On August 2, 2024, Chatham Lodging Trust (CLDT, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Chatham Lodging Trust is a U.S.-based real estate investment trust that invests in upscale extended-stay hotels. The firm operates across various states in the U.S., including California, New York, Texas, Florida, Minnesota, Massachusetts, and Pennsylvania among others. Substantially all of the company's assets are held and operated by its Operating Partnership, Chatham Lodging, LP. Chatham Lodging LP and its subsidiaries lease the overall company's hotels. The firm operates through a single segment because of the similar economic characteristics of its hotels. Chatham's revenue streams include Room, Food and beverage, and Other. Room comprises the majority of total revenue. Chatham's hotels operate under brands which include, Hilton, Marriott, and Hyatt.
Performance and Challenges
Chatham Lodging Trust (CLDT, Financial) reported a 4% increase in Portfolio Revenue Per Available Room (RevPAR) to $151 compared to the second quarter of 2023 for its 38 comparable hotels. The average daily rate (ADR) remained unchanged at $183, while occupancy rose by 4% to 82%. Notably, for the first time since 2019, portfolio RevPAR exceeded 2019 levels. However, net income decreased to $7.0 million from $9.4 million in the same period last year, with net income per diluted common share dropping to $0.10 from $0.15.
Financial Achievements
Despite the challenges, Chatham Lodging Trust (CLDT, Financial) achieved significant milestones. The company generated a hotel EBITDA margin of 39%, albeit lower than the 41% margin in Q2 2023. Adjusted EBITDA stood at $31.4 million, slightly down from $31.9 million in the previous year. Adjusted Funds From Operations (FFO) per diluted share was $0.39, surpassing analyst estimates of $0.36 per share. This performance underscores the company's resilience and strategic positioning in the REIT sector.
Key Financial Metrics
Chatham Lodging Trust (CLDT, Financial) reported the following key financial metrics for the three and six months ended June 30, 2024, and 2023:
| Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 |
|---|---|---|---|---|
| Net income (loss) to common shareholders | $4.9M | $7.2M | $(2.4)M | $0.3M |
| Diluted net income (loss) per common share | $0.10 | $0.15 | $(0.05) | $0.01 |
| GOP Margin | 46.0% | 48.5% | 42.7% | 44.6% |
| Hotel EBITDA Margin | 39.0% | 41.3% | 35.4% | 36.6% |
| Adjusted EBITDA | $31.4M | $31.9M | $50.2M | $49.6M |
| AFFO | $19.9M | $21.8M | $27.9M | $29.7M |
| AFFO per diluted share | $0.39 | $0.43 | $0.55 | $0.59 |
| Dividends per common share | $0.07 | $0.07 | $0.14 | $0.14 |
Commentary and Analysis
The second quarter was a great quarter for Chatham and our shareholders, posting impressive results for the quarter, with all key metrics finishing at the top of our guidance range and completing a multi-year transformation of our balance sheet that positions us strongly for future opportunities," emphasized Jeffrey H. Fisher, Chatham's president and chief executive officer.
Chatham Lodging Trust (CLDT, Financial) also made strategic moves to strengthen its balance sheet by repaying $261 million of maturing debt through various means, including the issuance of CMBS debt and borrowings on its unsecured term loan and revolving credit facility. This repositioning is expected to provide the company with the financial flexibility to pursue future growth opportunities.
Conclusion
Chatham Lodging Trust (CLDT, Financial) has demonstrated resilience and strategic foresight in navigating the challenges of the current economic environment. The company's ability to surpass analyst estimates for adjusted FFO per share and its strategic debt management initiatives position it well for future growth. Investors and stakeholders will be keenly watching how Chatham leverages its strengthened balance sheet to capitalize on emerging opportunities in the upscale extended-stay hotel market.
Explore the complete 8-K earnings release (here) from Chatham Lodging Trust for further details.
