UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | --- | |----------------------------------------------------------------------------|--------------------------------------------------|---------------------- ...

CHATHAM LODGING TRUST COMPANY PRESENTATION November 2019 Safe Harbor Disclosure 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 exp ...

Financial Data and Key Metrics Changes - RevPAR for the third quarter declined 0.3%, which was at the upper end of the guidance range of flat to minus 1.5% [10][29] - Adjusted EBITDA rose over 3% and adjusted FFO rose over 2% compared to the previous year [5][27] - Net income for the quarter was $10.1 million, down from $14.7 million in Q3 2018, primarily due to impairments [26] Business Line Data and Key Metrics Changes - RevPAR for the 40 comparable wholly owned hotels was $145, with ADR rising 0.5% to $173 and occupancy declining 80 basis points to 85% [14] - Other revenue significantly increased, with parking revenue up $400,000 or 22% in the quarter [20][21] Market Data and Key Metrics Changes - Silicon Valley showed strong performance with RevPAR up almost 5% to $194, while Houston struggled with a 17% decline to $84 [16][19] - Washington D.C. experienced a RevPAR gain of 5.4% to $152, driven by strong performance at the Tysons Residence Inn [17] Company Strategy and Development Direction - The company plans to explore asset sales on a limited and opportunistic basis to invest in development opportunities, such as the $65 million Warner Center project in LA [12] - Acquisitions remain challenging due to unreasonable seller expectations regarding cap rates [12] Management Comments on Operating Environment and Future Outlook - Management indicated that maintaining operating margins will require approximately a 2% RevPAR gain on a stabilized basis [35] - The company expects Q4 RevPAR to decline by 5% to 6.5%, influenced by difficult comparisons from the previous year [29][30] Other Important Information - The balance sheet remains strong with $86 million drawn under the revolving credit facility and $164 million of remaining availability [28] - Full year adjusted EBITDA is now expected to be between $128.7 million and $131.1 million [32] Q&A Session Summary Question: How should we think about the trade-off between RevPAR and EBITDA for next year? - Management indicated that maintaining margins will be challenging in Q4 due to expected RevPAR declines, but they believe a 2% gain may help maintain margins in 2020 [34][35] Question: Can you discuss the performance of specific markets versus budgets? - Silicon Valley outperformed expectations, while Houston and Boston met expectations, and Los Angeles underperformed due to weaker demand [39][40] Question: What is the status of the 2018 acquisitions? - The 2018 acquisitions are underperforming in total revenue, but there are signs of improvement, particularly at the Summerville Residence Inn [42] Question: What are the labor cost pressures in key markets? - Labor costs are particularly pressured in California and Seattle due to high demand and low availability of labor [54]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents Chatham Lodging Trust's unaudited consolidated financial statements for Q3 2019, including balance sheets, operations, equity, and cash flows Consolidated Balance Sheet Highlights (unaudited) | (In thousands) | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$1,453,500** | **$1,439,709** | | Investment in hotel properties, net | $1,352,891 | $1,373,773 | | Cash and cash equivalents | $10,257 | $7,192 | | **Total Liabilities** | **$661,465** | **$632,291** | | Mortgage debt, net | $497,640 | $501,782 | | Revolving credit facility | $86,000 | $81,500 | | **Total Equity** | **$792,035** | **$807,418** | Consolidated Statements of Operations Highlights (unaudited) | (In thousands, except per share data) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$90,080** | **$88,897** | **$253,631** | **$247,187** | | Operating Income | $19,898 | $20,375 | $45,924 | $49,759 | | **Net Income** | **$10,098** | **$14,691** | **$21,251** | **$31,044** | | Net Income Attributable to Common Shareholders | $10,002 | $14,580 | $21,052 | $30,813 | | **Diluted EPS** | **$0.21** | **$0.31** | **$0.44** | **$0.66** | Consolidated Statements of Cash Flows Highlights (unaudited) | (In thousands) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $69,681 | $71,431 | | Net cash used in investing activities | ($35,696) | ($40,484) | | Net cash used in financing activities | ($39,928) | ($28,793) | | **Net change in cash, cash equivalents and restricted cash** | **($5,943)** | **$2,154** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's financial performance, comparing Q3 and nine-month results, detailing operating expenses, non-GAAP measures, liquidity, and capital plans - The company projects a 2019 RevPAR change of **-2.0% to -1.5%** compared to 2018, citing elevated room supply growth in the Upscale segment[125](index=125&type=chunk) Q3 2019 vs Q3 2018 Performance | Metric | Q3 2019 | Q3 2018 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $90.1M | $88.9M | +1.3% | | Net Income | $10.1M | $14.7M | -31.3% | | Same Property RevPAR | - | - | -0.3% | Nine Months 2019 vs 2018 Performance | Metric | YTD 2019 | YTD 2018 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $253.6M | $247.2M | +2.6% | | Net Income | $21.3M | $31.0M | -31.3% | | Same Property RevPAR | - | - | -0.5% | Adjusted FFO and Adjusted EBITDA (Non-GAAP) | (In thousands) | Q3 2019 | Q3 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Adjusted FFO | $28,604 | $28,370 | $72,449 | $72,280 | | Adjusted EBITDA | $39,412 | $38,629 | $105,096 | $102,593 | - The company is developing a hotel in Los Angeles, CA, with expected total development costs of approximately **$65 million**; as of the report date, **$15.2 million** in costs have been incurred[221](index=221&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) The company's primary market risk is interest rate changes on its long-term debt, mitigated by fixed-rate or low-margin variable-rate debt, with a 100 basis point increase in variable rates raising annual interest expense by approximately **$0.9 million** Debt Profile as of September 30, 2019 | Debt Type | Balance Outstanding (In millions) | Weighted Avg. Interest Rate | | :--- | :--- | :--- | | Floating Rate | $86.0 | 4.45% | | Fixed Rate | $499.1 | 4.66% | - A hypothetical **100 basis points** increase on the variable interest rate would result in an additional annual interest expense of approximately **$0.9 million**[239](index=239&type=chunk) - The estimated fair value of the Company's fixed-rate debt was **$509.6 million** as of September 30, 2019, compared to a carrying value of **$499.1 million**[237](index=237&type=chunk)[238](index=238&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures.) The company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting during Q3 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of the end of the period[242](index=242&type=chunk) - **No changes** occurred in the company's internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[243](index=243&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings.) The company's hotel manager, IHM, is defending two class-action lawsuits in California for wage and hour violations, with **$0.1 million** accrued for potential exposure as of September 30, 2019 - The company's hotel manager, IHM, is defending **two class-action lawsuits** in California related to alleged misclassification of managerial staff and other wage and hour violations[244](index=244&type=chunk) - As of September 30, 2019, the company has accrued **$0.1 million**, representing its estimated total exposure to the litigation[244](index=244&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors.) This section supplements the annual report's risk factors, focusing on hotel development risks including construction delays, cost overruns, permitting, and capital raising challenges - The company is exposed to risks associated with its **hotel development project** in Los Angeles, California[246](index=246&type=chunk) - Key development risks include **construction delays, cost overruns, obtaining governmental permits, and potential inability to raise capital**[246](index=246&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reported no unregistered sales of equity securities during the reporting period - None[250](index=250&type=chunk) [Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reported no defaults upon its senior securities - None[252](index=252&type=chunk) [Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company's operations - Not applicable[254](index=254&type=chunk) [Other Information](index=48&type=section&id=Item%205.%20Other%20Information.) No information was reported under this item - None[256](index=256&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the report, including corporate governance documents and certifications from the CEO and CFO as required by the Sarbanes-Oxley Act - The report includes exhibits such as **corporate governance documents** (Articles of Amendment, Bylaws) and **certifications** required under Sections 302 and 906 of the Sarbanes-Oxley Act[260](index=260&type=chunk)

Chatham Lodging Trust (NYSE:CLDT) Q2 2019 Earnings Conference Call July 31, 2019 10:00 AM ET Company Participants Chris Daly - IR Jeffrey Fisher - Chairman, President & CEO Dennis Craven - EVP & COO Jeremy Wegner - SVP & CFO Conference Call Participants Anthony Powell - Barclays Bank Bryan Maher - B. Riley FBR, Inc. Tyler Batory - Janney Montgomery Scott Operator Greetings, and welcome to Chatham Lodging Trust's Second Quarter 2019 Financial Results Conference Call. [Operator Instructions]. As a reminder, t ...

