Top Markets Post Significant Gains, GOP Margins
Higher than 2019
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 second quarter ended June 30, 2022.
Second Quarter 2022 Operating Results
- Portfolio Revenue Per Available Room (RevPAR) –
Increased 50 percent to $138 compared to the 2021 second quarter.
Average daily rate (ADR) accelerated 36 percent to $179, and
occupancy grew 10 percent to 77 percent for the 37 comparable
hotels owned as of June 30, 2022 (excludes one Austin hotel that
opened in June 2021 and the Woodland Hills hotel that opened in
January 2022).
- Second quarter 2022 RevPAR of $138 compares to $146 in the 2019
second quarter.
- Net income – Swung from a $8.7 million loss in the 2021
second quarter to net income of $9.3 million in the 2022 second
quarter. Net income per diluted common share was $0.15 versus a net
loss per diluted common share of $(0.18) for the same period last
year.
- GOP Margin – Generated margins for all hotels owned
during the quarter of 49.2 percent, up significantly from margins
of 43.1 percent in the 2021 second quarter.
- For the 36 comparable hotels (also excludes the Destin hotel
that was not open in 2019), GOP margins rose 60 basis points to
50.1 percent compared to 49.5 percent for the 2019 second quarter
despite 2022 RevPAR being $8 lower.
- Adjusted EBITDA – Jumped to $31.1 million from $12.5
million in the 2021 second quarter.
- Adjusted FFO – Increased significantly from FFO of $4.9
million in the 2021 second quarter to positive adjusted FFO of
$20.7 million this year. Adjusted FFO per diluted share was $0.41,
more than four times higher than 2021 FFO per share of $0.10.
- Cash Flow Before Capital Expenditures – Generated second
quarter 2022 cash flow before capital expenditures of $20.3 million
in the 2022 second quarter compared to $2.8 million in the 2022
first quarter and cash flow of $4.0 million in the 2021 second
quarter. Cash flow/burn includes $2.2 million of principal
amortization per quarter.
- Recycling of Hotels Enhances Portfolio Value - Sold four
hotels comprising 537 rooms for aggregate proceeds of approximately
$80 million. Including near term capital expenditure requirements,
the aggregate sales proceeds equated to an approximate 2 and 6
percent capitalization rate on net operating income for 2021 and
2019, respectively.
The following chart summarizes the consolidated financial
results for the three and six months ended June 30, 2022, and 2021,
based on all properties owned during those periods ($ in millions,
except margin percentages and per share data):
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net income (loss)
$9.3
$(8.7)
$(0.4)
$(6.0)
Diluted net income (loss) per common
share
$0.15
$(0.18)
$(0.09)
$(0.12)
GOP Margin
49.2%
43.1%
44.8%
38.0%
Hotel EBITDA Margin
41.9%
31.2%
36.8%
23.4%
Adjusted EBITDA
$31.1
$12.5
$44.4
$13.7
AFFO
$20.7
$4.9
$24.2
$(2.3)
AFFO per diluted share
$0.41
$0.10
$0.48
$(0.05)
“The second quarter was fantastic, hitting on all cylinders as
RevPAR jumped significantly coinciding with the continued return of
our business traveler, operating margins surpassing 2019 levels and
the successful sale of four, non-core assets at a cap rate that
highlights the underlying value of our premium-quality portfolio,”
highlighted Jeffrey H. Fisher, Chatham’s president and chief
executive officer. “The stellar operating performance generated by
our best-in-class platform enabled us to more than quadruple
adjusted funds from operations over the 2021 second quarter and,
importantly, generate positive cash flow before CAPEX of $20.3
million which is up significantly from $2.8 million last quarter
and more than five times higher than the 2021 second quarter.
Excellent operating results combined with very successful hotel
recycling has greatly enhanced our financial position, and we have
the available liquidity and flexibility to build shareholder
value.”
Hotel RevPAR Performance
The below chart summarizes key hotel financial statistics for
the 37 comparable hotels owned as of June 30, 2022, compared to the
2022 first, 2021 second and 2019 second quarter:
Q2 2022
Q1 2022
Q2 2021
Q2 2019
Occupancy
77%
61%
70%
84%
ADR
$179
$149
$131
$174
RevPAR
$138
$91
$92
$146
% Change in RevPAR to Prior Year
50%
57%
n/a
n/a
The below chart summarizes RevPAR statistics by month for the
company’s 37 comparable hotels:
April
May
June
July
Occupancy - 2022
75%
75%
83%
82%
ADR - 2022
$166
$178
$191
$192
RevPAR - 2022
$123
$133
$158
$158
RevPAR - 2021
$79
$93
$103
$122
% Change in RevPAR
56%
43%
53%
30%
Fisher continued, “June 2022 RevPAR of $158 was up 19 percent
over May and exceeded June 2019’s $157, marking the first month we
have surpassed pre-pandemic RevPAR levels. Additionally, second
quarter ADR of $179 exceeded 2019 second quarter ADR of $174.
