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 ...

Financial Data and Key Metrics Changes - Chatham Lodging Trust reported a Q4 2021 RevPAR of $92, representing a 93% increase compared to Q4 2020, but a 22.7% decline versus Q4 2019 [31] - The company generated total revenue of $57 million in Q4 2021, nearly double the $29 million from the previous year [27] - Adjusted EBITDA for Q4 2021 was $15.2 million, with FFO per share of $0.12, up from a loss of $0.18 per share in the same quarter last year [31][28] Business Line Data and Key Metrics Changes - The Residence Inn in San Diego Gaslamp and Residence Inn Anaheim were among the top producers of GOP in Q4 2021, indicating strong performance in specific locations [28] - The newly opened Home2 Suites at Warner Center has shown promising early results, achieving over 50% occupancy shortly after opening [12][20] Market Data and Key Metrics Changes - Silicon Valley, which comprised almost 25% of EBITDA in 2019, lagged with a RevPAR of $74 in Q4 2021, while occupancy was 61% [21] - The overall portfolio occupancy was 65% in Q4 2021, outperforming the industry average of 58% [24] Company Strategy and Development Direction - The company aims to focus on acquiring high-quality hotels in markets with strong growth potential while recycling capital from lower-tier hotels [35] - Chatham plans to maintain a portfolio that is approximately 80% extended stay, indicating a strategic focus on this segment [47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of business travel, particularly in tech-driven markets like Silicon Valley and Bellevue, Washington [7][33] - The company has significantly improved its balance sheet, reducing net debt by $250 million since March 2020, positioning itself well for future investments [34] Other Important Information - The company has committed to sustainability and corporate governance, forming an ESG committee and participating in GRESB assessments [16][17] - Chatham's capital expenditures for 2022 are budgeted at $23.5 million, including $17.5 million for renovations [30] Q&A Session Summary Question: Recovery trajectory in Silicon Valley and San Francisco - Management noted that Silicon Valley and San Francisco have different demand generators, with recovery in Silicon Valley being more dependent on tech companies [38][39] Question: Details on asset acquisitions and dispositions - The focus is on selling older hotels with lower RevPAR while considering acquisitions based on asset age and cash flow potential [40][41] Question: Labor situation and wage growth expectations - The company is in a good position regarding labor and anticipates mid single-digit increases in labor costs for 2022 [42] Question: Drivers of GOP margins in December - The majority of GOP margin improvements were attributed to labor savings [45] Question: Future portfolio reshaping - The company aims to diversify its portfolio geographically while maintaining a focus on extended stay properties [47] Question: Performance of Home2 in LA - The hotel is performing according to pro forma expectations, with positive feedback from guests [50][51]

Company Overview - As of December 31, 2021, the company owned 41 hotels with a total of 6,169 rooms located in 16 states and the District of Columbia[22]. - The company primarily invests in upscale extended-stay hotels and premium-branded select-service hotels, focusing on the 25 largest metropolitan markets in the U.S.[29]. - The company is internally managed and has a management agreement with Island Hospitality Management Inc. for day-to-day operations of its hotels[24]. - As of December 31, 2021, all 41 hotels are managed by a single management company, increasing operational risk concentration[89]. Financial Performance - The company's leverage ratio was approximately 30.6% as of December 31, 2021, down from 35.8% at December 31, 2020[30]. - The company anticipates lower revenue and operating income in the first and fourth quarters, with higher performance expected in the second and third quarters[33]. - Management fees totaled approximately $7.2 million, $5.3 million, and $10.8 million for the years ended December 31, 2021, 2020, and 2019, respectively[48]. - Franchise and marketing/program fees totaled approximately $16.6 million, $11.6 million, and $25.9 million for the years ended December 31, 2021, 2020, and 2019, respectively[50]. - The company has suspended dividends during the first quarter of 2020 and continued this suspension through 2021 due to reduced cash flows[80]. - Future growth is contingent on obtaining new financing, as the company must distribute at least 90% of its REIT taxable income each year[85]. - The company is required to distribute at least 90% of its REIT taxable income to shareholders, which may be impacted by downturns in operating results or unexpected capital improvements[95]. - The company’s ability to make distributions may be adversely affected by unanticipated expenses and decreases in asset values[205]. Investment Strategy - The company plans to maintain a prudent capital structure, financing growth with free cash flow, debt, and issuances of common shares and/or preferred shares[30]. - The company employs value-added strategies such as re-branding and renovating to increase the operating results and values of acquired hotels[29]. - The company operates under franchise agreements, which may expose it to risks associated with concentrating hotel properties in specific brands[91]. - The company is developing a hotel in Los Angeles, facing risks such as construction delays, cost overruns, and environmental issues[118]. Regulatory and Compliance Risks - The company elected to be taxed as a REIT for federal income tax purposes, requiring a distribution of at least 90% of REIT taxable income[41]. - The company must meet various complex requirements under the Internal Revenue Code to maintain its REIT status[41]. - The company is currently undergoing tax examinations by the IRS and the State of New Hampshire for prior tax years, which could materially impact financial results[42]. - Compliance with environmental regulations may require additional capital investments, impacting financial performance[151]. - The company may incur additional costs to comply with the Americans with Disabilities Act (ADA) during acquisitions and in the future, potentially affecting financial results[158]. Market and Economic Conditions - The COVID-19 pandemic has significantly impacted the U.S. lodging industry, leading to reduced occupancy rates at some hotels[76]. - The lodging industry is sensitive to economic conditions, and declines in corporate budgets or consumer demand could lower revenues and profitability of hotel properties[120]. - The performance of the lodging industry is closely linked to U.S. GDP growth and discretionary spending levels, which could impact the company's business strategy[119]. - Increased operating expenses and competition from new hotels could reduce hotel revenues, affecting cash available for distribution to shareholders[98]. Environmental and Operational Risks - Environmental regulations may impose liabilities for hazardous substances, potentially exceeding the value of the property[37]. - The company requires a Phase I environmental site assessment prior to investment, but these assessments may not uncover all hazardous substances[40]. - The presence of hazardous substances may adversely affect the company's ability to sell real estate or borrow funds[37]. - The presence of harmful mold in hotel properties could lead to liability and costly remediation efforts[167]. - Climate change poses risks such as severe weather events and increased operating costs, which could materially affect hotel operations and financial results[150]. Competition and Market Dynamics - The company faces competition from institutional investors and other REITs, which may affect occupancy rates and revenue per available room (RevPAR)[32]. - Competition for acquisitions may limit the number of hotel properties that can be acquired, potentially increasing costs and reducing profitability[125]. - The cyclical nature of the lodging industry can lead to returns that are substantially below expectations, particularly during economic downturns[127]. - Increased use of Internet travel intermediaries and alternative lodging marketplaces could reduce demand for conventional hotel rooms, impacting profitability[134]. Risk Management - The company faces risks related to potential increases in property taxes, which could adversely affect shareholder distributions[71]. - The ongoing need for capital expenditures at hotel properties may negatively impact the company's business[71]. - The concentration of operational risk in one hotel management company could materially affect the company's financial condition and results of operations[89]. - The company may incur additional costs due to franchisors requiring upgraded operating standards, reducing cash available for distributions[90]. - The company is vulnerable to fluctuations in financial performance and capital expenditure requirements, which could affect its ability to make distributions[1].

