Chatham Lodging Trust Announces Third Quarter Results, Amends Line of Credit with Increased Capacity, Lower Costs

  Chatham Lodging Trust Announces Third Quarter Results, Amends Line of Credit
  with Increased Capacity, Lower Costs

             Q3 RevPAR up 5.8 Percent, YTD RevPAR up 8.1 Percent

Business Wire

PALM BEACH, Fla. -- November 06, 2012

Chatham Lodging Trust (NYSE: CLDT), a hotel real estate investment trust
(REIT) focused on investing in premium-branded, upscale, extended-stay hotels
and select-service hotels, today announced results for the quarter ended
September 30, 2012.

In addition, the company announced that it amended its senior secured
revolving credit facility to increase the line of credit to $95 million and
lower costs by approximately 250 basis points.

Third Quarter 2012 Highlights

  *Hotel RevPAR – Rose 5.8 percent to $114.
  *Adjusted EBITDA – Increased 48.5 percent, or $3.9 million, to $12.0
    million.
  *Adjusted FFO – Improved adjusted FFO per diluted share 39.4 percent to 
    $0.46, in line with consensus estimates.
  *Comparable GOP Margins – Grew 180 basis points to 46.2 percent. Five of
    Chatham’s 18 hotels were acquired during the 2011 third quarter.
  *Joint Venture Portfolio – Continued to exceed internal budget expectations
    for RevPAR and EBITDA. Received distributions of $1.7 million in the third
    quarter, bringing total distributions to $20.9 million or 56.5 percent of
    Chatham’s initial investment in the joint venture.

Consolidated Financial Results

The following is a summary of the consolidated financial results ($ in
millions, except RevPAR, ADR, occupancy and per share amounts):

                                                   
                                 Three Months Ended   Nine Months Ended
                                 September 30,        September 30,
                                 2012      2011      2012     2011
RevPAR                           $114       $108      $109      $100
ADR                              $132       $128      $131      $126
Occupancy                        86.2%      84.4%     82.9%     79.4%
Adjusted EBITDA                  $12.0      $8.1      $32.5     $15.1
Comparable GOP Margin            46.2%      44.4%     45.3%     43.6%
Comparable Hotel EBITDA Margin   39.0%      37.9%     38.4%     36.5%
Net income / loss                $1.5       $(1.0)    $0.9      $(2.9)
AFFO                             $6.4       $4.5      $15.2     $9.3
AFFO per diluted share           $0.46      $0.33     $1.10     $0.71
                                                                

Market Share Gains and Fundamental Improvements Lead Operating Results

“Our portfolio continues to produce strong results with third quarter RevPAR
improving 5.8 percent and all other metrics continuing to advance nicely,”
said Jeffrey H. Fisher, Chatham’s president and CEO. “Our hotels enjoy a
competitive advantage due to the substantial renovations we made to our
portfolio, and we continue to see market share gains in both rate and
occupancy.

“Our wholly owned portfolio achieved a RevPAR Index premium of 121 percent in
the 2012 third quarter, and we believe there is opportunity for further
improvement,” he said. “New supply growth in our markets remains at a minimum,
and the barriers to new competition are high.

“Room rate increases now make up more than half of the improvement in RevPAR
which we view as quite positive,” Fisher added. “As we move into 2013, we
expect the predominant driver of RevPAR advances for our portfolio to be from
rate which will enhance our already strong operating profit margins.

“Our joint-venture investment continues to outperform hotel industry averages
and generate very strong returns,” Fisher stated. “These results validate our
business plan to generate superior returns for our shareholders by investing
in high quality, premium-branded hotels in high barrier-to-entry markets,
acquired at attractive prices that can benefit from strategic asset management
and experienced operators.”

During the quarter, the company transitioned the last of the six Homewood
Suites by Hilton hotels previously managed by Hilton to Island Hospitality.
For the quarter, RevPAR at those properties increased 6.3 percent.

Joint Venture Results Exceeded Budgeted Expectations

Chatham holds a 10.3 percent interest in a joint venture (JV) that currently
owns a 55-hotel portfolio, comprising 7,282 rooms.

The JV previously announced plans to sell 13 non-core assets. During the 2012
third quarter, the JV sold three hotels, bringing total dispositions to eight
non-core assets. The sale of the remaining five hotels is not expected to have
a material impact on the JV’s portfolio results as they are mostly unbranded
hotels. Upon completion of the sale of the remaining five hotels, the JV
expects to receive additional net proceeds of approximately $6 million.

