Warner Center Opening, Asset Recycling Will
Deliver Value and Outsized Growth
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, 2021.
Fourth Quarter 2021 Operating Results
- Portfolio Revenue Per Available Room (RevPAR) –
Increased 93 percent to $92 compared to the 2020 fourth quarter.
Average daily rate (ADR) accelerated 36 percent to $141, and
occupancy jumped 43 percent to 65 percent for the 40 comparable
hotels owned as of December 31, 2021 (excludes one Austin hotel
acquired in August 2021 that opened in June 2021).
- Net loss – Incurred a $11.4 million net loss compared to
a net loss of $3.4 million in the 2020 fourth quarter. Net loss per
diluted common share was $(0.27) versus net loss per diluted common
share of $(0.07) for the same period last year.
- GOP Margin – Grew margins a significant 64 percent to a
portfolio-wide GOP margin of 41 percent in the 2021 fourth quarter
compared to 25 percent in the 2020 fourth quarter.
- Adjusted EBITDA – Jumped to $15.2 million from $0.2
million in the 2020 fourth quarter.
- Adjusted FFO – Swung significantly from negative FFO of
$8.7 million in the 2020 fourth quarter to positive adjusted FFO of
$6.1 million this year. Adjusted FFO per diluted share was $0.12,
compared to an FFO loss of $(0.18) in the 2020 fourth quarter.
- Cash Flow/Burn Before Capital Expenditures – Generated
fourth quarter 2021 cash flow before capital expenditures of $5.1
million which compares to $10.0 million in the 2021 third quarter,
$4.0 million in the 2021 second quarter and cash burn of $7.6
million in the 2021 first quarter. Cash flow/burn includes $2.2
million of principal amortization per quarter.
- Amended and Extended Revolving Credit Facility – Amended
and extended its credit facility successfully, extending the
maturity date to March 2024, including extension options, and
waived key financial covenants through June 30, 2022.
The following chart summarizes the consolidated financial
results for the three months and year ended December 31, 2021, and
2020, based on all properties owned during those periods ($ in
millions, except margin percentages and per share data):
Three Months Ended
Year Ended
December 31,
December 31,
2021
2020
2021
2020
Net loss
$(11.4)
$(3.4)
$(18.8)
$(77.0)
Diluted net loss per common share
$(0.27)
$(0.07)
$(0.46)
$(1.62)
GOP Margin
41.1%
24.9%
41.0%
32.2%
Hotel EBITDA Margin
30.8%
7.9%
29.2%
15.9%
Adjusted EBITDA
$15.2
$0.2
$48.4
$18.5
AFFO
$6.1
$(8.7)
$14.3
$(19.0)
AFFO per diluted share
$0.12
$(0.18)
$0.29
$(0.40)
Jeffrey H. Fisher, Chatham’s president and chief executive
officer, highlighted, “Prior to the adverse impact on travel as a
result of fears related to the COVID-19 Omicron variant, we were
starting to see the return of the business traveler. Although that
is going to impact our first quarter, we are starting to see trends
rebound and believe we will experience a meaningful recovery in the
business traveler starting in the spring and accelerating
throughout 2022. Silicon Valley, our most significant market, is
coming back to life in February, and we know some of our top
clients there are resuming travel, opening offices and bringing
back in-person internships this summer.
“Despite the recent sluggish RevPAR trend owing to the Omicron
variant, I am really pleased with our operating margin performance
and what that means for our best-in-class operating model moving
forward. Our fourth quarter GOP margins were a strong 41 percent on
RevPAR of $92, which is only down 100 basis points compared to our
2019 fourth quarter when RevPAR was 22 percent higher at $118. In
December, our GOP margins were 330 basis points higher than our
December 2019 GOP margins even though RevPAR was $17 lower. As we
move forward, we certainly believe same store operating margins
will be higher compared to pre-pandemic levels,” Fisher pointed
out.
Post-Pandemic Balance Sheet Strength
Chatham is emerging from the pandemic with an even stronger
balance sheet, more buying capacity and an even higher quality
portfolio by executing numerous, meaningful transactions.