Chatham Lodging Trust (NYSE:CLDT) Q3 2021 Earnings Conference Call November 4, 2021 10:00 AM ET Company Participants Chris Daly - Investor Relations Jeff Fisher - Chairman, President and Chief Executive Officer Dennis Craven - Executive Vice President and Chief Operating Officer Jeremy Wegner - Senior Vice President and Chief Financial Officer Conference Call Participants Kyle Menges - B. Riley Securities Tyler Batory - Janney Operator Greetings, ladies and gentlemen and welcome to the Chatham Lodging Trust ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements of Chatham Lodging Trust, including the balance sheets, statements of operations, statements of equity, and statements of cash flows for the periods ended September 30, 2021, and December 31, 2020 (for balance sheet) or September 30, 2020 (for income/cash flow statements) - The financial statements are unaudited, prepared in accordance with GAAP and SEC rules for interim information, and include all necessary adjustments for fair presentation; interim results are not necessarily indicative of full-year performance[30](index=30&type=chunk) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets provide a snapshot of the company's assets, liabilities, and equity as of September 30, 2021, and December 31, 2020 Consolidated Balance Sheets (September 30, 2021 vs. December 31, 2020) | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Change (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $1,425,967 | $1,370,257 | +$55,710 | | Total Liabilities | $599,439 | $677,797 | -$78,358 | | Total Equity | $826,528 | $692,460 | +$134,068 | | Investment in hotel properties, net | $1,299,296 | $1,265,174 | +$34,122 | | Investment in hotel properties under development | $64,168 | $43,651 | +$20,517 | | Cash and cash equivalents | $18,580 | $21,124 | -$2,544 | | Mortgage debt, net | $441,414 | $460,145 | -$18,731 | | Revolving credit facility | $70,000 | $135,300 | -$65,300 | | Construction loan | $32,283 | $13,325 | +$18,958 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations detail the company's revenues, expenses, and net loss for the three and nine months ended September 30, 2021, and 2020 Consolidated Statements of Operations (Three Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :--------- | | Total Revenue | $64,295 | $34,969 | +$29,326 | +83.9% | | Total Operating Expenses | $59,848 | $45,214 | +$14,634 | +32.4% | | Operating Income (Loss) | $4,440 | $(10,245) | +$14,685 | N/A | | Net Loss | $(1,383) | $(18,312) | +$16,929 | N/A | | Net Loss Attributable to Common Shareholders | $(3,307) | $(18,057) | +$14,750 | N/A | | Loss per Common Share - Basic | $(0.07) | $(0.38) | +$0.31 | N/A | Consolidated Statements of Operations (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :--------- | | Total Revenue | $146,653 | $115,351 | +$31,302 | +27.1% | | Total Operating Expenses | $158,071 | $161,904 | -$3,833 | -2.4% | | Operating Income (Loss) | $(11,439) | $(46,550) | +$35,111 | N/A | | Net Loss | $(7,399) | $(73,616) | +$66,217 | N/A | | Net Loss Attributable to Common Shareholders | $(9,209) | $(72,667) | +$63,458 | N/A | | Loss per Common Share - Basic | $(0.19) | $(1.55) | +$1.36 | N/A | [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) The consolidated statements of equity outline changes in shareholders' equity, including preferred share issuances and net loss attributable to common shareholders Total Equity (September 30, 2021 vs. September 30, 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Total Shareholders' Equity | $810,667 | $681,128 | | Noncontrolling Interest in Operating Partnership | $15,861 | $13,753 | | Total Equity | $826,528 | $694,881 | - Issuance of **4,800,000 preferred shares** in 2021, net of offering costs, contributed **$48 thousand** to preferred shares amount and **$115,909 thousand** to additional paid-in capital[18](index=18&type=chunk) - Net loss attributable to common shareholders was **$(3,307) thousand** for the three months ended September 30, 2021, compared to **$(18,057) thousand** for the same period in 2020[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows categorize cash movements from operating, investing, and financing activities for the nine months ended September 30, 2021, and 2020 Consolidated Statements of Cash Flows (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | Change (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | $18,416 | $(12,750) | +$31,166 | | Net cash used in investing activities | $(94,276) | $(27,130) | -$67,146 | | Net cash provided by financing activities | $73,973 | $62,113 | +$11,860 | | Net change in cash, cash equivalents and restricted cash | $(1,887) | $22,233 | -$24,120 | | Cash, cash equivalents and restricted cash, end of period | $29,566 | $42,415 | -$12,849 | - Supplemental non-cash investing and financing information includes the issuance of shares for trustee compensation and accrued distributions payable[21](index=21&type=chunk) [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's organization, significant accounting policies, and specific financial statement line items [Note 1. Organization](index=9&type=section&id=Note%201.%20Organization) This note describes Chatham Lodging Trust's formation, investment focus, hotel portfolio, and management structure - Chatham Lodging Trust is a Maryland REIT, formed in 2009, investing in upscale extended-stay and premium-branded select-service hotels[25](index=25&type=chunk) - As of September 30, 2021, the Company wholly owned **41 hotels** across 15 states and D.C[27](index=27&type=chunk) - The Company sold its **10% noncontrolling interest** in the Inland JV in September 2021 and its **10.3% noncontrolling interest** in the NewINK JV in March 2021 for **$2.8 million**[27](index=27&type=chunk) - All **41 wholly-owned hotels** are managed by Island Hospitality Management LLC (IHM), which is 100% owned by the Company's Chairman, President, and CEO, Jeffrey H. Fisher[29](index=29&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the accounting principles and estimation methods used in preparing the unaudited interim consolidated financial statements - Unaudited interim consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules[30](index=30&type=chunk) - Management's estimates and assumptions are used, and actual results could differ[34](index=34&type=chunk) - Consolidated financial statements include all accounts of the Company and its wholly-owned subsidiaries, with intercompany balances and transactions eliminated[31](index=31&type=chunk) [Note 3. Acquisition of Hotel Properties](index=10&type=section&id=Note%203.