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]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) The unaudited consolidated financial statements detail the company's financial position, performance, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) **Balance Sheet Highlights (in thousands):** | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,302,478 | $1,343,930 | | Total Liabilities | $504,585 | $539,554 | | Total Equity | $797,893 | $804,376 | | Investment in hotel properties, net | $1,241,935 | $1,227,633 | | Cash and cash equivalents | $10,595 | $68,130 | | Mortgage debt, net | $190,373 | $394,544 | | Revolving credit facility | $120,000 | $— | | Unsecured term loan, net | $139,417 | $89,533 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) **Three Months Ended June 30 (in thousands):** | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $86,479 | $84,476 | 2.4% | | Total Operating Expenses | $72,401 | $69,077 | 4.8% | | Operating Income | $14,090 | $15,454 | (8.7)% | | Interest Expense | $(7,723) | $(6,442) | 19.9% | | Net Income Attributable to Common Shareholders | $4,861 | $7,157 | (32.1)% | | Basic EPS | $0.10 | $0.15 | (33.3)% | **Six Months Ended June 30 (in thousands):** | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $154,920 | $152,091 | 1.9% | | Total Operating Expenses | $139,714 | $134,624 | 3.8% | | Operating Income | $15,066 | $17,522 | (14.1)% | | Interest Expense | $(15,030) | $(12,880) | 16.7% | | Net Income Attributable to Common Shareholders | $(2,354) | $321 | (832.1)% | | Basic EPS | $(0.05) | $0.01 | (600.0)% | [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) **Total Equity (in thousands):** | Period | Balance, April 1, 2024 | Balance, June 30, 2024 | | :--- | :--- | :--- | | Total Shareholders' Equity | $765,029 | $766,472 | | Noncontrolling Interest in Operating Partnership | $29,949 | $31,421 | | Total Equity | $794,978 | $797,893 | - Key Equity Changes (Six Months Ended June 30, 2024, in thousands): - **Net income**: $1,548 - **Dividends declared on common shares**: $(6,847) - **Dividends accrued on preferred shares**: $(3,975) - **Amortization of share-based compensation**: $27[10](index=10&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) **Cash Flow Summary (Six Months Ended June 30, in thousands):** | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $32,069 | $32,741 | $(672) | | Net cash used in investing activities | $(46,008) | $(15,600) | $(30,408) | | Net cash used in financing activities | $(46,114) | $(14,595) | $(31,519) | | Net change in cash, cash equivalents and restricted cash | $(60,053) | $2,546 | $(62,599) | | Cash, cash equivalents and restricted cash, end of period | $25,696 | $47,699 | $(22,003) | - Key Investing Activities (Six Months Ended June 30, 2024, in thousands): - **Improvements and additions to hotel properties**: $(18,744) - **Acquisition of hotel properties**: $(43,730) - **Proceeds from sale of hotel properties, net**: $17,166[11](index=11&type=chunk) - Key Financing Activities (Six Months Ended June 30, 2024, in thousands): - **Repayments of mortgage debt**: $(263,961) - **Borrowings on revolving credit facility**: $121,000 - **Borrowings on unsecured term loan**: $50,000 - **Proceeds from the issuance of mortgage debt**: $60,300 - **Distributions-common shares/units**: $(7,200) - **Distributions-preferred shares**: $(3,975)[11](index=11&type=chunk) [Notes to the Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Note 1. Organization](index=8&type=section&id=Note%201.