The company minimized cash burn throughout the pandemic by
generating impressive operating results. Chatham was the second
fastest hotel REIT to become corporate cash flow positive. In 2021,
Chatham generated positive cash flow before capital expenditures of
$12 million, and, excluding principal amortization, cash flow was
$20 million. Since April 2020, essentially the start of the
pandemic for Chatham’s portfolio, cumulative cash burn before
capital expenditures was $16 million, but when excluding principal
amortization, cash burn was zero, a remarkable achievement given
the significant challenges faced during the worst era in the
history of the lodging industry.
Chatham preserved its capital structure and enhanced its
liquidity by generating increased liquidity of $185 million since
the start of the pandemic through the issuance of $120 million of
preferred equity in June 2021, the issuance of $25 million of
common equity, the issuance of a $40 million loan on the Warner
Center Development and getting multiple amendments to its credit
facility that maintained its ability to opportunistically sell and
buy hotels.
Since April 2020, Chatham has repaid a $13 million mortgage,
paid principal amortization of almost $16 million and paid down
borrowings on its credit facility by $103 million.
During 2021, the company acquired two high-quality, premium
branded, extended-stay hotels in Austin, Texas, for $71 million.
Additionally, Chatham completed and recently opened the Home2
Suites Woodland Hills Los Angeles. These three hotels are expected
to generate a yield over eight percent in the first year of
stabilized results. With these acquisitions, as well as the now
opened extended-stay Home2 Suites, these hotels increase further
Chatham’s exposure to high-quality, premium-branded, extended-stay
hotels.
“It’s been an uncertain and tumultuous time in the lodging
industry since early 2020. As we turn the page to 2022 healthier
than most of our peers, I am thankful for the remarkable efforts of
our teams at Chatham and Island, as well as their significant
accomplishments that placed us in a great position moving forward
with an outstanding portfolio. I am more energized than ever to
deliver great results and meaningfully enhance shareholder value,”
emphasized Fisher.
Hotel RevPAR Performance
The below chart summarizes key hotel financial statistics for
the 40 comparable hotels owned as of December 31, 2021, compared to
the 2021 third, second and first quarters:
Q4 2021 RevPAR
Q3 2021 RevPAR
Q2 2021 RevPAR
Q1 2021 RevPAR
Occupancy
65%
71%
69%
53%
ADR
$141
$150
$127
$107
RevPAR
$92
$107
$87
$56
% Change in RevPAR to Prior Year
93%
92%
177%
(41)%
The below chart summarizes RevPAR statistics by month for the
company’s 40 comparable hotels:
October
November
December
January '22
Occupancy – 2021
72%
66%
58%
50%
ADR – 2021
$148
$137
$135
$133
RevPAR – 2021
$107
$90
$79
$67
RevPAR – 2020
$56
$46
$41
$48
% Change in RevPAR
90%
96%
94%
40%
Fisher continued, “Fourth quarter RevPAR at our 40 comparable
hotels was $92, up 93 percent over the same period of 2020 and down
23 percent over the 2019 fourth quarter. Compared to 2019, October,
November and December RevPAR were down 26, 24 and 16 percent,
respectively. Reflecting the adverse impact from the COVID-19
Omicron variant, January RevPAR of $67 trended down to a decline of
36 percent compared to 2019, but encouragingly, through February
21st, RevPAR has rebounded significantly to $87, up 30 percent
versus January.
“Our portfolio did significantly better than the industry with
October and fourth quarter occupancy of 72 percent and 65 percent
compared to industry-wide occupancy of 63 percent and 58 percent,
respectively. Weekday occupancy reached 69 percent in October,
higher than third quarter weekday occupancy of 68 percent before
easing to 63 percent in November and 57 percent in December.
Weekend occupancy was 71 percent during the fourth quarter,
continuing the pandemic trend where leisure driven demand is
highest,” Fisher stated.