%20Acquisition%20of%20Hotel%20Properties) This note details the acquisition of two hotel properties in Austin, TX, during August 2021 Hotel Acquisitions (August 3, 2021) | Hotel | Location | Acquisition Price (in millions) | | :------------------------------------ | :--------- | :------------------------------ | | Residence Inn Austin Northwest/The Domain Area | Austin, TX | $37.0 | | TownePlace Suites Austin Northwest/The Domain Area | Austin, TX | $34.3 | [Note 4. Disposition of Hotel Properties](index=10&type=section&id=Note%204.%20Disposition%20of%20Hotel%20Properties) This note describes the sale of the Residence Inn Mission Valley in San Diego, CA, in November 2020 Hotel Disposition (November 24, 2020) | Hotel | Location | Sale Price (in millions) | Gain on Sale (in millions) | | :------------------------------------ | :--------- | :----------------------- | :------------------------- | | Residence Inn Mission Valley | San Diego, CA | $67.0 | $21.1 | [Note 5. Allowance for Doubtful Accounts](index=10&type=section&id=Note%205.%20Allowance%20for%20Doubtful%20Accounts) This note presents the allowance for doubtful accounts as of September 30, 2021, and December 31, 2020 Allowance for Doubtful Accounts | Date | Amount (in millions) | | :----------------- | :------------------- | | Sep 30, 2021 | $0.4 | | Dec 31, 2020 | $0.2 | [Note 6. Investment in Hotel Properties](index=10&type=section&id=Note%206.%20Investment%20in%20Hotel%20Properties) This note provides a breakdown of the company's investment in hotel properties, including land, buildings, and ongoing development Investment in Hotel Properties, Net | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Land and improvements | $291,749 | $287,049 | | Building and improvements | $1,263,289 | $1,195,276 | | Furniture, fixtures and equipment | $90,799 | $84,381 | | Renovations in progress | $6,387 | $11,225 | | Less: accumulated depreciation | $(352,928) | $(312,757) | | **Total Investment in hotel properties, net** | **$1,299,296** | **$1,265,174** | - The Company is developing a Home2 Suites by Hilton hotel in Los Angeles, CA, with **$64.2 million** of costs incurred to date (**$6.6 million** for land, **$57.6 million** for other development costs)[38](index=38&type=chunk) [Note 7. Investment in Unconsolidated Entities](index=11&type=section&id=Note%207.%20Investment%20in%20Unconsolidated%20Entities) This note details the disposition of interests in NewINK and Inland JVs and the resulting gains or losses - NewINK JV Disposition: Sold **10.3% interest** in March 2021 for **$2.8 million**, resulting in a **$23.8 million gain on sale**[40](index=40&type=chunk) - Inland JV Disposition: Sold **10.0% interest** in September 2021 for **$0**, after recording a **$15.3 million impairment loss** in Q1 2020[41](index=41&type=chunk) Loss from Unconsolidated Real Estate Entities (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :---------------------------------------------------- | :-------------------------- | :-------------------------- | | Total loss from unconsolidated real estate entities attributable to the Company | $1,231 | $6,099 | [Note 8. Debt](index=12&type=section&id=Note%208.%20Debt) This note outlines the company's debt structure, including revolving credit facilities, construction loans, and mortgage debt, along with covenant compliance Total Debt Outstanding | Date | Amount (in thousands) | | :----------------- | :-------------------- | | Sep 30, 2021 | $543,697 | | Dec 31, 2020 | $608,770 | Debt Composition (Sep 30, 2021 vs. Dec 31, 2020) | Debt Type | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Revolving Credit Facility | $70,000 | $135,300 | | Construction Loan | $32,283 | $13,325 | | Mortgage Debt | $441,414 | $460,145 | - The Company was in compliance with all modified financial covenants as of September 30, 2021, following an amendment in December 2020 that waived certain covenants through December 31, 2021, and required minimum liquidity of **$25 million**[49](index=49&type=chunk) - All mortgage loans were below minimum debt service coverage ratios or debt yields, allowing for cash trap enforcement, but no lenders had enforced these provisions as of September 30, 2021[50](index=50&type=chunk) - The Company uses interest rate cap agreements for its Warner Center construction loan to hedge against LIBOR exceeding **3.5%**[52](index=52&type=chunk) [Note 9. Income Taxes](index=14&type=section&id=Note%209.%20Income%20Taxes) This note discusses the company's income tax expense and the valuation allowance on deferred tax assets - Income tax expense was **$0** for the three and nine months ended September 30, 2021 and 2020[54](index=54&type=chunk) - The TRS expects continued taxable losses in 2021 and maintains a full valuation allowance on net deferred tax assets[55](index=55&type=chunk) [Note 10. Dividends Declared and Paid](index=14&type=section&id=Note%2010.%20Dividends%20Declared%20and%20Paid) This note details the suspension of common share dividends and the declaration of preferred share dividends - Common share dividends were suspended after March 2020 due to the COVID-19 pandemic[56](index=56&type=chunk) - No common share dividends were declared for the three and nine months ended September 30, 2021[56](index=56&type=chunk) Preferred Dividends Declared (September 2021) | Share Type | Dividend Per Share | Payable Date | Record Date | | :---------------------------------------------------- | :----------------- | :----------- | :---------- | | 6.625% Series A Cumulative Redeemable Preferred Shares | $0.48307 | Oct 15, 2021 | Sep 30, 2021 | [Note 11. Shareholders' Equity](index=14&type=section&id=Note%2011.%20Shareholders%27%20Equity) This note provides information on common shares outstanding, ATM plans, DRSPP, preferred share issuance, and LTIP units - Common Shares Outstanding: **48,767,816** as of September 30, 2021[58](index=58&type=chunk) - ATM Plan: Approximately **$77.5 million** available for issuance under the ATM Plan as of September 30, 2021[59](index=59&type=chunk) - DRSPP: Approximately **$48.0 million** available for issuance under the New DRSPP as of September 30, 2021[61](index=61&type=chunk) Series A Preferred Shares Issuance (June 30, 2021) | Metric | Value | | :-------------------------------- | :-------------------- | | Shares Issued | 4,800,000 | | Net Proceeds | ~$115.9 million | | Distribution Rate | 6.625% per annum ($1.65625 per share) | | Liquidation Preference | $25.00 per share | | Redemption | Callable by Company after June 30, 2026 | - Operating Partnership LTIP Units: **976,102 vested LTIP units** held by current and former employees as of September 30, 2021[64](index=64&type=chunk) [Note 12. Earnings Per Share](index=16&type=section&id=Note%2012.