CLDT Chatham Lodging Trust

Chatham Lodging Trust (NYSE: CLDT), a lodging real estate investment trust (REIT) that invests in upscale, extended-stay hotels and premium-branded, select-service hotels, today announced results for the fourth quarter ended December 31, 2023.

Fourth Quarter 2023 Key Items

• Portfolio Revenue Per Available Room (RevPAR) – Increased 2.5 percent to $121 compared to the 2022 fourth quarter. Average daily rate (ADR) accelerated 0.5 percent to $173, and occupancy jumped 2 percent to 70 percent for the 39 hotels owned as of December 31, 2023.
  • RevPAR for the Silicon Valley and Bellevue hotels was up 14 percent over the 2022 fourth quarter.
  • Excluding the Silicon Valley and Bellevue hotels, RevPAR was up 5 percent over the 2019 fourth quarter.
• Net Loss – Incurred a $11.0 million net loss applicable to common shareholders compared to a net loss of $4.0 million in the 2022 fourth quarter. Net loss per diluted common share was $(0.23) versus net loss per diluted common share of $(0.08) for the same period last year.
• Hotel EBITDA Margin – Generated margins of 31.6 percent in the 2023 fourth quarter compared to 2022 fourth quarter margins of 33.3 percent.
• Adjusted EBITDA – Rose $0.4 million from $20.4 million last year to $20.8 million in the 2023 fourth quarter.
• Adjusted FFO – Produced AFFO of $9.8 million in the 2023 fourth quarter versus $10.2 million in the 2022 fourth quarter. Adjusted FFO per diluted share was $0.19 compared to $0.20 in the 2022 fourth quarter.
• Asset Sale – Sold the Hilton Garden Inn Denver Tech Center for approximately $18 million subsequent to the end of the quarter. An approximate $6 million renovation of the hotel planned for 2023 was not completed due to the pending sale.

The following chart summarizes the consolidated financial results for the three months and year ended December 31, 2023, and 2022, based on all properties owned during those periods ($ in millions, except margin percentages and per share data):

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

Net (loss) income

$(9.3)

 

$(2.1)

 

$2.5

 

$9.9

Diluted net (loss) income per common share

$(0.23)

 

$(0.08)

 

$(0.11)

 

$0.04

GOP Margin

39%

 

40%

 

43%

 

45%

Hotel EBITDA Margin

32%

 

33%

 

36%

 

38%

Adjusted EBITDA

$20.8

 

$20.4

 

$101.1

 

$99.8

AFFO

$9.8

 

$10.2

 

$59.7

 

$59.6

AFFO per diluted share

$0.19

 

$0.20

 

$1.18

 

$1.19

Dividends per common share

$0.07

 

$0.07

 

$0.28

 

$0.07

2023 Highlights

“The lodging industry in 2023 was interesting given the differing RevPAR trends each segment experienced with leisure, group and business travel behaving independent of each other," explained Jeffrey H. Fisher, Chatham's president and chief executive officer. "For Chatham, it was quite the roller coaster, with the beginning of the year meaningfully impacted by significant layoffs in the technology sector, followed by the elimination of internship programs for the summer, all while business travel in most other markets was performing well. After Labor Day, building off the strong business travel undercurrent around the country, our technology markets started to gain traction in the fourth quarter, an encouraging sign as we head into 2024 with momentum."

Chatham's 2023 highlights include:

• RevPAR growth of 6.1 percent, exceeding industry RevPAR performance by approximately 25 percent, despite losing approximately $12 million of intern-related room revenue (represents almost 4 percent of 2022 portfolio room revenue)
• 25 percent rise in other department profits due primarily to continued revenue enhancement initiatives within the company's parking operation and hotel retail markets (combined growth of 21 percent)
• Reduced net debt by $26 million and leverage ratio to 25 percent from 27 percent, marking the lowest level in a decade, based on the ratio of Chatham’s net debt to investment in hotels, at cost
• Repaid $150 million of maturing debt using available liquidity and new debt issuances
• Successfully issued $83 million of fixed-rate debt
• Paid common share dividends of $0.28 per share compared to $0.07 per share in 2022
• Participated in the Global Real Estate Sustainability Benchmark (“GRESB”) for the second time, increasing its overall score by 9 percent from 75 to 82
  • Earned four of five GRESB Stars and was awarded GRESB's "Green Star"
  • Received an overall score of 82/100, ranking 31st out of 115 listed companies in the Americas region, and 2nd in Chatham's peer group

"Looking forward to the upcoming year, we are encouraged by the early trends our hotels are experiencing. Technology companies that stay with us are back to growing and investing in the future and requiring their employees to be present in their offices. We expect more deal flow in 2024 and we have the financial flexibility to address all upcoming debt maturities, make acquisitions, grow FFO and increase distributable cash flow," Fisher added.

