8-K: Chatham Lodging Trust Announces First Quarter 2025 Results and Initiates $25 Million Share Repurchase Program

Chatham Lodging Trust reports Q1 2025 results, including a 4% RevPAR increase and the launch of a $25 million share repurchase program.

Summary

• Chatham Lodging Trust (CLDT) announced its first quarter 2025 results, revealing a net loss of $1 million applicable to common shareholders, an improvement from the $7 million loss in Q1 2024.
• The company's RevPAR increased by 4% to $127 for comparable hotels.
• Occupancy rose by 4% to 72%, while the average daily rate (ADR) remained flat at $176.
• Adjusted EBITDA decreased by $1 million to $18 million.
• Adjusted FFO was $7 million, compared to $8 million in the same quarter last year.
• The company increased its quarterly common dividend by 29% to $0.09 per share.
• Chatham Lodging Trust initiated a $25 million share repurchase program.
• The company sold five hotels for a combined $83 million.
• For the second quarter of 2025, the company expects RevPAR to decline between 0.5% and 2.0%.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company reported a net loss, it was an improvement year-over-year. The initiation of a share repurchase program and dividend increase are positive signals, but the projected RevPAR decline for Q2 tempers the overall outlook.

Positives

• RevPAR increased by 4% to $127, outperforming the industry.
• Occupancy increased by 4% to 72%.
• The quarterly common dividend increased by 29% to $0.09 per share.
• The company initiated a $25 million share repurchase program.
• Net loss applicable to common shareholders improved to $1 million from $7 million year-over-year.
• The company successfully sold five hotels for $83 million.
• Net debt decreased to $365 million from $389 million at the end of 2024.
• Leverage ratio decreased to approximately 22% from 23% at the end of 2024.

Negatives

• Adjusted EBITDA decreased by $1 million to $18 million.
• Adjusted FFO decreased to $7 million from $8 million in the same quarter last year.
• Net loss applicable to common shareholders was $1 million.
• April RevPAR declined by 4% due to economic uncertainty and the timing of holidays.
• Coastal Northeast RevPAR decreased by 8%.

Risks

• The company acknowledges the uncertain economic climate impacting RevPAR performance.
• The company's guidance for Q2 2025 includes a projected RevPAR decline of 0.5% to 2.0%.
• The company's future results could differ materially from forward-looking statements due to various risks and uncertainties, including economic conditions and operating risks associated with the hotel business.

Future Outlook

The company expects RevPAR to decline 0.5% to 2.0% for the second quarter of 2025 and projects RevPAR to range from -1% to +1% for the second half of the year.

Management Comments

• '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,' Fisher stated.
• '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,' Fisher said.
• '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, 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,' Craven commented.

Industry Context

Chatham Lodging Trust's RevPAR growth outperformed the industry average, driven by strong business travel markets, particularly in technology-related sectors.

Comparison to Industry Standards

• Chatham's first quarter RevPAR growth of 4 percent basically doubled the industry performance of 2 percent.
• Chatham has the highest concentration of extended-stay rooms of any public lodging REIT at 61 percent.

Related Party Transactions

• The company had $609 and $490 due to related parties in accounts payable and accrued expenses at March 31, 2025 and December 31, 2024, respectively.
• Management fees paid to related parties were $2.290 million and $2.309 million for the three months ended March 31, 2025 and 2024, respectively.
• Reimbursable costs from related parties were $277 and $278 for the three months ended March 31, 2025 and 2024, respectively.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and share repurchase program.
• Employees may be affected by the sale of five hotels.
• Customers may experience improvements from hotel renovations.

Next Steps

• The company will continue to execute its share repurchase program.
• The company will focus on strategic investments to enhance shareholder value.
• The company will complete renovations at the Residence Inn Austin, Texas, and the Residence Inn Mountain View, Calif., during the fourth quarter.

Key Dates

Keywords

Chatham Lodging Trust, REIT, RevPAR, Share Repurchase Program, Dividend, Hotel, EBITDA, FFO, Results, Financials