%20Earnings%20Per%20Share) This note presents the basic loss per common share for the three and nine months ended September 30, 2021, and 2020 Loss per Common Share - Basic (Three Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 | Sep 30, 2020 | | :--------------------------------------- | :----------- | :----------- | | Net loss attributable to common shareholders | $(0.07) | $(0.38) | Loss per Common Share - Basic (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 | Sep 30, 2020 | | :--------------------------------------- | :----------- | :----------- | | Net loss attributable to common shareholders | $(0.19) | $(1.55) | - Unvested restricted shares and LTIP units are excluded from diluted loss per share when anti-dilutive[66](index=66&type=chunk) [Note 13. Equity Incentive Plan](index=17&type=section&id=Note%2013.%20Equity%20Incentive%20Plan) This note details the company's equity incentive plan, including available shares, restricted share awards, and LTIP unit awards - Shares Available for Issuance: **579,825 common shares** available under the Equity Incentive Plan as of September 30, 2021[68](index=68&type=chunk) - Restricted Share Awards: Unrecognized compensation costs of **$116 thousand** as of September 30, 2021, to be recognized over **~2.7 years**[70](index=70&type=chunk) LTIP Unit Awards (Non-vested at period end) | Date | Number of Units | | :----------------- | :-------------- | | Sep 30, 2021 | 764,178 | | Dec 31, 2020 | 669,609 | - Compensation expense for LTIP units was **$3.2 million** for the nine months ended September 30, 2021, with **$6.5 million** in unrecognized costs remaining, expected to be recognized over approximately **1.9 years**[81](index=81&type=chunk) - Performance-Based LTIP Unit Awards: Vesting is conditional on achieving certain long-term market-based Total Shareholder Return (TSR) criteria over a **three-year period** (March 1, 2021 to February 28, 2024) and continued employment[76](index=76&type=chunk)[77](index=77&type=chunk) [Note 14. Leases](index=19&type=section&id=Note%2014.%20Leases) This note outlines the company's lease liabilities, weighted-average remaining lease term, and discount rate Total Future Lease Payments (Sep 30, 2021) | Metric | Amount (in thousands) | | :--------------------------------------- | :-------------------- | | Total Future Lease Payments | $75,701 | | Less: Imputed interest | $(52,865) | | Present value of lease liabilities | $22,836 | Lease Term and Discount Rate (September 30, 2021) | Metric | Value | | :--------------------------------------- | :------ | | Weighted-average remaining lease term (years) | 40.56 | | Weighted-average discount rate | 6.59% | - Fixed lease payments incurred for nine months ended Sep 30, 2021: **$0.9 million**[88](index=88&type=chunk) [Note 15. Commitments and Contingencies](index=21&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) This note discusses routine litigation, management agreements, and franchise agreements, including associated fees - Litigation: Routine litigation is not expected to have a material adverse impact[91](index=91&type=chunk) - Management Agreements (IHM): Initial term of **five years**, automatically renewable. Base fees are a percentage of gross room revenue; incentive fees are **10% of net operating income** (less fixed costs, base fees, and return threshold), capped at **1% of gross hotel revenues**[92](index=92&type=chunk) Management Fees Incurred | Period | 2021 (in millions) | 2020 (in millions) | | :-------------------------------- | :----------------- | :----------------- | | Three months ended Sep 30 | $2.2 | $1.3 | | Nine months ended Sep 30 | $5.1 | $4.2 | - Franchise Agreements: Fees are a specified percentage of gross room revenue. Weighted average expiration is August 2030[94](index=94&type=chunk) Franchise and Marketing Fees Incurred | Period | 2021 (in millions) | 2020 (in millions) | | :-------------------------------- | :----------------- | :----------------- | | Three months ended Sep 30 | $5.3 | $2.9 | | Nine months ended Sep 30 | $12.0 | $9.2 | [Note 16. Related Party Transactions](index=22&type=section&id=Note%2016.%20Related%20Party%20Transactions) This note describes transactions with related parties, specifically hotel management fees paid to Island Hospitality Management LLC - Jeffrey H. Fisher, CEO, acquired **100% ownership** of IHM during the nine months ended September 30, 2021[96](index=96&type=chunk) - IHM manages all **41 of the Company's wholly-owned hotels**[96](index=96&type=chunk) Hotel Management Fees Paid to IHM | Period | 2021 (in millions) | 2020 (in millions) | | :-------------------------------- | :----------------- | :----------------- | | Three months ended Sep 30 | $2.2 | $1.3 | | Nine months ended Sep 30 | $5.1 | $4.2 | - Cost reimbursements from unconsolidated entities (including IHM) are recorded without markup and do not impact operating or net income[97](index=97&type=chunk) [Note 17. Subsequent Events](index=22&type=section&id=Note%2017.%20Subsequent%20Events) This note details the credit facility amendment in October 2021, extending covenant waivers and facility maturity - Credit Facility Amendment (October 26, 2021): Waiver of financial covenants extended to **June 30, 2022**. Facility maturity extended to **March 8, 2023**, with two six-month extension options (to March 8, 2024). Equity pledges on three unencumbered hotels provided to lenders[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides a detailed discussion and analysis of Chatham Lodging Trust's financial condition and results of operations, focusing on the impact of the COVID-19 pandemic, industry outlook, and key financial performance indicators - The lodging industry has been significantly impacted by the COVID-19 pandemic, but trends are improving, with strong growth expected in 2021 relative to 2020[101](index=101&type=chunk)[110](index=110&type=chunk) - Company actions to mitigate the impact of COVID-19 include suspending common share dividends, reducing capital expenditures, borrowing under its credit facility, obtaining credit facility covenant waivers, and temporarily reducing executive compensation[101](index=101&type=chunk) - Investment Strategy: Invests in upscale extended-stay and premium-branded select-service hotels in geographically diverse markets with high barriers to entry near strong demand generators[104](index=104&type=chunk) - Leverage Ratio: **30.6%** at September 30, 2021 (measured as net debt to hotel investments at cost)[105](index=105&type=chunk) [COVID-19 Pandemic](index=23&type=section&id=COVID-19%20Pandemic) This section discusses the significant impact of the COVID-19 pandemic on the lodging industry and the company's mitigating actions - The lodging industry has been significantly impacted by the COVID-19 pandemic, but trends are improving, with strong growth expected in 2021 relative to 2020[101](index=101&type=chunk)[110](index=110&type=chunk) - Company actions