Financial Performance - Total revenue for Q2 2019 was $87.874 million, an increase of 2.9% compared to $85.374 million in Q2 2018[14] - Net income attributable to common shareholders for Q2 2019 was $9.437 million, down 29.0% from $13.385 million in Q2 2018[14] - Operating income before loss on sale of hotel property was $19.433 million, slightly up from $19.134 million in the same period last year[14] - Net income for the six months ended June 30, 2019, was $11,153,000, compared to $16,353,000 for the same period in 2018, representing a decrease of approximately 32.5%[26] - Net income for the three months ended June 30, 2019, was $9.5 million, down from $13.5 million for the same period in 2018, reflecting a decrease of 29.6%[151] - Net income decreased to $11.2 million for the six months ended June 30, 2019, down from $16.4 million for the same period in 2018, reflecting a change of approximately 31.4%[182] Revenue Breakdown - Room revenue comprised 91.0% of total revenue for the quarter ended June 30, 2019, amounting to $80.0 million, up from $78.3 million in 2018, reflecting a 2.2% increase[125] - Revenue from the Residence Inn Summerville since acquisition was $1.024 million with an operating income of $409,000, while the Courtyard Dallas Downtown generated $1.990 million in revenue and $606,000 in operating income[46] - Food and beverage revenue increased by $0.3 million to $2.5 million for the quarter ended June 30, 2019, compared to $2.2 million in 2018[126] - Other operating revenue rose by $0.4 million to $3.9 million for the quarter ended June 30, 2019, driven by increases in parking and miscellaneous room income[127] - Room revenue for the six months ended June 30, 2019, was $148.1 million, up 2.4% from $144.5 million in 2018, with a contribution of $5.1 million from two hotels acquired in 2018[157] - Food and beverage revenue increased to $5.0 million for the six months ended June 30, 2019, a rise of 15.1% compared to $4.3 million in 2018[158] - Other operating revenue rose to $7.6 million for the six months ended June 30, 2019, up 15.2% from $6.6 million in 2018[159] Expenses and Losses - Total hotel operating expenses increased to $44.129 million in Q2 2019, compared to $42.967 million in Q2 2018, reflecting a rise of 2.7%[14] - Hotel operating expenses increased by $3.3 million to $86.0 million for the six months ended June 30, 2019, primarily due to the two hotels acquired in 2018[166] - Loss on sale of hotel property increased by $3.3 million for the six months ended June 30, 2019, due to the sale of two hotels in May 2019[175] - Loss on sale of hotel property increased by $3.3 million for the three months ended June 30, 2019, due to the sale of two hotels in Pennsylvania[144] - Depreciation and amortization expense rose by $1.1 million from $11.9 million in Q2 2018 to $13.0 million in Q2 2019, with $0.6 million attributed to the two hotels acquired in 2018[139] Cash and Assets - Cash and cash equivalents increased to $8.847 million as of June 30, 2019, from $7.192 million at the end of 2018[12] - Total assets as of June 30, 2019, were $1.444 billion, a slight increase from $1.439 billion at the end of 2018[12] - The company had cash, cash equivalents, and restricted cash of approximately $26.9 million as of June 30, 2019, down from $32.3 million at the end of 2018[203] Debt and Financing - Mortgage debt decreased to $499.403 million from $501.782 million at the end of 2018, showing a reduction of 0.5%[12] - Total debt outstanding as of June 30, 2019, was $578,403 thousand, a slight decrease from $583,282 thousand as of December 31, 2018[61] - The maximum borrowing availability under the senior unsecured revolving credit facility was $250.0 million as of June 30, 2019[63] - The company had $171.0 million available under its $250.0 million senior unsecured revolving credit facility as of June 30, 2019[203] Dividends and Shareholder Returns - The company declared distributions of $0.33 per common share for both Q2 2019 and Q2 2018[14] - The company declared dividends of $0.66 per share for the six months ended June 30, 2019, totaling $30,814,000, compared to $30,294,000 for the same period in 2018[22] - The Company declared total common share dividends of $0.33 per share for the three months ended June 30, 2019, and $0.66 per share for the six months ended June 30, 2019[72] Joint Ventures and Acquisitions - As of June 30, 2019, the Company wholly owned 40 hotels with a total of 6,092 rooms across 15 states and the District of Columbia[35] - The Company holds a 10.3% noncontrolling interest in a joint venture owning 47 hotels and a 10% interest in another joint venture owning 48 hotels, totaling 12,500 rooms[35] - The Company acquired the Residence Inn Summerville for $20.8 million and the Courtyard Dallas Downtown for $49.0 million in 2018[45] Tax and Regulatory Matters - The Company continues to recognize a full valuation allowance equal to 100% of the gross deferred tax assets due to uncertainty regarding the utilization of these assets[69] - The Company was notified of an ongoing examination by the IRS regarding its tax return for the year ended December 31, 2016, which could materially impact its financial position[70] Legal Matters - The company is involved in two class action lawsuits related to wage and hour law violations, with an estimated exposure of $0.1 million included in accounts payable[102]

Portfolio & Performance - Chatham Lodging Trust has a superior quality portfolio of 40 premium-branded, upscale extended stay and select service hotels[6] - The company's operating platform generates the highest margins and highest limited service RevPAR[6] - Chatham focuses on investing in great real estate in the best markets, leading to high RevPAR compared to select and full-service brands[10, 11] - Chatham has the highest RevPAR of the three lodging REITs focused almost entirely on the limited service segment[12] - The company's model drives high Hotel EBITDA margins, reaching 39% as of year-end 2018[15] Capital Allocation & Structure - Chatham is actively recycling capital to enhance portfolio quality, including acquisitions of five high-quality hotels for $202 million[6, 19] - The company's weighted average cost of debt is 4.6%, with 84% of debt outstanding at a fixed rate[28] - Chatham's annual dividend has grown 89% since its IPO in 2010, with a 2019E payout ratio of 71%[18] Market Presence - 41% of Chatham's portfolio is located on the West Coast and 29% in the Northeast[7] - The company has the 2nd highest exposure to West Coast markets of all U S lodging REITs[7] - Supply growth in Chatham's markets has been declining, with upscale supply growth at 1.8% as of 12/31/2018[13, 14] Financial Outlook - The company projects a portfolio RevPAR growth between (1.5%) and 0.5% for 2019[26] - The company anticipates an adjusted EBITDA between $130.2 million and $134.7 million for 2019[26]

Financial Data and Key Metrics Changes - The company reported a net income of $1.6 million for Q1 2019, down from $2.9 million in Q1 2018 [29] - Adjusted FFO decreased by 1.8% to $16.2 million, with adjusted FFO per share at $0.34 compared to $0.36 in Q1 2018 [30] - Adjusted EBITDA increased by 2.3% to $27 million compared to $26.4 million in Q1 2018 [31] Business Line Data and Key Metrics Changes - Total revenue increased year-over-year despite a $600,000 decline in actual room revenue, with parking revenue up 17% and F&B revenue up 9% [6][7] - RevPAR for 40 comparable hotels declined by 1%, with occupancy up 50 basis points to 76% and ADR down 1.5% to $159 [15][29] Market Data and Key Metrics Changes - RevPAR in Silicon Valley increased by 3.6% to $183, while San Diego saw a 13% increase due to easier comps [17][18] - Washington D.C. experienced a 5% decline in RevPAR, impacted by renovations and the government shutdown [19] - The Northeastern coastal market hotels had a strong quarter with a 4% increase in RevPAR [20] Company Strategy and Development Direction - The company plans to explore asset sales to fund acquisitions or developments, with a focus on value-add opportunities [12] - Development of one or two hotels in attractive markets is being considered, with a preference