Third Quarter RevPAR Surpasses 2019, Margin
Growth Accelerates
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 third quarter ended September 30, 2022.
Third Quarter 2022 Operating Results
- Portfolio Revenue Per Available Room (RevPAR) –
Increased 34 percent to $150 compared to the 2021 third quarter.
Average daily rate (ADR) increased 22 percent to $187, and
occupancy grew 10 percent to 80 percent for the 38 comparable
hotels owned as of September 30, 2022 (excludes the Woodland Hills
hotel that opened in January 2022).
- Third quarter 2022 RevPAR of $150 compares to $149 in the 2019
third quarter.
- Net Income – Swung from a $1.4 million loss in the 2021
third quarter to income of $12.4 million in the 2022 third quarter.
Net income per diluted common share was $0.21 versus a net loss per
diluted common share of $(0.07) for the same period last year.
- GOP Margin – Generated margins for all hotels owned
during the quarter of 50.1 percent, up significantly from margins
of 44.7 percent in the 2021 third quarter.
- For the comparable hotels, GOP margins rose a very strong 160
basis points to 50.5 percent compared to 48.9 percent for the 2019
third quarter.
- Adjusted EBITDA – Experienced a massive jump to $35.1
million from $19.6 million in the 2021 third quarter.
- Adjusted FFO – Increased significantly from FFO of $10.5
million in the 2021 third quarter to adjusted FFO of $25.2 million
this year, the highest quarterly FFO since the pandemic. Adjusted
FFO per diluted share was $0.50, more than two times higher than
2021 FFO per share of $0.21.
- Cash Flow Before Capital Expenditures – Generated third
quarter 2022 cash flow before capital expenditures of $24.6 million
in the 2022 third quarter compared to $20.3 million in the 2022
second quarter and cash flow of $10.0 million in the 2021 third
quarter. Cash flow/burn includes $2.2 million of principal
amortization per quarter.
The following chart summarizes the consolidated financial
results for the three and nine months ended September 30, 2022, and
2021, based on all properties owned during those periods ($ in
millions, except margin percentages and per share data):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net income (loss)
$12.4
$(1.4)
$12.0
$(7.4)
Diluted net income (loss) per common
share
$0.21
$(0.07)
$0.12
$(0.19)
GOP Margin
50.1%
44.7%
46.9%
41.0%
Hotel EBITDA Margin
43.6%
35.2%
39.5%
28.6%
Adjusted EBITDA
$35.1
$19.6
$79.4
$33.3
AFFO
$25.2
$10.5
$49.4
$8.2
AFFO per diluted share
$0.50
$0.21
$0.98
$0.17
“Building on a great second quarter, our third quarter results
were outstanding, with corporate EBITDA and adjusted FFO up 13
percent and 22 percent, respectively, over the 2022 second
quarter," commented Jeffrey H. Fisher, Chatham's president and
chief executive officer. "The third quarter was far and away our
best quarter since 2019, and the impressive results were driven by
strong RevPAR growth combined with effective cost containment via
our best-in-class platform that allowed us to produce GOP margins
over 50 percent, nicely above our 2019 third quarter operating
margins. The stellar operating performance enabled us to more than
double adjusted funds from operations (AFFO) over the 2021 third
quarter and, importantly, generate positive cash flow before CAPEX
of $24.6 million which is up approximately 21 percent over the 2022
second quarter."
Fisher highlighted, "Our portfolio is in excellent position to
continue to benefit from the resurgence of the business traveler,
and recent trends have been very encouraging on that front. We are
in great financial condition with full capacity under our new
credit agreement and access to $90 million of proceeds from our new
term loan that we will draw down over the next six months. We have
the available liquidity and flexibility to enhance shareholder
value by executing acquisitions or refinancings at the right
time."