%20Organization) - The company operates as an **internally-managed REIT**, investing in upscale extended-stay and premium-branded select-service hotels[12](index=12&type=chunk) - As of June 30, 2024, the hotel portfolio consisted of **39 hotels with 5,883 rooms** across 17 states and D.C[13](index=13&type=chunk) - All hotels are managed by **Island Hospitality Management, LLC (IHM)**, which is wholly owned by the Company's Chairman, President, and CEO[14](index=14&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The unaudited interim consolidated financial statements are prepared in accordance with **U.S. GAAP and SEC rules**, including normal, recurring adjustments[15](index=15&type=chunk) - The preparation of financial statements requires **management estimates and assumptions**, which may differ from actual results[17](index=17&type=chunk) - Recently Issued Accounting Standards: - **ASU 2023-07 (Segment Reporting)**: Effective for fiscal years beginning after December 15, 2024, with impact currently under evaluation[18](index=18&type=chunk) - **ASU 2020-04/2022-06 (Reference Rate Reform)**: Sunset provision deferred to December 31, 2024, with no material impact anticipated[19](index=19&type=chunk) [Note 3. Acquisition of Hotel Properties](index=10&type=section&id=Note%203.%20Acquisition%20of%20Hotel%20Properties) - The company acquired the **Home2 Suites Phoenix Downtown for $43.3 million** on May 30, 2024[20](index=20&type=chunk) - The hotel property is classified as a **finance lease**, with corresponding ROU assets and lease liability recorded[20](index=20&type=chunk) [Note 4. Disposition of Hotel Properties](index=10&type=section&id=Note%204.%20Disposition%20of%20Hotel%20Properties) - The company sold the **Hilton Garden Inn Denver Tech Center for $18.0 million** on January 9, 2024[21](index=21&type=chunk) - The disposition resulted in a recognized **loss on sale of $0.1 million**[21](index=21&type=chunk) [Note 5. Investment in Hotel Properties](index=10&type=section&id=Note%205.%20Investment%20in%20Hotel%20Properties) **Investment in Hotel Properties, Net (in thousands):** | Asset Category | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Land and improvements | $285,723 | $289,671 | | Building and improvements | $1,263,089 | $1,274,970 | | Furniture, fixtures and equipment | $109,683 | $108,222 | | Finance lease assets | $43,730 | $— | | Renovations in progress | $12,815 | $15,138 | | Less accumulated depreciation and amortization | $(473,105) | $(460,368) | | **Investment in hotel properties, net** | **$1,241,935** | **$1,227,633** | [Note 6. Debt](index=11&type=section&id=Note%206.%20Debt) **Total Debt Outstanding (in thousands):** | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total debt before unamortized debt issue costs | $452,448 | $486,109 | | Unamortized term loan and mortgage debt issue costs | $(2,658) | $(2,032) | | **Total debt outstanding** | **$449,790** | **$484,077** | - Debt Activity (Six Months Ended June 30, 2024): - Repaid **$263.96 million** in maturing mortgage loans[25](index=25&type=chunk) - Increased unsecured term loan from **$90.0 million to $140.0 million**[28](index=28&type=chunk) - Obtained new mortgage loans totaling **$60.3 million**[29](index=29&type=chunk)[30](index=30&type=chunk) - The weighted average interest rate on total debt was approximately **6.8%** at June 30, 2024[86](index=86&type=chunk) - One mortgage lender enforced **cash trap provisions**, resulting in $0.4 million of restricted cash with no expected impact on short-term liquidity[33](index=33&type=chunk) **Future Principal Payments (in thousands):** | Year | Amount | | :--- | :--- | | 2024 (remaining six months) | $33,248 | | 2025 | $155,975 | | 2026 | $120,000 | | 2027 | $— | | 2028 | $24,590 | | Thereafter | $118,635 | | **Total debt before unamortized debt issue costs** | **$452,448** | [Note 7. Income Taxes](index=13&type=section&id=Note%207.%20Income%20Taxes) - **Income tax expense was zero** for both the three and six months ended June 30, 2024 and 2023[37](index=37&type=chunk) - A **full valuation allowance** is recognized on net deferred tax assets due to uncertainty regarding the utilization of taxable losses[37](index=37&type=chunk) [Note 8. Dividends Declared and Paid](index=14&type=section&id=Note%208.%20Dividends%20Declared%20and%20Paid) **Common Dividends and LTIP Distributions:** | Period | Common Share Amount | LTIP Unit Amount | | :--- | :--- | :--- | | Six months ended June 30, 2024 | $0.14 | $0.14 | | Six months ended June 30, 2023 | $0.14 | $0.14 | **Preferred Dividends:** | Period | Dividend per Preferred Share | | :--- | :--- | | Six months ended June 30, 2024 | $0.82812 | | Six months ended June 30, 2023 | $0.82812 | [Note 9. Shareholders' Equity](index=15&type=section&id=Note%209.