to mitigate the operating and financial impact include suspending common share dividends, reducing capital expenditures, borrowing under its credit facility, obtaining credit facility covenant waivers, and temporarily reducing executive compensation[101](index=101&type=chunk) - The full magnitude of the impact of the COVID-19 pandemic on the Company's financial condition, liquidity, and future results of operations will depend on future developments which are highly uncertain[101](index=101&type=chunk) [Statement Regarding Forward-Looking Information](index=23&type=section&id=Statement%20Regarding%20Forward-Looking%20Information) This section highlights that forward-looking statements are subject to risks and uncertainties, particularly concerning the COVID-19 pandemic's ongoing impact - Forward-looking statements are subject to risks, and actual results could differ materially from expectations, particularly due to the ongoing impact of the COVID-19 pandemic[102](index=102&type=chunk) - The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements[102](index=102&type=chunk) [Overview](index=24&type=section&id=Overview) This section provides an overview of Chatham Lodging Trust as a self-advised hotel investment company, its strategy, and leverage ratio - Chatham Lodging Trust is a self-advised hotel investment company, organized in October 2009, focusing on upscale extended-stay and premium-branded select-service hotels[104](index=104&type=chunk) - Investment strategy is to acquire quality assets at attractive prices and improve their returns through knowledgeable asset management and seasoned, proven hotel management while remaining prudently leveraged[104](index=104&type=chunk) - At September 30, 2021, the Company's leverage ratio was **30.6%** (net debt to hotel investments at cost)[105](index=105&type=chunk) - As a REIT, the Company's Operating Partnership leases hotel properties to taxable REIT subsidiary lessees (TRS Lessees), who engage independent contractors to manage the hotels[106](index=106&type=chunk) [Key Indicators of Operating Performance and Financial Condition](index=24&type=section&id=Key%20Indicators%20of%20Operating%20Performance%20and%20Financial%20Condition) This section identifies the key non-financial and financial metrics used to assess the company's operating performance and financial health - Key non-financial metrics include Average Daily Rate (ADR), Occupancy, and Revenue Per Available Room (RevPAR)[107](index=107&type=chunk) - Key financial metrics include Funds From Operations (FFO), Adjusted FFO, Earnings before interest, taxes, depreciation and amortization (EBITDA), EBITDAre, Adjusted EBITDA, and Adjusted Hotel EBITDA[107](index=107&type=chunk) - These metrics are used to determine each hotel's contribution toward providing income to shareholders and increasing long-term total returns[108](index=108&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, expenses, and net loss, for the periods presented - Financial results benefited from increased visitation at properties due to a reduction in the impact from the COVID-19 pandemic relative to 2020[111](index=111&type=chunk)[137](index=137&type=chunk) - The comparisons are influenced by the COVID-19 pandemic, the acquisition of two hotels, the sale of the NewINK JV, and the disposition of one hotel[111](index=111&type=chunk)[137](index=137&type=chunk) Total Revenue (Three Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | % Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Revenue | $64,295 | $34,969 | 83.9% | Total Revenue (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | % Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Revenue | $146,653 | $115,351 | 27.1% | [Industry Outlook](index=25&type=section&id=Industry%20Outlook) This section provides an outlook on the US lodging industry, including RevPAR trends and expectations for 2021 - US lodging industry RevPAR increased **83.8%** for the three months ended September 30, 2021[110](index=110&type=chunk) - RevPAR is expected to increase significantly versus 2020 but remain below the RevPAR levels achieved in 2019 for the remainder of 2021[110](index=110&type=chunk) [Comparison of the three months ended September 30, 2021 to the three months ended September 30, 2020](index=25&type=section&id=Comparison%20of%20the%20three%20months%20ended%20September%2030%2C%202021%20to%20the%20three%20months%20ended%20September%2030%2C%202020) This section compares the company's financial performance for the three months ended September 30, 2021, against the same period in 2020 - Total revenue increased by **$29.3 million (83.9%)** to **$64.3 million**, primarily related to the recovery from the COVID-19 pandemic and the two hotels acquired in 2021[112](index=112&type=chunk) - Same property RevPAR increased **92.2%** due to a **39.3% increase in ADR** and a **38.1% increase in occupancy**[119](index=119&type=chunk) - Hotel operating expenses increased **$13.5 million (61.8%)** to **$35.4 million**, primarily due to the increase in revenues and occupancy[122](index=122&type=chunk) - Net loss was **$1.4 million**, compared to **$18.3 million** in the prior year, primarily due to increased occupancies and revenues and the sale of the NewINK JV[135](index=135&type=chunk) - Interest expense decreased by **19.6%** to **$5.8 million**, mainly due to mortgage debt repayments and a reduction in the revolving credit facility balance[132](index=132&type=chunk) [Comparison of the nine months ended September 30, 2021 to the nine months ended September 30, 2020](index=29&type=section&id=Comparison%20of%20the%20nine%20months%20ended%20September%2030%2C%202021%20to%20the%20nine%20months%20ended%20September%2030%2C%202020) This section compares the company's financial performance for the nine months ended September 30, 2021, against the same period in 2020 - Total revenue increased by **$31.3 million (27.1%)** to **$146.7 million**, primarily related to the recovery from the COVID-19 pandemic and the two hotels acquired in 2021[138](index=138&type=chunk) - Same property RevPAR increased **37.6%** due to a **4.5% increase in ADR** and a **31.5% increase in occupancy**[145](index=145&type=chunk) - Hotel operating expenses increased **$11.8 million (16.0%)** to **$85.7 million**, primarily due to the increase in revenues and occupancy[146](index=146&type=chunk) - Impairment loss on investment in unconsolidated real estate entities decreased by **$15.3 million**, as the prior year included an impairment on the Inland JV[150](index=150&type=chunk) - Gain on sale of investment in unconsolidated real estate entities increased by **$23.8 million** due to the sale of the NewINK JV[159](index=159&type=chunk) - Net loss was **$7.4 million**, compared to **$73.6 million** in the