Chatham Lodging Trust Announces Sale of Hotel

Rhea-AI Summary

Chatham Lodging Trust (CLDT) announced the closing of the sale of the 180-room Hilton Garden Inn Denver Tech Center for approximately $18 million. An approximate $6 million renovation of the hotel was planned for 2023 but was not completed due to the pending sale. Proceeds from the sale of the hotel will be used for corporate investments and to repay debt.

Insights

Financial Analyst

The divestiture of the Hilton Garden Inn Denver Tech Center by Chatham Lodging Trust for $18 million represents a strategic portfolio optimization move. With the hotel sector being capital-intensive, regular renovations are crucial for maintaining competitiveness. However, the planned $6 million renovation was circumvented by the sale, indicating a potential cost-saving maneuver.

From a financial perspective, the allocation of sale proceeds towards corporate investments and debt repayment suggests a focus on balance sheet strength. This could enhance creditworthiness and potentially reduce interest expenses, a significant factor for REITs given their reliance on capital markets for funding. Stakeholders should monitor the company's future investment decisions and their impact on revenue streams and dividend payouts, which are pivotal for REIT valuations.

Real Estate Market Analyst

The sale of a premium-branded property within the tech-centric Denver area could reflect market dynamics or strategic realignment. The upscale, extended-stay and select-service hotel segments have unique demand drivers, often linked to business travel and long-term stays. The decision not to proceed with renovations prior to the sale may indicate a calculated move to avoid over-investment in a property that no longer aligns with the company's long-term strategic goals.

Assessing the sale price against industry benchmarks and recent transactions in similar markets can provide insights into the property's valuation. If the sale price is in line with or above market trends, it may suggest a favorable deal for Chatham Lodging Trust. Conversely, a below-market price could imply a rapid divestiture strategy, possibly to address more pressing financial or strategic needs.

Debt Market Analyst

The use of proceeds to repay debt is a critical move for Chatham Lodging Trust, particularly in the context of the current interest rate environment. For REITs, which often carry high levels of debt to fund property acquisitions and improvements, interest rate fluctuations can significantly impact profitability. By reducing debt levels, the Trust could be aiming to decrease its interest burden and improve its debt-to-equity ratio.

Investors should evaluate the company's debt maturity profile and interest rate exposure. If the repaid debt carries higher interest rates or near-term maturities, the transaction could provide immediate financial relief and reduce refinancing risk. This strategic decision may be viewed positively by the debt markets, potentially leading to more favorable terms for future borrowings.

WEST PALM BEACH, Fla.--(BUSINESS WIRE)-- Chatham Lodging Trust (NYSE: CLDT), a hotel real estate investment trust (REIT) focused on investing in upscale, extended-stay hotels and premium-branded, select-service hotels, today announced the closing of the sale of the 180-room Hilton Garden Inn Denver Tech Center for approximately $18 million. An approximate $6 million renovation of the hotel was planned for 2023 but was not completed due to the pending sale. Proceeds from the sale of the hotel will be used for corporate investments and to repay debt.

About Chatham Lodging Trust

Chatham Lodging Trust is a self-advised, publicly traded real estate investment trust focused primarily on investing in upscale, extended-stay hotels and premium-branded, select-service hotels. The company owns 38 hotels with 5,735 rooms/suites in 16 states and the District of Columbia. Additional information about Chatham may be found at chathamlodgingtrust.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Statements about the company's business that are not historical facts are "forward-looking statements." Forward-looking statements are based on current expectations. You should not rely on our forward-looking statements because the matters they describe are subject to known and unknown risks and uncertainties that could cause the company's future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such statements. Such risks are set forth under the captions "Item 1A. Risk Factors" and "Forward-Looking Statements" in our annual report on Form 10-K and under the caption "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" (or similar captions) in our quarterly reports on Form 10-Q, and as described in our other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the dates on which they are made, and the company undertakes no obligation to update publicly or revise any guidance or other forward-looking statement, whether as a result of new information, future developments, or otherwise, unless required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240110313943/en/

Dennis Craven (Company)

Chief Operating Officer

(561) 227-1386

Source: Chatham Lodging Trust

FAQ

What did Chatham Lodging Trust (CLDT) announce?

Chatham Lodging Trust (CLDT) announced the closing of the sale of the 180-room Hilton Garden Inn Denver Tech Center for approximately $18 million.

How much was the planned renovation for the hotel?

An approximate $6 million renovation of the hotel was planned for 2023 but was not completed due to the pending sale.

What will the proceeds from the sale be used for?

Proceeds from the sale of the hotel will be used for corporate investments and to repay debt.