Chatham Lodging initiates share repurchase program

WEST PALM BEACH, FLA. – Chatham Lodging Trust, a lodging real estate investment trust (REIT) that invests in upscale, extended-stay hotels and premium-branded, select-service hotels, today announced results for the first quarter ended March 31, 2025.

First Quarter 2025 Key Items

• Portfolio Revenue Per Available Room (RevPAR) – Increased 4 percent to $127 compared to the 2024 first quarter for the 35 comparable hotels. Occupancy jumped 4 percent to 72 percent, and average daily rate (ADR) was flat at $176.
  – RevPAR for the four Silicon Valley hotels was up 8 percent.
• Net Income (loss) – Incurred a net loss applicable to common shareholders of $1 million compared to a net loss of $7 million in the 2024 first quarter. Net loss to common shareholders per diluted common share was $(0.01) versus net loss per diluted common share of $(0.15) for the same period last year.
• Hotel Margins – Drove GOP margins 30 basis points higher to 39 percent in the 2025 first quarter. Hotel EBITDA margins declined 30 basis points to 31 percent in the 2025 first quarter.
• Adjusted EBITDA – Adjusted EBITDA declined $1 million to $18 million from $19 million.
• Adjusted FFO – Produced AFFO of $7 million in the 2025 first quarter versus $8 million in the 2024 first quarter. Adjusted FFO per diluted share was $0.14 compared to $0.16 in the 2024 first quarter. Unlike some other lodging REITS, Chatham does not add-back share-based compensation expense in its calculation of adjusted FFO per share.
• Dividend Increased – Raised the quarterly common dividend by 29 percent, or $0.02 per common share, to $0.09 per share.
• Asset Recycling – Closed on the sale of two of the five hotels under contract to sell for combined proceeds of $31 million. After quarter-end, closed on the sale of the last of the five hotels for $23 million. Gross proceeds on the sale of the five hotels, which had an average age of 23 years old, were $83 million.

The following chart summarizes the consolidated financial results for the three months ended March 31, 2025, and 2024, based on all properties owned during those periods, except for RevPAR, which is based on the comparable hotels ($ in millions, except margin percentages and per share data):

Share Buy-Back Plan

For the first time since its inception, the board of trustees approved a $25 million share repurchase program. Purchases may be made from time to time at management’s discretion. The share repurchase program permits shares to be repurchased in a variety of methods, including open market purchases, accelerated share repurchases or other privately negotiated transactions. The share repurchase program has no time limit and may be suspended or discontinued at any time.

“Having successfully addressed close to $500 million in maturing debt essentially over the last two years while reducing our net debt ratio by approximately 50 percent since 2020 to the lowest levels in over a decade, we are well positioned to use a multitude of capital allocation strategies to enhance shareholder value,” Fisher emphasized. “Announcing our first ever share repurchase program is another strategic option for us, and we will focus on the best outcomes of our investment dollars, whether that is share purchases, acquisitions or our Portland development. We are confident in our long-term trajectory, and with our recently announced dividend increase and this share buy-back program, we are further increasing the amount of capital we plan to return to shareholders.”

First Quarter 2025 Operating Results

“Overall, we had a strong first quarter with RevPAR growth of 4 percent, and the quarter got off to a great start with growth of 5 percent in January, 7 percent in February followed by a flat March,” Fisher commented. “Yet again, our RevPAR growth significantly outperformed the industry as our business travel markets, especially technology related, drove us higher. GOP and hotel EBITDA margins were strong this quarter, and we were able to generate Adjusted FFO per share at the top of our guidance range.”

