Chatham Lodging Trust(US:CLDT)2025-11-05 16:00Financial Data and Key Metrics Changes - The company reported Q3 2025 hotel EBITDA of $28.8 million and adjusted EBITDA of $26.2 million, with adjusted FFO of $0.32 per share [22] - The GOP margin for the quarter was 43.6%, down 90 basis points from Q3 2024, reflecting strong expense control despite a challenging rent-par environment [22] - Year-over-year increase in labor and benefits cost per occupied room was held to 1.7% [22] Business Line Data and Key Metrics Changes - Rent-par performance in Silicon Valley showed mixed results, with Mountain View and San Mateo hotels growing by 2.5%, while Sunnyvale hotels fell by 9% [9] - Coastal Northeast and Greater New York markets experienced RevPAR growth of 2% and 8%, respectively, with the Hampton Inn Portland achieving an all-time record high for quarterly RevPAR [10] - The six predominantly leisure hotels produced rent-par growth of 3%, with SpringHill Suites Savannah seeing over 30% growth post-renovation [12] Market Data and Key Metrics Changes - The company noted that vehicle border crossings from Canada were down approximately 35% in Q3 compared to last year, impacting hotel performance in certain regions [17] - The three Washington, D.C. hotels experienced significant volatility, with rent-par down 19% in October due to the government shutdown [16] - Overall, the supply growth in the market is projected to remain below 1% for the next year, which is favorable for lodging [43] Company Strategy and Development Direction - The company completed the sale of five older hotels to enhance liquidity for future investments and plans to remain active in share repurchases, believing the stock is undervalued [5][6] - The company is optimistic about external growth opportunities, with deal flow underwriting steady and seller pricing expectations becoming more reasonable [6] - Development plans include the Home2 Suites in Portland, Maine, with site work expected to start in 2026 and a projected opening in early 2028 [30] Management Comments on Operating Environment and Future Outlook - Management acknowledged the volatility in operating fundamentals and the impact of external factors like government shutdowns and travel spending halts on performance [13] - The outlook for lodging dynamics is favorable, with expectations for capital investments and limited supply growth to support rent-par and margin expansion in the coming years [13] - Management expressed confidence in the long-term health of the markets, particularly in the Central and Southeastern U.S. [7] Other Important Information - The company repurchased approximately 500,000 shares, with plans to continue active repurchases [5][23] - Capital expenditures for the quarter were approximately $4 million, with ongoing renovations planned for two hotels [21] - The common dividend was increased by almost 30% earlier in the year, currently at 9 cents per share per quarter [21] Q&A Session Summary Question: Investment opportunities in the acquisition market - Management indicated that the current market presents opportunities due to negative rent-par trends, with cap rates now above 8% [26] Question: Timing of the Portland Maine development - Site work for the Portland development is expected to start in 2026, with a construction timeline of 21-24 months [30] Question: Factors driving rent-par performance variance - The decline was primarily due to the performance of the Sunnyvale hotels and the impact of the government shutdown on D.C. hotels [36] Question: Outlook for convention business in 2026 - The convention calendar in Austin and Dallas is expected to remain stable until 2027, with supply growth projected to be less than 1% [42] Question: Capital allocation priorities - The company prioritizes share repurchases, followed by hotel acquisitions and ongoing development projects [48]