for risk-adjusted returns over stabilized low cap rates [13] - The company has raised nearly $200 million over the past two years, positioning itself well for potential developments [13] Management's Comments on Operating Environment and Future Outlook - Management noted that RevPAR growth remains sluggish, but asset management efforts are focused on maximizing revenue and minimizing expenses [5] - The company expects Q2 RevPAR growth to be between 0.5% to 1.5%, with full-year guidance unchanged [33] - Challenges in the Boston area due to difficult Q4 comparisons are anticipated to impact overall 2019 RevPAR growth by approximately 65 basis points [33] Other Important Information - The company’s balance sheet remains strong, with net debt at $588 million and a leverage ratio of 35.1% [32] - Payroll and benefits costs increased by 2.7% on a per occupied room basis, with wages up 4.9% and benefits down 3.9% [24][25] Q&A Session Summary Question: What is the outlook for payroll and benefits increase? - Management expects moderation around a 3% range for total wages and benefits [35][36] Question: How much of the RevPAR weakness is attributed to renovations versus supply and tough comps? - Renovations accounted for about 60 basis points of the RevPAR decline, with total impact estimated at around one full point [38] Question: What is the outlook for new supply in the markets for 2020 and 2021? - Supply additions are expected to remain around 2% for the next year based on current trends [39] Question: What is the current state of acquisitions and dispositions? - The company is seeing a wide bid-ask spread in the market, but is looking for opportunistic deals [40] Question: Can you provide insights on March performance and expectations for April? - Strong corporate business in Silicon Valley and San Diego contributed positively to March performance [44][45] Question: How are recent acquisitions performing? - Charleston has underperformed expectations, while Dallas has exceeded occupancy expectations [47][49] Question: What are the potential development markets? - The company is focused on West Coast markets, particularly Southern California and Silicon Valley, for potential developments [51][52]

PART I. FINANCIAL INFORMATION This section presents Chatham Lodging Trust's financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the quarter ended March 31, 2019 [Item 1. Financial Statements](index=3&type=section&id=Item1.%20Financial%20Statements.) This section provides Chatham Lodging Trust's unaudited consolidated financial statements and comprehensive notes for Q1 2019 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This statement details the company's assets, liabilities, and equity as of March 31, 2019, and December 31, 2018 Consolidated Balance Sheets (in thousands) | Metric | March 31, 2019 (unaudited) | December 31, 2018 | |:---|:---|:---| | **Assets:** ||| | Investment | $1,372,077 | $1,373,773 | | Cash | $11,199 | $7,192 | | Total Assets | $1,464,111 | $1,439,709 | | **Liabilities:** ||| | Mortgage | $500,568 | $501,782 | | Revolving | $97,000 | $81,500 | | Total Liabilities | $669,194 | $632,291 | | **Equity:** ||| | Total Shareholders' Equity | $784,588 | $797,466 | | Total Equity | $794,917 | $807,418 | | Total Liabilities and Equity | $1,464,111 | $1,439,709 | - Total assets increased by **$24.4 million** from December 31, 2018, to March 31, 2019, primarily driven by an increase in cash[8](index=8&type=chunk) - Total liabilities increased by **$36.9 million**, mainly due to an increase in revolving credit facility borrowings[8](index=8&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This statement presents the company's revenues, expenses, and net income for the three months ended March 31, 2019 and 2018 Consolidated Statements of Operations (in thousands) | Metric | March 31, 2019 | March 31, 2018 | |:---|:---|:---| | Total Revenue | $75,679 | $72,915 | | Total Operating Expenses | $65,786 | $62,647 | | Operating Income | $9,893 | $10,251 | | Net Income | $1,628 | $2,868 | | Net Income Attributable to Common Shareholders | $1,613 | $2,848 | | Income per Common Share - Basic | $0.03 | $0.06 | | Income per Common Share - Diluted | $0.03 | $0.06 | - Total revenue increased by **$2.76 million (3.8%)** year-over-year, primarily driven by room revenue growth[12](index=12&type=chunk) - Net income attributable to common shareholders decreased by **$1.235 million (43.4%)** year-over-year, leading to a **50%** reduction in basic and diluted EPS[12](index=12&type=chunk) [Consolidated Statements of Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Equity) This statement outlines changes in the company's equity for the three months ended March 31, 2019 and 2018 Consolidated Statements of Equity (in thousands) | Metric | March 31, 2019 | March 31, 2018 | |:---|:---|:---| | Balance, January 1 | $807,418 | $809,780 | | Issuance of shares pursuant to Equity Incentive Plan | $500 | $500 | | Issuance of shares, net of offering costs | $93 | $10,282 | | Amortization of share based compensation | $947 | $792 | | Dividends declared on common shares | $(15,367) | $(15,141) | | Distributions declared on LTIP units | $(302) | $(283) | | Net income | $1,628 | $2,868 | | Balance, March 31 | $794,917 | $808,798 | - Total equity decreased from **$807.4 million** at January 1, 2019, to **$794.9 million** at March 31, 2019, primarily due to dividends declared exceeding net income[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities for Q1 2019 and Q1 2018 Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | For the three months ended March 31, 2019 | For the three months ended March 31, 2018 | |:---|:---|:---| | Net cash provided by operating activities | $13,311 | $13,426 | | Net cash used in investing activities | $(11,741) | $(5,928) | | Net cash used in financing activities | $(1,366) | $(5,196) | | Net change in cash, cash equivalents and restricted cash | $204 | $2,302 | | Cash, cash equivalents and restricted cash, end of period | $32,541 | $38,801 | - Net cash provided by operating activities remained stable year-over-year, at **$13.3 million** in Q1 2019[22](index=22&type=chunk) - Net cash used in investing activities significantly increased to **$11.7 million** in Q1 2019 from **$5.9 million** in Q1 2018, mainly due to higher capital improvements to hotel properties[22](index=22&type=chunk) - Net cash used in financing activities decreased to **$1.4 million** in Q1 2019 from **$5.2 million** in Q1 2018, driven by higher net borrowings on the revolving credit facility[22](index=22&type=chunk) [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [1. Organization](index=10&type=section&id=1.%20Organization) This note describes Chatham Lodging Trust's business structure, hotel portfolio, and equity offering plans - Chatham Lodging Trust is a Maryland REIT, internally-managed, investing primarily in upscale extended-stay and premium-branded select-service hotels[27](index=27&type=chunk) - As of March 31, 2019, the Company wholly owned 42 hotels (6,283 rooms) and held noncontrolling interests in two joint ventures (NewINK JV and Inland JV) owning 47 and 48 hotels, respectively[31](index=31&type=chunk) - The Company utilizes an 'At the Market' (ATM) equity offering plan with approximately **$92.4 million** available for issuance and a Dividend Reinvestment and Stock Purchase Plan (DRSPP) with approximately **$33.0 million** available[28](index=28&type=chunk)[29](index=29&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and recent standard adoptions impacting the financial statements - The Company adopted ASU 2016-02, Leases, on January 1, 2019, recognizing lease liabilities of **$25.7 million** and corresponding right-of-use assets of **$23.1 million** on its consolidated balance sheet[39](index=39&type=chunk) - Interim financial statements are unaudited and include all normal, recurring adjustments necessary for fair presentation, but are not necessarily indicative of full-year performance[35](index=35&type=chunk) [3. Acquisition of Hotel Properties](index=12&type=section&id=3.