RevPAR performance for Chatham’s six largest markets based on
hotel EBITDA contribution over the last twelve months is presented
below:
Q4 2021 RevPAR
Change vs. Q4 2020
Q3 2021 RevPAR
Q2 2021 RevPAR
Q1 2021 RevPAR
40 - Hotel Portfolio
$92
93%
$107
$87
$56
Silicon Valley
$74
61%
$80
$73
$54
Coastal Northeast
$122
92%
$219
$120
$48
Greater New York
$139
74%
$159
$123
$87
Dallas
$74
139%
$66
$78
$44
Los Angeles
$130
65%
$135
$103
$82
Houston
$70
104%
$72
$70
$52
“Since the start of the pandemic, our Coastal Northeastern and
Greater New York hotels have produced some of the best results in
our portfolio. Our Coastal Northeastern markets have benefited from
strong leisure demand, while our Greater New York hotels have been
the beneficiary of a multitude of demand generators,” commented
Dennis Craven, Chatham’s chief operating officer.
“As we head into 2022, our largest market, Silicon Valley, and
other technology dependent markets, such as Bellevue, Washington,
are poised to significantly outperform and deliver outsized
earnings growth as the business traveler returns, international
travel opens up, technology related training and product
development resumes and, importantly, the intern programs return.
Like the surge in leisure travel in 2021, we believe business
travel will return with a vengeance,” Craven noted.
Approximately 60 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 60 percent. Fourth quarter 2021 occupancy, ADR and
RevPAR for each of the company’s major brands, based on the 40
comparable hotels, is presented below (number of hotels in
parentheses):
Residence Inn
(17)
Homewood Suites (7)
Courtyard (5)
Hilton Garden Inn (4)
Hampton Inn (3)
Occupancy - 2021
68%
68%
64%
53%
68%
ADR – 2021
$143
$127
$117
$161
$155
RevPAR – 2021
$97
$86
$75
$84
$105
RevPAR – 2020
$60
$41
$28
$36
$57
% Change in RevPAR
64%
112%
170%
137%
84%
Hotel Operations Performance
The below chart summarizes key hotel operating performance
measures per month during the 2021 fourth quarter and for the three
months ended September 30, 2021, June 30, 2021, and March 31, 2021.
RevPAR is based on the 40 comparable hotels. Gross operating profit
is calculated as Hotel EBITDA plus property taxes, ground rent and
insurance (in millions, except for RevPAR and margin
percentages):
Oct.
Nov.
Dec.
Q4 2021
Q3 2021
Q2 2021
Q1 2021
RevPAR - 2021
$107
$90
$79
$92
$107
$87
$56
Gross operating profit
$10.3
$7.1
$6.0
$23.4
$28.6
$21.5
$9.4
Hotel EBITDA
$8.3
$5.2
$4.1
$17.6
$22.5
$15.6
$3.5
GOP margin
47%
39%
36%
41%
45%
43%
31%
Hotel EBITDA margin
37%
29%
25%
31%
35%
31%
11%
Craven added, “compared to the 2020 fourth quarter, we created
meaningful flow-through of 58 percent, which is particularly
impressive given the quick pivot required to adjust our operating
standards to stay ahead of the RevPAR decline caused by the
reduction in travel due to the onset of the Omicron variant of
COVID-19. On a per occupied room basis, our wage and benefit costs
were $32 in the quarter, down from $33 in the 2020 fourth quarter
and approximately 14 percent below fourth quarter 2019 per occupied
room costs of $37.”
Corporate Update
The below chart summarizes key financial performance measures
during the fourth quarter and for the three months ended September
30, 2021, June 30, 2021, and March 31, 2021. 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 (approximately $2.2 million per
quarter), as well as dividends on its preferred shares of $2.0
million per quarter. Cash flow/(burn) before CAPEX is calculated as
Corporate EBITDA less debt service. Amounts are in millions, except
RevPAR.
Oct.
Nov.
Dec.
