News for the Hospitality Executive |
PALM BEACH,
Fla., May 9, 2011—Chatham Lodging Trust (NYSE: CLDT), a hotel real
estate
investment trust (REIT) focused on investing in upscale extended-stay
hotels
and premium-branded select-service hotels, today announced results for
the first
quarter ended March 31, 2011.
“We will add
five hotels to our
portfolio that exemplify exactly what our acquisition strategy is—to
buy the
highest quality, upscale extended stay and limited-service hotels,
concentrated
in high-barrier-to-entry markets with strong and diverse demand
generators.
These hotels are positioned for cash flow growth driven by ADR and
margin
expansion. With the joint venture, we are able to participate in an off
balance
sheet, higher leveraged investment in hotels that we understand better
than
anyone, hotels we believe will generate strong returns for our
shareholders,”
Fisher continued. “Additionally, we believe the potential to
acquire
hotels from the joint venture will provide meaningful growth to the
company and
allow us to more efficiently leverage the REIT’s overhead structure in
our role
as asset manager of the joint venture.” Acquisition In
addition to the $230
million investments above, the company expects to close on the
acquisition of
the Residence Inn Pittsburgh University Medical Center in the second
quarter. “We
will be opportunistic in building our portfolio and deploying our
capital,”
commented Peter Willis, chief investment officer. We continue to have a
robust
pipeline of quality assets, consistent with our underwriting criteria,
that we
believe would be great additions to our portfolio.” As of the date
of this release, the
company has substantially completed major renovations on five of the
seven hotels
requiring full renovations during 2011. These
five hotels account for approximately 40
percent of the company’s rooms. The
company has spent approximately $8 million on the renovations as of
March 31,
2011 with full year expenditures unchanged from our prior guidance of
approximately
$12 million in 2011, excluding any potential expenditures related to
future hotels
that may be acquired. As of March
31, 2011, the company
had approximately $31 million of cash and cash equivalents and
borrowing
capacity of approximately $85 million under the company’s credit
facility. The company’s ratio of net debt
to investment
in hotels, at cost was approximately 5.7 percent as of March 31, 2011. Capital
Structure At March 31,
2011, the company
had debt outstanding of approximately $12 million, comprised of amounts
owed on
two separate loans collateralized by single hotels. The
weighted average interest rate on the two
loans is 5.91 percent. Subsequent to
the end of the first
quarter, the company amended certain covenants related to the company’s
consolidated leverage ratio and fixed charge coverage ratio. Subject to certain conditions, the line of
credit maintains its accordion feature that provides the company with
the
ability to increase the facility to $110 million. “This
amendment provides us with the
flexibility to consummate these opportunistic investments and
accelerate our
growth,” said Dennis M. Craven, chief financial officer. “Our
overall leverage will be higher than our
targeted 35 percent after these investments. However, we are
comfortable with
temporarily increasing our leverage at this early stage of the lodging
cycle
recovery to take advantage of these opportunities and add high quality
assets
to our portfolio that we expect will generate returns consistent with
our
current portfolio.” Dividend On February 9,
2011, the company
declared a common share dividend of $0.175 per share on its common
shares, paid
on April 15, 2011 to shareholders of record on March 31, 2011. The
company will
continue to evaluate its dividend policy on a quarterly basis. Second
Quarter Update The
improvement in the
hospitality industry forecast to occur in 2011 is largely dependent on
economic
growth, reduced unemployment and increased business travel spending. Excluding the Homewood Suites Dallas, which
was the only hotel under renovation in April 2011, RevPAR at the
company’s
remaining 12 hotels was up 5.4 percent in April 2011 as compared to
April 2010. Given the
uncertainty regarding
the timing of the acquisition of the five hotels and the joint venture
investment, the company is not providing updated guidance for the
remainder of
2011. The company
will hold a conference
call regarding its first quarter 2011 results tomorrow, May 10, 2011,
at 10
a.m. Eastern time. Shareholders and
other interested parties may listen to a simultaneous webcast of the
conference
call on the Internet by logging onto Chatham’s Web site, http://www.chathamlodgingtrust.com/,
or http://www.streetevents.com/,
or may participate in the conference call by calling (480) 629-9866,
reference
number 4436528. A recording of the call
will be available by telephone until midnight on Tuesday, May 17, 2011,
by
dialing (800) 406-7325, reference number 4436528. A
replay of the conference call will be posted
on Chatham’s website. Chatham
Lodging Trust is a
self-advised REIT that was organized to invest in upscale extended-stay
hotels
and premium-branded, select-service hotels. The
company currently owns 13 hotels with an
aggregate of 1,650 rooms/suites in nine states, six additional hotels
comprising 938 rooms/suites under contract to purchase and a minority
investment in a joint venture that will acquire 64 hotels in the 2011
third
quarter. Additional information about
Chatham may be found at www.chathamlodgingtrust.com.
Included
in this
press release are certain “non-GAAP financial measures,” within the
meaning of
Securities and Exchange Commission (SEC) rules and regulations, that
are
different from measures calculated and presented in accordance with
GAAP
(generally accepted accounting principles). The company considers the
following
non-GAAP financial measures useful to investors as key supplemental
measures of
its operating performance: (1) FFO, (2) Adjusted FFO,
(3) EBITDA, and (4) Adjusted EBITDA. These non-GAAP financial
measures could be considered along with, but not as alternatives to,
net income
or loss, cash flows from operations or any other measures of the
company’s
operating performance prescribed by GAAP. The company calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income or loss (calculated in accordance with GAAP), excluding gains or losses from sales of real estate, items classified by GAAP as extraordinary, the cumulative effect of changes in accounting principles, plus depreciation and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures. The company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it measures performance without regard to specified non-cash items such as real estate depreciation and amortization, gain or loss on sale of real estate assets and certain other items that the company believes are not indicative of the performance of its underlying hotel properties. The company believes that these items are more representative of its asset base and its acquisition and disposition activities than its ongoing operations, and that by excluding the effects of the items, FFO is useful to investors in comparing its operating performance between periods and between REITs that also report FFO in accordance with the NAREIT definition. The
company further
adjusts FFO for certain additional items that are not in NAREIT’s
definition of
FFO, including acquisition transaction costs and costs associated with
the
departure of the company’s former CFO. The
company believes that Adjusted FFO provides investors with another
financial
measure that may facilitate comparisons of operating performance
between
periods and between REITs that make similar adjustments to FFO. EBITDA and Adjusted EBITDA The company calculates EBITDA as net income or
loss excluding interest expense; provision for income taxes, including
income
taxes applicable to sale of assets; and depreciation and amortization.
The
company believes EBITDA is useful to investors in evaluating its
operating
performance because it helps investors compare the company’s operating
performance between periods and between REITs that report similar
measures by
removing the impact of its capital structure (primarily interest
expense) and
asset base (primarily depreciation and amortization) from its operating
results. In addition, the company uses EBITDA as one measure in
determining the
value of hotel acquisitions and dispositions. The company further adjusts EBITDA for certain
additional items, including acquisition transaction costs and non-cash
share-based compensation, which it believes are not indicative of the
performance of its underlying hotel properties. The company believes
that
Adjusted EBITDA provides investors with another financial measure that
may facilitate comparisons of operating performance between periods and
between REITs. Although the company presentsFFO, Adjusted
FFO, EBITDA and Adjusted EBITDA because it believes they are useful to
investors in comparing the company’s operating performance between
periods and
between REITs, these measures have limitations as analytical tools.
Some of
these limitations are:
|
Contact: Dennis Craven (Company) Chief Financial Officer (561) 227-1386 Jerry Daly or Carol McCune |