%20Acquisition%20of%20Hotel%20Properties) This note details the hotel properties acquired by the company in 2018 and their financial contributions - In 2018, the Company acquired Residence Inn Summerville for **$20.8 million** and Courtyard Dallas Downtown for **$49.0 million**[41](index=41&type=chunk) Acquisition of Hotel Properties (in thousands) | Hotel | Acquisition Date | Revenue (3 months ended March 31, 2019) | Operating Income (3 months ended March 31, 2019) | |:---|:---|:---|:---|\ | Residence Inn Summerville, SC | 08/27/2018 | $800 | $254 | | Courtyard Dallas Downtown, TX | 12/5/2018 | $2,001 | $797 | | **Total** | | **$2,801** | **$1,051** | [4. Allowance for Doubtful Accounts](index=12&type=section&id=4.%20Allowance%20for%20Doubtful%20Accounts) This note reports the stable allowance for doubtful accounts as of March 31, 2019 - The allowance for doubtful accounts remained stable at **$0.3 million** as of March 31, 2019, and December 31, 2018[43](index=43&type=chunk) [5. Investment in Hotel Properties](index=13&type=section&id=5.%20Investment%20in%20Hotel%20Properties) This note provides a breakdown of the company's net investment in hotel properties Investment in Hotel Properties (in thousands) | Asset Category | March 31, 2019 | December 31, 2018 | |:---|:---|:---| | Land and improvements | $296,260 | $296,253 | | Building and improvements | $1,222,728 | $1,214,780 | | Furniture, fixtures and equipment | $78,237 | $73,411 | | Renovations in progress | $23,594 | $25,370 | | Less: accumulated depreciation | $(248,742) | $(236,041) | | **Investment in hotel properties, net** | **$1,372,077** | **$1,373,773** | - Net investment in hotel properties slightly decreased by **$1.7 million** from December 31, 2018, to March 31, 2019, primarily due to increased accumulated depreciation[45](index=45&type=chunk) [6. Investment in Unconsolidated Entities](index=13&type=section&id=6.%20Investment%20in%20Unconsolidated%20Entities) This note details the company's equity method investments in joint ventures and their financial contributions - The Company holds a **10.3%** noncontrolling interest in NewINK JV and a **10.0%** noncontrolling interest in Inland JV, both accounted for under the equity method[46](index=46&type=chunk) - Cash distributions from both NewINK JV and Inland JV were **$0** for the three months ended March 31, 2019, compared to **$719 thousand** and **$300 thousand**, respectively, in the prior year period[46](index=46&type=chunk) Investment in Unconsolidated Entities (in thousands) | Metric | For the three months ended March 31, 2019 | For the three months ended March 31, 2018 | |:---|:---|:---| | Revenue (Combined JVs) | $112,120 | $110,174 | | Operating income (Combined JVs) | $33,566 | $32,150 | | Total income from unconsolidated real estate entities attributable to the Company | $(1,123) | $(754) | [7. Debt](index=15&type=section&id=7.%20Debt) This note outlines the company's debt structure, including revolving credit facilities and mortgage debt, and compliance with covenants Debt (in thousands) | Debt Type | March 31, 2019 Balance Outstanding | December 31, 2018 Balance Outstanding | |:---|:---|:---| | Senior Unsecured Revolving Credit Facility | $97,000 | $81,500 | | Mortgage Debt (various properties) | $502,247 | $501,782 | | Total Debt Outstanding | $597,568 | $583,282 | - Total debt outstanding increased by **$14.286 million** from December 31, 2018, to March 31, 2019, primarily due to increased borrowings on the revolving credit facility[52](index=52&type=chunk) - The Company was in compliance with all financial covenants as of March 31, 2019, with a consolidated fixed charge coverage ratio of **3.3** against a covenant of **1.5**[57](index=57&type=chunk) [8. Income Taxes](index=16&type=section&id=8.%20Income%20Taxes) This note explains the company's income tax position, including the Taxable REIT Subsidiary's (TRS) tax expense and valuation allowance - The Company's Taxable REIT Subsidiary (TRS) is subject to federal and state income taxes but reported **$0** income tax expense for the three months ended March 31, 2019 and 2018[59](index=59&type=chunk) - The TRS expects increased taxable losses in 2019 and maintains a full valuation allowance against its deferred tax assets due to uncertainty of utilization[60](index=60&type=chunk) [9. Dividends Declared and Paid](index=17&type=section&id=9.%20Dividends%20Declared%20and%20Paid) This note details the dividends declared on common shares and distributions on LTIP units for Q1 2019 Dividends Declared and Paid (per share/unit) | Period | Common Share Amount | LTIP Unit Amount | |:---|:---|:---| | 1st Quarter 2019 Total | $0.33 | $0.33 | | Total 2019 | $0.33 | $0.33 | - The Company declared total common share dividends of **$0.33** per share and distributions on LTIP units of **$0.33** per unit for the three months ended March 31, 2019[63](index=63&type=chunk) [10. Earnings Per Share](index=17&type=section&id=10.%20Earnings%20Per%20Share) This note presents the basic and diluted earnings per common share for Q1 2019 and Q1 2018 Earnings Per Share (in thousands, except per share data) | Metric | For the three months ended March 31, 2019 | For the three months ended March 31, 2018 | |:---|:---|:---| | Net income attributable to common shareholders | $1,613 | $2,848 | | Basic Income per Common Share | $0.03 | $0.06 | | Diluted Income per Common Share | $0.03 | $0.06 | | Weighted average number of common shares outstanding - Basic | 46,556,710 | 45,753,792 | | Weighted average number of common shares outstanding - Diluted | 46,734,958 | 46,022,690 | - Basic and diluted EPS decreased by **50%** from **$0.06** in Q1 2018 to **$0.03** in Q1 2019, reflecting lower net income attributable to common shareholders[64](index=64&type=chunk) [11. Equity Incentive Plan](index=18&type=section&id=11.%20Equity%20Incentive%20Plan) This note describes the company's equity incentive plan, including available shares and compensation expense for LTIP awards - The Company maintains an Equity Incentive Plan to attract and retain key personnel, with **1,372,659** common shares available for issuance as of March 31, 2019[66](index=66&type=chunk) - In Q1 2019, the Company granted **88,746** time-based LTIP awards and **133,107** performance-based LTIP awards, with compensation expense recognized over the vesting period[73](index=73&type=chunk)[75](index=75&type=chunk) Equity Incentive Plan (in millions) | Metric | For the three months ended March 31, 2019 | For the three months ended March 31, 2018 | |:---|:---|:---| | Compensation expense related to LTIP units | $0.9 | $0.7 | | Total unrecognized compensation cost related to LTIP units (as of March 31) | $8.2 | $7.8 | [12. Leases](index=20&type=section&id=12.%20Leases) This note details the company's lease agreements, including liabilities, remaining terms, and discount rates - The Company is a lessee under ground, air rights, garage, and office lease agreements for certain properties, all qualifying as operating leases[86](index=86&type=chunk) Lease Metrics (in thousands, except years and percentage) | Lease Metric | As of March 31, 2019 | |:---|:---|\ | Present value of lease liabilities | $25,623 | | Weighted-average remaining lease term (years) | 40.16 | | Weighted-average discount rate | 6.57% | - For Q1 2019, the Company incurred **$0.5 million** in fixed lease payments and **$39.0 thousand** in variable lease payments[90](index=90&type=chunk) [13. Commitments and Contingencies](index=23&type=section&id=13.%20Commitments%20and%20Contingencies) This note discloses legal proceedings, management fees, and franchise and marketing fees - The Company is a defendant in two class action lawsuits related to alleged wage and hour law violations at hotels managed by Island Hospitality Management LLC (IHM), with an estimated exposure of **$0.1 million** as of March 31, 2019[92](index=92&type=chunk) - Management fees paid to IHM totaled **$2.5 million** in Q1 2019, up from **$2.4 million** in Q1 2018[94](index=94&type=chunk) - Franchise and marketing fees increased to **$5.9 million** in Q1 2019 from **$5.5 million** in Q1 2018[95](index=95&type=chunk) [14. Related Party Transactions](index=23&type=section&id=14.