Q4 2021
Q3 2021
Q2 2021
Q1 2021
RevPAR - 2021
$107
$90
$79
$92
$107
$87
$56
Hotel EBITDA
$8.3
$5.2
$4.1
$17.6
$22.5
$15.6
$3.5
Corporate EBITDA
$7.3
$4.2
$3.5
$15.0
$19.6
$12.5
$1.1
Debt Service & Preferred
$(3.3)
$(3.3)
$(3.3)
$(9.9)
$(9.6)
$(8.5)
$(8.7)
Cash flow/(burn) before CAPEX
$4.0
$0.9
$0.2
$5.1
$10.0
$4.0
$(7.6)
Chatham has estimated liquidity of $199 million, including cash
of approximately of $19 million, as of December 31, 2021, and
remaining borrowing capacity on the credit facility of $180
million.
Opening of Home2 Suites in California
In January 2022, Chatham announced the opening of the 170-suite
Home2 Suites by Hilton Woodland Hills Warner Center. The opening
adds another high-quality, extended-stay hotel to the portfolio.
The hotel was constructed to the highest building standards in the
country. The hotel will generate one of the highest RevPARs in
Chatham’s portfolio. The hotel is the only premium-branded,
extended-stay room product within an 11-mile radius of the hotel
and will appeal to any traveler coming to the area for business,
leisure or both.
Warner Center is located within the highly desirable San
Fernando Valley submarket of Los Angeles. The San Fernando Valley
encompasses some of the most coveted and affluent communities in
southern California. Warner Center currently generates significant
standalone demand with 10 million square feet (SF) of office space
with approximately 50,000 employees, almost 8 million SF of retail
space and is home to over 20,000 local residents. The city of Los
Angeles introduced the Warner Center 2035 Plan, a development
blueprint that emphasizes mixed-use and transit-oriented
development, walkability and sustainability with a goal of further
urbanizing the zoning district. The Warner Center 2035 Plan
facilitates the creation of a Regional Center where people can
live, work and play. The plan encompasses approximately 1,100 acres
and allows for a net increase of 12.5 million SF of office, 2.3
million SF of retail and 23.5 million SF of new residential
apartments (across 20,000 units).
“This beautiful asset is an ideal addition to our industry
leading portfolio of premium-branded, extended stay hotels. We know
that this hotel provides the best all-around lodging experience in
the market with an awesome public space that includes a
full-service, indoor/outdoor bar and restaurant along with large
rooms equipped with kitchens,” Fisher highlighted. “The Warner
Center market is poised to boom over the next decade, and
components of the Warner Center 2035 Plan already are underway,
including the massive Westfield Mall redevelopment and new retail
space, as well as several, new residential communities. The future
prospects for this hotel are great.”
Hotel Recycling
The opening of Home2 Suites Woodland Hills concludes the
successful recycling of the proceeds from the sale of an older
hotel in San Diego for $67 million into the Woodland Hills hotel
with an investment of $70 million, and Chatham expects the
reinvestment will contribute incremental, stabilized EBITDA of more
than $1 million compared to the sold hotel.
“In 2022, we will continue to recycle capital out of older
assets into newer hotels with higher growth prospects. We have
emerged from the pandemic with a stronger balance sheet and have
the capacity to make value-enhancing acquisitions and generate
incremental cash flow,” Craven commented.
Hotel Investments
During the 2021 fourth quarter, the company incurred capital
expenditures of $4.3 million, excluding any spending related to the
Warner Center development. Chatham’s 2022 capital expenditure
budget is approximately $23.7 million, which includes renovations
at five hotels and excludes any spending related to the Warner
Center development.
Capital Markets & Capital Structure
As of December 31, 2021, the company had net debt of $525.8
million (total consolidated debt less unrestricted cash), down
$62.8 million from December 31, 2020. Total debt outstanding as of
December 31, 2021, was $544.9 million at an average interest rate
of 4.7 percent, comprised of $439.9 million of fixed-rate mortgage
debt at an average interest rate of 4.6 percent, $70.0 million
outstanding on the company’s $250 million senior unsecured
revolving credit facility, which currently carries a 3.0 percent
interest rate, and $35.0 million outstanding on the Warner Center
construction loan, which carries a 7.75 percent interest rate.