Fourth Quarter 2023 Operating Results

Fisher highlighted, "We were pleased to beat fourth quarter consensus estimates as we achieved better-than-expected top- and bottom-line performance. We were able to combine RevPAR growth of 2.5 percent with a 25 percent increase in other operating profit while holding departmental expenses flat year-over-year on a cost per occupied room basis. This quarter felt more stabilized than the last six quarters, and year-over-year RevPAR growth accelerated throughout the quarter and into January. February RevPAR has been adversely impacted by the severe weather across the country as heavy rains in the west and heavy rain and snow across the middle of the country and the northeast impacted travel. Through last week, RevPAR is up 2 percent year-to-date.

"Although Silicon Valley and Bellevue RevPAR recovery has been slower than we hoped, the future looks incredibly bright with surging investments being made into artificial intelligence and the processing infrastructure necessary to support those initiatives. Including our Austin hotels, no other lodging REIT has the exposure to this AI based tech resurgence as Chatham does," Fisher emphasized.

Hotel RevPAR Performance

The below chart summarizes key hotel financial statistics for the 39 comparable hotels owned as of December 31, 2023, compared to the 2022 and 2019 fourth quarters:

 

Q4 2023 RevPAR

 

Q4 2022 RevPAR

 

Q4 2019 RevPAR

Occupancy

70%

 

69%

 

76%

ADR

$173

 

$172

 

$160

RevPAR

$121

 

$118

 

$122

The below chart summarizes RevPAR statistics by month for the company’s 39 comparable hotels (38 hotels in January 2024 after the sale of the Hilton Garden Inn Denver Tech Center):

 

October

 

November

 

December

Occupancy

78%

 

69%

 

63%

ADR

$187

 

$167

 

$160

RevPAR

$147

 

$116

 

$101

RevPAR – prior year

$145

 

$115

 

$95

% Change in RevPAR vs. prior year

1%

 

1%

 

7%

Fisher continued, “Our fourth quarter RevPAR growth of 2.5 percent was almost double industry-wide RevPAR growth, and as trends normalize for us moving forward, we should continue to outperform the industry given the resurgence of our primarily technology dependent markets. Relative to 2019, fourth quarter ADR was up 8 percent which, again, bodes well as we move ahead into 2024 and business travel demand accelerates.

"Weekday and weekend occupancy was up about 100 basis points in the fourth quarter versus last year and is down approximately 9 and 7 percent versus 2019, respectively. Conversely, weekday ADR was up over 4 percent versus 2019, and weekend ADR was up approximately 20 percent over 2019 levels."

RevPAR performance for Chatham’s largest markets (markets that account for five percent of hotel EBITDA contribution over the last twelve months) is presented below:

 

% OF LTM EBITDA

 

Q4 2023 RevPAR

 

Change vs. Q4 2022

 

Q4 2022 RevPAR

 

Q4 2019 RevPAR

39 - Hotel Portfolio

 

 

$121

 

3%

 

$118

 

$122

Silicon Valley

13%

 

$119

 

11%

 

$108

 

$158

Coastal Northeast

9%

 

$152

 

(3)%

 

$156

 

$135

Los Angeles

9%

 

$147

 

(5)%

 

$155

 

$149

Washington D.C.

8%

 

$125

 

5%

 

$119

 

$132

Greater New York

7%

 

$163

 

16%

 

$141

 

$138

San Diego

6%

 

$164

 

1%

 

$163

 

$148

Dallas

6%

 

$105

 

8%

 

$97

 

$91

Austin

5%

 

$125

 

1%

 

$124

 

$125

“Outside of our New York and Los Angeles markets which were oppositely impacted by renovation comparisons, it was encouraging to see all but one market grow in the fourth quarter and great that our largest market produced the strongest growth of all our top markets," stated Dennis Craven, Chatham's chief operating officer. "Within Silicon Valley, the underlying demand is strengthening, and fourth quarter occupancy of 65 percent was not far off 2019 fourth quarter occupancy of 69 percent. We expect to see continued demand growth in 2024.