%20Related%20Party%20Transactions) This note details transactions with related parties, including management fees paid to Island Hospitality Management LLC (IHM) - Jeffrey H. Fisher, the Company's Chairman, President, and CEO, owns **51%** of Island Hospitality Management LLC (IHM), which manages all 42 wholly-owned hotels and most JV hotels[34](index=34&type=chunk)[96](index=96&type=chunk) - Hotel management, revenue management, and accounting fees paid to IHM for Company-owned hotels were **$2.5 million** in Q1 2019 and **$2.4 million** in Q1 2018[96](index=96&type=chunk) - Cost reimbursements from unconsolidated real estate entities (NewINK JV, Inland JV, and Castleblack) were **$1.5 million** for both Q1 2019 and Q1 2018, with no impact on operating or net income[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item2.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section analyzes Chatham Lodging Trust's financial condition, operating results, liquidity, and capital resources for Q1 2019, including industry outlook and key accounting policies [Overview](index=25&type=section&id=Overview) This section provides a high-level description of Chatham Lodging Trust's business model and financial position - Chatham Lodging Trust is a self-advised hotel investment company focused on upscale extended-stay and premium-branded select-service hotels[103](index=103&type=chunk) - As of March 31, 2019, the Company's leverage ratio was **35.1%** (net debt to hotel investments at cost), with total debt of **$599.2 million** at an average interest rate of approximately **4.7%**[105](index=105&type=chunk) - The Company operates as a REIT, leasing its hotels to Taxable REIT Subsidiary (TRS) Lessees, which engage independent contractors for management[107](index=107&type=chunk) [Statement Regarding Forward-Looking Information](index=25&type=section&id=Statement%20Regarding%20Forward-Looking%20Information) This statement cautions readers about forward-looking information, which is subject to various risks and uncertainties - The report contains forward-looking statements subject to risks such as economic conditions, competition, regulations, real estate conditions, operating costs, and interest rates[102](index=102&type=chunk) - The Company does not undertake to publicly release revisions to forward-looking statements[102](index=102&type=chunk) [Financial Condition and Operating Performance Metrics](index=26&type=section&id=Financial%20Condition%20and%20Operating%20Performance%20Metrics) This section lists the key financial and operational metrics used to evaluate the company's performance - Key financial metrics used include Revenue Per Available Room (RevPAR), Average Daily Rate (ADR), Occupancy, Funds From Operations (FFO), Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, and Adjusted Hotel EBITDA[108](index=108&type=chunk) - These metrics are used to evaluate hotel performance, income contribution, and long-term total returns for shareholders[109](index=109&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's operational performance, including revenue, expenses, and net income, for Q1 2019 compared to Q1 2018 [Industry Outlook](index=27&type=section&id=Industry%20Outlook) This section provides an overview of the lodging industry's performance and projections, including supply growth and RevPAR changes - Lodging industry performance is correlated with economic indicators like GDP growth, employment, and corporate profits, which appear healthy[112](index=112&type=chunk) - U.S. hotel supply growth is projected to increase by **1.9%** in 2019, potentially impacting RevPAR growth[112](index=112&type=chunk) - The Company projects a 2019 RevPAR change of **-1.5% to +0.5%** compared to 2018[112](index=112&type=chunk) [Comparison of the three months ended March 31, 2019 to the three months ended March 31, 2018](index=27&type=section&id=Comparison%20of%20the%20three%20months%20ended%20March%2031,%202019%20to%20the%20three%20months%20ended%20March%2031,%202018) This section provides a detailed comparative analysis of the company's financial performance for the first quarter of 2019 versus 2018 [Revenues](index=27&type=section&id=Revenues) This section analyzes the changes in total revenue and its components, including room, food and beverage, and other revenues Revenues (in thousands) | Revenue Category | March 31, 2019 | March 31, 2018 | % Change | |:---|:---|:---|:---|\ | Room | $68,085 | $66,251 | 2.8% | | Food and beverage | $2,427 | $2,098 | 15.7% | | Other | $3,676 | $3,027 | 21.4% | | Cost reimbursements from unconsolidated real estate entities | $1,491 | $1,539 | (3.1)% | | **Total Revenue** | **$75,679** | **$72,915** | **3.8%** | Key Operating Metrics (in thousands, except percentages) | Metric | Same Property (40 hotels) March 31, 2019 | Actual (42 hotels) March 31, 2019 | Same Property (40 hotels) March 31, 2018 | Actual (40 hotels) March 31, 2018 | % Change Same Property | % Change Actual | |:---|:---|:---|:---|:---|:---|:---|\ | Occupancy | 76.0% | 75.8% | 75.6% | 75.6% | 0.5% | 0.3% | | ADR | $159.33 | $158.92 | $161.74 | $161.74 | (1.5)% | (1.7)% | | RevPAR | $121.12 | $120.43 | $122.31 | $122.31 | (1.0)% | (1.5)% | - Total revenue increased by **$2.8 million**, with **$2.8 million** of this increase attributed to two hotels acquired in 2018[114](index=114&type=chunk) - Same property RevPAR decreased by **1.0%** due to a **1.5%** decrease in ADR, partially offset by a **0.5%** increase in occupancy[122](index=122&type=chunk) [Hotel Operating Expenses](index=28&type=section&id=Hotel%20Operating%20Expenses) This section details the changes in various hotel operating expenses, including labor, franchise fees, and utilities Hotel Operating Expenses (in thousands) | Expense Category | March 31, 2019 | March 31, 2018 | % Change | |:---|:---|:---|:---|\ | Room | $15,570 | $14,553 | 7.0% | | Food and beverage | $2,009 | $1,740 | 15.5% | | Telephone | $433 | $459 | (5.7)% | | Other | $939 | $721 | 30.2% | | General and administrative | $6,167 | $6,033 | 2.2% | | Franchise and marketing fees | $5,932 | $5,525 | 7.4% | | Advertising and promotions | $1,533 | $1,565 | (2.0)% | | Utilities | $2,750 | $2,699 | 1.9% | | Repairs and maintenance | $3,611 | $3,624 | (0.4)% | | Management fees | $2,544 | $2,437 | 4.4% | | Insurance | $338 | $333 | 1.5% | | **Total Hotel Operating Expenses** | **$41,826** | **$39,689** | **5.4%** | - Total hotel operating expenses increased by **$2.1 million (5.4%)**, with **$1.4 million** attributed to newly acquired hotels and the remainder due to rising labor and benefit costs at comparable hotels[125](index=125&type=chunk) [Depreciation and Amortization](index=29&type=section&id=Depreciation%20and%20Amortization) This section explains the increase in depreciation and amortization expense, primarily due to recent hotel acquisitions - Depreciation and amortization expense increased by **$0.8 million** to **$12.8 million** in Q1 2019, with **$0.6 million** of the increase from hotels acquired in 2018[128](index=128&type=chunk) [Property Taxes, Ground Rent and Insurance](index=29&type=section&id=Property%20Taxes,%20Ground%20Rent%20and%20Insurance) This section details the increase in property taxes, ground rent, and insurance expenses, largely due to acquired hotels - These expenses increased by **$0.4 million** to **$6.2 million** in Q1 2019, with **$0.3 million** of the increase from hotels acquired in 2018[129](index=129&type=chunk) [General and Administrative](index=29&type=section&id=General%20and%20Administrative) This section explains the decrease in general and administrative expenses, excluding stock-based compensation - General and administrative expenses (excluding stock-based compensation) decreased by **$0.3 million** to **$2.4 million** in Q1 2019, mainly due to lower professional fees, travel, and office expenses[130](index=130&type=chunk) [Other Charges](index=29&type=section&id=Other%20Charges) This section highlights the shift from other income to an expense, primarily due to an insurance charge - Other charges shifted from an income of **$14.0 thousand** in Q1 2018 to an expense of **$17.0 thousand** in Q1 2019, primarily due to an insurance charge[131](index=131&type=chunk) [Reimbursed Costs from Unconsolidated Real Estate