prior year, primarily due to increased occupancies and revenues and the NewINK JV sale gain[161](index=161&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures such as FFO, Adjusted FFO, EBITDA, and Adjusted Hotel EBITDA - The Company uses FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, and Adjusted Hotel EBITDA as key supplemental measures of operating performance[163](index=163&type=chunk) FFO and Adjusted FFO Attributable to Common Share and Unit Holders (Three Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | FFO | $10,241 | $(3,974) | | Adjusted FFO | $10,497 | $(4,173) | FFO and Adjusted FFO Attributable to Common Share and Unit Holders (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | FFO | $7,557 | $(13,141) | | Adjusted FFO | $8,236 | $(10,351) | EBITDA, EBITDAre, and Adjusted EBITDA (Three Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | EBITDA | $18,108 | $4,129 | | EBITDAre | $18,115 | $4,130 | | Adjusted EBITDA | $19,606 | $5,056 | EBITDA, EBITDAre, and Adjusted EBITDA (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | EBITDA | $52,789 | $(4,678) | | EBITDAre | $28,993 | $11,991 | | Adjusted EBITDA | $33,257 | $18,254 | Adjusted Hotel EBITDA (Three Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Adjusted Hotel EBITDA | $22,518 | $6,134 | Adjusted Hotel EBITDA (Nine Months Ended Sep 30, 2021 vs. 2020) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Adjusted Hotel EBITDA | $41,563 | $20,200 | [Sources and Uses of Cash](index=36&type=section&id=Sources%20and%20Uses%20of%20Cash) This section analyzes the company's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021 Cash, Cash Equivalents and Restricted Cash | Date | Amount (in millions) | | :----------------- | :------------------- | | Sep 30, 2021 | $29.6 | | Dec 31, 2020 | $31.5 | Net Cash Flows (Nine Months Ended Sep 30, 2021) | Activity | Amount (in millions) | | :--------------------------------------- | :------------------- | | Operating Activities | +$18.4 | | Investing Activities | -$94.3 | | Financing Activities | +$74.0 | - Key Investing Activities (Nine Months Ended Sep 30, 2021): Acquisition of RI Austin and TPS Austin hotels (**$71.3 million**), capital improvements (**$5.2 million**), hotel development (**$20.5 million**)[179](index=179&type=chunk) - Key Financing Activities (Nine Months Ended Sep 30, 2021): Net proceeds from Series A Preferred Share offering (**$115.9 million**), common equity proceeds (**$24.6 million**), net repayments on revolving credit facility (**$65.3 million**)[179](index=179&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's leverage ratio, total debt, and strategies for meeting short-term and long-term liquidity requirements - At September 30, 2021, the Company's leverage ratio was approximately **30.6%** (net debt to hotel investments at cost)[183](index=183&type=chunk) - Total debt at September 30, 2021, was **$544.4 million** at an average interest rate of approximately **4.7%**[183](index=183&type=chunk) Outstanding Borrowings (Sep 30, 2021) | Debt Type | Amount (in millions) | | :-------------------------- | :------------------- | | Revolving Credit Facility | $70.0 | | Construction Loan | $32.3 | | Mortgage Debt | $442.1 | - The credit facility amendment in December 2020 waived certain financial covenants through December 31, 2021, requiring a minimum liquidity of **$25 million**[185](index=185&type=chunk) - Short-term liquidity requirements are expected to be met through existing cash balances and availability under the credit facility; long-term liquidity requirements will be met through additional borrowings, equity/debt issuances, or asset sales[189](index=189&type=chunk) [Dividend Policy](index=38&type=section&id=Dividend%20Policy) This section outlines the company's dividend policy, including the suspension of common share dividends and preferred share distributions - Common share dividends were suspended after the March 2020 payment due to the decline in operating performance caused by the COVID-19 pandemic[191](index=191&type=chunk) - No common share dividends were declared for the nine months ended September 30, 2021[191](index=191&type=chunk) - Chatham declared a dividend of **$0.48307 per share** of 6.625% Series A Cumulative Redeemable Preferred Shares payable on October 15, 2021[192](index=192&type=chunk) [Capital Expenditures](index=38&type=section&id=Capital%20Expenditures) This section details capital expenditures on existing hotels and the ongoing development of a new hotel property Capital Expenditures on Existing Hotels | Period | Amount (in millions) | | :--------------------------------------- | :------------------- | | Nine months ended Sep 30, 2021 | $5.2 | | Nine months ended Sep 30, 2020 | $13.9 | - The Company expects to invest an additional **$1.1 million** on renovations, discretionary and emergency expenditures on existing hotels for the remainder of 2021[194](index=194&type=chunk) Hotel Development (Home2 Suites by Hilton, Warner Center) | Metric | Amount (in millions) | | :--------------------------------------- | :------------------- | | Estimated Total Development Costs | ~$70 | | Costs Incurred to Date (Sep 30, 2021) | $64.2 | [Off-Balance Sheet Arrangements](index=38&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements as of September 30, 2021 - The Company had no material off-balance sheet arrangements at September 30, 2021[196](index=196&type=chunk) [Contractual Obligations](index=39&type=section&id=Contractual%20Obligations) This section presents a summary of the company's contractual obligations, including leases and debt, as of September 30, 2021 - Total contractual obligations as of September 30, 2021, were **$661,327 thousand**[198](index=198&type=chunk) Contractual Obligations (Sep 30, 2021, in thousands) | Obligation Type | Total | Less Than One Year | One to Three Years | Three to Five Years | More Than Five Years | | :--------------------------------------- | :------ | :----------------- | :----------------- | :------------------ | :------------------- | | Corporate office lease | $4,374 | $211 | $1,727 | $1,814 | $622 | | Revolving credit facility, including interest | $71,283 | $740 | $70,543 | $0 | $0 | | Construction loan | $39,389 | $625 | $5,004 | $33,760 | $0 | | Ground leases | $71,328 | $305 | $2,438 | $2,487 | $66,098 | | Property loans, including interest | $474,953 | $7,366 | $147,374 | $320,213 | $0 | - The table does not include management and franchise fees, or **$5.8 million** of estimated remaining costs associated with the Los Angeles hotel development[198](index=198&type=chunk) [Inflation](index=39&type=section&id=Inflation) This section discusses the impact of inflation on hotel operations and the ability to adjust room rates - Operators of hotels generally