Portfolio RevPAR is strengthening, and we have significantly more
upside in our largest market, Silicon Valley, that will further
boost performance. Compared to 2019, April, May and June RevPAR
were down 12, 6 and then up 2 percent, respectively. While our
hotels build occupancy as business travel demand rises, we expect
to continue growing ADR.
“Business travel demand has continued to rise, and weekday
occupancy is the appropriate indicator to track this trend, as
occupancy rose from approximately 60 percent in the first quarter
to over 70 percent in April and May and now surpassed 80 percent in
June, the first time since the start of the pandemic that weekday
occupancy was that high,” Fisher stated.
RevPAR performance for Chatham’s six largest markets based on
hotel EBITDA contribution over the last twelve months is presented
below:
Q2 2022 RevPAR
Change vs. Q2 2021
Q1 2022 RevPAR
Q2 2021 RevPAR
Q2 2019 RevPAR
37 - Hotel Portfolio
$138
50%
$91
$92
$146
Silicon Valley
$142
94%
$71
$73
$194
Coastal Northeast
$158
32%
$72
$120
$157
Greater New York
$154
25%
$109
$123
$153
Los Angeles
$170
65%
$128
$103
$162
Washington D.C.
$156
120%
$87
$71
$185
San Diego
$187
42%
$130
$132
$177
“In comparing our top six markets from the 2019 second quarter
with the 2022 second quarter, it is something of a return to normal
with five of the same markets appearing in both. The only
difference is that the 2022 top six markets substitute the lower
RevPAR market of Houston with the higher RevPAR market of Greater
New York,” commented Dennis Craven, Chatham’s chief operating
officer. “The only other two markets that comprise more than five
percent of our trailing twelve-month hotel EBITDA are Austin and
Dallas, and combined with our top six markets, the eight markets
comprise 61 percent of our trailing twelve-month hotel EBITDA.
Second quarter 2022 RevPAR exceeded 2019 RevPAR in six of our top
eight markets. RevPAR in our Washington D.C. market jumped 120
percent over the same quarter last year as the return to office has
been slower than in other parts of the country.
“Our largest market, Silicon Valley, has experienced the slowest
recovery of our top markets, but with the return of a robust intern
program this summer, is rebounding sharply with RevPAR basically
doubling from the same quarter last year as well as the 2022 first
quarter. With return to office and international travel to Silicon
Valley slowly but steadily coming back, we decided to take more
intern business than previously which was the right decision and
proven out by gaining market share over 2019. Given that 2022
second quarter RevPAR in Silicon Valley is 27 percent below 2019,
the market has a tremendous amount of upside that will further
propel our portfolio RevPAR to levels well above pre-pandemic
levels,” Craven added.
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. Second quarter 2022 occupancy, ADR and
RevPAR for each of the company’s major brands, based on the 37
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
81%
78%
72%
70%
77%
ADR – 2022
$189
$151
$142
$207
$181
RevPAR – 2022
$153
$118
$102
$144
$138
RevPAR – 2021
$95
$78
$72
$111
$112
% Change in RevPAR
60%
51%
41%
30%
24%
Hotel Operations Performance
The below chart summarizes key hotel operating performance
measures per month during the 2022 second quarter, compared to the
2022 first, 2021 second and 2019 second quarter. RevPAR is based on
the 37 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):
April 2022
May 2022
June 2022
Q2 2022
Q1 2022
Q2 2021
Q2 2019
RevPAR
$123
$133
$158
$138
$91
$92
$146
Gross operating profit
$11.8
$13.0
$15.3
$40.1
$20.9
$21.5
$42.3
Hotel EBITDA
$9.7
$11.1
$13.3
$34.1
$15.9
$15.6
$36.1
GOP margin
47%
49%
51%
49%
38%
43%
49%
Hotel EBITDA margin
39%
41%
45%
42%
29%
31%
42%
“As RevPAR rose throughout the quarter, we delivered
significantly higher operating margins and are thrilled to report
that comparable margins at our 36 comparable hotels surpassed 2019
margins, up 60 basis points to 50.1 percent,” Fisher remarked. “We
were able to grow margins despite RevPAR being $8 lower than 2019,
a testament to the efficacy of our platform with Island and a
harbinger of future earnings power resulting from higher margins as
RevPAR surpasses pre-pandemic levels.