Hotel RevPAR Performance
The below chart summarizes key hotel financial statistics for
the 38 comparable hotels owned as of September 30, 2022, compared
to the 2022 second, 2021 third and 2019 third quarter:
Q3 2022
Q2 2022
Q3 2021
Q3 2019
Occupancy
80%
78%
73%
85%
ADR
$187
$178
$153
$176
RevPAR
$150
$138
$112
$149
% Change in RevPAR to Prior Year
34%
51%
n/a
n/a
The below chart summarizes RevPAR statistics by month for the
company’s 38 comparable hotels:
July
August
September
October
Occupancy - 2022
82%
79%
80%
78%
ADR - 2022
$191
$184
$186
$186
RevPAR - 2022
$157
$146
$148
$144
RevPAR - 2021
$121
$108
$108
$111
% Change in RevPAR
31%
35%
37%
30%
Fisher continued, "Quarterly portfolio occupancy reached 80
percent for the first time since 2019, still approximately five
percent below pre-pandemic levels. However, this was more than
offset by much higher ADR, coming in $11, or six percent higher
than the 2019 third quarter. Relative to 2019, September RevPAR had
the largest growth. Historically, September trends down from
August, but once we got past Labor Day, driven by the transient
business traveler, we saw weekday travel demand accelerate."
Compared to 2019, July, August and September RevPAR were down
0.1, down 2.7 and then up 6.2 percent, respectively. October RevPAR
of approximately $144 is down 1.5 percent compared to 2019.
“Business travel demand continues its improvement from earlier
this year, and we have seen weekday occupancies rise from
approximately 60 percent in the first quarter, 75 percent in the
second quarter, rising further to 79 percent in the third quarter
and now over 80 percent in October. Importantly, since the week of
Labor Day, Tuesday/Wednesday occupancy jumped to 87 percent,
surpassing Friday/Saturday occupancy of 82 percent over that same
period, marking the first time since before the pandemic where
prime weekday occupancy has consistently outperformed the weekend,”
Fisher emphasized.
RevPAR performance for Chatham’s six largest markets based on
hotel EBITDA contribution over the last twelve months is presented
below:
Q3 2022 RevPAR
Change vs. Q3 2021
Q2 2022 RevPAR
Q3 2021 RevPAR
Q3 2019 RevPAR
38 - Hotel Portfolio
$150
34%
$138
$112
$149
Silicon Valley
$182
127%
$142
$80
$205
Coastal Northeast
$257
17%
$158
$219
$225
Los Angeles
$187
39%
$170
$135
$174
Greater New York
$166
4%
$154
$159
$153
Washington D.C.
$134
41%
$156
$95
$152
San Diego
$207
47%
$187
$141
$185
“As proven by our strong performance during the quarter, our top
business travel markets are experiencing the most year-over-year
growth, and the largest growth among our major markets was in
Silicon Valley, by far our largest and most important market,"
stated Dennis Craven, Chatham's chief operating officer.
"Strengthened by our robust intern program this summer, Silicon
Valley RevPAR was up $102 over the third quarter last year and up
$40 or 28 percent over the second quarter. Despite these attractive
growth numbers, Silicon Valley RevPAR was still $23 or 11 percent
below the 2019 third quarter results and ultimately will provide
tremendous upside which should contribute to higher portfolio
growth as international and business travel continues to recover in
that market."
Craven commented further, "Our coastal northeast market remains
on fire, as evidenced by our three hotels in Maine and New
Hampshire where RevPAR far outpaced any other market. Additionally,
our Hampton Inn Portland produced the highest RevPAR of any of our
hotels during the third quarter at $343, and our Portsmouth Hilton
Garden Inn produced the second highest at $238. Demand remains
robust heading into the fall. Austin, Dallas and Bellevue are our
other markets which comprise more than five percent of our trailing
twelve-month hotel EBITDA. Combined with our top six markets, the
nine markets comprise 68 percent of our trailing twelve-month hotel
EBITDA and of our top nine markets, six of them had RevPAR growth
over 2019."
