Core Insights - Preferred shares issued by hospitality REITs have recently become significantly undervalued, presenting potential investment opportunities [1] Group 1: Investment Opportunities - The investment group European Small Cap Ideas focuses on high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1] Group 2: Analyst Position - The analyst has a beneficial long position in Chatham Lodging Trust's preferred shares, indicating confidence in the investment [1]

Financial Data and Key Metrics Changes - Chatham Lodging Trust reported Q3 2024 hotel EBITDA of $32.2 million and adjusted EBITDA of $29.6 million, with adjusted FFO of $0.35 per share [21] - RevPAR growth was 1.3% for Q3 2024, with GOP margin at 44.5% and hotel EBITDA margin at 37.1%, reflecting a decline of only 40 basis points from Q3 2023 [21] - The company ended the quarter with a net debt to LTM EBITDA ratio of 4.2x, significantly below pre-pandemic levels of 5.5x to 6x [22] Business Line Data and Key Metrics Changes - RevPAR in the seven predominantly leisure hotels rose 0.7%, with the Hampton Inn Portland, Maine, being the best performer at 8% growth [14] - The five tech-driven hotels in Silicon Valley and Bellevue achieved RevPAR growth of 8% in Q3, with ADR rising 5% to nearly $200 [9][16] - Overall, RevPAR for the portfolio exceeded 2019 levels for the second consecutive quarter, with a Q3 RevPAR of $150 [8] Market Data and Key Metrics Changes - Business travel showed steady growth across the country, with occupancy rates for key weekdays reaching 79% on Monday and 84% on Tuesday and Wednesday [12] - In October, RevPAR grew 6% with occupancy up 5% to 83% and ADR up 1% to $191 [15] - The company noted that 30 of its 38 comparable hotels produced positive RevPAR in October, indicating strong overall trends [15] Company Strategy and Development Direction - The company is focused on recycling capital by selling five hotels, expected to generate approximately $80 million, to pay down debt and invest in higher-quality assets [4][5] - Chatham aims to enhance internal growth by acquiring newer assets and reducing ongoing capital requirements, with a target leverage range of 4.75x to 5.25x [28][30] - The company is optimistic about the demand dynamics in Silicon Valley, driven by tech industry growth and corporate expansions [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of margins and overall performance, citing a shift in demand towards business travel post-summer [25] - The company anticipates RevPAR growth of 1% to 3% for Q4 2024, with adjusted EBITDA guidance of $19 million to $21 million [23] - Management noted that expense pressures have lessened, with labor costs returning to more historical increases [13] Other Important Information - The company has only $30 million of debt maturing over the next 12 months and $135 million available under its revolving credit facility [22] - Capital expenditures for 2024 are expected to be around $34 million, slightly below the budget of $37 million [20] Q&A Session Summary Question: Improvement in RevPAR in September and October - Management indicated that the improvement is likely due to a shift in demand towards corporate travel as leisure travel wanes post-summer [25] Question: Target leverage and asset sales - Management stated that a leverage target of 4.75x to 5.25x is reasonable, and they are actively pursuing asset sales to enhance growth [28][30] Question: Market conditions and pricing - Management noted that while there hasn't been dramatic movement in buyer-seller expectations, there is increased activity in the market [31]