Entities](index=29&type=section&id=Reimbursed%20Costs%20from%20Unconsolidated%20Real%20Estate%20Entities) This section notes the stable reimbursed costs from joint ventures, which offset revenue without impacting operating income - Reimbursed costs remained stable at **$1.5 million** for both Q1 2019 and Q1 2018, offsetting corresponding revenue and having no impact on operating income[132](index=132&type=chunk) [Interest and Other Income](index=29&type=section&id=Interest%20and%20Other%20Income) This section explains the increase in interest and other income, mainly from services provided to Castleblack - Interest and other income increased by **$53 thousand** to **$55 thousand** in Q1 2019, mainly due to fees from services provided to Castleblack[133](index=133&type=chunk) [Interest Expense, Including Amortization of Deferred Fees](index=31&type=section&id=Interest%20Expense,%20Including%20Amortization%20of%20Deferred%20Fees) This section details the increase in total interest expense, primarily due to higher utilization of the revolving credit facility Interest Expense, Including Amortization of Deferred Fees (in thousands) | Expense Category | March 31, 2019 | March 31, 2018 | % Change | |:---|:---|:---|:---|\ | Mortgage debt interest | $5,860 | $5,917 | (1.0)% | | Credit facility interest and unused fees | $1,104 | $472 | 133.9% | | Amortization of deferred financing costs | $233 | $242 | (3.7)% | | **Total** | **$7,197** | **$6,631** | **8.5%** | - Total interest expense increased by **$0.6 million (8.5%)** in Q1 2019, primarily due to higher utilization of the senior unsecured revolving credit facility[135](index=135&type=chunk) [Loss from Unconsolidated Real Estate Entities](index=31&type=section&id=Loss%20from%20Unconsolidated%20Real%20Estate%20Entities) This section explains the increased loss from joint ventures, mainly due to higher interest on floating rate debt - Loss from unconsolidated real estate entities increased to **$1.1 million** in Q1 2019 from **$0.8 million** in Q1 2018, mainly due to higher interest on floating rate debt at the JVs[136](index=136&type=chunk) [Income Tax Expense](index=31&type=section&id=Income%20Tax%20Expense) This section reports the consistent zero income tax expense for the TRS due to expected taxable losses and a full valuation allowance - Income tax expense remained **$0.0 million** for both Q1 2019 and Q1 2018, as the TRS expects taxable losses and recognizes a full valuation allowance against deferred tax assets[137](index=137&type=chunk) [Net Income](index=31&type=section&id=Net%20Income) This section summarizes the decrease in net income for Q1 2019, driven by various operational and financial factors - Net income decreased to **$1.6 million** in Q1 2019 from **$2.9 million** in Q1 2018, driven by the factors discussed above[138](index=138&type=chunk) [Material Trends or Uncertainties](index=31&type=section&id=Material%20Trends%20or%20Uncertainties) This section confirms no new material trends or uncertainties beyond those previously disclosed - The Company is not aware of any material trends or uncertainties, favorable or unfavorable, beyond those disclosed in this report and its Annual Report on Form 10-K[139](index=139&type=chunk) [Non-GAAP Financial Measures](index=32&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures to evaluate operating performance and their limitations - The Company uses non-GAAP financial measures such as FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, and Adjusted Hotel EBITDA to supplement GAAP measures for evaluating operating performance[141](index=141&type=chunk) Non-GAAP Financial Measures (in thousands) | Metric | For the three months ended March 31, 2019 | For the three months ended March 31, 2018 | |:---|:---|:---| | Net income | $1,628 | $2,868 | | FFO attributable to common share and unit holders | $16,156 | $16,541 | | Adjusted FFO attributable to common share and unit holders | $16,173 | $16,539 | | EBITDA | $25,952 | $25,443 | | EBITDAre | $25,952 | $25,460 | | Adjusted EBITDA | $27,028 | $26,353 | | Adjusted Hotel EBITDA | $26,196 | $25,912 | - These non-GAAP measures have limitations, as they do not reflect cash expenditures, working capital needs, or funds available for distributions[154](index=154&type=chunk) [Sources and Uses of Cash](index=36&type=section&id=Sources%20and%20Uses%20of%20Cash) This section outlines the primary sources and applications of the company's cash, including operating activities, investing, and financing - Principal cash sources include net cash from operations and debt/equity issuances; principal uses include acquisitions, capital expenditures, operating costs, debt repayments, and distributions[158](index=158&type=chunk) - As of March 31, 2019, cash, cash equivalents, and restricted cash totaled **$32.5 million**, with **$153.0 million** available under the **$250.0 million** revolving credit facility[159](index=159&type=chunk) - Net cash provided by operations was **$13.3 million** in Q1 2019, while net cash used in investing activities was **$11.7 million** and net cash used in financing activities was **$1.4 million**[160](index=160&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial flexibility, leverage, and strategies for meeting short-term and long-term funding needs - The Company's leverage ratio was **35.1%** at March 31, 2019, with total debt of **$599.2 million** at an average interest rate of approximately **4.7%**[164](index=164&type=chunk) - The Company expects to meet short-term liquidity needs through operations, existing cash, and its revolving credit facility, and long-term needs through additional borrowings, equity issuances, or asset sales[168](index=168&type=chunk) - The senior unsecured credit facility was refinanced in March 2018, extending maturity to March 2023 with an option for an additional year, and reducing borrowing costs[167](index=167&type=chunk) [Dividend Policy](index=37&type=section&id=Dividend%20Policy) This section outlines the company's policy to distribute nearly all its annual taxable income as dividends - The Company's policy is to distribute approximately **100%** of its annual taxable income as dividends[170](index=170&type=chunk) - The current monthly dividend and distribution rate is **$0.11** per common share and LTIP unit, totaling **$0.33** for Q1 2019[170](index=170&type=chunk) [Capital Expenditures](index=38&type=section&id=Capital%20Expenditures) This section details the company's investments in hotel properties and planned expenditures for the remainder of 2019 - Capital investments in hotels were **$11.7 million** in Q1 2019, up from **$6.9 million** in Q1 2018[173](index=173&type=chunk) - The Company plans to invest an additional **$20.5 million** in renovations, discretionary, and emergency expenditures for the remainder of 2019[173](index=173&type=chunk) [Off-Balance Sheet Arrangements](index=38&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements, except for non-recourse debt related to joint ventures - The Company had no material off-balance sheet arrangements at March 31, 2019, other than non-recourse debt associated with the NewINK JV and Inland JV[174](index=174&type=chunk) - The Operating Partnership could be required to repay its pro rata share of JV indebtedness under certain non-recourse carve-out provisions[174](index=174&type=chunk) [Contractual Obligations](index=38&type=section&id=Contractual%20Obligations) This section presents a table summarizing the company's contractual obligations and their payment schedules Contractual Obligations (in thousands) | Obligation | Total | Less Than One Year | One to Three Years | Three to Five Years | More Than Five Years | |:---|:---|:---|:---|:---|:---|\ | Corporate office lease | $6,401 | $595 | $1,643 | $1,727 | $2,436 | | Revolving credit facility, including interest | $111,162 | $4,370 | $8,969 | $97,823 | — | | Ground leases | $78,848 | $955 | $2,646 | $2,661 | $72,586 | | Property loans, including interest | $596,360 | $23,455 | $78,109 | $174,647 | $320,149 | | **Total** | **$792,771** | **$29,375** | **$91,367** | **$276,858** | **$395,171** | - Total contractual obligations amount to **$792.8 million**, with the largest portion (**$395.2 