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 61 percent. Third quarter 2022 occupancy, ADR and
RevPAR for each of the company’s major brands, based on the 38
comparable hotels, is presented below (number of hotels in
parentheses):
Residence Inn (16)
Homewood Suites (6)
Courtyard (4)
Hilton Garden Inn (4)
Hampton Inns (3)
Occupancy - 2022
85%
80%
64%
78%
84%
ADR – 2022
$199
$145
$131
$230
$239
RevPAR – 2022
$170
$116
$84
$179
$201
RevPAR – 2021
$111
$92
$73
$155
$185
% Change in RevPAR
53%
26%
16%
15%
9%
Hotel Operations Performance
The below chart summarizes key hotel operating performance
measures per month during the 2022 third quarter, compared to the
2022 second, 2021 third and 2019 third quarter. RevPAR is based on
the 38 comparable hotels. All other metrics are based on the as
reported consolidated financial statements. Gross operating profit
is calculated as Hotel EBITDA plus property taxes, ground rent and
insurance (in millions, except for RevPAR and margin
percentages):
July 2022
August 2022
Sep 2022
Q3
2022
Q2
2022
Q3
2021
Q3
2019
RevPAR
$157
$146
$148
$150
$138
$112
$149
Gross operating profit
$16.5
$13.9
$13.5
$43.9
$40.1
$28.6
$42.3
Hotel EBITDA
$14.5
$11.9
$11.8
$38.2
$34.1
$22.5
$36.6
GOP margin
54%
49%
48%
50%
49%
45%
49%
Hotel EBITDA margin
47%
42%
42%
44%
42%
35%
42%
“Driven by strong operating controls, for the first time since
2020, all hotel operating financial metrics surpassed 2019 levels,
and if you look at our 38 comparable hotels, operating margins were
up a meaningful 160 basis points to 50.5% on a $1 increase in
RevPAR,” Craven remarked. “Our hotel EBITDA margins of 44 percent
are the highest of all lodging REITs that have reported to date,
evidence that our platform with Island Hospitality is best at
generating the best flow-through to the bottom line, which
translates to incremental cash flow, earnings power and ultimately
distributable cash to our shareholders. Despite continued wage
pressure that has persisted for years, we have been able to adjust
our operating model and become much more efficient and this has
allowed us to reduce our costs per occupied room."
Corporate Update
The below chart summarizes key financial performance measures
during the third quarter, compared to the 2022 second, 2021 third
and 2019 third quarter (adjusted to remove the impact of the joint
ventures). 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). Dividends on its
preferred shares are approximately $2.0 million per quarter. Cash
flow before CAPEX is calculated as Corporate EBITDA less debt
service and preferred dividends. Amounts are in millions, except
RevPAR.
July 2022
August 2022
Sep 2022
Q3
2022
Q2
2022
Q3
2021
Q3
2019
RevPAR – 2022
$157
$146
$148
$150
$138
$112
$149
Hotel EBITDA
$14.5
$11.9
$11.8
$38.2
$34.1
$22.5
$36.6
Corporate EBITDA
$13.5
$10.9
$10.7
$35.1
$31.1
$19.6
$34.4
Debt Service & Preferred
$(3.5)
$(3.5)
$(3.5)
$(10.5)
$(10.8)
$(9.6)
$(8.2)
Cash flow before CAPEX
$10.0
$7.4
$7.2
$24.6
$20.3
$10.0
$26.6
Home2 Suites in California
In January 2022, Chatham opened the 170-suite Home2 Suites by
Hilton Woodland Hills Warner Center. The hotel is the only
premium-branded, extended-stay room product within an 11-mile
radius and will appeal to any traveler coming to the area for
business, leisure or both.
After opening in January, the hotel has ramped up quickly with
third quarter occupancy of 86 percent, ADR of $189 and RevPAR of
$162, up 20 percent over second quarter RevPAR of $135. Third
quarter RevPAR of $162 would rank 15th of Chatham’s hotels.
Destin Acquisition
During the first quarter in an off-market transaction, Chatham
acquired the beachside, 111-room Hilton Garden Inn Destin Miramar
Beach, Fla., for $30 million or approximately $279,000 per room.
