Chatham Lodging Trust Provides Business Update

Rhea-AI Summary

Chatham Lodging Trust (NYSE: CLDT), a hotel REIT, reported a strong RevPAR growth of 5% quarter-to-date through May, exceeding its second quarter guidance of 2.5-4%. April occupancy increased 6% to 83% with ADR down 1% to $177, while May occupancy rose 4% to 82% with ADR up 1% to $182. Silicon Valley and Bellevue hotels saw an 11% RevPAR surge driven by a 6% occupancy increase to 77% and 6% ADR rise to $188. Key markets like Cherry Creek, Dallas, and San Diego also performed well. The company repaid $29M and $35M mortgages, borrowed $50M on its term loan, acquired Home2 Suites Phoenix Downtown for $43M, and issued $23M of CMBS debt. By June 30, Chatham expects $50M in cash and no outstanding balance on its $260M credit facility, post repaying $189M maturing debt in July. This marks their lowest leverage levels in a decade.

Positive

• RevPAR growth of 5% quarter-to-date exceeded guidance of 2.5-4%.
• Occupancy for April increased 6% to 83%, May occupancy rose 4% to 82%.
• Silicon Valley and Bellevue hotels saw an 11% RevPAR increase.
• 14 of 38 hotels posted double-digit RevPAR growth.
• Acquired Home2 Suites Phoenix Downtown for $43M.
• Projected $50M cash with no outstanding balance on $260M credit facility by June 30.
• Lowest leverage levels since the company's early years.

Negative

• Average Daily Rate (ADR) for April decreased by 1%.
• Expected to repay $189M of maturing debt in July.
• Incurred additional $50M term loan borrowing in May.

Insights

Financial Analyst

Chatham Lodging Trust's recent updates provide several noteworthy financial aspects.

First, the RevPAR (Revenue per Available Room) growth exceeding guidance is a positive indicator. For hotels, RevPAR is a key performance metric, combining occupancy rates and Average Daily Rate (ADR). An increase in RevPAR suggests better revenue management and higher occupancy, both of which are critical for profitability in the hospitality sector. The reported growth of 5% in April and May above the guidance reflects strong demand recovery, likely driven by the resurgence in business travel and leisure activities.

Additionally, the strategic management of debt and capital markets is crucial. The repayment of maturing mortgages and the issuance of new debt indicate a proactive approach to managing financial obligations. This reduces financial risks and improves liquidity. Notably, the acquisition of the Home2 Suites by Hilton Phoenix Downtown aligns with their investment strategy in premium-branded, select-service hotels, potentially contributing to higher future cash flows.

Overall, these financial maneuvers suggest a robust balance sheet and improved financial flexibility, enhancing the company's ability to seize growth opportunities. Investors should view these developments positively, but also keep an eye on how these financial strategies impact operational performance in the long run.

Market Research Analyst

From a market perspective, Chatham Lodging Trust’s update reveals significant trends. The across-the-board increase in occupancy rates and ADR in key markets like Silicon Valley, Bellevue and Greater New York reflects a broader recovery in the hospitality industry. This is particularly notable given that business travel is resurging, which has been a critical revenue driver for hotels traditionally.

Furthermore, the double-digit RevPAR growth in 14 of the 38 comparable hotels highlights effective market positioning and strong demand. High rates of both weekday and weekend occupancies nearing pre-pandemic levels are encouraging.

However, it's important to consider the potential headwinds. The economic environment, inflationary pressures and changes in travel behavior could impact future performance. While the current metrics are optimistic, maintaining this growth trajectory will require continual adaptation to market conditions.

For investors, this signals a positive near-term outlook, but vigilance is necessary for any shifts in market dynamics that could affect occupancy and ADR trends.

April and May RevPAR Trend Well Above Second Quarter Guidance

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 RevPAR grew a strong 5 percent quarter-to-date through May, well above its second quarter guidance of 2.5 to 4.0 percent. RevPAR gained 5 percent in both April and May.

Key RevPAR growth metrics (excluding the recently acquired Home2 Phoenix Downtown):

• April occupancy was up 6 percent to 83 percent with average daily rate (ADR) down 1 percent to $177
• May occupancy was up 4 percent to 82 percent, and ADR also increased 1 percent to $182
• RevPAR growth for the Silicon Valley and Bellevue hotels surged 11 percent through May driven by an approximate 6 percent advance in occupancy to 77 percent and a 6 percent rise in ADR to $188
• Other strong markets through May were Cherry Creek, Dallas, Greater New York, San Antonio and San Diego

“Driven by the resurgence in business travel around the country, 14 of our 38 comparable hotels generated double digit RevPAR growth through May, leading us to meaningfully outperform the industry and our peers,” highlighted Jeffrey H. Fisher, Chatham’s chief executive officer and president. “April and May weekday and weekend occupancies were the highest since 2019, and weekday and weekend portfolio ADR exceeded 2019 levels. As occupancies climb, rate growth should accelerate, and this is very encouraging as we enter our busiest time of the year.”

Capital Markets & Capital Structure

During the 2024 second quarter, the company:

• Repaid the Residence Inn Anaheim $29 million maturing mortgage on April 5^th
• Borrowed an additional $50 million on its term loan on May 3^rd
• Acquired on May 30^th the recently opened, 148-room Home2 Suites by Hilton Phoenix Downtown for $43 million or approximately $293,000 per room
• Issued $23 million of CMBS debt secured by the Hyatt Place Pittsburgh North Shore on May 31^st
• Repaid the Residence Inn Mountain View $35 million maturing mortgage on May 31^st
• Expects to issue approximately $37 million of CMBS debt during June

“Pro-forma for the above transactions, we project to have approximately $50 million of cash with nothing outstanding on our $260 million credit facility as of June 30^th and have only $189 million of maturing debt to repay in July,” commented Jeremy Wegner, Chatham’s chief financial officer. “After repaying the July maturing debt, we will have approximately $140 million outstanding on our credit facility and 29 hotels unencumbered. It’s important to have this debt overhang behind us as we have successfully repositioned our balance sheet and are at our lowest leverage levels since Chatham’s early years over a decade ago."

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 39 hotels with 5,883 rooms/suites in 17 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/20240603211334/en/

Dennis Craven (Company)

Chief Operating Officer

(561) 227-1386

Source: Chatham Lodging Trust

FAQ

What is the recent RevPAR growth for Chatham Lodging Trust (CLDT)?

Chatham Lodging Trust reported a RevPAR growth of 5% quarter-to-date through May, exceeding its guidance of 2.5-4%.

How did Silicon Valley and Bellevue hotels perform for CLDT?

Silicon Valley and Bellevue hotels saw an 11% RevPAR growth driven by a 6% occupancy increase to 77% and 6% ADR rise to $188.

What are the recent occupancy and ADR trends for CLDT?

April occupancy increased 6% to 83% with ADR down 1% to $177. May occupancy rose 4% to 82% with ADR up 1% to $182.

What recent acquisitions has CLDT made?

Chatham Lodging Trust acquired the Home2 Suites by Hilton Phoenix Downtown for $43 million on May 30.

What is CLDT's current leverage and cash position?

By June 30, Chatham projects $50M in cash with no outstanding balance on its $260M credit facility, marking the lowest leverage levels since its early years.

How much maturing debt is CLDT expected to repay in July?

Chatham Lodging Trust expects to repay $189 million of maturing debt in July.