The company received distributions of $1.7 million from the joint venture
attributed to cash flow from operations and asset sales during the 2012 third
quarter, bringing total distributions to Chatham of $20.9 million
year-to-date.

“The joint-venture portfolio’s performance has been outstanding, with RevPAR
growing significantly more than the industry average, strong margin growth and
cash distributions ahead of our original expectations,” Fisher said. “With
Chatham’s net investment after distributions now approximately $16.1 million,
our JV investment is producing strong, double digit, leveraged returns in the
first year of the partnership.”

Capital Structure

As of September 30, 2012, the company had debt outstanding of $208.7 million
at an average interest rate of 5.8 percent. Net debt was $203.0 million at
September 30, 2012. Chatham’s leverage ratio is 48 percent based on the
company’s investment in hotels at cost and its investment in the joint venture
at cost. “During the third quarter, we continued to generate significant free
cash flow, allowing us to pay down $5.4 million of debt during the third
quarter, on top of the $8.9 million of debt we paid down in the second
quarter,” said Dennis Craven, Chatham’s chief financial officer.

“We experienced only minor damage and power disruptions at several of our
hotels due to Hurricane Sandy,” Craven added. “Looking ahead, we will begin in
the 2012 fourth quarter planned renovations at our Residence Inns in New
Rochelle, N.Y. and Anaheim, Calif., which will be completed in the 2013 first
quarter. Our portfolio will be in top physical condition with our next
renovation, one hotel, not scheduled until 2014. With our joint venture
investment and our wholly owned portfolio producing solid results and cash
flow, we expect to continue to generate free cash flow which we will use to
further reduce debt and/or acquire hotels.”

Fisher commented, “We will continue to opportunistically look at ways to grow
Chatham’s returns without raising equity in the current market. We have
several sources of funding, including using free cash flow generated from
operations, distributions from the joint venture and recycling capital
profitably by selectively disposing assets.”

Line of Credit Amendment Provides Greater Capacity, Lowers Costs

Chatham also announced that it successfully amended its senior secured
revolving credit facility. The company currently has approximately $46.5
million available on its line of credit. On November 5, 2012, the company
completed the amendment which extends the maturity date to November 5, 2015,
and includes an option to extend the maturity by an additional year. Other key
terms amended include:

                                                  
                          Original Terms           Amended Terms
Facility amount            $85 million              $95 million
Accordion feature          Additional $25 million   Additional $20 million
LIBOR floor                1.25%                    None
Interest rate applicable   325-425 basis points,    200-300 basis points,
margin                       based on                   based on
                          leverage ratio           leverage ratio
Unused fee                   50 basis points            25 basis points if
                                                        less than
                                                        50% unused, 35 basis
                                                        points if
                                                  more than 50% unused
Minimum fixed charge         1.75-2.0x                  1.5x
coverage ratio                                     
                                                        

Participating lenders for the secured credit facility include Barclays
Capital, Regions Capital Markets, Credit Agricole Corporate and Investment
Bank, UBS Securities and US Bank National Association. Barclays Capital and
Regions Capital Markets acted as joint lead arrangers, Barclays Bank PLC as
administrative agent, Regions Bank as syndication agent, with Credit Agricole
Corporate and Investment Bank, UBS Securities and US Bank National Association
acting as co-documentation agents.

“We appreciate the support of our lenders as we continue to build Chatham into
a premier owner of upscale, extended-stay and premium-branded, select-service
hotels,” Craven commented. “With this amendment, our credit facility borrowing
costs decrease by approximately 250 basis points which certainly augments our
earnings going forward.”

Dividend

Chatham currently pays a quarterly dividend of $0.20 per common share. The
annualized dividend represents a dividend yield of 6.1 percent, one of the
highest in the industry, based on the company’s commons share closing price of
$13.21 at the close of business on November 5, 2012.