Based on the ratio of the company’s net debt to hotel
investments at cost, Chatham’s leverage ratio was approximately
30.6 percent on December 31, 2021, down from 35.8 percent on
December 31, 2020. The weighted average maturity date for Chatham’s
fixed-rate debt is April 2024.
During the fourth quarter, Chatham completed a successful
amendment and extension of its credit facility, which extends the
final maturity date to March 2024, including extension options, and
provides for the waiver of key financial covenants until June 30,
2022. There was no change in pricing relative to prior levels.
Participating lenders in the credit facility include Barclays Bank
PLC, Regions Bank, Citibank N.A., US Bank National Association,
Wells Fargo Bank National Association, Bank of America N.A.,
Citizens Bank N.A. and BMO Harris Bank N.A.
“With this amendment, our balance sheet remains strong and
provides us the flexibility to invest meaningful dollars to acquire
assets. We have no debt maturities in 2022 and only $114 million of
debt maturing in 2023,” stated Jeremy Wegner, Chatham’s chief
financial officer.
Dividend
No common dividend was necessary for Chatham to maintain its
REIT status for 2021. The Board of Trustees will regularly evaluate
its common dividend moving forward. Pursuant to its amended credit
facility, any dividends paid would include a cash component no
greater than the minimum percentage allowed under the Internal
Revenue Code.
During the fourth quarter, the Board of Trustees declared a
preferred share dividend of $0.41406 per share, payable on January
18, 2022, to shareholders of record as of December 31, 2021.
2022 Guidance
Due to uncertainty surrounding the hotel industry, the company
is not providing guidance at this time.
Earnings Call
The company will hold its fourth quarter 2021 conference call
later today at 10:30 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 and
referencing Chatham Lodging Trust. A recording of the call will be
available by telephone until 11:59 p.m. ET on Thursday, March 3,
2022, by dialing 1-844-512-2921, reference number 13726138. 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 42 hotels totaling 6,340 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.
One of the most significant factors, however, is the ongoing
impact of the current outbreak of the COVID-19 pandemic on the
United States, regional and global economies, the broader financial
markets, our customers and employees, governmental responses
thereto and the operation changes we have and may implement in
response thereto. The current outbreak of the COVID-19 pandemic has
also impacted, and is likely to continue to impact, directly or
indirectly, many of the other important factors below. New factors
emerge from time to time, and it is not possible for us to predict
which factors will arise. In addition, we cannot assess the impact
of each factor on our business or the extent to which any factor,
or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
In particular, it is difficult to fully assess the impact of the
COVID-19 pandemic at this time due to, among other factors,
uncertainty regarding the severity and duration of the outbreak
domestically and internationally and the effectiveness of federal,
state and local governments' efforts to contain the spread of
COVID-19 and respond to its direct and indirect impact on the U.S.
economy and economic activity.
