Chatham Lodging Trust Q4 FY2024 earnings call

• RevPAR growth of 3% in 2024, other departmental profits up 8%, GOP margins 43%, and 150 basis points of margin expansion in the fourth quarter.
• Sold or under contract to sell six hotels with an average age of 24 years, RevPAR $98, net proceeds $101 million.
• Repaid $297 million of maturing debt in 2024, reduced net debt by $29 million, and leverage ratio decreased to 23% from 25% a year ago.
• Participated in GRESB, achieved score 83, earned four GRESB stars and Green Star, and returned $22 million dividends.
• Fourth quarter RevPAR growth 4%, beat industry performance, operating margins increased 150 basis points, labor costs moderated.
• Six of top eight markets had RevPAR growth, Silicon Valley hotels 14% RevPAR growth, Bellevue market 9% RevPAR growth.
• Plan to commence Portland, Maine hotel development in 2025, CapEx budget 2025 approximately $26 million.

In 2024, RevPAR growth was 3%, and other departmental profits increased by 8%. GOP margins were 43%. Six hotels were sold or are under contract to sell, with an average age of 24 years and RevPAR of $98, generating net proceeds of $101 million. In 2024, $297 million of maturing debt was repaid, and net debt was reduced by $29 million. The leverage ratio was reduced to 23% from 25% a year ago. Chatham participated in GRESB for the third time, achieving a score of 83, earning four out of five GRESB stars and the Green Star. $22 million of dividends were returned to shareholders. In the fourth quarter, RevPAR growth was 4%, operating margins increased by 150 basis points, and RevPAR grew in six of the top eight markets. Silicon Valley hotels had 14% RevPAR growth, and Bellevue market had 9% RevPAR growth.

• 2025 Q1: RevPAR growth 3%-4%, adjusted EBITDA $16.7M-$18.3M, adjusted FFO per share $0.12-$0.15.
• 2025 full year: RevPAR growth 1%-3.5%, adjusted EBITDA $92M-$97M, adjusted FFO per share $1.01-$1.11.
• Impact of asset sales on 2025 EBITDA approximately $6.8M, proceeds used to repay debt, expected impact on FFO per share $0.05 per share, plan to reinvest in accretive acquisitions.

• Acquisition market has bid-ask gap for quality assets in desired markets.
• Market fluctuations may affect asset valuation and acquisition plans.
• Industry competition may impact RevPAR growth and margins.
• Dallas market decline due to convention center expansion.

Q: About asset recycling and redeployment into acquisition market, A: Jeff said acquisition market is thin for desired assets, but will redouble efforts to find replacement assets this year.

Q: About Portland, Maine development, A: Jeff said expects 150-200 basis points premium over existing hotel acquisition, Portland market has hotel moratorium, but project is grandfathered.

Q: About RevPAR guide and occupancy/ADR drive, A: Dennis said demand growth drives occupancy, ADR lags, summer and business months have ADR growth.

Q: About capital recycling and acquisition activity, A: Jeremy said has dry powder, prefers BT and business-focused hotels, will be opportunistic.

Q: About impact of Los Angeles wildfires on hotels, A: Dennis said no physical damage to assets, one hotel benefited from wildfires.

Q: About stock price performance, A: Jeremy said relative valuation in line with peers, Silicon Valley RevPAR still below 2019 levels, need to further improve.

Q: About asset disposition and market entry, A: Dennis said focus on BT and business-related hotels, consider selling older assets and reinvesting in new ones.

Q: About BlackRock's shareholding change, A: Jeff said saw the filings, but no active dialogue with them, not sure of the reason.