2012 Guidance

The company provides guidance, but does not undertake to update it for any
developments in its business. Achievement of the results is subject to the
risks disclosed in the company’s filings with the Securities and Exchange
Commission. The company’s guidance for the fourth quarter reduces the upper
end of its adjusted FFO and FFO per share outlook for the full year to account
for a more slightly modest RevPAR growth estimated for the fourth quarter as a
result of the uncertainty surrounding the impact from Hurricane Sandy:

                                                            
                                             Q4 2012           2012 Forecast
RevPAR                                       $98-$100          $105-$106
RevPAR growth                                +3-5%             +7.0-7.3%
Net loss                                     $(1.9)-$(1.5) M   $(1.0)-$(0.7) M
Net loss per diluted share                   $(0.14)-$(0.11)   $(0.07)-$(0.05)
Adjusted EBITDA                              $8.0-$8.5 M       $40.5-$41.0 M
Adjusted funds from operation ("FFO")        $2.5-$3.0 M       $17.8-$18.2 M
Adjusted FFO per diluted share               $0.18-$0.21       $1.28-$1.31
Hotel EBITDA margins                         34-35%            37.3-37.5%
Corporate cash administrative expenses       $1.5 M            $5.4 M
Corporate non-cash administrative expenses   $0.5 M            $2.0 M
Interest expense                             $2.9 M            $12.8 M
Non-cash amortization of deferred fees       $0.5 M            $2.0 M
Weighted average shares outstanding          13.91 M           13.91 M
                                                               

Funds from operations (FFO), Adjusted FFO (AFFO), EBITDA and Adjusted EBITDA
are non-GAAP financial measures within the meaning of the rules of the
Securities and Exchange Commission. See the discussion included in this press
release for information regarding these non-GAAP financial measures.

Earnings Call

The company will hold its third quarter 2012 conference call tomorrow,
November 7, 2012, 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, www.chathamlodgingtrust.com, or
www.streetevents.com, or may participate in the conference call by dialing
1-877-941-9205, reference number 4569457. A recording of the call will be
available by telephone until midnight on Wednesday, November 14, 2012, by
dialing 1-800-406-7325, reference number 4569457. A replay of the conference
call will be posted on Chatham’s website.

About Chatham Lodging Trust

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 18 hotels with an aggregate of 2,414 rooms/suites in 10
states and the District of Columbia and holds a minority investment in a joint
venture that owns 55 hotels with 7,282 rooms/suites. 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.

FFO As Defined by NAREIT and Adjusted FFO

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, impairment write-downs, 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 or other
charges and adjustments for unconsolidated partnerships and joint ventures.
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; depreciation and amortization; and after adjustments for
unconsolidated partnerships and joint ventures. 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 other charges, non-cash share-based
compensation and adjustments for unconsolidated partnerships and joint
ventures, 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 presents FFO, 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:

  *FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect the company’s
    cash expenditures, or future requirements, for capital expenditures or
    contractual commitments;
  *FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect changes in,
    or cash requirements for, the company’s working capital needs;
  *FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect funds
    available to make cash distributions;
  *EBITDA and Adjusted EBITDA do not reflect the significant interest
    expense, or the cash requirements necessary to service interest or
    principal payments, on the company’s debts;
  *although depreciation and amortization are non-cash charges, the assets
    being depreciated and amortized may need to be replaced in the future, and
    FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect any cash
    requirements for such replacements;
  *non-cash compensation is and will remain a key element of the company’s
    overall long-term incentive compensation package, although the company
    excludes it as an expense when evaluating its operating performance for a
    particular period using adjusted EBITDA;
  *Adjusted FFO and Adjusted EBITDA do not reflect the impact of certain cash
    charges (including acquisition transaction costs) that result from matters
    the company considers not to be indicative of the underlying performance
    of its hotel properties;and
  *Other companies in the company’s industry may calculate FFO, Adjusted FFO,
    EBITDA and Adjusted EBITDA differently than the company does, limiting
    their usefulness as a comparative measure.

The company’s reconciliation of FFO, Adjusted FFO, EBITDA and Adjusted EBITDA
to net income (loss) attributable to common shareholders, as determined under
GAAP, is set forth below.