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, 2020, 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,
2021
December 31,
2020
Assets:
Investment in hotel properties, net
$
1,282,870
$
1,265,174
Investment in hotel properties under
development
67,554
43,651
Cash and cash equivalents
19,188
21,124
Restricted cash
10,681
10,329
Right of use asset, net
19,985
20,641
Hotel receivables (net of allowance for
doubtful accounts of $382 and $248, respectively)
3,003
1,688
Deferred costs, net
4,627
5,384
Prepaid expenses and other assets
2,791
2,266
Total assets
$
1,410,699
$
1,370,257
Liabilities and Equity:
Mortgage debt, net
$
439,282
$
460,145
Revolving credit facility
70,000
135,300
Construction loan
35,007
13,325
Accounts payable and accrued expenses
27,718
25,374
Distributions and losses in excess of
investments in unconsolidated real estate entities
—
19,951
Lease liability, net
22,696
23,233
Distributions payable
1,803
469
Total liabilities
596,506
677,797
Commitments and contingencies
Equity:
Shareholders’ Equity:
Preferred shares, $0.01 par value,
100,000,000 shares authorized; 4,800,000 and 0 shares issued and
outstanding at December 31, 2021 and 2020, respectively
48
—
Common shares, $0.01 par value,
500,000,000 shares authorized; 48,768,890 and 46,973,473 shares
issued and outstanding at December 31, 2021 and 2020,
respectively
487
470
Additional paid-in capital
1,048,070
906,000
Accumulated deficit
(251,103
)
(228,718
)
Total shareholders’ equity
797,502
677,752
Noncontrolling Interests:
Noncontrolling Interest in Operating
Partnership
16,691
14,708
Total equity
814,193
692,460
Total liabilities and equity
$
1,410,699
$
1,370,257
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,
2021
2020
2021
2020
Revenue:
Room
$
52,159
$
26,360
$
187,369
$
130,564
Food and beverage
1,380
301
3,525
2,718
Other
3,452
2,029
11,350
7,589
Reimbursable costs from unconsolidated
entities
331
875
1,731
4,045
Total revenue
57,322
29,565
203,975
144,916
Expenses:
Hotel operating expenses:
Room
11,859
7,069
40,396
31,883
Food and beverage
911
254
2,404
2,456
Telephone
388
378
1,502
1,451
Other hotel operating
647
326
2,299
1,629
General and administrative
5,473
4,187
20,424
16,733
Franchise and marketing fees
4,577
2,375
16,560
11,608
Advertising and promotions
1,051
772
3,721
3,983
Utilities
2,557
2,259
10,255
9,229
Repairs and maintenance
3,351
2,448
11,784
9,799
Management fees
2,015
1,125
7,156
5,289
Insurance
721
357
2,792
1,438
Total hotel operating expenses
33,550
21,550
119,293
95,498
Depreciation and amortization
13,860
13,522
54,215
53,871
Impairment loss
5,640
—
5,640
—
Impairment loss on investment in
unconsolidated real estate entities
—
—
—
15,282
Property taxes, ground rent and
insurance
5,879
4,879
23,826
23,040
General and administrative
3,759
3,353
15,752
11,564
Other charges
78
1,601
711
4,385
Reimbursable costs from unconsolidated
entities
331
875
1,731
4,045
Total operating expenses
63,097
45,780
221,168
207,685
Operating loss before gain (loss) on sale
of hotel property
(5,775
)
(16,215
)
(17,193
)
(62,769
)
Gain (loss) on sale of hotel property
—
21,113
(21
)
21,116
Operating (loss) income
(5,775
)
4,898
(17,214
)
(41,653
)
Interest and other income
140
32
243
179
Interest expense net of amounts
capitalized, including amortization of deferred fees
(5,811
)
(7,010
)
(24,460
)
(28,122
)
Loss from unconsolidated real estate
entities
—
(1,325
)
(1,231
)
(7,424
)
Gain on sale of investment in
unconsolidated real estate entities
—
—
23,817
—
Loss before income tax expense
(11,446
)
(3,405
)
(18,845
)
(77,020
)
Income tax expense
—
—
—
—
Net loss
(11,446
)
(3,405
)
(18,845
)
(77,020
)
Net loss attributable to non-controlling
interest
257
49
435
997
Net loss attributable to Chatham Lodging
Trust
(11,189
)
(3,356
)
(18,410
)
(76,023
)
Preferred dividends
(1,987
)
—
(3,975
)
—
Net loss attributable to common
