Summary and Analysis of Key Points

Overview

• Chatham Lodging Trust is a self-advised hotel investment company that focuses on upscale extended-stay and premium-branded select-service hotels.
• The company’s future hotel acquisitions may be funded through various sources including equity and debt issuances, credit facility drawdowns, and asset sales.
• As of March 31, 2025, Chatham had a leverage ratio of 22.3% and total debt of $383.2 million at a weighted-average interest rate of 6.43%.

Key Performance Indicators

• Chatham uses various metrics to evaluate its financial condition and hotel operating performance, including ADR, Occupancy, RevPAR, FFO, Adjusted FFO, EBITDA, EBITDA re, Adjusted EBITDA, and Adjusted Hotel EBITDA.

Results of Operations

• For the three months ended March 31, 2025, Chatham’s total revenue was $68.6 million, up 0.3% from the prior year period, driven by a 3.8% increase in same-property RevPAR.
• Hotel operating expenses remained flat at $41.8 million, as increases in costs were offset by the impact of hotel dispositions.
• Net income was $1.5 million, compared to a net loss of $5.5 million in the prior year period, primarily due to the factors discussed above.

Non-GAAP Financial Measures

• Chatham presents several non-GAAP metrics, including FFO, Adjusted FFO, EBITDA, EBITDA re, Adjusted EBITDA, and Adjusted Hotel EBITDA, to provide additional insight into its operating performance.
• These measures have limitations and should be considered alongside GAAP results.

Liquidity and Capital Resources

• Chatham had $25.2 million in cash, cash equivalents, and restricted cash as of March 31, 2025.
• The company has a $260 million revolving credit facility and a $140 million unsecured term loan, with $100 million and $140 million outstanding, respectively, as of March 31, 2025.
• Chatham expects to meet its short-term liquidity needs through existing cash and credit facility availability, and its long-term needs through additional borrowings, equity issuances, and asset sales.

Outlook

• The lodging industry experienced slowing RevPAR growth in early 2025, and Chatham believes there is uncertainty around industry performance for the remainder of the year.
• Chatham’s dividend policy is to distribute approximately 100% of its annual taxable income to maintain REIT status.
• Inflation may impact the company’s expenses and capital investment costs, though hotels generally have the ability to adjust room rates to offset inflationary pressures.
• Chatham’s business is subject to seasonal fluctuations, with lower revenue and cash flow in the first and fourth quarters.

Overall, Chatham Lodging Trust appears to be navigating a challenging operating environment, with mixed financial results in the first quarter of 2025. The company’s focus on upscale extended-stay and select-service hotels, prudent leverage, and use of non-GAAP metrics to evaluate performance provide a balanced perspective on its financial condition and outlook.