Sotherly Hotels Inc (SOHO) 2015 Q3 法說會逐字稿

Good morning, and welcome to the Sotherly Hotels third-quarter earnings call and webcast.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Scott Kucinski, Vice President of Operations and Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. Welcome to Sotherly Hotels' third-quarter earnings call and webcast. Dave Folsom, our President and COO, will begin today's call with a review of the Company's quarterly activities and a review of portfolio performance. Tony Domalski, our CFO, will provide our key financial results for the quarter and update our 2015 guidance. Drew Sims, our Chairman and CEO, will conclude with an update on our strategic objectives. We will then take questions.

If you did not receive a copy of the earnings release, you may access it on our website at www.sotherlyhotels.com. In the release, the Company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements.

Any statements made during this conference call which are not historical may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained. Factors and risks that can cause actual results to differ materially from those expressed or implied by forward-looking statements are detailed in today's press release and from time to time in the Company's filings with the SEC. The Company does not undertake a duty to update or revise any forward-looking statements. With that, I'll turn the call over to Dave.

Thank you, Scott, and good morning, everyone. I would like to start the call today by discussing our transactional activity in the quarter, which was some of the highest we have seen in the Company's history.

At the end of July, we completed the acquisition of the Crowne Plaza Hollywood Beach Resort in South Florida by purchasing the 75% interest in the hotel that was held by the Carlyle Group. During our joint venture with Carlisle, we had owned the remaining 25% of that hotel. As a result of the transaction, we booked a $6.5 million non-taxable gain, and we anticipate this asset will be a major contributor to the portfolio heading into 2016 and beyond.

Also in July, we announced that the Company closed on the refinancing of our Jacksonville hotel. The $20 million first mortgage with Bank of the Ozarks carries an interest rate of LIBOR plus 350 basis points with a 4% floor, a four-year term, with a one-year extension, and it amortizes on a 25-year schedule. The proceeds from this loan were used to repay the existing first mortgage, partially fund the renovation project, and for general corporate purposes.

Subsequent to the loan closing, we purchased a LIBOR cap so as to minimize our interest rate risk going forward. At the end of September, we announced that the Company closed on the refinancing of the Crowne Plaza Hollywood Beach Resort. The $60 million first mortgage with Bank of America carries a 4.9% interest rate, a 10-year term, and amortizes on a 30-year schedule. The proceeds from the loan were used to repay the existing floating rate mortgage and for general corporate purposes.

The original loan which we assumed was part of the acquisition at no cost was a floater but by fixing this debt, over 90% of the Company's debt is now at a fixed rate. We also recently completed the sale of an outparcel of land adjacent to the Georgian Terrace in Atlanta, as well as transferable development rights associated with the property for a combined gross sales price of $2.6 million.

In terms of our asset repositionings, our Jacksonville hotel was successfully converted to the new DoubleTree by Hilton flag as the Jacksonville Riverfront Hotel in early September. This marks a significant upbranding for the asset and the benefits of the new brand and renovated product are already being seen.

I'll speak more about that in a minute. And lastly in September, we launched our boutique Sotherly Hotels collection at the Georgian Terrace in Atlanta. This hotel in the hallmarks of the collection are representative of the Company's strategy going forward to help maximize shareholder value and position our portfolio for long-term success.

Turning to our portfolio performance. For the quarter, portfolio RevPAR was $90.32, an increase of nearly 1% over prior year with a 4.5% increase in rate and occupancy declining 3.6%.

Regarding our occupancy declines, in the quarter we had approximately 12,500 room nights out of service for renovations in our Laurel, Atlanta, and Houston hotels, which represented over 20% of the inventory in these hotels. This obviously impacted our occupancy for the quarter.

Excluding the impact of the renovations of these properties, RevPAR increased 4.4% driven by a 3% increase in rate and 1% increase in occupancy. Hotel EBITDA for the portfolio increased 6% to approximately $8 million for the quarter.

To review individual property highlights, specifically where renovation projects have been ongoing, first in Jacksonville as I previously mentioned, the hotel successfully converted to the DoubleTree flag in early September. The renovation has been substantially complete since that time with no further on impact to operations.