"We continue to monitor deplanements into our tech driven markets. Deplanements into San Francisco were up 12 percent over the 2022 fourth quarter and only down 8 percent to 2019. At SFO, international deplanements were only off 3 percent versus 2019 levels. San Jose deplanements remain off about 27 percent to 2019 levels. Seattle deplanements are only off 2 percent versus 2019 levels."

Craven commented further, "Washington, D.C., is building momentum heading into 2024 and still has meaningful upside to 2019 levels. Dallas and Austin continue to benefit from corporate relocations. San Diego is poised for a strong 2024 given the increase in large conventions in 2024, although the recent bad weather resulted in the cancellation of some business in February."

Approximately 63 percent of Chatham’s hotel EBITDA over the last twelve months was generated from its extended-stay hotels. Chatham has the highest concentration of extended-stay rooms of any public lodging REIT at 61 percent.

Fourth quarter 2023 occupancy, ADR and RevPAR for each of the company’s major brands, based on the 39 comparable hotels, is presented below (number of hotels in parentheses):

 

 

Residence Inn (16)

 

 

Homewood Suites (6)

 

 

Courtyard (4)

 

Hilton Garden Inn (4)

 

 

Hampton Inn (3)

Occupancy - 2023

73%

 

75%

 

66%

 

61%

 

78%

ADR – 2023

$190

 

$145

 

$144

 

$170

 

$164

RevPAR – 2023

$138

 

$108

 

$95

 

$104

 

$128

RevPAR – 2022

$126

 

$110

 

$92

 

$115

 

$125

% Change in RevPAR

9%

 

(2)%

 

3%

 

(10)%

 

2%

Hotel Operations Performance

The below chart summarizes key hotel operating performance measures for the three months ended December 31, 2023, 2022, and 2019. RevPAR is based on the 39 comparable hotels, and all other data is based on all properties owned during that period. Gross operating profit is calculated as Hotel EBITDA plus property taxes, ground rent and insurance (in millions, except for RevPAR and margin percentages):

 

 

Q4 2023

 

Q4 2022

 

Q4 2019

RevPAR

 

$121

 

$118

 

$122

Gross operating profit

 

$28.1

 

$27.9

 

$30.9

Hotel EBITDA

 

$22.8

 

$23.3

 

$24.8

GOP margin

 

39%

 

40%

 

43%

Hotel EBITDA margin

 

32%

 

33%

 

34%

"Labor and benefits increased approximately 4 percent versus the 2022 fourth quarter on a cost per occupied room basis and adversely impacted operating margins by approximately 70 basis points. Wage pressures stabilized over the second half of the year as our December average hourly wage is essentially unchanged from July," Craven concluded.

Corporate Update

The below chart summarizes key financial performance measures for the three months ended December 31, 2023, 2022 and 2019. Corporate EBITDA is calculated as hotel EBITDA minus cash corporate general and administrative expenses and is before debt service and capital expenditures. Debt service includes interest expense and principal amortization on its secured debt, as well as dividends on its preferred shares of $2.0 million per quarter. Cash flow before CapEx is calculated as Corporate EBITDA less debt service. Amounts are in millions, except RevPAR.

 

 

Q4 2023

 

Q4 2022

 

Q4 2019

RevPAR

 

$121

 

$118

 

$122

Hotel EBITDA

 

$22.8

 

$23.3

 

$24.8

Corporate EBITDA

 

$20.8

 

$20.4

 

$22.6

Debt Service & Preferred

 

$(10.7)

 

$(10.7)

 

$(8.5)

Cash flow before CapEx

 

$10.1

 

$9.7

 

$14.1

Hotel Investments

During the 2023 fourth quarter, the company incurred capital expenditures of $6.7 million.

Chatham commenced renovations on four hotels in the fourth quarter that will be completed in the 2024 first quarter, including the renovations of the Hilton Garden Inn Marina Del Rey, Calif.; Homewood Suites San Antonio, Texas; Hyatt Place Denver Cherry Creek, Colo.; and accelerated the start of the Embassy Suites Springfield, Va., that was planned for 2024.

Chatham’s 2024 capital expenditure budget is approximately $37 million, which includes renovations at five hotels expected to cost approximately $23 million. The five hotels scheduled for renovation in 2024 are the Courtyard Addison, Texas; Embassy Suites, Springfield, Va.; Residence Inns in Austin, Texas and Bellevue, Wash.; and the SpringHill Suites in Savannah, Ga. Except for the Embassy Suites, which is being renovated in the first quarter, the other four renovations will occur in the third and fourth quarters.