%20Shareholders'%20Equity) - **Common shares outstanding totaled 48,909,201** as of June 30, 2024[44](index=44&type=chunk) - The ATM Program has approximately **$77.5 million in common shares available** for issuance, with no shares issued in the first half of 2024[45](index=45&type=chunk) - The DRSPP has approximately **$50.0 million in common shares available** for issuance, with 2,752 shares issued for $27 thousand in the first half of 2024[46](index=46&type=chunk) - There are **4,800,000 Series A Preferred Shares outstanding** with a 6.625% annual distribution rate[48](index=48&type=chunk) - **1,909,342 vested LTIP units** were held by current and former employees as of June 30, 2024[50](index=50&type=chunk) [Note 10. Earnings Per Share](index=16&type=section&id=Note%2010.%20Earnings%20Per%20Share) **EPS Reconciliation (Six Months Ended June 30, in thousands, except per share data):** | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | $(2,354) | $321 | | Net income (loss) attributable to common shareholders excluding amounts attributable to unvested shares and units | $(2,418) | $349 | | Weighted average number of common shares - basic | 48,896,301 | 48,842,850 | | Weighted average number of common shares - diluted | 48,896,301 | 48,964,908 | | Basic income (loss) per common share | $(0.05) | $0.01 | | Diluted income (loss) per common share | $(0.05) | $0.01 | - For the six months ended June 30, 2024, **347,788 unvested shares and units were excluded** from the diluted EPS calculation as they were anti-dilutive[51](index=51&type=chunk) [Note 11. Equity Incentive Plan](index=17&type=section&id=Note%2011.%20Equity%20Incentive%20Plan) - The plan is designed to **attract and retain** independent trustees, executive officers, and other key employees[54](index=54&type=chunk) - There are **722,380 common shares available for issuance** under the plan as of June 30, 2024[54](index=54&type=chunk) **Restricted Share Awards (Six Months Ended June 30, 2024):** | Metric | Number of Shares | Weighted-Average Grant Date Fair Value | | :--- | :--- | :--- | | Non-vested at beginning of period | 5,789 | $11.78 | | Granted | 2,943 | $10.20 | | Vested | (819) | $12.21 | | Non-vested at end of period | 7,913 | $11.15 | **LTIP Unit Awards (Six Months Ended June 30, 2024):** | Metric | Number of Units | Weighted-Average Grant Date Fair Value | | :--- | :--- | :--- | | Non-vested at beginning of period | 999,955 | $15.37 | | Granted | 512,264 | $11.18 | | Vested | (322,025) | $14.03 | | Forfeited | (28,391) | $15.91 | | Non-vested at end of period | 1,161,803 | $13.88 | - 2024 LTIP Grants (March 1, 2024): - **Time-Based LTIP Unit Awards**: 204,909 units, vesting ratably based on employment[58](index=58&type=chunk)[59](index=59&type=chunk) - **Performance-Based LTIP Unit Awards**: 307,355 units, vesting based on relative TSR performance over a three-year period[61](index=61&type=chunk)[62](index=62&type=chunk) - Unrecognized compensation cost for LTIP units was **$9.9 million** as of June 30, 2024, expected to be recognized over approximately 2.1 years[63](index=63&type=chunk) [Note 12. Leases](index=20&type=section&id=Note%2012.%20Leases) - Leases are classified as **operating or finance leases**, with corresponding ROU assets and lease liabilities recognized on the balance sheet[65](index=65&type=chunk) - A new **10-year corporate office lease** was signed in May 2024, with annual base rent ranging from $0.6 million to $0.7 million[70](index=70&type=chunk) - The Home2 Phoenix hotel property is under an 8-year GPLET agreement, classified as a **finance lease**[71](index=71&type=chunk) **ROU Assets and Lease Liabilities (in thousands):** | Metric | June 30, 2024 | | :--- | :--- | | Finance lease assets, net | $43,580 | | Operating lease assets, net | $17,849 | | **Total ROU asset, net** | **$61,429** | | Finance lease liability | $273 | | Operating lease liability | $20,586 | | **Total lease liability** | **$20,859** | - The weighted-average remaining lease term is **41.6 years**[73](index=73&type=chunk) - The weighted-average discount rate is **6.90%**[73](index=73&type=chunk) **Total Future Lease Payments (in thousands):** | Year | Amount | | :--- | :--- | | 2024 (remaining six months) | $940 | | 2025 | $1,966 | | 2026 | $1,768 | | 2027 | $1,313 | | 2028 | $1,338 | | Thereafter | $62,510 | | **Total lease payments** | **$69,835** | [Note 13. Commitments and Contingencies](index=22&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) - The company is subject to various claims and lawsuits, but aggregate liabilities are **not expected to have a material adverse impact**[75](index=75&type=chunk) - All 39 hotels are managed by IHM, with base management fees being a percentage of gross room revenue and incentive fees capped at **1% of gross hotel revenues**[76](index=76&type=chunk)[79](index=79&type=chunk) - Management fees totaled **$2.9 million for Q2 2024** and **$5.2 million year-to-date**[77](index=77&type=chunk) - Franchise agreements have a weighted average expiration of **May 2034**, with fees based on a percentage of gross room revenue[78](index=78&type=chunk) - Franchise and marketing fees totaled **$6.9 million for Q2 2024** and **$12.4 million year-to-date**[78](index=78&type=chunk) [Note 14. Related Party Transactions](index=22&type=section&id=Note%2014.%20Related%20Party%20Transactions) - **IHM, owned by the CEO**, manages all 39 of the company's hotels[79](index=79&type=chunk) - Management Fees Paid to IHM: - **Three months ended June 30**: $2.9 million (2024) vs $2.8 million (2023)[79](index=79&type=chunk) - **Six months ended June 30**: $5.2 million (2024) vs $5.1 million (2023)[79](index=79&type=chunk) - The company receives reimbursements for shared office expenses from related parties, which have **no impact on operating or net income**[80](index=80&type=chunk) [Note 15. Subsequent Events](index=22&type=section&id=Note%2015.%20Subsequent%20Events) - Debt Activity (July 2024): - Borrowed **$15.0 million** on the unsecured revolving credit facility[81](index=81&type=chunk) - Repaid an **$18.8 million** mortgage loan on the Hilton Garden Inn Marina del Rey[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses financial condition, operational results, performance indicators, liquidity, and capital resources [Statement Regarding Forward-Looking Information](index=23&type=section&id=Statement%20Regarding%20Forward-Looking%20Information) - The report includes **forward-looking statements** about future results, financial condition, liquidity, and plans[84](index=84&type=chunk) - These statements are subject to known and unknown risks, including **economic conditions, competition, and lodging fundamentals**[84](index=84&type=chunk) [Overview](index=23&type=section&id=Overview) - The company's strategy is to invest in **upscale extended-stay and premium-branded select-service hotels** in diverse markets with high barriers to entry[85](index=85&type=chunk) - The leverage ratio was **25.8%** as of June 30, 2024 (net debt to hotel investments at cost)[86](index=86&type=chunk) - Total debt was **$452.4 million** at a weighted average interest rate of approximately **6.8%** as of June 30, 2024[86](index=86&type=chunk) - The company operates as a **REIT**, leasing hotels to taxable REIT subsidiary lessees managed by independent contractors[88](index=88&type=chunk) [Key Indicators of Operating Performance and Financial Condition](index=24&type=section&id=Key%20Indicators%20of%20Operating%20Performance%20and%20Financial%20Condition) - Non-financial metrics include **Average Daily Rate (ADR), Occupancy, and Revenue Per Available Room (RevPAR)**[89](index=89&type=chunk) - Financial metrics include **Funds From Operations (FFO), Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, and Adjusted Hotel EBITDA**[89](index=89&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) [Industry Outlook](index=25&type=section&id=Industry%20Outlook) - U.S. Lodging **RevPAR increased 2.5%** for the three months ended June 30, 2024[92](index=92&type=chunk) - A **modest RevPAR increase** is expected for the remainder of 2024[92](index=92&type=chunk) [Comparison of the three months ended June 30, 2024 to the three months ended June 30, 