Filed Pursuant to Rule 424(b)(5)
Registration No. 333-220369
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 20, 2017)
SOTHERLY HOTELS INC.
1,080,000 Shares
8.25% Series D Cumulative Redeemable Perpetual
Preferred Stock
(Liquidation Preference $25.00 Per Share)
We are offering 1,080,000 shares
of our newly designated 8.25% Series D cumulative redeemable perpetual preferred stock, par value $0.01 per share (the Series D Preferred Stock). We will pay cumulative distributions on our Series D Preferred Stock at a distribution rate
of 8.25% per annum of the $25.00 liquidation preference per share, which is equivalent to $2.0625 per share of Series D Preferred Stock. Distributions on our Series D Preferred Stock sold in this offering will be payable quarterly in arrears on the
15th day of January, April, July and October of each year. The first distribution on the Series D Preferred Stock sold in this offering will be paid on July 15, 2019, and will be in the
pro-rated
amount
of $0.41823 per share. Our Series D Preferred Stock is not subject to any sinking fund. Upon liquidation, dissolution or winding up, our Series D Preferred Stock will rank senior to our common stock, par value $0.01 per share (the common
stock), with respect to the payment of distributions and
pari passu
with our 8.0% Series B cumulative redeemable perpetual preferred stock, which we refer to as Series B Preferred Stock, and our 7.875% Series C cumulative redeemable
perpetual preferred stock, which we refer to as Series C Preferred Stock.
We may not redeem our Series D Preferred Stock prior to April 18, 2024,
except as described in the immediately following paragraph and in limited circumstances to preserve our status as a real estate investment trust (REIT). On or after April 18, 2024, we may, at our option, redeem our Series D
Preferred Stock, in whole or from time to time in part, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid distributions on such shares of Series D Preferred Stock up to, but not including, the redemption date.
In addition, upon the occurrence of a Change of Control (as defined herein), we may, at our option, redeem shares of our Series D Preferred Stock, in whole or
in part and within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid distributions to, but not including, the date of redemption.
To the extent we exercise our redemption rights relating to the Series D Preferred Stock, holders of shares of Series D Preferred Stock will not be permitted to
exercise the conversion right described below in respect of their shares called for redemption. The Series D Preferred Stock has no maturity date and will remain outstanding indefinitely unless redeemed by us or converted by the holders of shares of
the Series D Preferred Stock. Holders of our Series D Preferred Stock will have no voting rights except as set forth in this prospectus supplement under Description of the Series D Preferred StockLimited Voting Rights.
Upon the occurrence of a Change of Control, each holder of shares of Series D Preferred Stock will have the right (unless, prior to the Change of Control
Conversion Date (as defined herein), we have provided or provide notice of our election to redeem the Series D Preferred Stock) to convert some or all of the Series D Preferred Stock held by such holder on the Change of Control Conversion Date into
a number of shares of our common stock per share of our Series D Preferred Stock to be converted equal to the lesser of:
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the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any
accrued and unpaid distributions to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for a Series D Preferred Stock distribution payment and prior to the corresponding
Series D Preferred Stock distribution payment date, in which case no additional amount for such accrued and unpaid distribution will be included in this sum) by (ii) the Common Stock Price (as defined herein); and
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7.39645, (the Share Cap) subject to certain adjustments;
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subject, in each case, to provisions for the receipt of alternative consideration as described in this prospectus supplement.
The Series D Preferred Stock is subject to certain restrictions on ownership designed to preserve our qualification as a REIT for federal income tax purposes.
See Description of Common Stock and Preferred StockRestrictions on Ownership and Transfer in the accompanying prospectus and Description of the Series D Preferred StockRestrictions on Ownership and Transfer in
this prospectus supplement.
We have filed an application to list the Series D Preferred Stock on the NASDAQ Global Market (NASDAQ) under the
symbol SOHON. If the application is approved, we expect trading of the Series D Preferred Stock on NASDAQ to commence within 30 days after the initial date of issuance. Our common stock is traded on NASDAQ under the symbol
SOHO.
Investing in our Series D Preferred Stock involves risks. Please carefully read the
Risk
Factors
beginning on page
S-11
of this prospectus supplement, on page 5 of the accompanying prospectus, and the documents incorporated by reference in this prospectus supplement, including our Annual
Report on Form
10-K
for the year ended December 31, 2018 and any subsequent Quarterly Reports on Form
10-Q
or Current Reports on Form
8-K,
for a discussion of certain factors that you should consider before making your investment decision.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus supplement and the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Share
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Total
(2)
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Public offering price
(1)
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$
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25.00
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$
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27,000,000
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Underwriting discounts and
commissions
(3)
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$
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1.00
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$
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1,080,000
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Proceeds, before expenses, to us
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$
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24.00
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$
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25,920,000
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(1)
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Plus accrued distributions, if any, from (but excluding) April 18, 2019.
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(2)
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Assumes no exercise of the underwriters option to purchase additional shares of our Series D Preferred
Stock to cover over-allotments, if any.
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(3)
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See Underwriting for additional information regarding underwriter compensation.
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We granted the underwriters the right to purchase up to an additional 162,000 shares of our Series D Preferred Stock at the public
offering price, less underwriting discounts and commissions, within 30 days from the date of this prospectus supplement to cover over-allotments, if any. The underwriters expect to deliver the shares of our Series D Preferred Stock in book-entry
form only, through the facilities of the Depository Trust Company (DTC), on or about April 18, 2019, which is the fifth business day following the date of this prospectus supplement.
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Sandler ONeill + Partners, L.P.
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Janney Montgomery Scott
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American Capital Partners, LLC
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Boenning & Scattergood, Inc.
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The date of this prospectus supplement is April 11, 2019