Capital Markets & Capital Structure

As of December 31, 2023, the company had net debt of $418.0 million (total consolidated debt less unrestricted cash), down $26.0 million from December 31, 2022. Total debt outstanding as of December 31, 2023, was $486.1 million at an average interest rate of 5.5 percent, comprised of $396.1 million of fixed-rate mortgage debt at an average interest rate of 5.2 percent, $90 million outstanding on its term loan at a rate of 6.6% and nothing outstanding on the company's $260 million revolving credit facility.

Based on the ratio of the company’s net debt to hotel investments at cost, Chatham’s leverage ratio was approximately 25 percent, down from 27 percent on December 31, 2022.

“We have $328 million of liquidity as of December 31, 2023 plus 24 hotels that are currently unencumbered and 8 hotels with maturing debt this year that we can utilize to smartly address maturing debt of $294 million in 2024,” highlighted Jeremy Wegner, Chatham’s chief financial officer. “Given our low debt levels, we have plenty of capacity to acquire assets or make other hotel investments.”

Dividend

During the quarter, the Board of Trustees declared a preferred share dividend of $0.41406 per share, as well as a common share dividend of $0.07 per share, payable on January 16, 2024, to shareholders of record as of December 29, 2023.

2024 Guidance

The company’s 2024 first quarter guidance reflects the following assumptions:

a.

 

Renovations at the following hotels: Four hotels mentioned in the Hotel Investments section of this release

b.

 

No additional acquisitions, dispositions, debt or equity issuance

 

 

Q1 2024

RevPAR

$118 - $121

RevPAR growth

0% to 3%

Total hotel revenue

$67.0-$69.0 M

Net income (loss)

$(9.4)-$(7.4) M

Net income (loss) per diluted share

$(0.19)-$(0.15)

Adjusted EBITDA

$16.2-$18.2 M

Adjusted FFO

$5.2-$7.2 M

Adjusted FFO per diluted share

$0.10-$0.14

Hotel EBITDA margins

27.5%-29.5%

Corporate cash administrative expenses

$2.9 M

Corporate non-cash administrative expenses

$1.6 M

Interest expense (excluding fee amortization)

$7.0 M

Non-cash amortization of deferred fees

$0.4 M

Weighted average shares/units outstanding

50.8 M

The company provides guidance but does not undertake to update it for any developments in its business. Achievement of the results is subject to the risks disclosed in the company’s filings with the Securities and Exchange Commission.

Earnings Call

The company will hold its fourth quarter 2023 conference call later today at 11:00 a.m. Eastern Time. Shareholders and other interested parties may listen to a simultaneous webcast of the conference call on the Internet by logging onto Chatham’s Web site, www.chathamlodgingtrust.com, or www.streetevents.com, or may participate in the conference call by dialing 1-877-407-0789 or 1-201-689-8562 and referencing Chatham Lodging Trust. A recording of the call will be available by telephone until Tuesday, March 5, 2024, at 11:59 PM ET , by dialing 1-844-512-2921 or 1-412-317-6671, access ID 13743907. A replay of the conference call will be posted on Chatham’s website.

About Chatham Lodging Trust

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

Non-GAAP Financial Measures

Included in this press release are certain “non-GAAP financial measures,” within the meaning of Securities and Exchange Commission (SEC) rules and regulations, that are different from measures calculated and presented in accordance with GAAP (generally accepted accounting principles). The company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its operating performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (5) EBITDAre (6) Adjusted EBITDA and (7) Adjusted Hotel EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as prescribed by GAAP as a measure of its operating performance.

FFO As Defined by NAREIT and Adjusted FFO

The company calculates FFO in accordance with standards established by the NAREIT, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding gains or losses from sales of real estate, impairment write-downs, the cumulative effect of changes in accounting principles, plus depreciation and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures following the same approach. The company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it measures its performance without regard to specified non-cash items such as real estate depreciation and amortization, gain or loss on sale of real estate assets and certain other items that the company believes are not indicative of the property level performance of its hotel properties. The company believes that these items reflect historical cost of its asset base and its acquisition and disposition activities and are less reflective of its ongoing operations, and that by adjusting to exclude the effects of these items, FFO is useful to investors in comparing its operating performance between periods and between REITs that also report using the NAREIT definition.