Revenue and Performance - Total revenue for the three months ended September 30, 2024, was $87.2 million, a 0.5% increase from $86.7 million in the same period of 2023, primarily driven by a 1.3% increase in same property RevPAR[100]. - Same property RevPAR increased 1.3% for the three months ended September 30, 2024, with an ADR of $187.52 and occupancy at 79.9%[106]. - Total revenue for the nine months ended September 30, 2024, was $242.1 million, a 1.4% increase from $238.8 million for the same period in 2023[121]. - Room revenue for the nine months ended September 30, 2024, was $221.8 million, a 1.3% increase from $219.0 million for the same period in 2023[121]. - Same property RevPAR increased by 2.1% for the nine months ended September 30, 2024, driven by a 0.5% increase in ADR and a 1.6% increase in occupancy[127]. - The U.S. lodging industry RevPAR increased by 0.9% for the three months ended September 30, 2024, with expectations for modest increases for the remainder of the year[98]. Expenses and Costs - Hotel operating expenses rose by $0.5 million, or 1.2%, to $48.2 million for the three months ended September 30, 2024, compared to $47.7 million in the same period of 2023[107]. - Hotel operating expenses rose to $136.7 million for the nine months ended September 30, 2024, a 3.9% increase from $131.5 million for the same period in 2023[128]. - Food and beverage revenue decreased to $1.8 million for the three months ended September 30, 2024, down from $2.0 million in the same period of 2023, attributed to the sale of one hotel[101]. - Food and beverage revenue decreased by 5.7% to $5.8 million for the nine months ended September 30, 2024, compared to $6.2 million for the same period in 2023[122]. - Depreciation and amortization expense increased to $15.3 million for the three months ended September 30, 2024, compared to $14.7 million in the same period of 2023[111]. Income and Profitability - Net income decreased to $4.3 million for the three months ended September 30, 2024, down from $7.5 million for the same period in 2023[118]. - Net income decreased from $11.8 million to $5.9 million, a decline of 50% for the nine months ended September 30, 2024[141]. - Funds From Operations (FFO) attributable to common share and unit holders decreased from $49.258 million to $44.792 million, a drop of 9.5% for the nine months ended September 30, 2024[148]. - Adjusted FFO attributable to common share and unit holders decreased from $49.834 million to $45.466 million, a decline of 8.5% for the nine months ended September 30, 2024[148]. - EBITDA for the nine months ended September 30, 2024 was $74.636 million, a slight decrease from $75.166 million for the same period in 2023[152]. - Adjusted EBITDA for the nine months ended September 30, 2024 was $79.795 million, down from $80.248 million in 2023, a decrease of 0.6%[152]. Debt and Financial Position - The company maintained a leverage ratio of 24.3% as of September 30, 2024, with total debt of $438.5 million at a weighted-average interest rate of approximately 6.8%[91]. - Total debt principal and interest obligations were $545.6 million as of September 30, 2024, with $59.3 million payable within the next 12 months[164]. - The leverage ratio was approximately 24.3% as of September 30, 2024, with total debt of $438.5 million at an average interest rate of 6.8%[166]. - As of September 30, 2024, the Company had $265.0 million in floating rate debt with an average interest rate of 6.91%[183]. - A hypothetical 100 basis points increase in SOFR would result in additional interest of approximately $2.7 million annually, assuming the floating rate debt remains at $265.0 million[183]. Investments and Strategic Initiatives - The company’s investment strategy focuses on upscale extended-stay and premium-branded select-service hotels in diverse markets with high barriers to entry[90]. - The company expects to invest approximately $11.9 million on renovations and improvements during the remainder of 2024[161]. - The company sold one hotel in Denver, CO, and acquired one hotel in Phoenix, AZ, impacting revenue and operational metrics[99]. - The company sold one hotel in January 2024 and acquired another in May 2024, impacting overall revenue and expenses[120]. Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash totaled $28.8 million as of September 30, 2024, a decrease of $56.9 million from December 31, 2023[158]. - Net cash flows provided by operating activities decreased by $5.4 million to $60.9 million during the nine months ended September 30, 2024[159]. - Net cash flows used in investing activities increased by $30.7 million to $(52.1) million during the nine months ended September 30, 2024[160]. - The Company may utilize cash on hand or borrowings to cover expenses during quarters with insufficient cash flow from operations due to seasonal fluctuations[178]. Tax and Regulatory Matters - Income tax expense remained at $0 for both the nine months ended September 30, 2024 and 2023, with a combined federal and state tax rate of approximately 25% expected for TRS Lessees[140]. Dividends - The company declared total dividends of $0.21 per common share for the nine months ended September 30, 2024, consistent with the previous year[163]. - Chatham declared dividends of $1.24218 per share for the 6.625% Series A Cumulative Redeemable Preferred Shares during the nine months ended September 30, 2024[176]. Risk Management - The Company’s interest rate risk management objectives include limiting the impact of interest rate changes on earnings and cash flows[181]. - Management companies may face competitive pressures that limit their ability to raise room rates despite inflationary pressures[177]. - The Company evaluates its accounting estimates and judgments on an ongoing basis, with significant policies disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[179].

Core Insights - Chatham Lodging (CLDT) reported revenue of $87.18 million for the quarter ended September 2024, reflecting a year-over-year increase of 0.5% [1] - The earnings per share (EPS) for the same period was $0.35, compared to $0.11 a year ago, indicating significant growth [1] - The reported revenue fell short of the Zacks Consensus Estimate of $87.63 million, resulting in a surprise of -0.52% [1] - The company met the consensus EPS estimate of $0.35, showing no surprise in earnings [1] Revenue Breakdown - Room revenue was $80.24 million, slightly below the average estimate of $81.02 million from three analysts, with a year-over-year change of +0.5% [3] - Reimbursable costs from related parties were reported at $0.28 million, compared to the estimated $0.31 million, reflecting a +0.7% change year-over-year [3] Net Income - Net income attributable to common shareholders (diluted) was $0.05, exceeding the average estimate of $0.04 from three analysts [3] Stock Performance - Chatham Lodging shares have returned +1.5% over the past month, while the Zacks S&P 500 composite has seen a +3.2% change [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]