possess the ability to adjust room rates daily to reflect the effects of inflation[199](index=199&type=chunk) - Competitive pressures may limit the ability of management companies to raise room rates[199](index=199&type=chunk) [Seasonality](index=39&type=section&id=Seasonality) This section explains the recurring seasonal patterns affecting hotel demand, revenue, operating income, and cash flow - Demand for hotels is affected by recurring seasonal patterns, generally resulting in lower revenue, operating income, and cash flow in the first and fourth quarters[200](index=200&type=chunk) - Higher revenue, operating income, and cash flow are typically expected in the second and third quarters[200](index=200&type=chunk) - These trends are influenced by overall economic cycles and the geographic locations of the hotels[200](index=200&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) This section highlights the critical accounting policies that require significant management estimates and assumptions - Consolidated financial statements are prepared in conformity with GAAP, requiring management to make estimates and assumptions[201](index=201&type=chunk) - Actual results could differ from these estimates due to the exercise of judgment and assumptions about future uncertainties[201](index=201&type=chunk) - All significant accounting policies, including critical accounting policies, are disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[201](index=201&type=chunk) [Recently Issued Accounting Standards](index=39&type=section&id=Recently%20Issued%20Accounting%20Standards) This section refers to Note 2 for details on recently issued accounting standards relevant to the company - Refer to Note 2, Summary of Significant Accounting Policies, for all new recently issued accounting standards[202](index=202&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 is exposed to interest rate changes primarily as a result of its assumption of long-term debt, with risk management focused on limiting impact and lowering borrowing costs - The Company is exposed to interest rate changes primarily as a result of its assumption of long-term debt[204](index=204&type=chunk) - Interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs, primarily by borrowing at fixed rates or variable rates with the lowest margins available[204](index=204&type=chunk) Fair Value of Debt (September 30, 2021 vs. December 31, 2020) | Debt Type | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | | :----------------- | :------------------------- | :------------------------- | | Fixed Rate Debt | $450.7 | $462.6 | | Variable Rate Debt | $102.3 | $148.6 | - A hypothetical **100 basis points increase** in LIBOR would result in additional interest of approximately **$0.7 million** annually[206](index=206&type=chunk) [Item 4. Controls and Procedures.](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management evaluated the effectiveness of disclosure controls and procedures as of September 30, 2021, concluding they were effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective by the Chief Executive Officer and Chief Financial Officer as of September 30, 2021[209](index=209&type=chunk) - There have been no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the last fiscal quarter[210](index=210&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings.](index=41&type=section&id=Item%201.%20Legal%20Proceedings.) The Company is subject to various routine legal claims and lawsuits arising in the ordinary course of business, not expected to have a material adverse impact - The Company is subject to various claims, lawsuits and legal proceedings arising in the ordinary course of business[212](index=212&type=chunk) - Management believes that the aggregate identifiable amount of such liabilities, if any, will not have a material adverse impact on its financial condition or results of operations[212](index=212&type=chunk) [Item 1A. Risk Factors.](index=41&type=section&id=Item%201A.%20Risk%20Factors.) This section refers to the detailed discussion of risk factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, as updated by subsequent SEC filings - Detailed discussions of risk factors are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, as updated by subsequent filings with the SEC[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The Company reported no unregistered sales of equity securities or use of proceeds for the period - None reported[214](index=214&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The Company reported no defaults upon senior securities for the period - None reported[216](index=216&type=chunk) [Item 4. Mine Safety Disclosures.](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the Company - Not applicable[218](index=218&type=chunk) [Item 5. Other Information.](index=41&type=section&id=Item%205.%20Other%20Information.) The Company reported no other information for the period - None reported[220](index=220&type=chunk) [Item 6. Exhibits.](index=42&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed as part of the report, including articles of amendment, bylaws, credit agreement amendments, and certifications from the CEO and CFO - Exhibits include Articles of Amendment and Restatement, Second Amended and Restated Bylaws, and Articles Supplementary designating the 6.625% Series A Cumulative Redeemable Preferred Shares[223](index=223&type=chunk) - The Fourth Amendment to Amended and Restated Credit Agreement, dated October 26, 2021, is filed as an exhibit[223](index=223&type=chunk) - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are included[223](index=223&type=chunk) [SIGNATURE](index=43&type=section&id=SIGNATURE) The report is duly signed on November 4, 2021, by Jeremy B. Wegner, Senior Vice President and Chief Financial Officer, as the principal financial and accounting officer - The report was signed on November 4, 2021, by Jeremy B. Wegner, Senior Vice President and Chief Financial Officer[226](index=226&type=chunk)

Chatham Lodging Trust (NYSE:CLDT) Q2 2021 Earnings Conference Call August 3, 2021 10:00 AM ET Company Participants Chris Daly - Daly Gray Public Relations, IR Jeffrey Fisher - Chairman, President & CEO Dennis Craven - EVP & COO Jeremy Wegner - SVP & CFO Conference Call Participants Aryeh Klein - BMO Capital Markets Anthony Powell - Barclays Bank Kyle Menges - B. Riley Securities FBR Tyler Batory - Janney Montgomery Scott Operator Greetings, and welcome to Chatham Lodging Trust's Second Quarter 2021 Financia ...

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 TRUST Investor Presentation June 2021 Safe Harbor Disclosure 2 We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, cash flow and plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expr ...