In the quarter at this hotel, we increased RevPAR share by 10.8% and in the month of September alone, the month of the conversion, RevPAR share was up 14.4%. These results are a great indicator of how we believe the hotel will respond in 2016 both operationally and financially. Booking pace is strong with the new flag and transient rates are up over $20.

In Laurel, the renovation proved to be extremely impactful to operations as the window for the conversion became increasingly tight. We completed a comprehensive product improvement plan in eight months and the hotel successfully converted to the DoubleTree flag on October 20 with all renovation work now complete.

With the renovation impact, the operation over, and with the new high-quality product to sell, and with a much stronger DoubleTree flag compared to the old [Hollywood] flag, we expect this hotel to reverse course very quickly. Since the conversion not too long ago, we are already seeing transient ADR bookings increase by $20 to $25 which is in excess of 25% ADR growth.

In Houston, we substantially completed a full-room refresh in the quarter resulting in significantly impact to occupancy. That work concluded at the end of September, and we are now in the final stages of preparation to convert the hotel to the Whitehall, an independent hotel affiliated with Preferred Hotels Group. Upon conversion, this hotel will be the second addition to our Sotherly Hotels collection. This will take place in April of next year.

While the Houston market continues to show negative trends, we should see an end to the rate cap associated with the Crowne Plaza flag and also see initial margin expansion as we conclude the repositioning of this asset where the market recovery performance will be even further enhanced.

In Atlanta, the guestroom renovation project continues to progress and is expected to conclude next spring. As you can see from property level detail, while this hotel saw a decline in occupancy due to limited inventory caused by the renovation, ADR was up nearly 11% showing the benefits of the high-quality product and our positioning in the market. We expect the hotel to be poised for outperformance in the market once the renovations are concluded.

In terms of our relative overall market performance, our southern and mid-Atlantic markets performed fairly well as 9 of 12 of our markets showed quarterly year-over-year RevPAR growth. Our share performance was mixed. We saw a slight overall decline in share performance for the quarter mainly due to the impacts of the aforementioned ongoing renovations at our properties in Houston, Laurel, and Atlanta. If not for that activity, we believe our overall share would have met or exceeded the market.

With those notes, I will now turn over the call to our CFO, Tony Domalski.

Thank you, Dave. Reviewing performance for the period ended September 30, 2015. Total revenue for the quarter was approximately $33.9 million representing an increase of 6.9% over the same quarter a year ago. For the nine months ended September 30, total revenue was approximately $101.8 million representing an increase of 9.3% over the same period a year ago.

For the quarter, adjusted EBITDA was approximately $6.4 million representing a decrease of 5% over the same quarter a year ago. However, for the nine months ended September 30, adjusted EBITDA was approximately $24.4 million, which is a 4.7% increase over the same period a year ago.

For the quarter, adjusted FFO was approximately $1.8 million compared to adjusted FFO of approximately $3 million for the same quarter a year ago. For the nine months ended September 30, adjusted FFO was approximately $11.8 million compared to adjusted FFO of approximately $12.3 million for the same period a year ago.

Please note that both our adjusted FFO and adjusted EBITDA exclude charges related to the early extinguishment of debt, losses on derivative instruments, the gain in the value of our non- controlling interest in the joint venture and the Crowne Plaza Hollywood Beach Resort, acquisition costs, changes to the deferred portion of our income tax position, as well as other items. Please refer to our earnings release for additional detail.

Looking at our balance sheet, as of September 30, the total book value of our assets was approximately $395.2 million which includes net investment in hotel properties of approximately $354.9 million. The Company had total cash of approximately $21.8 million consisting of unrestricted cash and cash equivalents of approximately $15.5 million, as well as approximately $6.3 million, which was reserved for real estate taxes, capital improvements, and certain other expenses.

As of September 30, the Company had approximately $321.7 million in outstanding debt at a weighted average interest rate of 5.24%. As Dave said, with the Hollywood refinance and the purchase of an interest rate cap for a substantial portion of the balance on our Jacksonville mortgage, essentially 90% of the Company's debt carries a fixed rate interest.