Financial Performance - Net income for Q3 2024 was $4.3 million, down from $7.5 million in Q3 2023, resulting in diluted net income per share of $0.05 versus $0.11 in the prior year[2]. - Adjusted EBITDA for Q3 2024 was $29.6 million, a decrease from $30.6 million in Q3 2023[2]. - The company reported a GOP margin of 44.5% in Q3 2024, compared to 44.9% in Q3 2023[3]. - Total revenue for the three months ended September 30, 2024, was $87,177 million, a 0.5% increase from $86,741 million in 2023[37]. - Net income for the three months ended September 30, 2024, was $4,339 million, down 42.9% from $7,499 million in 2023[39]. - EBITDA for the three months ended September 30, 2024, was $27,888 million, a decrease of 3.9% compared to $29,035 million in 2023[39]. - Total operating expenses for the three months ended September 30, 2024, were $74,659 million, an increase of 2.5% from $72,868 million in 2023[37]. - Funds From Operations (FFO) attributable to common share and unit holders for the three months ended September 30, 2024, was $17,169 million, down from $20,145 million in 2023[38]. - Adjusted FFO attributable to common share and unit holders for the three months ended September 30, 2024, was $17,599 million, compared to $20,156 million in 2023[38]. Revenue and Growth - RevPAR growth of 2.1% was achieved in Q3 2024, with a RevPAR of $150 for comparable hotels, compared to $148 in Q3 2023[2]. - October RevPAR accelerated to $158, marking a 6% increase compared to October 2023, representing the second highest October RevPAR since the company's inception[2]. - Q4 2024 revenue guidance is projected to be between $124 million and $127 million, reflecting a growth of 1% to 3% year-over-year[19]. - Total revenue for the nine months ended September 30, 2023, was $242,099,000, an increase from $238,832,000 in the prior year, reflecting a growth of about 1.1%[40]. - Hotel revenue for the three months ended September 30, 2023, was $86,894,000, compared to $86,460,000 in the same period last year, indicating a slight increase of 0.5%[40]. Debt and Assets - Total debt outstanding as of September 30, 2024, was $439 million, with a leverage ratio of approximately 24%[14]. - As of September 30, 2024, total assets amount to $1.295 billion, while total liabilities stand at $496.9 million[35]. - Mortgage debt decreased significantly to $171.5 million from $394.5 million[35]. - Cash and cash equivalents decreased to $19.3 million from $68.1 million as of December 31, 2023[35]. - The company reported an accumulated deficit of $(282.0) million as of September 30, 2024[36]. Hotel Operations - Hotel EBITDA margin for Q3 2024 was 37%, slightly down from 38% in Q3 2023[2]. - The company experienced an increase in hotel operating expenses, totaling $48,241 million for the three months ended September 30, 2024, compared to $47,668 million in 2023[37]. - Hotel EBITDA margin for the nine months ended September 30, 2023, was 36.0%, consistent with the margin of 37.1% from the previous year[40]. Capital Expenditures and Dividends - The company invested $6 million in capital expenditures during Q3 2024, with a year-to-date total of approximately $25 million[16]. - A common dividend of $0.07 per share was declared, payable on October 15, 2024[17]. - Distributions declared per common share remained stable at $0.07 for both the three months ended September 30, 2024, and 2023[37]. Future Projections - The company expects a net loss in Q4 2024 between $(6) million and $(4) million, translating to a loss per share of $(0.15) to $(0.11)[19]. - Adjusted EBITDA is anticipated to be in the range of $19 million to $21 million, with an Adjusted Hotel EBITDA margin of 30% to 32%[19]. - Funds From Operations (FFO) attributable to common share and unit holders for the three months ended December 31, 2024, is projected to be between $7,051,000 and $8,943,000[42]. - Adjusted FFO per diluted share is expected to range from $0.15 to $0.18 for the three months ended December 31, 2024[42]. - Total revenue for the three months ended December 31, 2024, is anticipated to be between $74,075,000 and $75,375,000[44]. - Adjusted Hotel EBITDA for the three months ended December 31, 2024, is forecasted to be between $22,140,000 and $24,032,000[44]. - Hotel EBITDA margin for the three months ended December 31, 2024, is expected to be between 30.0% and 32.0%[44].