“In the several years prior to the pandemic, rising hourly wages
and increasing brand requirements drove margin erosion, but as we
emerge from the pandemic, our operating model is more profitable
given the reduced amount of labor required for housekeeping
services, as well as the elimination of brand requirements such as
the evening social hour or reduced breakfast offerings. Labor is by
far our most significant cost, and despite hourly wages rising
significantly since 2019, on a per occupied room basis, our wage
and benefit costs have declined from $34 in the 2019 second quarter
to $32 this year, a remarkable achievement,” Craven concluded.
Corporate Update
The below chart summarizes key financial performance measures
during the second quarter, compared to the 2022 first, 2021 fourth
and 2019 second 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 $2.3 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.
April 2022
May 2022
June 2022
Q2 2022
Q1 2022
Q2 2021
Q2 2019
RevPAR – 2022
$123
$133
$158
$138
$91
$92
$146
Hotel EBITDA
$9.7
$11.1
$13.3
$34.1
$15.9
$15.6
$36.1
Corporate EBITDA
$8.8
$10.1
$12.2
$31.1
$13.3
$12.5
$33.8
Debt Service & Preferred
$(3.6)
$(3.7)
$(3.5)
$(10.8)
$(10.5)
$(8.5)
$(8.2)
Cash flow before CAPEX
$5.2
$6.4
$8.7
$20.3
$2.8
$4.0
$25.6
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
second quarter occupancy of 71 percent, ADR of $191 and RevPAR of
$135, which would rank in the top half of Chatham’s hotels,
impressive given that the hotel has only been open for five full
months.
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 second
quarter, the hotel achieved RevPAR of $167, which would rank 10th
in the portfolio during the quarter.
Asset Sales & Value Enhancing Recycling
During the second quarter, Chatham closed on the sale of four
hotels comprising 537 rooms for aggregate proceeds of approximately
$80 million. Including near term capital expenditure requirements,
the aggregate sales proceeds would equate to an approximate two and
six percent capitalization rate on net operating income for 2021
and 2019, respectively. The four hotels comprise the following:
- 180-room Hilton Garden Inn, Burlington, Massachusetts
- 100-room Courtyard by Marriott Houston West University
- 120-room Residence Inn by Marriott Houston West University
- 137-room Homewood Suites by Hilton Dallas Market Center
Burlington
CY West U
RI West U
HW Dallas
Year Built
1975
2004
2004
1998
2021 RevPAR
$31
$60
$64
$80
2019 RevPAR
$110
$85
$94
$97
CAPEX (2022-2023)
~$7mm
~$4mm
<$1mm
<$1mm
Three of the hotels were among Chatham’s six lowest RevPAR
hotels, and all four hotels were among the fifteen lowest RevPAR
hotels in the portfolio (based on 2019 RevPAR). Additionally, the
four hotels generated 2021 Hotel EBITDA of $2.2 million. The
recently acquired Destin hotel is the third youngest hotel in the
portfolio, generated 2021 Hotel EBITDA of $2.3 million and is
expected to be in the top 10 of Chatham’s portfolio in RevPAR for
2022.
“We want to recycle capital out of older assets into newer
hotels with higher growth prospects. Combining the acquisition of
the beachside Destin hotel with the sale of these four hotels is a
giant step towards reducing the average age of our portfolio and
providing ample liquidity for future growth,” emphasized
Fisher.
Hotel Investments
During the 2022 second quarter, the company incurred capital
expenditures of $5.3 million ($4.1 million in the first 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 hotels, which includes renovations at
five hotels and excludes any spending related to the Warner Center
development.
Capital Markets & Capital Structure
As of June 30, 2022, the company had net debt of $471.8 million
(total consolidated debt less unrestricted cash), down from $525.7
million at year-end. Total debt outstanding as of June 30, 2022,
was $489.6 million at an average interest rate of 4.9 percent,
comprised of $435.5 million of fixed-rate mortgage debt at an
average interest rate of 4.6 percent, $15.0 million outstanding on
the company’s $250 million senior unsecured revolving credit
facility, which currently carries a 4.0 percent interest rate, and
$39.1 million outstanding on the Warner Center construction loan,
which currently 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
28.4 percent on June 30, 2022. The weighted average maturity date
for Chatham’s fixed-rate debt is April 2024. Chatham has $34.8
million maturing in the 2023 first quarter, $16.6 million in the
2023 second quarter, $20.4 million in the 2023 third quarter and
$41.8 million maturing in the 2023 fourth quarter. Chatham also can
repay the Warner Center construction loan after the 2023 first
quarter without incurring any prepayment costs.