Recently opened in 2020, the hotel is within walking distance of
the pristine white sands of the Gulf of Mexico. During the third
quarter, the hotel achieved RevPAR of $196, up 17 percent from
second quarter RevPAR of $167. Third quarter RevPAR of $196 would
rank 6th in the portfolio during the quarter.
Hotel Investments
During the 2022 third quarter, the company incurred capital
expenditures of $3.0 million ($4.1 million in the first quarter and
$5.3 million in the second quarter), excluding any spending related
to the Warner Center development. Chatham’s 2022 capital
expenditure budget is approximately $19 million after the sale of
the four hotels, which includes renovations at five hotels and
excludes any spending related to the Warner Center development.
Chatham will commence renovations on three hotels in the fourth
quarter, including the Residence Inns in Holtsville and White
Plains, New York, and the Residence Inn Washington D.C.
Capital Markets & Capital Structure
As of September 30, 2022, the company had net debt of $452.6
million (total consolidated debt less unrestricted cash), down from
$525.7 million at year-end. Total debt outstanding as of September
30, 2022, was $472.6 million at an average interest rate of 5.0
percent, comprised of $433.2 million of fixed-rate mortgage debt at
an average interest rate of 4.6 percent, $0 outstanding on the
company’s $250 million senior unsecured revolving credit facility,
which carries a 3.4 percent interest rate, and $39.3 million
outstanding on the Warner Center construction loan, which carries
an 8.6 percent interest rate.
Based on the ratio of the company’s net debt to hotel
investments at cost, Chatham’s leverage ratio was approximately
27.2 percent on September 30, 2022. The weighted average maturity
date for Chatham’s fixed-rate debt is April 2024. Chatham has $34.3
million maturing in the 2023 first quarter, $16.3 million maturing
in the 2023 second quarter, $20.1 million maturing in the 2023
third quarter, and $41.4 million maturing in the 2023 fourth
quarter. Chatham also can repay the Warner Center construction loan
during the 2023 first quarter without incurring any prepayment
costs.
“We exited our credit facility covenant waiver period this
quarter and are at our lowest leverage levels in the last decade.
Our balance sheet is in fantastic shape and we have very manageable
maturities aggregating $112 million in 2023. We have full borrowing
capacity under our credit facility and have encumbrances on only 15
of our 39 hotels, which provides us flexibility to appropriately
address our maturities and capacity to acquire assets at the right
time,” stated Jeremy Wegner, Chatham’s chief financial officer.
Subsequent to the end of the third quarter, Chatham closed on a
new $215 million revolving credit facility as well as a $90 million
delayed-draw term loan, which allows Chatham to draw down over the
first six months of the loan. Including extension options, both
facilities mature in October 2027. At Chatham’s current leverage
level, the borrowing cost under the credit facility is SOFR plus
1.65 percent, and the borrowing cost under the term loan is SOFR
plus 1.60 percent. There are currently no outstanding borrowings on
the unsecured credit facility or term loan.
"We greatly appreciate the support of our bank group during a
tumultuous time in the credit markets and given that we now have
access to $305 million of borrowing capacity versus $250 million
prior to these new agreements is indicative of our excellent
financial condition. In the future, we can increase capacity by up
to $145 million through an accordion feature," Wegner iterated.
Dividend
The Board of Trustees will regularly evaluate its common
dividend moving forward on a quarterly basis.
During the quarter, the Board of Trustees declared a preferred
share dividend of $0.41406 per share, payable on October 17, 2022,
to shareholders of record as of September 30, 2022.