Total stockholder and unitholder equity increased to approximately $55.3 million at the end of the quarter of which stockholders' equity was approximately $51 million and approximately 14.5 million shares outstanding. Unitholders' equity was approximately $4.3 million with approximately 2.2 million limited partnership units outstanding.

At the end of the third quarter, our interest-bearing debt was approximately $103,450 per room. Additionally, the ratio of debt to total asset value as defined in the indenture agreement to our senior unsecured notes was 55.4%, based on the total asset value of approximately $581.3 million at the end of the quarter and total debt of approximately $321.7 million.

Turning to guidance. We're updating our previous guidance for 2015, which accounts for current and expected performance within our portfolio, the impact of recently completed renovations in Jacksonville and Laurel, as well as other items. For the year, we're projecting total revenue in the range of $136.4 million to $139.1 million. At the midpoint of this range, this represents 12.1% increase over last year's total revenue.

Hotel EBITDA is projected in the range of $37.1 million to $37.6 million, and at the midpoint of the range, this represents a 16.4% increase over last year's hotel EBITDA. And adjusted FFO is projected in the range of $15.4 million to $16 million, or $1.04 to $1.08 per share. Additional details can be found in the outlook section of our earnings release. I will now turn the call over to Drew.

Thank you, Tony. As Dave has described, the third quarter contained a high level of transactional activity for the Company in terms of capital markets, acquisition and disposition, and hotel repositioning efforts. While we were pleased with the results of these individual transactions and are confident they will reap benefits to our shareholders going forward, the unfortunate result was a negative impact to quarterly earnings.

Transaction costs were significant including legal fees, accounting opinions, investment banking fees, and startup costs at our repositioned hotels. Most of this is behind us now.

The acquisition of the remaining interest in our Hollywood hotel was also a negative for the quarter given the timing of the transaction. We increased our share count to make the acquisition at the end of the second quarter. However, we only owned the increased ownership interest for two months, August and September, which seasonally are the two lowest revenue months for the year for this hotel. Therefore, the acquisition was a drag on earnings for the third quarter.

Another negative impact came as a result of real estate tax assessments in Georgia that were dramatically increased. We are refuting these assessments along with the rest of our fellow hoteliers and expect a reasonable outcome. However, we do have to account for the potential increases at this time.

From an operational perspective, our combined portfolio's performance was significantly muted by the impact of our renovation activity. With 12,500 room nights out of service in the quarter, and 4 of our 12 hotels under some stage of renovation, this represented the highest level of renovation activities we have seen as a company since 2008.

The impact wasn't solely caused by renovations as the industry as a whole experienced an exceptionally weak August. With the stock market sell-off in mid August, transient business travelers seemed to disappear overnight resulting in a very soft month. Our portfolio was down 7.5% in August. Fortunately, August proved to be an anomaly because September was strong with RevPAR up 6.7% for the portfolio. October was the best month in the Company's 58-year history, and as many of our peers have reported signs of weakness in the fourth quarter, we are seeing a very strong quarter materialize. We believe the next several quarters will provide exceptional growth for our shareholders.

With Jacksonville and Laurel now fully renovated and converted, we expect these assets to produce significant year-over-year growth going forward. I would like to note that the conversion of the Laurel to DoubleTree by Hilton from the Holiday Inn marks our Company's exit from the mid-scale hotel business, something we have been working towards for the past several years.

We believe the Company will benefit greatly from all the hard work completed in the third quarter. We are poised to outperform our markets and peers heading into next year. We look forward to reporting greatly improved operating results in the fourth quarter and thereafter.

We will now open the call up for questions.

(Operator Instructions)

Carol Kemple, Hilliard Lyons.

Good morning. Your G&A expense looks to be up quite a bit in the quarter. I'm guessing some of that is transaction costs. Was there anything else a one-time or should be back out that transaction cost and use that as a run rate going forward?

Tony, I'm going to defer that over to you.