“Our balance sheet is in fantastic shape, the strongest it has
been in the last decade. We have very manageable maturities
aggregating $114 million in 2023. We are exiting our credit
facility covenant waiver period this month, will have $235 million
of credit facility availability 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.
Dividend
The Board of Trustees will regularly evaluate its common
dividend moving forward.
During the quarter, the Board of Trustees declared a preferred
share dividend of $0.41406 per share, payable on July 15, 2022, to
shareholders of record as of June 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 second 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 1-877-407-0789 and referencing Chatham Lodging
Trust. A recording of the call will be available by telephone until
11:59 p.m. ET on Wednesday, August 10, 2022, by dialing
1-844-512-2921, reference number 13731637. 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)
June 30, 2022
December 31,
2021
(unaudited)
Assets:
Investment in hotel properties, net
$
1,286,661
$
1,282,870
Investment in hotel properties under
development
—
67,554
Cash and cash equivalents
17,750
19,188
Restricted cash
10,038
10,681
Right of use asset, net
19,645
19,985
Hotel receivables (net of allowance for
doubtful accounts of $230 and $382, respectively)
7,276
3,003
Deferred costs, net
4,121
4,627
Prepaid expenses and other assets
8,269
2,791
Total assets
$
1,353,760
$
1,410,699
Liabilities and Equity:
Mortgage debt, net
$
434,940
$
439,282
Revolving credit facility
15,000
70,000
Construction loan
39,143
35,007
Accounts payable and accrued expenses
27,913
27,718
Lease liability, net
22,410
22,696
Distributions payable
1,656
1,803
Total liabilities
541,062
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 June 30, 2022 and December 31, 2021,
respectively
48
48
Common shares, $0.01 par value,
500,000,000 shares authorized; 48,806,107 and 48,768,890 shares
issued and outstanding at June 30, 2022 and December 31, 2021,
respectively
488
487
Additional paid-in capital
1,046,980
1,048,070
Accumulated deficit
(255,372
)
(251,103
)
Total shareholders’ equity
792,144
797,502
Noncontrolling interests:
Noncontrolling interest in Operating
Partnership
20,554
16,691
Total equity
812,698
814,193
Total liabilities and equity
$
1,353,760
$
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 six months
ended
June 30,
June 30,
2022
2021
2022
2021
Revenue:
Room
$
75,761
$
46,514
$
125,926
$
75,905
Food and beverage
1,968
756
3,382
1,120
Other
3,674
2,647
6,654
4,218
Reimbursable costs from unconsolidated
entities
358
327
684
1,114
Total revenue
81,761
50,244
136,646
82,357
Expenses:
Hotel operating expenses:
Room
14,480
9,486
26,074
16,653
Food and beverage
1,429
491
2,476
775
Telephone
359
348
760
748
Other hotel operating
879
544
1,611
909
General and administrative
6,804
5,056
12,153
8,870
Franchise and marketing fees
6,559
4,091
10,966
6,688
Advertising and promotions
1,230
835
2,419
1,592
Utilities
2,784
2,352
5,673
4,638
Repairs and maintenance
3,347
2,720
6,792
5,180
Management fees
2,727
1,760
4,645
2,956
Insurance
747
707
1,457
1,356
Total hotel operating expenses
41,345
28,390
75,026
50,365
Depreciation and amortization
15,277
13,353
30,313
26,687
Property taxes, ground rent and
insurance
5,932
5,954
10,890
11,833
General and administrative
4,462
4,316
8,405
7,844
Other charges
150
322
400
377
Reimbursable costs from unconsolidated
entities
358
327
684
1,114
Total operating expenses
67,524
52,662
125,718
98,220
Operating income (loss) before gain (loss)
on sale of hotel properties
14,237
(2,418
)
10,928
(15,863
)
Gain (loss) on sale of hotel
properties
2,020
28
2,020
(15
)
Operating income (loss)
16,257
(2,390
)
12,948
(15,878
)
Interest and other income
1
28
1
102