Financial Performance - Chatham Lodging reported quarterly funds from operations (FFO) of $0.35 per share, matching the Zacks Consensus Estimate, but down from $0.40 per share a year ago [1] - The company posted revenues of $87.18 million for the quarter ended September 2024, slightly missing the Zacks Consensus Estimate by 0.52%, compared to $86.74 million in the same quarter last year [2] - Over the last four quarters, Chatham Lodging has surpassed consensus FFO estimates three times and topped consensus revenue estimates two times [2][3] Market Performance - Chatham Lodging shares have declined approximately 21.6% since the beginning of the year, contrasting with the S&P 500's gain of 24.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Future Outlook - The current consensus FFO estimate for the upcoming quarter is $0.17 on revenues of $73.86 million, and for the current fiscal year, it is $1.07 on revenues of $316.45 million [7] - The outlook for the industry, particularly the REIT and Equity Trust - Other sector, is currently in the top 29% of Zacks industries, suggesting a favorable environment for performance [8]

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, indicating a long-standing interest in markets and the economy [1] - The author has recently adopted a strategy that combines long stock positions with covered calls and cash secured puts, emphasizing a fundamental long-term investment approach [1] - The author primarily covers REITs and financials on Seeking Alpha, with occasional articles on ETFs and other stocks influenced by macro trade ideas [1]

Financial Data and Key Metrics Changes - The company repaid approximately $280 million of maturing debt in the past three months, leaving only $30 million of maturing debt over the next year [3] - FFO is expected to increase by $2.6 million or $0.05 per share for every 100 basis points decline in SOFR [3] - Q2 2024 hotel EBITDA was $33.7 million, adjusted EBITDA was $31.4 million, and adjusted FFO was $0.39 per share [14] Business Line Data and Key Metrics Changes - RevPAR growth was 4% in Q2 2024, with a RevPAR of $151, exceeding 2019 levels for the first time since the pandemic [5] - Occupancy rates for key weekday business travel days were 85% on Monday, 88% on Tuesday, 84% on Wednesday, and 83% on Thursday [5] - RevPAR for tech hotels in Silicon Valley and Bellevue increased by 10% in the quarter, with Bellevue showing a 14% increase [6][7] Market Data and Key Metrics Changes - RevPAR in markets representing over half of the trailing 12-month EBITDA grew between 5% and 10% [9] - San Francisco's airport saw international passenger traffic surpass 2019 levels in April and May, indicating a recovery in travel demand [11] - The company noted that the competitive set occupancy at tech hotels was up 8% to approximately 70% in the quarter [6] Company Strategy and Development Direction - The company is actively marketing a handful of hotels for sale, expecting to realize between $40 million and $80 million from these sales [4] - The acquisition of a new hotel, Home2 Suites by Hilton Phoenix, for $43.3 million is part of the strategy to increase exposure in desirable markets [4] - The company aims to benefit from declining interest rates and has the capacity to acquire hotels that are accretive to FFO and cash flow [8] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong occupancy levels and business travel demand, despite some concerns about leisure travel pullback [20] - The company expects RevPAR growth of 0% to 2.5% in Q3 2024, with adjusted EBITDA projected between $28.2 million and $30.6 million [15] - Management noted that the normalization phase post-COVID is underway, with no immediate concerns about a significant economic slowdown [20] Other Important Information - GOP margins of 46% finished at the top of the guidance range, despite absorbing approximately $700,000 of one-time non-recurring expenses [8] - The company spent $48 million in capital expenditures during the quarter and expects to spend approximately $37 million in 2024 [13] - Average hourly wages for labor costs were only up 1% from December, indicating improved productivity [12] Q&A Session Summary Question: Trends in recent weeks and leisure demand impact on Q3 outlook - Management indicated that leisure hotel performance was down 2% in Q2 and does not expect significant changes for Q3, with a potential slight decline [16] Question: RevPAR cadence for the second half of the year - Management expects the fourth quarter to be similar to the third quarter, with October typically being a strong month for tech hotels [17] Question: Opportunities for acquisitions and dispositions - Management noted that the Home2 Phoenix acquisition was unique, with expectations for more deal flow as the year progresses, while also looking to sell lower RevPAR hotels facing renovations [18] Question: Demand commentary and concerns - Management expressed no immediate concerns about demand slowdown, citing strong occupancy levels and a normalization phase post-COVID [20] Question: Margin performance and outperformance drivers - Management attributed margin outperformance to better-than-expected property taxes and improved productivity on rooms labor [21] Question: Feedback on transaction market for hotel sales - Management reported positive feedback on hotel sales, with expectations to achieve targeted pricing ranges [22]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Shares of Beneficial Interest, $0.01 par value CLDT New York Stock Exchange 6.625% Series A Cumulative Redeemable Preferred Shares CLDT-PA New York Stock Exchange FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ...

Chatham Lodging (CLDT) reported $86.48 million in revenue for the quarter ended June 2024, representing a year-over-year increase of 2.4%. EPS of $0.39 for the same period compares to $0.15 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $85.48 million, representing a surprise of +1.17%. The company delivered an EPS surprise of +8.33%, with the consensus EPS estimate being $0.36. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wal ...