Carol, you can cut out that transaction cost, which is about $600,000 or so. We also had some one-time costs associated with the launch of the Sotherly brand in September. Probably a couple hundred thousand dollars there. I think you take that out -- out of the run rate there. You were asking about the G&A expenses particularly, right?

Correct.

That's what I would do.

Okay. And then your food and beverage department sales look to be down. Was that just purely based on occupancy or were you seeing less weddings and conferences and events in the quarter?

I would say, Carol, that in Houston in particular, we have seen a massive decrease in our food and beverage component. Chevron was our -- is our biggest client in that market and while we're still seeing a good volume of business on the room side, they have cut out completely their food and beverage component. So that was a major hit to food and beverage.

Generally, I would say that the renovation activity had a negative effect certainly in Laurel where the hotel was for the month of August and September appeared to be closed. That's how extensive the renovation appeared to be. We really hurt ourself there.

And then in the Jacksonville market as well, we in July and August, we did the lobby renovations and the ballroom renovations. So the ballroom was shut down for two months. So all of these things are unfortunate but necessary to improve the hotels on a go forward basis.

Okay, and then can you talk about -- I know you're not giving 2016 guidance but your expectations for occupancy and ADR next year?

Dave, can I defer to you on that one?

I think we're going to announce those numbers little bit later, Carol. I think we've got a bias to say they're going to be very attractive given what we've done at the hotels with our renovation activity. So I think on that basis, when we talk about 12,500 room nights out of inventory, those room nights are going to be in inventory next year.

Okay. Thank you.

Whitney Stevenson, JMP Securities.

Good morning, everyone. I was wondering, I appreciate the month by month detail you gave on August and September. Could you just talk a little bit more about some of the positive trends that you saw in October? And that's it for me. Thank you.

Sure. Well, October generally is a good month for us, and obviously adding Hollywood to the portfolio is huge. It's going to be a big part of our overall performance on a go forward basis.

When we bought the hotel in Hollywood, we had the activity in August and September, which are their absolute lowest performing months of the year. October starts to ramp up a little bit. So that certainly helped us from that perspective.

When we look around the portfolio, last year we were in the final stages of renovating our hotel in Philadelphia so we had similar issues that we had solved in the quarter this year there, and we obviously don't have that problem this year. So we had huge increases in that market.

Wilmington, North Carolina, had a huge month and certainly performed at a very, very high level. When you look at some of our bigger box stores, October, they just knocked it out of the park. We've actually had just a great October. We are looking at a November that it's going to be considerably up over last year. And we're pretty bullish even about December.

We've got some really a bullish view here on this end from this point forward. And feel like when we report in February for the fourth quarter, I think that everyone is going to be pleased with the results.

Daniel Donlan, Ladenburg Thalmann.

Thank you, and good morning. Drew and Dave, just curious, when you guys put together the guidance, obviously you knew that you were going to be renovating these assets, so I was just curious if the displacement was greater than you anticipated or how much of the reduction in guidance is related to just general market weakness, as well as Houston being weaker than expected relative to renovation disruption given that you knew that going in this year.

Yes, I mean, that's fair, Dan. We saw a real impact -- increase at impact in Laurel that surprised us. The problem there was we had a delay as a result of getting our approvals from Hilton back in January, and then we put our POs in for orders and the goods did not start showing up until April and May. So all of a sudden, we are faced with we've got to do a full-blown renovation to all the public space in about five months.

We accomplished that but to accomplish that you basically have to shut the hotel down. We had to tear down the porte cochere in the front of the building. We had to rebuild that. We had to redo the lobby and all of public space.

It was just the hotel look like it was closed. If performed like it was almost closed so that one was huge.

And then on top of that, we were at the very impactful part of the Jacksonville renovation as well where we had to shut down all the meeting space and ballrooms. And we tried to plan for that because quite frankly, in the Jacksonville market, the slowest time of the year is August and September. So we thought if we're going to bite the bullet, let's do it then. So we kind of saved that until the end of the project.

But it chased away all of our group business because didn't have the facilities to accommodate the group segment. As far as Houston goes, it's kind of an A plus B scenario there, Dan, because we've got all these rooms out of service. We had two floors out of service for the entire summer so that we could expedite the renovations and try and do those renovations during the slow season, in Houston which is the summertime. And yet the market is down, as you well know.

