediately before the Effective Time (as defined in the Merger Agreement), shall be entitled to receive the Merger Consideration if the holder thereof elects to convert, subject to the terms and conditions contained in the Company's charter (including any articles supplementary) (the "Charter"), including the share cap as defined therein, their respective shares of Preferred Stock into shares of Common Stock after the closing of the Merger. If not converted, each share of the Preferred Stock shall be unaffected by the Merger and will remain outstanding in accordance with their respective terms as set forth in the Company's Charter.
The Merger is expected to close in the first quarter of 2026, subject to approval by Sotherly stockholders and customary closing conditions. Andrew Sims, Sotherly's Chairman of the Board and one of the Company's largest stockholders, has agreed to vote all of his shares in favor of the transaction.
As a result of today's announcement, the Company will not host a conference call to discuss its financial results for the quarter ended September 30, 2025, nor will they issue a separate earnings release for that period. The Company will file a Form 8-K with the Securities and Exchange Commission (the "SEC") shortly that includes the Merger Agreement and other relevant information for stockholders.
