Chatham Lodging Trust(CLDT) - 2024 Q4 - Annual Report

Company Overview - As of December 31, 2024, the company owned 37 hotels with a total of 5,596 rooms located in 16 states and the District of Columbia[25]. - 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.[34]. - The company is managed by Island Hospitality Management, LLC, which is 100% owned by the company's Chairman, President, and CEO[27]. - The company is internally managed and primarily invests in upscale extended-stay and premium-branded select-service hotels[203]. Financial Performance - Total revenue for the year ended December 31, 2024, was $317.2 million, a 2.0% increase from$ 311.1 million in 2023[212]. - Room revenue increased to $290.3 million in 2024, representing 91.5% of total revenue, compared to$ 285.0 million in 2023[212]. - Same property RevPAR increased by 2.8% during the year ended December 31, 2024[212]. - Food and beverage revenue decreased by 4.8% to $7.7 million in 2024 from$ 8.1 million in 2023[212]. - Other operating revenue increased by 8.2% to $18.1 million in 2024 compared to$ 16.7 million in 2023[212]. Capital Structure and Financing - The company's leverage ratio was approximately 23.1% as of December 31, 2024, down from 24.8% at December 31, 2023[31]. - The company aims to maintain a prudent capital structure with a long-term leverage ratio similar to historical levels, typically between the mid 20s and low 50s[31]. - The company plans to finance growth through free cash flow, debt, and issuances of common or preferred shares[31]. - The company has a mortgage debt balance of $159.2 million across its properties[185]. REIT Compliance and Distributions - The Company is required to distribute at least 90% of its REIT taxable income to maintain its REIT status[43]. - The company must make distributions to shareholders each year to maintain its REIT qualification, with future distributions dependent on financial performance and other factors[196]. - The company is required to distribute at least 90% of its REIT taxable income each year to shareholders, which may be impacted by downturns in operating results or unexpected capital improvements[84]. - The company must ensure that at least 75% of the value of gross assets consists of cash, government securities, and qualified real estate assets at the end of each calendar quarter[161]. Management and Operational Risks - The company cannot operate its hotels directly to maintain its qualification as a REIT, leasing them to taxable REIT subsidiary lessees[26]. - The company faces risks related to potential cancellations or non-renewals of franchise licenses, which could materially affect operations and financial condition[83]. - Increased operating expenses and capital expenditure requirements could adversely affect the company's ability to make distributions to shareholders[85]. - The company executed an amendment to its corporate office lease on June 1, 2023, resulting in an early termination payment of$ 0.1 million for vacating 7,374 rentable square feet[55]. Market and Economic Conditions - The COVID-19 pandemic has had a significant adverse impact on the lodging industry, affecting the Company's financial condition and performance[75]. - The lodging industry is sensitive to economic conditions, and declines in corporate budgets or consumer demand could lower revenues and profitability[101]. - Inflation and price volatility could increase operating and borrowing costs, negatively impacting financial condition and cash available for distribution[100]. - The cyclical nature of the lodging industry can lead to returns that are substantially below expectations, particularly during economic downturns[107]. Cybersecurity and Compliance - The company has not experienced any material information security breach incidents in the last three fiscal years, indicating a strong cybersecurity posture[181]. - The company has established a comprehensive cybersecurity framework aligned with the National Institute of Standards and Technology Cybersecurity Framework to manage risks[174]. - The company has implemented risk-based controls to prevent, detect, and respond to information security threats, relying on third-party tools and services[175]. - The Audit Committee is responsible for oversight of cybersecurity risks, with periodic reviews and assessments conducted by the Executive Leadership Team[182]. Community and Environmental Responsibility - The Company published its annual Corporate Responsibility Report in December 2024, adhering to standards from GRI, SASB, and TCFD[64]. - The Company is committed to improving energy efficiency through initiatives such as installing energy-efficient lighting and smart thermostats[65]. - The Company prioritizes community investment and has engaged in charitable activities in the West Palm Beach area[66].