Interest expense, including amortization
of deferred fees
(6,936
)
(6,356
)
(13,325
)
(12,826
)
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
9,322
(8,718
)
(376
)
(6,016
)
Income tax expense
—
—
—
—
Net income (loss)
9,322
(8,718
)
(376
)
(6,016
)
Net (income) loss attributable to
noncontrolling interests
(171
)
160
82
114
Net income (loss) attributable to Chatham
Lodging Trust
9,151
(8,558
)
(294
)
(5,902
)
Preferred dividends
(1,987
)
—
(3,975
)
—
Net income (loss) attributable to common
shareholders
$
7,164
$
(8,558
)
$
(4,269
)
$
(5,902
)
Income (loss) per Common Share -
Basic:
Net income (loss) attributable to common
shareholders
$
0.15
$
(0.18
)
$
(0.09
)
$
(0.12
)
Income (loss) per Common Share -
Diluted:
Net income (loss) attributable to common
shareholders
$
0.15
$
(0.18
)
$
(0.09
)
$
(0.12
)
Weighted average number of common
shares outstanding:
Basic
48,795,348
48,637,484
48,791,455
47,935,130
Diluted
49,017,184
48,637,484
48,791,455
47,935,130
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 six months
ended
June 30,
June 30,
2022
2021
2022
2021
Funds From Operations (“FFO”):
Net income (loss)
$
9,322
$
(8,718
)
$
(376
)
$
(6,016
)
Preferred dividends
(1,987
)
—
(3,975
)
—
Net income (loss) attributable to common
shares and common units
7,335
(8,718
)
(4,351
)
(6,016
)
(Gain) loss on sale of hotel
properties
(2,020
)
(28
)
(2,020
)
15
Gain on sale of investment in
unconsolidated real estate entities
—
—
—
(23,817
)
Depreciation
15,223
13,292
30,193
26,566
Adjustments for unconsolidated real estate
entity items
—
—
—
568
FFO attributable to common share and unit
holders
20,538
4,546
23,822
(2,684
)
Other charges
150
322
400
377
Adjustments for unconsolidated real estate
entity items
—
—
—
46
Adjusted FFO attributable to common share
and unit holders
$
20,688
$
4,868
$
24,222
$
(2,261
)
Weighted average number of common shares
and units
Basic
50,010,107
49,613,586
49,928,420
48,823,781
Diluted
50,231,943
49,794,765
50,139,358
48,823,781
For the three months
ended
For the six months
ended
June 30,
June 30,
2022
2021
2022
2021
Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”):
Net income (loss)
$
9,322
$
(8,718
)
$
(376
)
$
(6,016
)
Interest expense
6,936
6,356
13,325
12,826
Depreciation and amortization
15,277
13,353
30,313
26,687
Adjustments for unconsolidated real estate
entity items
—
—
—
1,184
EBITDA
31,535
10,991
43,262
34,681
(Gain) loss on sale of hotel
properties
(2,020
)
(28
)
(2,020
)
15
Gain on sale of investment in
unconsolidated real estate entities
—
—
—
(23,817
)
EBITDAre
29,515
10,963
41,242
10,879
Other charges
150
322
400
377
Adjustments for unconsolidated real estate
entity items
—
—
—
46
Share based compensation
1,419
1,194
2,713
2,351
Adjusted EBITDA
$
31,084
$
12,479
$
44,355
$
13,653
CHATHAM LODGING TRUST
ADJUSTED HOTEL EBITDA
(In thousands, except share and
per share data)
For the three months
ended
For the six months
ended
June 30,
June 30,
2022
2021
2022
2021
Net income (loss)
$
9,322
$
(8,718
)
$
(376
)
$
(6,016
)
Add:
Interest expense
6,936
6,356
13,325
12,826
Depreciation and amortization
15,277
13,353
30,313
26,687
Corporate general and administrative
4,462
4,316
8,405
7,844
Other charges
150
322
400
377
Loss from unconsolidated real estate
entities
—
—
—
1,231
Loss on sale of hotel property
—
—
—
15
Less:
Interest and other income
(1
)
(28
)
(1
)
(102
)
Gain on sale of hotel properties
(2,020
)
(28
)
(2,020
)
—
Gain on sale of investment in
unconsolidated real estate entities
—
—
—
(23,817
)
Adjusted Hotel EBITDA
$
34,126
$
15,573
$
50,046
$
19,045
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005130/en/
Dennis Craven (Company) Chief Operating Officer (561)
227-1386
Chris Daly (Media) DG Public Relations (703) 864-5553
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