Fisher continued, “Top of mind for us and our investor community is what the future looks like as the current uncertain economic climate has impacted RevPAR performance for us and the industry. Prior to the initial tariff policies and cuts in government spending announced in early March, we were projecting RevPAR growth of 3 percent in March, but RevPAR ended up flat for the month. April’s RevPAR decline of 4 percent was impacted by slowing demand attributable to the uncertain economic environment, but the biggest impact was the period surrounding the Passover and Easter holidays. Those holidays coming in successive weeks in the same month meaningfully impacted business travel. Through the first twelve days of April leading into Passover, RevPAR was up over 1 percent, then for the ten days from April 13th to the 23rd surrounding the holidays, RevPAR was down approximately 15 percent, and we finished the month with RevPAR up slightly over the last 8 days of the month.  Good news is that versus last year, May RevPAR is trending better and is currently forecast to range from flat to slightly positive.” 

Dennis Craven, Chatham’s Chief Operating Officer, commented, “Yet again, after beating industry performance for the past three years, our first quarter RevPAR growth of 4 percent basically doubled the industry performance of 2 percent. Six of our top eight markets are primarily business travel oriented, and business travel demand growth was broad across most of those markets and drove our outperformance. April RevPAR statistics declined with occupancy, ADR and RevPAR down 3, 1 and 4 percent, respectively. Occupancy was still a very healthy 80 percent despite the slippage surrounding the religious holidays.”

Craven remarked, “Silicon Valley, our largest market, produced solid RevPAR growth of 8 percent in the quarter as technology related demand remained strong. We set post-pandemic first quarter highs in both occupancy and ADR with 72 percent and a strong $191, respectively. After a great first quarter, RevPAR at our four Silicon Valley hotels declined 2 percent in April.”

“Staying in California, Los Angeles RevPAR grew 14 percent as our Woodland Hills Home2 Suites experienced RevPAR growth of 40 percent due to demand from the California wildfires. In addition, our other two area hotels also had RevPAR growth over 10 percent with little demand from wildfire related business.”

Craven remarked further, “RevPAR in our leisure markets was down 1 percent in the quarter when you exclude our Portsmouth hotel that was under renovation. San Diego was our only top market that declined in the quarter (excluding renovation impacts), and it benefited from a great convention calendar in 2024, so this quarter is not surprising. Within our leisure hotels, RevPAR at our two Florida hotels was down 8 percent while our Anaheim Residence Inn had a great quarter with RevPAR up 9 percent.”

Approximately 65 percent of Chatham’s hotel EBITDA over the last twelve months was generated from its extended-stay hotels. Chatham has the highest concentration of extended-stay rooms of any public lodging REIT at 61 percent.

Asset Recycling

In the fourth quarter of 2024, Chatham entered into contracts to sell five hotels with an average age of approximately 23 years. Two of those hotels sold in the 2024 fourth quarter, two sold in the first quarter of 2025 and one sold subsequent to quarter end. The five hotels sold comprise the following:

• 144-suite Homewood Suites Bloomington, Minn. (sold in December 2024)
• 143-suite Homewood Suites Maitland, Fla. (sold in December 2024)
• 121-suite Homewood Suites Brentwood, Tenn. (sold in January 2025)
• 120-room Hampton Inn and Suites Houston, Texas (sold in March 2025)
• 197-room Courtyard by Marriott Houston, Texas (sold in April 2025)

Including near term capital expenditure requirements, the $83 million aggregate sales proceeds of the five hotels equated to an approximate six percent capitalization rate on 2024 net operating income. Each of the five hotels were among the six lowest RevPAR hotels in Chatham’s portfolio.

Hotel Investments

During the 2025 first quarter, the company incurred capital expenditures of approximately $7 million. In the recently completed renovation of the Hilton Garden Inn Portsmouth, N.H., the entire ground floor was entirely re-designed and enhanced with an upscale bar, restaurant, market and meeting rooms. Also, the company converted former meeting room space into five additional guest rooms, adding significant value to the hotel.

Chatham’s 2025 capital expenditure budget is approximately $26 million, which includes renovations at three hotels expected to cost approximately $16 million. The three hotels scheduled for renovation in 2025 are the Hilton Garden Inn Portsmouth, N.H., during the first quarter and the Residence Inn Austin, Texas, and the Residence Inn Mountain View, Calif., both during the fourth quarter.

The article Chatham Lodging initiates share repurchase program first appeared in TravelDailyNews International.