shareholders
$
(13,176
)
$
(3,356
)
$
(22,385
)
$
(76,023
)
Loss per Common Share - Basic:
Net loss attributable to common
shareholders
$
(0.27
)
$
(0.07
)
$
(0.46
)
$
(1.62
)
Loss per Common Share -
Diluted:
Net loss attributable to common
shareholders
$
(0.27
)
$
(0.07
)
$
(0.46
)
$
(1.62
)
Weighted average number of common
shares outstanding:
Basic
48,756,792
46,969,483
48,349,027
46,961,039
Diluted
48,756,792
46,969,483
48,349,027
46,961,039
Distributions per common share:
$
—
$
—
$
—
$
0.22
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,
2021
2020
2021
2020
Funds From Operations (“FFO”):
Net loss
$
(11,446
)
$
(3,405
)
$
(18,845
)
$
(77,020
)
Preferred dividends
(1,987
)
—
(3,975
)
—
Net loss attributable to common shares and
common units
(13,433
)
(3,405
)
(22,820
)
(77,020
)
(Gain) loss on sale of hotel property
—
(21,113
)
21
(21,116
)
(Gain) loss on sale of assets within the
unconsolidated real estate entities
—
(1
)
—
2
Gain on sale of investment in
unconsolidated real estate entities
—
—
(23,817
)
—
Depreciation
13,795
13,461
53,967
53,627
Impairment loss
5,640
—
5,640
—
Impairment loss on investment in
unconsolidated real estate entities
—
—
—
15,282
Impairment loss within the unconsolidated
real estate entities
—
—
—
1,388
Adjustments for unconsolidated real estate
entity items
—
793
568
4,434
FFO attributed to common share and unit
holders
6,002
(10,265
)
13,559
(23,403
)
Other charges
78
1,601
711
4,385
Adjustments for unconsolidated real estate
entity items
—
4
46
9
Adjusted FFO attributed to common share
and unit holders
$
6,080
$
(8,660
)
$
14,316
$
(19,009
)
Weighted average number of common shares
and units
Basic
49,732,894
47,686,099
49,281,763
47,635,600
Diluted
50,038,285
47,686,099
49,490,938
47,635,600
For the three months
ended
For the years ended
December 31,
December 31,
2021
2020
2021
2020
Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”):
Net loss
$
(11,446
)
$
(3,405
)
$
(18,845
)
$
(77,020
)
Interest expense
5,811
7,010
24,460
28,122
Depreciation and amortization
13,860
13,522
54,215
53,871
Adjustments for unconsolidated real estate
entity items
—
1,488
1,184
8,965
EBITDA
8,225
18,615
61,014
13,938
Impairment loss
5,640
—
5,640
—
Impairment loss on investment in
unconsolidated real estate entities
—
—
—
15,282
Impairment loss within the unconsolidated
real estate entities
—
—
—
1,388
(Gain) loss on sale of hotel property
—
(21,113
)
21
(21,116
)
(Gain) loss on the sale of assets within
unconsolidated real estate entities
—
(1
)
—
2
Gain on sale of investment in
unconsolidated real estate entities
—
—
(23,817
)
—
EBITDAre
13,865
(2,499
)
42,858
9,494
Other charges
78
1,601
711
4,385
Adjustments for unconsolidated real estate
entity items
—
4
46
9
Share based compensation
1,238
1,125
4,823
4,597
Adjusted EBITDA
$
15,181
$
231
$
48,438
$
18,485
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,
2021
2020
2021
2020
Net loss
$
(11,446
)
$
(3,405
)
$
(18,845
)
$
(77,020
)
Add:
Interest expense
5,811
7,010
24,460
28,122
Depreciation and amortization
13,860
13,522
54,215
53,871
Corporate general and administrative
3,759
3,353
15,752
11,564
Other charges
78
1,601
711
4,385
Impairment loss
5,640
—
5,640
—
Loss from unconsolidated real estate
entities
—
1,325
1,231
7,424
Impairment loss on investment in
unconsolidated real estate entities
—
—
—
15,282
Loss on sale of hotel property
—
—
21
—
Less:
Interest and other income
(140
)
(34
)
(243
)
(179
)
Gain on sale of hotel property
—
(21,113
)
—
(21,116
)
Gain on sale of investment in
unconsolidated real estate entities
—
—
(23,817
)
—
Adjusted Hotel EBITDA
$
17,562
$
2,259
$
59,125
$
22,333
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220224005241/en/
Dennis Craven (Company) Chief Operating Officer (561)
227-1386
Chris Daly (Media) DG Public Relations (703) 864-5553
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