Chatham Lodging Trust Q3 FY2025 earnings call

• Completed sale of 5 hotels with average age 25 years at ~6% cap rate, all among lowest RevPAR in portfolio; under contract to sell another hotel in Q4. - Repurchased ~500,000 or 1% of outstanding shares at avg price $6.85. - Upsized and recast syndication of credit facility and term loan, enhancing financial condition. - Silicon Valley hotels replacing half of business lost from a large corporate client. - Washington D.C. hotels had volatile RevPAR: Q1 +6%, Q2 -2%, Q3 impacted by shutdown threat. - Coastal Northeast and Greater New York markets benefited from supply restrictions and demand balance. - Hampton Inn Portland, Maine set all-time quarterly RevPAR high; upcoming Home2 Portland development in Downtown Portland. - Labor and benefits costs up 2% in Q3, GOP margin declined 70 points to 44% but still strong; other operating profit up slightly, improving margins by 30 basis points.

Chatham Lodging Trust's segment performance varied across regions. In Silicon Valley, RevPAR at 2 Sunnyvale hotels was down 9% in Q3, while the other 2 Silicon Valley hotels had 7% growth; excluding the 2 Sunnyvale hotels, portfolio RevPAR was down 1.7%. Coastal Northeast and Greater New York markets saw RevPAR growth of 2% and 8% respectively. The 6 predominantly leisure hotels, accounting for ~20% of EBITDA, had 3% RevPAR growth. For example, the Hampton Inn Portland, Maine set an all-time record high for quarterly RevPAR. The Residence Inn Holtsville, Long Island had 28% RevPAR growth due to the Ryder Cup, and year-to-date RevPAR was up 17% through August. Austin, Dallas, and San Diego were adversely impacted by convention-related demand losses. The Sunbelt hotels like Savannah had RevPAR up over 30% post-renovation, Charleston hotels had 4% RevPAR growth, etc. Revenue contribution % wasn't explicitly stated in absolute terms but performance was detailed by region and hotel type.

• Q4 2025 guidance: RevPAR -3.5% to -2.5%, adjusted EBITDA $16.7M to $18.3M, adjusted FFO per share $0.14 to $0.17. - Full-year 2025 guidance: RevPAR -0.7% to -0.3%, adjusted EBITDA $89.2M to $90.8M, adjusted FFO per share $0.96 to $0.99. Guidance assumes no further asset sales, capital markets activity, or changes in floating interest rates.

• Government shutdown impact on Washington D.C. hotels, affecting RevPAR. - Convention demand losses in Austin, Dallas, and San Diego, with Austin and Dallas convention centers closed for renovation and San Diego coming off a record 2024 convention year. - Inbound international travel, especially from Canada, down substantially, impacting certain markets. - Seller pricing expectations in acquisition market moving north of 8% cap rate, which could affect investment decisions.

Q: Can you provide more color on investment opportunities and acquisition market?

A: Jeff Fisher mentioned acquisition market has opportunities but seller asking caps are north of 8%, and they aim to create long-term shareholder value with new hotels. Dennis Craven added newer assets facing renovation decisions might spur activity.

Q: What's the timing of the Portland, Maine development?

A: Dennis Craven said site work starts in 2026, construction timeline is 21-24 months, likely opening early 2028.

Q: What drove the RevPAR variance in Q3?

A: Dennis Craven stated it was the decision on 2 Sunnyvale hotels and government shutdown impact on Washington D.C. hotels.

Q: How is convention business shaping up for 2026 and supply outlook?

A: Dennis Craven said Austin and Dallas will maintain current convention status until 2027, San Diego will have a similar year to 2025, and supply growth in markets is less than 1% and projected to remain so.

Q: What are the capital allocation priorities?

A: Dennis Craven said first priority is active share repurchases, next is acquisitions, and then development like the Home2 Portland project.

Q: Why pursue the Portland development when stock is trading at half the cost per key?

A: Dennis Craven explained evaluating the Portland development individually based on projected returns for the specific asset and whether it adds value to the overall portfolio; they only proceed if it makes long-term sense and earns returns well above the portfolio's current return.