Sotherly Hotels Inc (NASDAQ: SOHO) was up by over 141 per cent at market close on Monday after agreeing to be acquired for US$2.25 per share. The pending deal represents a 152.7 per cent premium on the real estate investment trust’s closing price on Oct. 24 and 126.4 per cent on the weighted 30-day average.
Stock closed at US$0.89 on Friday, leaving Sotherly with a market capitalization of US$18.24 million.
Sotherly has inked a definitive merger agreement with a joint venture comprised of Kemmons Wilson Hospitality Partners, LP (KWHP) with Ascendant Capital Partners LP. They will be obtaining all of Sotherly’s outstanding common stock by the end of Q1, 2026. The deal will be valued at approximately US$425 million.
“This transaction provides our stockholders with a significant premium over Sotherly’s current share price,” said Sotherly’s Chairman of the Board, Andrew Sims, “and represents the highest premium paid for a public, exchange-traded REIT in the past five years.”
Affiliates of Ascendant and Apollo Global Management Ord Shs (NYSE: APO) have provided debt financing commitments to the joint venture in connection with the deal, as specified by Sotherly in a press release on Oct. 27.
Sotherly currently owns 10 upscale hotels throughout Georgia, Florida, Maryland, Pennsylvania, North Carolina, Texas and Illinois. It went public in 2004 and has roots dating back decades.
Aside from Hotels, Sotherly holds stakes in the two luxury condo buildings in Florida where it manages rental programs. The Hyde Resort & Residences and Hyde Beach House Resort & Residences in Hollywood Beach generate ancillary revenue for the company through food, beverage and retail services. Sotherly currently owns a total of 2,786 rooms.
KWHP was launched as an opportunistic hospitality investment fund in 2018. Its founders, the Kemmons Wilson family, are responsible for founding Holiday Inn Hotels in 1952.
Real estate investors Russell Gimelstob and Alex Halpern founded Ascendant Capital Partners in 2019. The Los Angeles-based firm focuses on high-grade urban hospitality projects.
The United States currently hosts more than half of the world’s REIT market capitalization. Prologis Inc (NYSE: PLD), American Tower Corp (NYSE: AMT) (FRA: A0T) and Equinix Inc (NASDAQ: EQIX) are among the top ranking in the country.
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