million**) due in more than five years[176](index=176&type=chunk) [Inflation](index=39&type=section&id=Inflation) This section discusses the hotel industry's ability to adjust room rates in response to inflation, subject to competitive pressures - Hotel operators can generally adjust room rates daily to reflect inflation, but competitive pressures may limit this ability[181](index=181&type=chunk) [Seasonality](index=39&type=section&id=Seasonality) This section describes the seasonal nature of demand for the company's hotels, impacting revenue and cash flow - Demand for the Company's hotels is seasonal, with lower revenue, operating income, and cash flow typically in the first and fourth quarters, and higher in the second and third quarters[182](index=182&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) This section states that financial statements are prepared using GAAP, requiring management estimates and assumptions - The consolidated financial statements are prepared in conformity with GAAP, requiring management estimates and assumptions that could differ from actual results[183](index=183&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 adopted accounting standards - Refer to Note 2, Summary of Significant Accounting Policies, for details on recently issued accounting standards[184](index=184&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item3.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) This section discusses the Company's exposure to market risks, primarily interest rate changes, and its strategies to manage these risks - The Company is exposed to interest rate changes from long-term debt and aims to limit impact on earnings/cash flows by borrowing at fixed or low-margin variable rates with conversion options[186](index=186&type=chunk) Market Risk Disclosures (in thousands) | Debt Type | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total/Weighted Average | Fair Value | |:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|\ | Floating rate debt | — | — | — | $97,000 | — | — | — | $97,000 | $97,000 | | Average interest rate (floating) | — | — | — | 4.56% | — | — | — | 4.56% | | | Fixed rate debt | $5,684 | $9,536 | $21,962 | $9,954 | $142,545 | $296,658 | $15,908 | $502,247 | $503,579 | | Average interest rate (fixed) | 4.69% | 4.68% | 5.26% | 4.63% | 4.66% | 4.64% | 4.25% | 4.66% | | - A hypothetical **100 basis points** increase in the variable interest rate would result in approximately **$1.0 million** in additional annual interest expense, assuming **$97.0 million** outstanding floating rate debt[189](index=189&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item4.%20Controls%20and%20Procedures.) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the last fiscal quarter - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2019, providing reasonable assurance for timely and accurate reporting[192](index=192&type=chunk) - There have been no material changes in internal control over financial reporting during the last fiscal quarter[193](index=193&type=chunk) PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=41&type=section&id=Item1.%20Legal%20Proceedings.) This section discloses ongoing legal proceedings, specifically two class action lawsuits against Island Hospitality Management LLC (IHM) related to wage and hour law violations, with an estimated exposure of $0.1 million for the Company - IHM is a defendant in two class action lawsuits alleging wage and hour law violations and incorrect employee paystubs in California[194](index=194&type=chunk) - As of March 31, 2019, the Company's estimated total exposure to the litigation is **$0.1 million**, included in accounts payable[194](index=194&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item1A.%20Risk%20Factors.) This section states that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 - No material changes have occurred in the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2018[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item2.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities and use of proceeds to report[197](index=197&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item3.%20Defaults%20Upon%20Senior%20Securities.) This section reports that there were no defaults upon senior securities during the period - There were no defaults upon senior securities[199](index=199&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item4.%20Mine%20Safety%20Disclosures.) This section states that mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable to the Company[201](index=201&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item5.%20Other%20Information.) This section indicates that there is no other information to report for the period - There is no other information to report[203](index=203&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item6.%20Exhibits.) This section lists the exhibits filed as part of the report, including organizational documents, certifications from the CEO and CFO, and XBRL taxonomy documents - Exhibits include Articles of Amendment and Restatement, Second Amended and Restated Bylaws, CEO and CFO certifications (pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. 1350), and XBRL Taxonomy Extension documents[205](index=205&type=chunk)

PART I [Business](index=5&type=section&id=Item%201.%20Business) Chatham Lodging Trust is a REIT specializing in upscale hotels, owning 42 properties and interests in 95 JV hotels, managed by an affiliate - As of December 31, 2018, the Company owned **42 hotels** with **6,283 rooms** and held noncontrolling interests in two joint ventures (NewINK JV and Inland JV) which own a total of **95 hotels** with **12,500 rooms**[22](index=22&type=chunk) - The Company's primary business strategy includes disciplined acquisition of properties below replacement cost, opportunistic repositioning, aggressive asset management, and maintaining a prudent capital structure with a leverage ratio of approximately **34.7%** as of year-end 2018[31](index=31&type=chunk)[32](index=32&type=chunk) - All **42** of the Company's wholly-owned hotels are managed by Island Hospitality Management Inc. (IHM), which is **51%** owned by the Company's CEO, Mr. Fisher. IHM also manages a significant portion of the JV hotels[25](index=25&type=chunk) Management Fee Structure with IHM | Fee Type | Rate/Terms | | :--- | :--- | | **Base Management Fee** | A percentage of the hotel's gross room revenue (typically 3.0%) | | **Incentive Management Fee** | 10% of the hotel's net operating income above a specified return threshold, capped at 1% of gross hotel revenues | - To maintain its REIT status, the Company cannot operate its hotels directly. It leases them to Taxable REIT Subsidiaries (TRS Lessees), which then engage third-party management companies like IHM[24](index=24&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The Company faces diverse business, industry, real estate, and REIT-specific risks, including reliance on IHM and maintaining REIT status - A significant concentration of operational risk exists as one management company, IHM (affiliated with the CEO), managed all **42** wholly-owned hotels and most JV hotels as of December 31, 2018[81](index=81&type=chunk)[114](index=114&type=chunk) - The Company's growth and operations are dependent on its ability to obtain financing, as REIT rules require distributing at least **90%** of taxable income, limiting the use of retained earnings for funding[73](index=73&type=chunk)[88](index=88&type=chunk) - Risks related to joint venture investments include a lack of full decision-making authority, reliance on partners' financial condition, and potential disputes or impasses with co-venturers[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - The lodging industry is cyclical and highly competitive. Performance is linked to the general economy, and risks include over-supply of rooms, competition from alternative lodging (e.g., Airbnb), and the need for ongoing capital expenditures[117](index=117&type=chunk)[123](index=123&type=chunk)[126](index=126&type=chunk)[133](index=133&type=chunk) - Failure to maintain qualification as a REIT would subject the Company to federal