We under performed the market, and that's understandable given that we've got so many rooms out of service. I guess we were a little surprised at how well the Houston market did, and I know that sounds counterintuitive but it did better than we thought. And so the impact was greater than we thought because generally we would just take one floor out of service but since we thought we were going to have a terrible summer, we figured we would just go ahead and bite the bullet and get it all done real quickly, which is what we did. It was a little more impactful than we thought.

In terms of the overall market, August was just a whiff. I don't know what to tell you. It was a very strange set of circumstances and had something to do with the calendar, but we pretty much took it on the chin in every market. I don't really understand exactly why but I'm glad it was just a one-time thing because September was good and October was great. We seem to be back on track.

That's helpful.

Dan, let me add one thing. When Tony mentioned the tax assessments and how that relates to our guidance. Those aren't just a few thousand dollars.

Those are very meaningful and impactful to the guidance that we've issued. For instance, in Savannah at the Hilton, the assessment came back and our taxes tripled, from $300,000 to $900,000; that is a material impact to the Company which we're going to take action to address that with the city and the county. And to a lesser extent, we had probably $200,000 plus or minus in Atlanta in reassessment costs.

It wasn't just our hotels. The entire hotel community in Savannah was reassessed and it was dramatic. So when you look at the guidance we're issuing, the accounting rules force us to recognize this implied tax liability that we now face.

I don't think we're going to pay those taxes because we're going to get them reduced on appeal and either that or in court along with the rest of the hotels in the market. But we don't get to do that until we actually win the day in court or upon appeal. So it's not an insignificant amount of money. It's a lot.

Yes, no. I was just looking at the hotel EBITDA, and it's not down any more than anybody else's in the hotel REIT space. I was just curious. It sounded to me basically what you just said that you guys had to put -- you got squeezed on some of the time constraints relative to the renovations. I was just trying to better understand that.

And at the end of the day, Dan, I think it's better that we just go ahead and get it done and get it behind us. Which I have. And then up branding these two hotels and going from IHG brands to Hilton brands, it's going to be huge for us.

I would agree. And then as we look forward to 2016 on maybe some capital improvements, just curious what your thoughts are there. I'm just looking at the three months and nine months ended results for the Hilton Wilmington and it's down from where it was in 2013, so just curious if you're planning a refresh there in order to bring the property up to -- a more updated. Was just curious on capital improvements for 2016.

On the capital front, obviously, our license terms dictate when we do major renovations. We are always doing routine CapEx, and generally that's $3 million a year plus or minus. Tony, jump in here and help if I'm way off on that.

It's closer to $5 million for the recurring tax.

Yes, since we took Hollywood. So somewhere in the $5 million range. This year, we're going to spend upwards of $15 million or $16 million on our product that we didn't -- that we wouldn't normally do that.

Next year, that number is probably going to be a third of that because we'll be starting renovations in Savannah and we'll be finishing up renovations in Atlanta. And that's basically it for next year. So it's going to be pretty light next year in terms of what our capital commitments are and needs are.

Okay. That is helpful. And as far as your debt maturities go, I think you took care of Jacksonville, obviously, but you've got it looks to be two mortgages coming due next year. I don't know if you can extend those out. I think you can on the Crowne Plaza Houston, and then you've got a couple more coming due in 2017.

I was just curious how you plan to tackle that. Some of this stuff is not prepayable, some of it is. I'm just curious what your plans were there to get it done ahead of time or how you are looking at that maturity -- those maturities.

Yes, I think on our long-term hold properties, we obviously want to lock in long-term rates as soon as we can. And I think we will be working towards that end.

On the properties that are not, it's going be long-term holds for us on the notes, which ones those are. Those properties will probably be marketed sometime between now and that time if the market is receptive to that. So I think generally our plan is to lock in fixed rate debt for 5 to 10 years on the properties that we are very bullish on, and I think that Atlanta, for instance, early this year we locked into a 10-year loan.