Financial Data and Key Metrics Changes - Chatham's Q1 2021 RevPAR was $55, representing a 17% increase from Q4 2020's RevPAR of $47 [40] - April 2021 RevPAR reached $75, indicating a sequential improvement and a critical point for positive cash flow after debt service and corporate overhead [5][43] - The company experienced a 54% decline in Q1 2021 RevPAR compared to Q1 2019, with April's RevPAR reflecting a 45.3% decline from April 2019 [41] Business Line Data and Key Metrics Changes - The company reported that 21 of its 39 hotels had occupancy over 50% in Q1 2021, with weekend RevPAR significantly outperforming weekday RevPAR [22] - The Residence Inn brand achieved the highest occupancy at 60%, while Homewood Suites and Hampton also performed well with occupancy rates of 58% and 60% respectively [23] - The average length of stay for Residence Inn hotels was 4.5 nights, nearly double the 2.4 nights recorded in Q1 2020 [27] Market Data and Key Metrics Changes - South Florida markets, particularly Fort Lauderdale, showed strong performance with a RevPAR of $161, nearly double its Q4 2020 RevPAR [17] - Coastal New Hampshire markets are experiencing a significant uptick in room reservation demand, indicating strong summer booking momentum [55] - Silicon Valley's RevPAR was $54, with occupancy at 51%, but there are signs of recovery as business travel begins to return [15][16] Company Strategy and Development Direction - The company plans to focus on acquisitions in the extended-stay hotel sector, anticipating opportunities as the market stabilizes [8][58] - Chatham aims to emerge from the pandemic financially healthier than many peers, with no debt maturities until 2023, allowing for strategic growth [7][47] - The Warner Center development is projected to open in Q4 2021, expected to contribute to revenue and FFO growth in 2022 and 2023 [5][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the return of business and transient travel, particularly from tech companies and medical sectors [11][12] - The company expects continued sequential RevPAR improvement as leisure travel demand remains strong [4] - Management highlighted the importance of controlling costs and maintaining operational efficiency to maximize profits as the market recovers [30][31] Other Important Information - The company generated positive GOP and hotel EBITDA each month during Q1 2021, with operating margins improving significantly throughout the quarter [29] - Labor costs per occupied room decreased by approximately 24% compared to Q1 2020, reflecting effective cost management strategies [31] - Chatham's liquidity improved to $145 million by the end of Q1 2021, providing a solid financial foundation for future growth [47] Q&A Session Summary Question: How should we expect ADR to play out in the rest of the portfolio? - Management noted that while leisure travel is performing well, the business side remains challenged with ADR until business traveler volume increases [49] Question: How are you thinking about staffing as occupancy ramps? - Management acknowledged labor challenges but noted that extended-stay hotels benefit from longer guest stays, reducing the frequency of room cleaning [52][53] Question: Can you discuss demand in coastal Maine and New Hampshire? - Management reported strong booking momentum in coastal New Hampshire, with expectations for high ADRs compared to 2019 levels [55][56] Question: How are you weighing acquisitions versus CapEx? - Management indicated a conservative approach to CapEx while actively seeking acquisition opportunities, particularly in the extended-stay sector [57][58] Question: What visibility do you have into May's performance? - Management expects continued RevPAR growth in May over April, with strong performance anticipated for the summer months [60][61] Question: Can you quantify labor needs in extended-stay hotels? - Management explained that extended-stay hotels require less labor due to longer stays, allowing for more efficient operations compared to traditional hotels [64][65]

Financial Performance - Total revenue for Q1 2021 was $32,114,000, a decrease of 46.7% compared to $60,209,000 in Q1 2020[12] - Room revenue decreased to $29,390,000 in Q1 2021 from $53,048,000 in Q1 2020, representing a decline of 44.8%[12] - Net income attributable to common shareholders for Q1 2021 was $2,656,000, compared to a net loss of $27,783,000 in Q1 2020[12] - Revenue for the three months ended March 31, 2021, was $24.7 million, down from $90.9 million in the same period of 2020, indicating a decline of approximately 72.8%[45] - Net income was $2.7 million for Q1 2021, a significant improvement from a net loss of $(28.1) million in Q1 2020, driven by a gain of $23.8 million from the sale of the NewINK JV[137] - For the three months ended March 31, 2021, net income was $2.7 million compared to a net loss of $28.1 million for the same period in 2020[149] - EBITDA for the three months ended March 31, 2021, was $23.7 million, a significant improvement from $(4.1) million in the same period of 2020[149] - Adjusted EBITDA for the three months ended March 31, 2021, was $1.2 million, down from $16.5 million in the same period of 2020[149] Assets and Liabilities - Total assets as of March 31, 2021, were $1,362,747,000, a slight decrease from $1,370,257,000 as of December 31, 2020[10] - Total liabilities decreased to $645,281,000 as of March 31, 2021, from $677,797,000 as of December 31, 2020[10] - Shareholders' equity increased to $704,148,000 as of March 31, 2021, up from $677,752,000 at the end of 2020[10] - The Company's total debt outstanding as of March 31, 2021, was $599.7 million, a slight decrease from $608.8 million as of December 31, 2020[47] - The Company has a revolving credit facility with an outstanding balance of $120.0 million as of March 31, 2021, down from $135.3 million at the end of 2020[47] Cash Flow and Financing - Cash flows from operating activities resulted in a net cash used of $12.072 million, compared to $2.860 million in the prior year, indicating increased operational challenges[17] - The company reported a net cash provided by financing activities of $11.185 million, a decrease from $64.556 million in the previous year, indicating a shift in financing strategy[17] - Net cash flows used in operations for the three months ended March 31, 2021, were $12.1 million, driven by net income and non-cash items[154] - Net cash flows provided by financing activities for the three months ended March 31, 2021, were $11.2 million, primarily from common equity proceeds[154] Operational Expenses - The company reported total hotel operating expenses of $21,974,000 in Q1 2021, down from $36,341,000 in Q1 2020, a reduction of 39.4%[12] - Hotel operating expenses decreased by $14.4 million or 39.5% to $22.0 million for the three months ended March 31, 2021, from $36.3 million for the same period in 2020[124] - Room expenses, the largest component of hotel operating expenses, decreased by $6.2 million from $13.4 million in 2020 to $7.2 million in Q1 2021[125] - General and administrative expenses increased to $2.4 million for Q1 2021 from $1.6 million in Q1 2020, mainly due to the absence of bonus accruals in the prior year[129] - Interest expense decreased by 5.3% to $6.47 million for the three months ended March 31, 2021, compared to $6.83 million for the same period in 2020[134] Investments and Development - The company invested $8.889 million in hotel properties under development, reflecting ongoing expansion efforts despite previous investments of $6.197 million in the same period of 2020[17] - The company is developing a hotel in Los Angeles with total expected development costs of approximately $70 million, of which $52.5 million has been incurred to date[171] - The investment in hotel properties, net, was reported at $1.252 billion as of March 31, 2021, slightly down from $1.265 billion at the end of 2020[38] Shareholder Actions - The company did not declare any distributions per common share in Q1 2021, compared to $0.22 per share in Q1 2020[12] - The company declared total dividends of $0.00 per common share for the three months ended March 31, 2021, compared to $0.22 per common share for the same period in 2020[158] - The total amount of dividends declared for the three months ended March 31, 2021, was $0.00 per common share and LTIP unit, following a suspension due to COVID-19 impacts[168] Legal and Regulatory Matters - The company is involved in multiple class action lawsuits related to wage and hour law violations in California, indicating ongoing legal challenges[195] - The Company recorded a payment of $0.1 million related to the settlement of class action lawsuits in August 2020, representing its total exposure[88] - The Annual Report on Form 10-K for the year ended December 31, 2020 includes detailed discussions of risk factors, highlighting potential vulnerabilities in operations[196] Market Conditions - The U.S. lodging industry RevPAR declined 27.7% for the three months ended March 31, 2021, with a significant drop of 48.2% in January 2021 and a recovery of 34.4% in March 2021[110][119] - The company expects RevPAR to increase significantly in 2021 compared to 2020 but remain below 2019 levels[110] - The COVID-19 pandemic continues to disrupt financial markets, impacting the company's business and liquidity, with uncertain future effects[167]