corporate income tax, significantly reducing cash available for shareholder distributions and adversely impacting share value[173](index=173&type=chunk)[174](index=174&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) As of December 31, 2018, the Company owned 42 hotels (6,283 rooms) for $1.48 billion, with $503.6 million in mortgage debt Wholly-Owned Hotel Portfolio Summary (as of Dec 31, 2018) | Metric | Value | | :--- | :--- | | **Number of Hotels** | 42 | | **Number of Rooms** | 6,283 | | **Total Purchase Price** | $1,483.9 million | | **Total Mortgage Debt Balance** | $503.6 million | [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) IHM, the Company's hotel manager, faces two California class-action lawsuits for wage violations, with the Company accruing $0.1 million in estimated liability - IHM is defending two class-action lawsuits in California related to alleged wage and hour law violations at hotels it operates, including some owned by the Company[218](index=218&type=chunk) - The Company has accrued an estimated liability of **$0.1 million** related to these lawsuits as of year-end 2018[218](index=218&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company's common shares trade on the NYSE under "CLDT", with 2018 distributions characterized as 86.7% ordinary income and 13.3% return of capital - The Company's common shares are listed on the NYSE under the ticker symbol **"CLDT"**[222](index=222&type=chunk) Tax Characterization of Common Share Distributions | Year | Ordinary Income | Return of Capital | Unrecap. Sec. 1250 Gain | | :--- | :--- | :--- | :--- | | **2018** | 86.7% | 13.3% | 0.0% | | **2017** | 85.5% | 9.1% | 5.5% | - As of December 31, 2018, there were **1,400,529** securities remaining available for future issuance under the company's equity compensation plans[232](index=232&type=chunk) [Selected Financial Data](index=40&type=section&id=Item%206.%20Selected%20Financial%20Data) This section summarizes five-year financial data, showing 2018 total revenue of $324.2 million, net income of $30.6 million, and total assets of $1.44 billion Selected Financial Highlights (in thousands, except per share data) | Metric | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Total Revenue** | $324,230 | $301,844 | $295,871 | | **Net Income to Common Shareholders** | $30,641 | $29,478 | $31,483 | | **Diluted EPS** | $0.66 | $0.73 | $0.81 | | **Total Assets** | $1,439,709 | $1,392,216 | $1,302,954 | | **Total Liabilities** | $632,291 | $582,436 | $621,364 | | **Cash Dividends per Share** | $1.32 | $1.32 | $1.30 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=42&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A analyzes 2018 financial performance, with revenue up 7.4% to $324.2 million, net income at $30.9 million, and a 34.7% leverage ratio [Results of Operations](index=43&type=section&id=Item%207.%20Results%20of%20Operations) In 2018, total revenue increased 7.4% to $324.2 million, driven by acquisitions and RevPAR growth, while net income rose to $30.9 million, impacted by a 2017 impairment loss Year-over-Year Performance Comparison (2018 vs. 2017) | Metric | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $324.2M | $301.8M | 7.4% | | **Hotel Operating Expenses** | $170.6M | $155.7M | 9.6% | | **Net Income** | $30.9M | $29.7M | 4.0% | | **Same Property RevPAR** | $134.19 | $133.04 | 0.9% | - The increase in 2018 revenue was primarily driven by contributions from hotels acquired in 2017 (**$23.5 million**) and 2018 (**$1.1 million**), along with a **$4.7 million** increase from the 37 comparable hotels[251](index=251&type=chunk) - The Company recorded a **$6.7 million** impairment loss on its Washington SHS, PA hotel during 2017, which negatively impacted year-over-year net income comparisons[267](index=267&type=chunk)[294](index=294&type=chunk) [Non-GAAP Financial Measures](index=51&type=section&id=Item%207.%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like FFO and EBITDA; in 2018, FFO was $85.8 million and Adjusted EBITDA was $131.5 million Reconciliation of Net Income to FFO and Adjusted FFO (in thousands) | Metric | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net Income** | $30,870 | $29,680 | $31,695 | | **Depreciation & Amortization** | $47,932 | $46,060 | $48,562 | | **Impairment Loss** | $0 | $6,663 | $0 | | **FFO** | $85,812 | $85,676 | $88,453 | | **Adjusted FFO** | $90,696 | $86,295 | $88,992 | Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) | Metric | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net Income** | $30,870 | $29,680 | $31,695 | | **EBITDA** | $122,384 | $118,919 | $124,374 | | **EBITDAre** | $122,402 | $122,255 | $124,384 | | **Adjusted EBITDA** | $131,499 | $126,698 | $127,973 | [Liquidity and Capital Resources](index=55&type=section&id=Item%207.%20Liquidity%20and%20Capital%20Resources) The Company's liquidity relies on cash and its credit facility, with $7.2 million cash, $168.5 million available, $585.1 million total debt, and a 34.7% leverage ratio - As of December 31, 2018, the Company had **$7.2 million** in cash and cash equivalents and **$168.5 million** available for borrowing under its **$250 million** senior unsecured revolving credit facility[327](index=327&type=chunk) - The company's leverage ratio (net debt to investment in hotels at cost) was **34.7%** at year-end 2018, with total debt of **$585.1 million** at an average interest rate of approximately **4.6%**[333](index=333&type=chunk) - In March 2018, the senior unsecured credit facility was refinanced, extending the maturity to March 2023 and reducing borrowing costs by up to **15 basis points**[336](index=336&type=chunk) - During 2018, the Company raised **$16.9 million** through its Dividend Reinvestment and Stock Purchase Plan (DRSPP) and **$7.6 million** through its At the Market (ATM) equity offering program[338](index=338&type=chunk)[339](index=339&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=63&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Company's primary market risk is interest rate changes on its $81.5 million variable-rate debt, with a 100 basis point increase raising annual interest expense by $0.8 million - The company's main market risk is interest rate fluctuations on its variable-rate debt, which totaled **$81.5 million** at year-end 2018[375](index=375&type=chunk)[377](index=377&type=chunk) - A hypothetical **100 basis point** increase in the variable interest rate would result in an estimated additional annual interest expense of approximately **$0.8 million**[378](index=378&type=chunk) [Controls and Procedures](index=64&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2018 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year 2018[383](index=383&type=chunk) - Management's assessment, based on the COSO framework, concluded that internal control over financial reporting was effective as of December 31, 2018, a conclusion audited and confirmed by PricewaterhouseCoopers LLP[386](index=386&type=chunk)[387](index=387&type=chunk) PART III [Trustees, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees](index=65&type=section&id=Items%2010-14) Information for Items 10-14, including corporate governance, executive compensation, and related party transactions, is incorporated by reference from the 2019 Proxy Statement - Information regarding corporate governance, executive compensation, security ownership, and related transactions is not detailed in this 10-K but is incorporated by reference from the forthcoming 2019 Proxy Statement[391](index=391&type=chunk)[392](index=392&type=chunk)[393](index=393&type=chunk)[394](index=394&type=chunk)[395](index=395&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=66&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section includes consolidated financial statements, the independent auditor's report, Schedule III, and an index of all exhibits filed with the report - This part contains the full audited consolidated financial statements for the fiscal years 2018, 2017, and 2016[398](index=398&type=chunk) - Financial Statement Schedule III, detailing Real Estate and Accumulated Depreciation as of December 31, 2018, is included[398](index=398&type=chunk)