The company calculates Adjusted FFO by further adjusting FFO for certain additional items that are not addressed in NAREIT’s definition of FFO, including other charges, losses on the early extinguishment of debt and similar items related to its unconsolidated real estate entities that it believes do not represent costs related to hotel operations. The company believes that Adjusted FFO provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs that make similar adjustments to FFO.

EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA

The company calculates EBITDA for purposes of the credit facility debt as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; (3) depreciation and amortization; and (4) unconsolidated real estate entity items including interest, depreciation and amortization excluding gains and losses from sales of real estate. The company believes EBITDA is useful to investors in evaluating and facilitating comparisons of its operating performance because it helps investors compare the company’s operating performance between periods and between REITs by removing the impact of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results. In addition, the company uses EBITDA as one measure in determining the value of hotel acquisitions and dispositions.

The company calculates EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated joint ventures. We believe that the presentation of EBITDAre provides useful information to investors regarding the Company's operating performance and can facilitate comparisons of operating performance between periods and between REITs.

The company calculates Adjusted EBITDA by further adjusting EBITDA for certain additional items, including other charges, losses on the early extinguishment of debt, amortization of non-cash share-based compensation and similar items related to its unconsolidated real estate entities, which it believes are not indicative of the performance of its underlying hotel properties entities. The company believes that Adjusted EBITDA provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs that report similar measures.

Adjusted Hotel EBITDA is defined as net income before interest, income taxes, depreciation and amortization, corporate general and administrative, impairment loss, loss on early extinguishment of debt, interest and other income and income or loss from unconsolidated real estate entities. The Company presents Adjusted Hotel EBITDA because the Company believes it is useful to investors in comparing its hotel operating performance between periods and comparing its Adjusted Hotel EBITDA margins to those of our peer companies. Adjusted Hotel EBITDA represents the results of operations for its wholly owned hotels only.

Although the company presents FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA because it believes they are useful to investors in comparing the company’s operating performance between periods and between REITs that report similar measures, these measures have limitations as analytical tools. Some of these limitations are:

• FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect the company’s cash expenditures, or future requirements, for capital expenditures or contractual commitments;
• FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect changes in, or cash requirements for, the company’s working capital needs;
• FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect funds available to make cash distributions;
• EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the company’s debts;
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may need to be replaced in the future, and FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect any cash requirements for such replacements;
• Non-cash compensation is and will remain a key element of the company’s overall long-term incentive compensation package, although the company excludes it as an expense when evaluating its ongoing operating performance for a particular period using adjusted EBITDA;
• Adjusted FFO, Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect the impact of certain cash charges (including acquisition transaction costs) that result from matters the company considers not to be indicative of the underlying performance of its hotel properties; and
• Other companies in the company’s industry may calculate FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA differently than the company does, limiting their usefulness as a comparative measure.

In addition, FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not represent cash generated from operating activities as determined by GAAP and should not be considered as alternatives to net income or loss, cash flows from operations or any other operating performance measure prescribed by GAAP. FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA are not measures of the Company’s liquidity. Because of these limitations, FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on its GAAP results and using FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA only supplementally. The Company’s consolidated financial statements and the notes to those statements included elsewhere are prepared in accordance with GAAP. The company’s reconciliation of FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA to net income attributable to common shareholders, as determined under GAAP, is set forth below.

Forward-Looking Statement Safe Harbor

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements include those with regard to the potential future impact of the COVID-19 pandemic, within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include information about possible or assumed future results of the lodging industry and our business, financial condition, liquidity, results of operations, cash flow and plans and objectives. These statements generally are characterized by the use of the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Important factors that we think could cause our actual results to differ materially from expected results are summarized below.

Other risks include, but are not limited to: national and local economic and business conditions, including the effect on travel of potential terrorist attacks, that will affect occupancy rates at the company’s hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the company’s indebtedness and its ability to meet covenants in its debt agreements; relationships with property managers; the company’s ability to maintain its properties in a Fourth-class manner, including meeting capital expenditure requirements; the company’s ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; the company’s ability to complete acquisitions and dispositions; and the company’s ability to continue to satisfy complex rules in order for the company to remain a REIT for federal income tax purposes and other risks and uncertainties associated with the company’s business described in the company's filings with the SEC; inaccuracies of our accounting estimates and the uncertainty and economic impact of pandemics, epidemics or other public health emergencies of fear of such events, such as the recent COVID-19 pandemic. Given these uncertainties, undue reliance should not be placed on such statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. The forward-looking statements should also be read in light of the risk factors identified in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as updated by the Company's subsequent filings with the SEC under the Exchange Act.