2023](index=25&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202024%20to%20the%20three%20months%20ended%20June%2030%2C%202023) **Revenues (in thousands):** | Revenue Category | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Room | $79,044 | $77,486 | 2.0% | | Food and beverage | $2,127 | $2,094 | 1.6% | | Other | $5,033 | $4,531 | 11.1% | | Reimbursable costs from related parties | $275 | $365 | (24.7)% | | **Total revenue** | **$86,479** | **$84,476** | **2.4%** | **Same Property Metrics (38 hotels):** | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | 82.3% | 79.2% | 3.9% | | ADR | $183.16 | $183.52 | (0.2)% | | RevPAR | $150.69 | $145.40 | 3.6% | **Hotel Operating Expenses (in thousands):** | Expense Category | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Room | $16,966 | $14,578 | 16.4% | | Total hotel operating expenses | $46,571 | $43,323 | 7.5% | - **Depreciation and Amortization** was $14.9 million in Q2 2024 compared to $14.7 million in Q2 2023[102](index=102&type=chunk) - **Property Taxes, Ground Rent and Insurance** decreased by $0.1 million due to successful property tax appeals[102](index=102&type=chunk) - **Interest Expense** increased by $1.3 million to $7.7 million, primarily due to higher credit facility and term loan interest[105](index=105&type=chunk)[106](index=106&type=chunk) - **Net Income** was $7.0 million in Q2 2024 versus $9.4 million in Q2 2023, a decrease driven by higher operating costs and interest expense[107](index=107&type=chunk) [Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023](index=29&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202024%20to%20the%20six%20months%20ended%20June%2030%2C%202023) **Revenues (in thousands):** | Revenue Category | YTD Q2 2024 | YTD Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Room | $141,526 | $139,157 | 1.7% | | Food and beverage | $3,973 | $4,182 | (5.0)% | | Other | $8,868 | $8,022 | 10.5% | | Reimbursable costs from related parties | $553 | $730 | (24.2)% | | **Total revenue** | **$154,920** | **$152,091** | **1.9%** | **Same Property Metrics (38 hotels):** | Metric | YTD Q2 2024 | YTD Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | 76.2% | 74.3% | 2.6% | | ADR | $177.44 | $177.24 | 0.1% | | RevPAR | $135.16 | $131.70 | 2.6% | **Hotel Operating Expenses (in thousands):** | Expense Category | YTD Q2 2024 | YTD Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Room | $32,099 | $28,694 | 11.9% | | Total hotel operating expenses | $88,413 | $83,800 | 5.5% | - **Depreciation and Amortization** increased by $1.3 million to $30.2 million[118](index=118&type=chunk) - **Property Taxes, Ground Rent and Insurance** decreased by $0.9 million due to successful property tax appeals[119](index=119&type=chunk) - The company recognized a **$0.1 million loss on sale of hotel property** in 2024 versus a $0.1 million gain in 2023[121](index=121&type=chunk) - **Interest and Other Income** increased by $1.3 million to $1.5 million[122](index=122&type=chunk) - **Interest Expense** increased by $2.1 million to $15.0 million, primarily due to higher credit facility and term loan interest[122](index=122&type=chunk) - **Net Income** decreased by $2.8 million to $1.5 million in the first half of 2024 from $4.3 million in the prior year period[126](index=126&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) - **FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, and Adjusted Hotel EBITDA** are used as supplemental performance measures[128](index=128&type=chunk) - **Nareit's definition of FFO** is net income excluding gains/losses from real estate sales and impairment, plus depreciation and amortization[130](index=130&type=chunk) - **Adjusted FFO** further adjusts FFO for items not related to hotel operations, such as losses on early extinguishment of debt[131](index=131&type=chunk) **FFO and Adjusted FFO (Six Months Ended June 30, in thousands):** | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net income | $1,548 | $4,324 | | FFO attributable to common share and unit holders | $27,621 | $29,115 | | Adjusted FFO attributable to common share and unit holders | $27,865 | $29,680 | - **EBITDAre** is net