Hollywood obviously is a long-term hold for us; we locked into a 10-year loan. And Jacksonville recently, we got a new five-year loan on that. So that's the plan. The ones that are maturing are for the most part the smaller loans that we have in the loan portfolio.

Okay. That's it for me. Thank you.

Scott Williams, Palogic Capital.

Good morning, Drew. The high-level review or just a quick take of the Fort Lauderdale property suggests there's considerable upside to the current performance. You've got institutional ownership at the Weston Diplomat that's committing big dollars. You've got the significant potential development adjacent to you. Significant renovation is going on at Fort Lauderdale airport. How do you view that -- as you work toward the flag rule, Drew, how do you anticipate positioning property to succeed and how do you think about supply like the Margaritaville property and Miami product coming online?

Sure. I think Hollywood is a separate market than Miami. So a lot of that product down in Miami doesn't seem to affect us too awful much.

The Margaritaville property is -- it's a very unique product with a very -- it's targeted at a very unique customer. It's the quote parrotheads folks, so it's kind of got a blue-collar twist to it, and it seems to be 100% leisure travel.

They really aren't anticipating doing any group business there or very, very little group business. The location of that is somewhat remote to our hotel, although I will say there seem to be on the initial launch have lowered their rates considerably which is a little bit of a concern for us on the transient side.

We have a great working relationship with the Diplomat. So we do a considerable amount of business with them on an overflow basis or we are one segment below, so they don't feel threatened by us and they feel good about sending us business. So over time, we've developed just an excellent relationship with them.

In terms of future branding, we really haven't made a decision on that, Scott. We're looking at a couple alternatives. Obviously, we like Hilton. We've made that known. So we're looking at that alternative.

We are in discussions with the hotel to be built next to us, which is a [Conda] hotel. So there may be some opportunities there for the Company which we're looking at. We're not in a position to really divulge anything on that at this point, but those are all things we're working on.

Okay. The question was asked earlier about the debt maturities, but as you get closer to those, seemingly Savannah, Wilmington, Louisville would have the opportunity to take out some equity on a secured basis. As you get closer and then you have the ability to prepay the 8% bonds, just quarterly how should we think about how you want to design overall leverage and how you want the balance sheet to be structured?

Sure. Next year, we have the opportunity to take out the 8%, the first bond issuance and that's something we're going to be looking at and would like to figure out a way to do that. Clearly, we're not going to issue any common stock to do that with the level of pricing on our stock today.

So we're going to have to scratch our heads and work on that a little bit. But you're right. Savannah and Wilmington, we had long-term life company loans on those hotels. We are actually in discussions with them now about a blend and extend as an option. Whether or not we take that option depends on how well the negotiations go.

But there is considerable equity available there. We will need to refresh those hotels. But we've got to put pencil to paper and figure out what our lender -- how much they will increase our loan at this point. That's kind of what we are working on. That's probably a first quarter project for us for the first half of next year. So that's on our to-do list for the first half of next year as far as Savannah and Wilmington.

Okay, and then last one for me. Being a discussion that we tend to have from time to time. You've moved back to a pretty wide discount.

Is there point where you and the Board would for some period of time would go in another direction whether it be stock buybacks, asset sales, or just some form of commitment to slow the acquisition growth until the cost of capital moves something closer to fair?

Yes. I mean, Scott, think you've seen over the last 11 or 12 years as a public company, we have raised capital once. Right? We've -- we had an asset base at the IPO that was worth about $200 million. Our asset base now is $600 million, more or less.

So we have grown the Company without diluting the shareholder base. Being one of the largest shareholders, I certainly don't want to dilute myself, and I think that you can -- that strategy is going to continue in the future. We're not going to be serial raisers of equity.

Unless, of course, we find a great acquisition that's accretive for everybody and it makes a whole lot of sense and then we might do that. I think we can allay your fears that we're not just going to run out and raise a bunch of equity. We've got options. And I think one of the things we've talked about in the past is recycling hotels, which is going to be again, one of the high priority items on our list for next year. Is to start selling some of our non-core assets and then trading into markets that we want to be in.