CHATHAM LODGING TRUST

Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

December 31, 2023

 

December 31, 2022

 

 

 

 

Assets:

 

 

 

Investment in hotel properties, net

$

1,227,633

 

 

$

1,264,252

 

Cash and cash equivalents

 

68,130

 

 

 

26,274

 

Restricted cash

 

17,619

 

 

 

18,879

 

Right of use asset, net

 

18,141

 

 

 

19,297

 

Hotel receivables (net of allowance for doubtful accounts of $280 and $344, respectively)

 

4,375

 

 

 

5,178

 

Deferred costs, net

 

4,246

 

 

 

6,428

 

Prepaid expenses and other assets

 

3,786

 

 

 

3,430

 

Total assets

$

1,343,930

 

 

$

1,343,738

 

Liabilities and Equity:

 

 

 

Mortgage debt, net

$

394,544

 

 

$

430,553

 

Revolving credit facility

 

—

 

 

 

—

 

Construction loan

 

—

 

 

 

39,331

 

Unsecured term loan, net

 

89,533

 

 

 

—

 

Accounts payable and accrued expenses (including $399 and $361 due to related parties, respectively)

 

29,255

 

 

 

28,528

 

Lease liability, net

 

20,808

 

 

 

22,108

 

Distributions payable

 

5,414

 

 

 

5,221

 

Total liabilities

 

539,554

 

 

 

525,741

 

Commitments and contingencies

 

 

 

Equity:

 

 

 

Shareholders’ Equity:

 

 

 

Preferred shares, $0.01 par value, 100,000,000 shares authorized; 4,800,000 and 4,800,000 shares issued and outstanding at December 31, 2023 and 2022, respectively

 

48

 

 

 

48

 

Common shares, $0.01 par value, 500,000,000 shares authorized; 48,859,836 and 48,808,105 shares issued and outstanding at December 31, 2023 and 2022, respectively

 

488

 

 

 

488

 

Additional paid-in capital

 

1,047,176

 

 

 

1,047,023

 

Accumulated deficit

 

(271,651

)

 

 

(252,665

)

Total shareholders’ equity

 

776,061

 

 

 

794,894

 

Noncontrolling Interests:

 

 

 

Noncontrolling Interest in Operating Partnership

 

28,315

 

 

 

23,103

 

Total equity

 

804,376

 

 

 

817,997

 

Total liabilities and equity

$

1,343,930

 

 

$

1,343,738

 

CHATHAM LODGING TRUST

Consolidated Statements of Operations

(In thousands, except share and per share data)

 

 

For the three months ended

 

For the years ended

 

December 31,

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

Room

$

65,980

 

 

$

64,369

 

 

$

284,999

 

 

$

272,265

 

Food and beverage

 

1,968

 

 

 

2,105

 

 

 

8,124

 

 

 

7,303

 

Other

 

4,058

 

 

 

3,517

 

 

 

16,703

 

 

 

13,958

 

Reimbursable costs from related parties

 

272

 

 

 

329

 

 

 

1,283

 

 

 

1,325

 

Total revenue

 

72,278

 

 

 

70,320

 

 

 

311,109

 

 

 

294,851

 

Expenses:

 

 

 

 

 

 

 

Hotel operating expenses:

 

 

 

 

 

 

 

Room

 

15,876

 

 

 

15,107

 

 

 

61,794

 

 

 

56,073

 

Food and beverage

 

1,700

 

 

 

1,608

 

 

 

6,352

 

 

 

5,520

 

Telephone

 

333

 

 

 

343

 

 

 

1,439

 

 

 

1,449

 

Other hotel operating

 

900

 

 

 

994

 

 

 

3,712

 

 

 

3,488

 

General and administrative

 

7,270

 

 

 

7,051

 

 

 

28,884

 

 

 

26,085

 

Franchise and marketing fees

 

5,776

 

 

 

5,601

 

 

 

24,897

 

 

 

23,674

 

Advertising and promotions

 

1,572

 

 

 

1,479

 

 

 

6,085

 

 

 

5,397

 

Utilities

 

3,199

 

 

 

2,957

 

 

 

13,007

 

 

 

12,048

 

Repairs and maintenance

 

4,103

 

 

 

3,753

 

 

 

15,837

 

 

 

14,145

 

Management fees paid to related parties

 

