SOHON Sotherly Hotels Inc

Item 2.01 Completion of Acquisition or Disposition of Assets.

As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission on November 30, 2021, Raleigh Hotel Associates, LLC, an affiliate of Sotherly Hotels Inc. (“Sotherly” or the “Company”), a Maryland corporation and the sole general partner of Sotherly Hotels LP, a Delaware limited partnership (the “Operating Partnership”), entered into a real estate sale agreement (the “Agreement”) on November 30, 2021 to sell the DoubleTree by Hilton Raleigh-Brownstone University hotel located in Raleigh, North Carolina (the “Hotel”) to CS Acquisition Vehicle, LLC for a purchase price of $42.0 million. On June 10, 2022, the sale of the Hotel and related transactions contemplated by the Agreement, as subsequently amended, were completed. The Company used approximately $18.6 million of the net cash proceeds from the sale of the Hotel to repay the existing mortgage on the property and approximately $19.8 million of the net cash proceeds to repay a portion of the secured notes with KWHP SOHO, LLC and MIG SOHO, LLC (together, “KW”) as required by the terms of the secured notes. The Company intends to use the remaining net cash proceeds to make any distributions on the Company’s preferred stock that may be required in order to comply with the REIT requirements applicable to the Company related to distributions of taxable income, and for general corporate purposes. KW received approximately $19.8 million of the proceeds from the sale of the Hotel, of which approximately $13.3 million was applied toward principal, approximately $6.3 million was applied toward the exit fee owed under the KW secured notes, and approximately $0.2 million was applied toward accrued interest. Additionally, the terms of the KW secured notes allowed for the release of a portion of the interest reserves in the amount of approximately $1.6 million, of which approximately $1.1 million was applied toward principal and approximately $0.5 million was applied toward the exit fee. Following the partial repayment of the KW secured notes, the outstanding balance owed on the secured notes is approximately $5.6 million.

The foregoing summary description of the Agreement and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by the complete text of the Agreement, as amended.