income excluding interest, taxes, depreciation, amortization, gains/losses from real estate sales, and impairment[135](index=135&type=chunk) - **Adjusted EBITDA** further adjusts EBITDAre for items like share-based compensation and other non-recurring expenses[136](index=136&type=chunk) **EBITDA, EBITDAre, and Adjusted EBITDA (Six Months Ended June 30, in thousands):** | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net income | $1,548 | $4,324 | | EBITDA | $46,747 | $46,132 | | EBITDAre | $46,887 | $46,077 | | Adjusted EBITDA | $50,241 | $49,649 | - **Adjusted Hotel EBITDA** is net income before interest, taxes, depreciation, amortization, corporate G&A, and other specified non-hotel operating items[137](index=137&type=chunk) **Adjusted Hotel EBITDA (Six Months Ended June 30, in thousands):** | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net income | $1,548 | $4,324 | | Adjusted Hotel EBITDA | $54,679 | $54,969 | - These non-GAAP measures have limitations as they **do not reflect cash expenditures**, working capital needs, or asset replacement costs and may not be comparable across companies[140](index=140&type=chunk) [Sources and Uses of Cash](index=36&type=section&id=Sources%20and%20Uses%20of%20Cash) - **Cash, cash equivalents, and restricted cash decreased by $60.1 million** to $25.7 million as of June 30, 2024[142](index=142&type=chunk) - Net cash provided by **operating activities decreased by $0.6 million** to $32.1 million for the six months ended June 30, 2024[143](index=143&type=chunk) - Net cash used in **investing activities increased by $30.4 million** to $(46.0) million, including $43.7 million for a hotel acquisition[144](index=144&type=chunk) - Net cash used in **financing activities increased by $31.5 million** to $(46.1) million, driven by $264.0 million in mortgage debt repayments[146](index=146&type=chunk) - Material cash requirements within the next 12 months include **$78.4 million for debt obligations** and **$1.9 million for lease payments**[147](index=147&type=chunk) - The company expects to meet short-term liquidity needs through existing cash and credit facility availability[154](index=154&type=chunk) [Dividend Policy](index=38&type=section&id=Dividend%20Policy) - The company's policy is to annually distribute approximately **100% of taxable income** to maintain its REIT status[156](index=156&type=chunk) - Dividends declared for the first six months of 2024 were **$0.14 per common share/LTIP unit** and **$0.82812 per Series A preferred share**[156](index=156&type=chunk) [Inflation](index=39&type=section&id=Inflation) - Operators can adjust room rates daily, but **competitive pressures may limit increases**[158](index=158&type=chunk) - Inflation may **increase costs** for construction, labor, benefits, food, materials, and utilities[158](index=158&type=chunk) [Seasonality](index=39&type=section&id=Seasonality) - Hotel performance is typically **lower in Q1 and Q4** and **higher in Q2 and Q3**[159](index=159&type=chunk) - The company uses cash on hand or credit facility borrowings to manage seasonal fluctuations in liquidity[159](index=159&type=chunk) [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) - Financial statements require management to make **estimates and assumptions** involving judgment and future uncertainties[160](index=160&type=chunk) - Significant accounting policies and critical estimates are disclosed in the **Annual Report on Form 10-K**[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) The company manages interest rate risk by primarily using fixed-rate debt or variable-rate debt with conversion options - The company is primarily exposed to **interest rate risk** from its long-term debt[162](index=162&type=chunk) - Risk management aims to limit the impact on earnings and cash flows by using **fixed rates or variable rates with conversion options**[162](index=162&type=chunk) **Debt Maturities and Interest Rates (in thousands):** | Category | 2024 (remaining) | 2025 | 2026 | 2027 | 2028 | Thereafter | Total/Weighted Average | Fair Value | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Floating rate debt | — | $140,000 | $120,000 | — | — | — | $260,000 | $260,000 | | Average interest rate | — | 6.91% | 6.96% | — | — | — | 6.93% | | | Fixed rate debt | $33,248 | $15,975 | — | — | $24,590 | $118,635 | $192,448 | $198,652 | | Average interest rate | 4.52% | 4.25% | — | — | 7.61% | 7.16% | 6.52% | | - A hypothetical **100 basis point increase in SOFR** would result in approximately **$2.6 million in additional annual interest**[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control - Disclosure controls and procedures were evaluated and concluded to be **effective as of June 30, 2024**[165](index=165&type=chunk) - There were **no material changes** in internal control over financial reporting during the last fiscal quarter[166](index=166&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings.) The company does not expect routine legal proceedings to have a material adverse impact on its financial condition - The company is subject to **routine claims, lawsuits, and legal proceedings** in the ordinary course of business[168](index=168&type=chunk) - Aggregate identifiable liabilities are **not expected to have a material adverse impact** on financial condition or results of operations[168](index=168&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report - There have been **no material changes** to risk factors since the Annual Report on Form 10-K for December 31, 2023[169](index=169&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reports no unregistered sales of equity securities or use of proceeds for the period - There were **no unregistered sales of equity securities** or use of proceeds to report[169](index=169&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reports no defaults upon senior securities for the period - There were **no defaults upon senior securities** to report[169](index=169&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are **not applicable** to the company[169](index=169&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information.) No trustees or officers adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** were adopted or terminated by trustees or officers during Q2 2024[170](index=170&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed as part of the report, including certifications and XBRL documents - The exhibits list includes corporate governance documents, **CEO/CFO certifications**, and XBRL related documents[172](index=172&type=chunk)

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 ...

| --- | --- | |-----------------------------|-------------------------| | | | | For Immediate Release | Exhibit 99.1 | | Contact: | | | Dennis Craven (Company) | Chris Daly (Media) | | Chief Operating Officer | DG Public Relations | | (561) 227-1386 | (703) 864-5553 | Chatham Lodging Trust Announces Second Quarter 2024 Results Adjusted FFO Per Share Beats Estimates WEST PALM BEACH, Fla., August 2, 2024 — Chatham Lodging Trust (NYSE: CLDT), a lodging real estate investment trust (REIT) that invests in upscal ...

Core Viewpoint - Chatham Lodging (CLDT) reported quarterly funds from operations (FFO) of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, but down from $0.43 per share a year ago, indicating an FFO surprise of 8.33% [1] Financial Performance - The company achieved revenues of $86.48 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1.17% and up from $84.48 million year-over-year [2] - Over the last four quarters, Chatham Lodging has exceeded consensus FFO estimates four times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - Chatham Lodging shares have declined approximately 19.1% since the beginning of the year, contrasting with the S&P 500's gain of 14.2% [3] - The company's FFO outlook is crucial for assessing future stock performance, with current consensus FFO estimates at $0.37 for the upcoming quarter and $1.08 for the current fiscal year [4][7] Estimate Revisions and Industry Context - The estimate revisions trend for Chatham Lodging is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] - The REIT and Equity Trust - Other industry is ranked in the top 39% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]