2,484

 

 

 

2,502

 

 

 

10,557

 

 

 

10,133

 

Insurance

 

705

 

 

 

651

 

 

 

2,822

 

 

 

2,746

 

Total hotel operating expenses

 

43,918

 

 

 

42,046

 

 

 

175,386

 

 

 

160,758

 

Depreciation and amortization

 

14,639

 

 

 

14,379

 

 

 

58,254

 

 

 

59,350

 

Impairment loss

 

4,266

 

 

 

—

 

 

 

4,266

 

 

 

—

 

Property taxes, ground rent and insurance

 

5,325

 

 

 

4,651

 

 

 

23,507

 

 

 

21,210

 

General and administrative

 

4,345

 

 

 

4,341

 

 

 

17,517

 

 

 

17,339

 

Other charges

 

2,256

 

 

 

(21

)

 

 

2,300

 

 

 

683

 

Reimbursable costs from related parties

 

272

 

 

 

329

 

 

 

1,283

 

 

 

1,326

 

Total operating expenses

 

75,021

 

 

 

65,725

 

 

 

282,513

 

 

 

260,666

 

Operating (loss) income before (loss) gain on sale of hotel property

 

(2,743

)

 

 

4,595

 

 

 

28,596

 

 

 

34,185

 

(Loss) gain on sale of hotel property

 

(38

)

 

 

139

 

 

 

18

 

 

 

2,268

 

Operating (loss) income

 

(2,781

)

 

 

4,734

 

 

 

28,614

 

 

 

36,453

 

Interest and other income

 

847

 

 

 

1

 

 

 

1,534

 

 

 

10

 

Interest expense net of amounts capitalized, including amortization of deferred fees

 

(7,399

)

 

 

(6,726

)

 

 

(27,128

)

 

 

(26,454

)

Loss on early extinguishment of debt

 

—

 

 

 

(138

)

 

 

(696

)

 

 

(138

)

Gain from partial lease termination

 

—

 

 

 

—

 

 

 

164

 

 

 

—

 

(Loss) income before income tax expense

 

(9,333

)

 

 

(2,129

)

 

 

2,488

 

 

 

9,871

 

Income tax expense

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Net (loss) income

 

(9,333

)

 

 

(2,129

)

 

 

2,488

 

 

 

9,871

 

Net loss (income) attributable to non-controlling interest

 

354

 

 

 

99

 

 

 

156

 

 

 

(66

)

Net (loss) income attributable to Chatham Lodging Trust

 

(8,979

)

 

 

(2,030

)

 

 

2,644

 

 

 

9,805

 

Preferred dividends

 

(1,987

)

 

 

(1,987

)

 

 

(7,950

)

 

 

(7,950

)

Net (loss) income attributable to common shareholders

$

(10,966

)

 

$

(4,017

)

 

$

(5,306

)

 

$

1,855

 

(Loss) income per common share - basic:

 

 

 

 

 

 

 

Net (loss) income attributable to common shareholders

$

(0.23

)

 

$

(0.08

)

 

$

(0.11

)

 

$

0.04

 

(Loss) income per common share - diluted:

 

 

 

 

 

 

 

Net (loss) income attributable to common shareholders

$

(0.23

)

 

$

(0.08

)

 

$

(0.11

)

 

$

0.04

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

48,853,357

 

 

 

48,800,992

 

 

 

48,847,386

 

 

 

48,795,642

 

Diluted

 

48,853,357

 

 

 

48,800,992

 

 

 

48,847,386

 

 

 

49,058,722

 

Distributions per common share:

$

0.07

 

 

$

0.07

 

 

$

0.28

 

 

$

0.07

 

CHATHAM LODGING TRUST

FFO and EBITDA

(In thousands, except share and per share data)

 

 

For the three months ended

 

For the years ended

 

December 31,

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Funds From Operations (“FFO”):

 

 

 

 

 

 

 

Net (loss) income

$

(9,333

)

 

$

(2,129

)

 

$

2,488

 

 

$

9,871

 

Preferred dividends

 

(1,987

)

 

 

(1,987

)

 

 

(7,950

)

 

 

(7,950

)

Net (loss) income attributable to common shares and common units

 

(11,320

)

 

 

(4,116

)

 

 

(5,462

)

 

 

1,921

 

Loss (gain) on sale of hotel property

 

38

 

 

 

(139

)

 

 

(18

)

 

 

(2,268

)

Depreciation

 