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 third quarter 2022 conference call
later today at 10:00 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 may participate in the conference
call by dialing 1-844-826-3035 and referencing Chatham Lodging
Trust. A recording of the call will be available by telephone until
11:59 p.m. ET on Tuesday, November 15, 2022, by dialing
1-844-512-2921, reference number 10172160. 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 39 hotels totaling 5,914 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 Second-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, 2021, 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)
September 30,
2022
December 31,
2021
(unaudited)
Assets:
Investment in hotel properties, net
$
1,275,723
$
1,282,870
Investment in hotel properties under
development
—
67,554
Cash and cash equivalents
19,915
19,188
Restricted cash
14,283
10,681
Right of use asset, net
19,472
19,985
Hotel receivables (net of allowance for
doubtful accounts of $280 and $382, respectively)
15,227
3,003
Deferred costs, net
3,709
4,627
Prepaid expenses and other assets
6,379
2,791
Total assets
$
1,354,708
$
1,410,699
Liabilities and Equity:
Mortgage debt, net
$
432,787
$
439,282
Revolving credit facility
—
70,000
Construction loan
39,331
35,007
Accounts payable and accrued expenses
34,289
27,718
Lease liability, net
22,262
22,696
Distributions payable
1,656
1,803
Total liabilities
530,325
596,506
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 September 30, 2022 and December 31, 2021,
respectively
48
48
Common shares, $0.01 par value,
500,000,000 shares authorized; 48,807,154 and 48,768,890 shares
issued and outstanding at September 30, 2022 and December 31, 2021,
respectively
488
487
Additional paid-in capital
1,047,002
1,048,070
Accumulated deficit
(245,231
)
(251,103
)
Total shareholders’ equity
802,307
797,502
Noncontrolling interests:
Noncontrolling interest in Operating
Partnership
22,076
16,691
Total equity
824,383
814,193
Total liabilities and equity
$
1,354,708
$
1,410,699
CHATHAM LODGING TRUST
Consolidated Statements of
Operations
(In thousands, except share and
per share data)
(unaudited)
For the three months
ended
For the nine months
ended
September 30,
September 30,
2022
2021
2022
2021
Revenue:
Room
$
81,970
$
59,305
$
207,896
$
135,210
Food and beverage
1,816
1,025
5,199
2,145
Other
3,786
3,679
10,439
7,898
Reimbursable costs from unconsolidated
entities
313
286
997
1,400
Total revenue
87,885
64,295
224,531
146,653
Expenses:
Hotel operating expenses:
Room
14,892
11,884
40,966
28,537
Food and beverage
1,435
717
3,911
1,493
Telephone
346
366
1,106
1,114
Other hotel operating
883
743
2,494
1,652
General and administrative
6,880
6,082
19,035
14,950
Franchise and marketing fees
7,107
5,294
18,073
11,983
Advertising and promotions
1,499
1,078
3,918
2,670
Utilities
3,419
3,059
9,091
7,698
Repairs and maintenance
3,600
3,253
10,392
8,433
Management fees
2,987
2,185
7,631
5,141
Insurance
638
716
2,095
2,072
Total hotel operating expenses
43,686
35,377
118,712
85,743
Depreciation and amortization
14,658
13,668
44,971
40,355
Property taxes, ground rent and
insurance
5,669
6,114
16,559
17,947
General and administrative
4,592
4,147
12,998
11,993
Other charges
304
256
704
633
Reimbursable costs from unconsolidated
entities
313
286
997
1,400
Total operating expenses
69,222
59,848
194,941
158,071
Operating income (loss) before gain (loss)
on sale of hotel properties
18,663
4,447
29,590
(11,418
)
Gain (loss) on sale of hotel
properties
109
(7
)
2,129
(21
)
Operating income (loss)
18,772
4,440
31,719
(11,439
)
Interest and other income
8
—
10
103
Interest expense, including amortization
of deferred fees
(6,404
)
(5,823
)
(19,729
)
(18,649
)
Loss from unconsolidated real estate
entities
—
—
—
(1,231
)
Gain on sale of investment in
unconsolidated real estate entities
