Acceleration/Increase of Financial Obligation, Termination of Material Agreement, Financial Obligation (Form 8-K)

Item 1.02 Termination of a Material Definitive Agreement.

As previously disclosed in a Current Report on Form 8-K filed on July 30, 2025, SOHO Atlanta, LLC (the "Seller"), a Delaware limited liability company and an affiliate of Sotherly Hotels Inc., a Maryland corporation (the "Company") and the sole general partner of Sotherly Hotels LP, a Delaware limited partnership, entered into a sale, purchase and escrow agreement (the "Agreement") on July 24, 2025 to sell a portion of its real estate containing the parking garage, associated with the Georgian Terrace hotel, located in Atlanta, Georgia, to Banyan Street Capital LLC (the "Buyer"), a Delaware limited liability company, for a purchase price of $17.75 million.

The closing of the transactions contemplated by the Agreement was subject to various contingencies, including Buyer's investigation period, as extended, during which period Buyer was entitled to terminate the Agreement for any reason. On November 13, 2025, Buyer sent a notice that it was terminating the Agreement pursuant to such termination right.

Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

On September 28, 2015, certain subsidiaries of the Company entered into a promissory note, loan agreement, and other loan documents to secure a mortgage (the "Mortgage Loan") on the DoubleTree Resort by Hilton Hollywood Beach hotel with Bank of America, N.A.

On November 12, 2025, the Company received a Notice of Default (the "Notice") from the special servicer for the Mortgage Loan. The Notice provides that the Company's subsidiaries, Hollywood Hotel Associates LLC and Hollywood Hotel Associates Lessee LLC, are in default under the note and the loan documents by virtue of, among other things, their failure to pay all amounts when due thereunder, and that the current lender, Wilmington Trust, National Association, as Trustee, will take all such actions as it deems appropriate to protect its interest in the Mortgage Loan and to collect the debt thereunder, including, without limitation, seeking foreclosure and/or reconveyance of its security under the loan documents without further notice or demand. The Company estimates that the amount of the direct financial obligation, as of November 12, 2025, is approximately $49.3 million.

The Company has engaged a consultant to negotiate for an extension of the Mortgage Loan with the special servicer, and proposed extension terms have been provided to the special servicer. The Company continues to be in a "cash trap" with respect to the property which requires substantially all the revenue generated by the hotel to be deposited directly into a lockbox account and swept into a cash management account for the benefit of the lender.