14,586

 

 

 

14,326

 

 

 

58,040

 

 

 

59,123

 

Impairment loss

 

4,266

 

 

 

—

 

 

 

4,266

 

 

 

—

 

FFO attributed to common share and unit holders

 

7,570

 

 

 

10,071

 

 

 

56,826

 

 

 

58,776

 

Other charges

 

2,256

 

 

 

(21

)

 

 

2,300

 

 

 

683

 

Loss on early extinguishment of debt

 

—

 

 

 

138

 

 

 

696

 

 

 

138

 

Gain from partial lease termination

 

—

 

 

 

—

 

 

 

(164

)

 

 

—

 

Adjusted FFO attributed to common share and unit holders

$

9,826

 

 

$

10,188

 

 

$

59,658

 

 

$

59,597

 

Weighted average number of common shares and units

 

 

 

 

 

 

 

Basic

 

50,440,674

 

 

 

50,015,751

 

 

 

50,374,481

 

 

 

49,971,823

 

Diluted

 

50,729,096

 

 

 

50,376,373

 

 

 

50,532,122

 

 

 

50,234,903

 

 

For the three months ended

 

For the years ended

 

December 31,

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”):

 

 

 

 

 

 

 

Net (loss) income

$

(9,333

)

 

$

(2,129

)

 

$

2,488

 

 

$

9,871

 

Interest expense

 

7,399

 

 

 

6,726

 

 

 

27,128

 

 

 

26,454

 

Depreciation and amortization

 

14,639

 

 

 

14,379

 

 

 

58,254

 

 

 

59,350

 

EBITDA

 

12,705

 

 

 

18,976

 

 

 

87,870

 

 

 

95,675

 

Impairment loss

 

4,266

 

 

 

—

 

 

 

4,266

 

 

 

—

 

Loss (gain) on sale of hotel property

 

38

 

 

 

(139

)

 

 

(18

)

 

 

(2,268

)

EBITDAre

 

17,009

 

 

 

18,837

 

 

 

92,118

 

 

 

93,407

 

Other charges

 

2,256

 

 

 

(21

)

 

 

2,300

 

 

 

683

 

Loss on early extinguishment of debt

 

—

 

 

 

138

 

 

 

696

 

 

 

138

 

Gain from partial lease termination

 

—

 

 

 

—

 

 

 

(164

)

 

 

—

 

Share based compensation

 

1,555

 

 

 

1,419

 

 

 

6,117

 

 

 

5,551

 

Adjusted EBITDA

$

20,820

 

 

$

20,373

 

 

$

101,067

 

 

$

99,779

 

CHATHAM LODGING TRUST

ADJUSTED HOTEL EBITDA

(In thousands, except share and per share data)

 

 

 

For the three months ended

 

For the years ended

 

 

December 31,

 

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(9,333

)

 

$

(2,129

)

 

$

2,488

 

$

9,871

 

Add:

Interest expense

 

7,399

 

 

 

6,726

 

 

 

27,128

 

 

 

26,454

 

 

Depreciation and amortization

 

14,639

 

 

 

14,379

 

 

 

58,254

 

 

 

59,350

 

 

Corporate general and administrative

 

4,345

 

 

 

4,341

 

 

 

17,517

 

 

 

17,339

 

 

Other charges

 

2,256

 

 

 

—

 

 

 

2,300

 

 

 

683

 

 

Impairment loss

 

4,266

 

 

 

—

 

 

 

4,266

 

 

 

—

 

 

Loss on early extinguishment of debt

 

—

 

 

 

138

 

 

 

696

 

 

 

138

 

 

Loss on sale of hotel property

 

38

 

 

 

—

 

 

 

—

 

 

 

—

 

Less:

Interest and other income

 

(847

)

 

 

(1

)

 

 

(1,534

)

 

 

(10

)

 

Other charges

 

—

 

 

 

(21

)

 

 

—

 

 

 

—

 

 

Gain on sale of hotel property

 

—

 

 

 

(139

)

 

 

(18

)

 

 

(2,268

)

 

Gain from partial lease termination

 

—

 

 

 

—

 

 

 

(164

)

 

 

—

 

 

Adjusted Hotel EBITDA

$

22,763

 

 

$

23,294

 

 

$

110,933

 

 

$

111,557

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240227828272/en/

Dennis Craven (Company) Chief Operating Officer (561) 227-1386 Chris Daly (Media) DG Public Relations (703) 864-5553