—
—
—
23,817
Income (loss) before income tax
expense
12,376
(1,383
)
12,000
(7,399
)
Income tax expense
—
—
—
—
Net income (loss)
12,376
(1,383
)
12,000
(7,399
)
Net (income) loss attributable to
noncontrolling interests
(248
)
64
(166
)
178
Net income (loss) attributable to Chatham
Lodging Trust
12,128
(1,319
)
11,834
(7,221
)
Preferred dividends
(1,987
)
(1,988
)
(5,962
)
(1,988
)
Net income (loss) attributable to common
shareholders
$
10,141
$
(3,307
)
$
5,872
$
(9,209
)
Income (loss) per common share -
basic:
Net income (loss) attributable to common
shareholders
$
0.21
$
(0.07
)
$
0.12
$
(0.19
)
Income (loss) per common share -
diluted:
Net income (loss) attributable to common
shareholders
$
0.21
$
(0.07
)
$
0.12
$
(0.19
)
Weighted average number of common
shares outstanding:
Basic
48,798,528
48,755,561
48,793,839
48,211,612
Diluted
49,072,895
48,755,561
49,023,835
48,211,612
Distributions declared per common
share:
$
—
$
—
$
—
$
—
CHATHAM LODGING TRUST
FFO and EBITDA
(In thousands, except share and
per share data)
For the three months
ended
For the nine months
ended
September 30,
September 30,
2022
2021
2022
2021
Funds From Operations (“FFO”):
Net income (loss)
$
12,376
$
(1,383
)
$
12,000
$
(7,399
)
Preferred dividends
(1,987
)
(1,988
)
(5,962
)
(1,988
)
Net income (loss) attributable to common
shares and common units
10,389
(3,371
)
6,038
(9,387
)
(Gain) loss on sale of hotel
properties
(109
)
7
(2,129
)
21
Gain on sale of investment in
unconsolidated real estate entities
—
—
—
(23,817
)
Depreciation
14,604
13,605
44,797
40,172
Adjustments for unconsolidated real estate
entity items
—
—
—
568
FFO attributable to common share and unit
holders
24,884
10,241
48,706
7,557
Other charges
304
256
704
633
Adjustments for unconsolidated real estate
entity items
—
—
—
46
Adjusted FFO attributable to common share
and unit holders
$
25,188
$
10,497
$
49,410
$
8,236
Weighted average number of common shares
and units
Basic
50,013,287
49,731,663
49,957,020
49,129,734
Diluted
50,287,654
49,941,959
50,187,016
49,311,113
For the three months
ended
For the nine months
ended
September 30,
September 30,
2022
2021
2022
2021
Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”):
Net income (loss)
$
12,376
$
(1,383
)
$
12,000
$
(7,399
)
Interest expense
6,404
5,823
19,729
18,649
Depreciation and amortization
14,658
13,668
44,971
40,355
Adjustments for unconsolidated real estate
entity items
—
—
—
1,184
EBITDA
33,438
18,108
76,700
52,789
(Gain) loss on sale of hotel
properties
(109
)
7
(2,129
)
21
Gain on sale of investment in
unconsolidated real estate entities
—
—
—
(23,817
)
EBITDAre
33,329
18,115
74,571
28,993
Other charges
304
256
704
633
Adjustments for unconsolidated real estate
entity items
—
—
—
46
Share based compensation
1,419
1,235
4,132
3,585
Adjusted EBITDA
$
35,052
$
19,606
$
79,407
$
33,257
CHATHAM LODGING TRUST
ADJUSTED HOTEL EBITDA
(In thousands, except share and
per share data)
For the three months
ended
For the nine months
ended
September 30,
September 30,
2022
2021
2022
2021
Net income (loss)
$
12,376
$
(1,383
)
$
12,000
$
(7,399
)
Add:
Interest expense
6,404
5,823
19,729
18,649
Depreciation and amortization
14,658
13,668
44,971
40,355
Corporate general and administrative
4,592
4,147
12,998
11,993
Other charges
304
256
704
633
Loss from unconsolidated real estate
entities
—
—
—
1,231
Loss on sale of hotel property
—
7
—
21
Less:
Interest and other income
(8
)
—
(10
)
(103
)
Gain on sale of hotel properties
(109
)
—
(2,129
)
—
Gain on sale of investment in
unconsolidated real estate entities
—
—
—
(23,817
)
Adjusted Hotel EBITDA
$
38,217
$
22,518
$
88,263
$
41,563
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108005237/en/
Dennis Craven (Company) Chief Operating Officer (561)
227-1386
Chris Daly (Media) DG Public Relations (703) 864-5553
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