Chatham Lodging Trust(CLDT) - 2024 Q3 - Quarterly Report

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