The hard part of that in the last couple of years has been that the market has been so heated up that it's really hard to find an acquisition that is going to be accretive for the shareholders. And I think that things slowing down a little bit might be helpful, quite frankly. So we believe that we can get out of hotels that are non-core and get into core markets and that's going to be our mission for next year.

Okay. Thank you for your time.

Bob Evans, Pennington Capital.

Good morning. Thanks for taking my questions. You've touched on this a little bit but could you -- I know you can't give guidance per se but can you talk a little bit more about the larger puts and takes that would drive EBITDA growth next year?

Dave, can I hand that off to you? I think I've given my --

Bob, can you just repeat that? I missed part of that.

Sure. As we look into 2016, just looking at the more significant items that might drive your EBITDA growth for next year.

Yes, well I think the renovation projects are going to be very, very accretive. You're going to see substantial EBITDA growth in Jacksonville and in Laurel, and we're seeing that already at these hotels. Very substantial, not linear growth but geometric growth, substantial increases.

Based on the new franchises that are on the hotel and also the fact that the comparables year over year are going to be quite easy because of the impact of the renovations. So we should see outsized growth there.

In Atlanta, Atlanta is a big hotel for us. It's 356 rooms but these are very large rooms. It acts more like 700 room hotel because of the size and room types we have there.

We went backwards a little bit on occupancy this year. But I think we're going to address that through the completion of the rooms renovation this spring.

And frankly, in Houston, I think another EBITDA driver relative to where the market is, not -- the market continues to deteriorate in Houston, the pie gets smaller, we just want a bigger piece of the share pie in Houston. And we think we can do that when we exit the Crowne franchise. And the Crowne franchise is, frankly, not very strong in that market nor is it strong in many of our markets and that's why we're exiting that brand.

And I think what we should find is some share capture, and we get rid of that low rated ADR cap we have that comes with that flag. So I think bits and pieces of our EBITDA growth are going to be obviously centered on some of the hard work that frankly is impacted our earnings today.

And then lastly, Hollywood, we get the full-year benefit next year of that hotel, as Drew mentioned. We raised equity, then we waited a month to buy that hotel. And then this quarter that we are reporting on represents only two months of ownership of that hotel which are the two worst months of the year.

And that is a very, very strong market right now, even with the new supply. And our relationship with the Diplomat is good. And so we will get a full year's worth of growth out of the Hollywood asset. I think the year-over-year numbers, like you said, we can't telegraph any earnings right now but we are very bullish, as Drew said, on the coming year.

Dave, when our projections for next year, when are we going to publish those?

Probably towards the end of the quarter, this quarter.

Two weeks from now.

Okay. Can I also ask, I mean obviously I assume you agree the stock is a value and especially given the increase in the asset value that you've created over recently as well as the decline. Any thought of, I know you own -- you have decent insider ownership but of adding to that and kind of sending a signal to the market about the value of the Company.

I don't know that that's something we can discuss openly here but, yes. We're always looking at opportunities to buy. I wouldn't put that out of the range of possibilities here.

I guess as a shareholder, we would certainly encourage management and the Board to send that signal from an insider buying standpoint.

Understood. I am the largest shareholder so this is very impactful to me every time we report earnings. So it's near and dear to my heart. We will make sure that we take that advice to heart.

Thank you.

(Operator Instructions)

Mark Tremba, a private investor.

Hi, guys. I definitely encouraged by your outlook for next year. Could you talk a little bit about the dividend and possible -- David, I know you held the dividend steady this quarter, but do you think you'll be able to increase the dividend next year?

Yes, thanks for joining us this morning. Our philosophy on that has been to have a consistent and rising dividend, and I think that if you look at back in our history, we have raised the dividend three out of four of the last quarters over the last 3 1/2 to 4 years. I think you can expect the same kind of growth in the dividend that we had this year and next year.

Okay, great. That's encouraging. Thank you, guys.

This concludes our question-and-answer session. I would like turn the conference back over to management for any closing remarks.

Thank you all for joining us, and we look forward to reporting much improved results for the fourth quarter in February. Thank you. Bye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.