Forward-Looking Statement Safe Harbor

Note: This press release contains forward-looking statements within the
meaning of federal securities regulations. These forward-looking statements
are identified by their use of terms and phrases such as "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "should," "plan,"
"predict," "project," "will," "continue" and other similar terms and phrases,
including references to assumption and forecasts of future results.
Forward-looking statements are not guarantees of future performance and
involve known and unknown risks, uncertainties and other factors which may
cause the actual results to differ materially from those anticipated at the
time the forward-looking statements are made. These risks include, but are not
limited to: national and local economic and business conditions, including the
effect on travel of potential terrorist attacks, that will affect occupancy
rates at the company’s hotels and the demand for hotel products and services;
operating risks associated with the hotel business; risks associated with the
level of the company’s indebtedness and its ability to meet covenants in its
debt agreements; relationships with property managers; the company’s ability
to maintain its properties in a first-class manner, including meeting capital
expenditure requirements; the company’s ability to compete effectively in
areas such as access, location, quality of accommodations and room rate
structures; changes in travel patterns, taxes and government regulations which
influence or determine wages, prices, construction procedures and costs; the
company’s ability to complete acquisitions and dispositions; and the company’s
ability to continue to satisfy complex rules in order for the company to
remain a REIT for federal income tax purposes and other risks and
uncertainties associated with the company’s business described in the
company's filings with the SEC. Although the company believes the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that the expectations will be attained
or that any deviation will not be material. All information in this release is
as of November 6, 2012, and the company undertakes no obligation to update any
forward-looking statement to conform the statement to actual results or
changes in the company's expectations.


CHATHAM LODGING TRUST
Consolidated Balance Sheets
(In thousands, except share and per share data)
                                                               
                                                  September 30,   December 31,
                                                  2012            2011
                                                  (unaudited)
                                                                  
Assets:
Investment in hotel properties, net               $  396,666      $  402,815
Cash and cash equivalents                            5,744           4,680
Restricted cash                                      2,598           5,299
Investment in unconsolidated real estate             15,052          36,003
entities
Hotel receivables (net of allowance for              1,866           2,057
doubtful accounts of $22 and $17, respectively)
Deferred costs, net                                  5,186           6,350
Prepaid expenses and other assets                   3,298         1,502   
Total assets                                     $  430,410     $  458,706 
                                                                  
Liabilities and Equity:
Debt                                              $  160,213      $  161,440
Revolving credit facility                            48,500          67,500
Accounts payable and accrued expenses                7,434           10,184
Distributions payable                               2,864         2,464   
Total liabilities                                  219,011       241,588 
                                                                  
Commitments and contingencies
                                                                  
Equity:
Shareholders' Equity:
Preferred shares, $0.01 par value, 100,000,000
shares authorized and unissued at September 30,      -               -
2012 and December 31, 2011
Common shares, $0.01 par value, 500,000,000
shares authorized; 13,909,822 and 13,908,907
shares issued and outstanding, respectively at       137             137
September 30, 2012 and 13,820,854 and
13,819,939 shares issued and outstanding,
respectively at December 31, 2011
Additional paid-in capital                           240,118         239,173
Accumulated deficit                                 (30,323  )     (23,220 )
Total shareholders' equity                         209,932       216,090 
                                                                  
Noncontrolling Interests:
Noncontrolling Interest in Operating                1,467         1,028   
Partnership
Total equity                                       211,399       217,118 
Total liabilities and equity                     $  430,410     $  458,706 



CHATHAM LODGING TRUST
Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)
                                                               
                 For the three months ended        For the nine months ended
                 September 30,                     September 30,
                 2012             2011             2012             2011
Revenue:
Room             $ 25,337         $ 22,660         $ 71,778         $ 49,288
Other              1,255            918              3,250            1,679
operating
Cost
reimbursements
from              410            -              1,160          -          
unconsolidated
real estate
entities
Total revenue     27,002         23,578         76,188         50,967     
Expenses:
Hotel
operating
expenses:
Room               5,462            4,653            15,726           10,865
Other             8,885          8,185          25,468         18,215     
operating
Total hotel
operating          14,347           12,838           41,194           29,080
expenses
Depreciation
and                3,399            3,399            10,861           8,647
amortization
Property taxes     1,918            1,623            5,174            3,723
and insurance
General and        1,676            1,427            5,400            4,280
administrative
Hotel property
acquisition        24               2,104            108              3,587
costs
Reimbursed
costs from
unconsolidated    410            -              1,160          -          
real estate
entities
Total
operating         21,774         21,391         63,897         49,317     
expenses
Operating          5,228            2,187            12,291           1,650
income
Interest and       53               6                54               18
other income
Interest
expense,
including          (3,627     )     (3,087     )     (11,303    )     (4,503     )
amortization
of deferred
fees
Loss from
unconsolidated    (195       )    -              (57        )    -          
real estate
entities
Income (loss)
before income      1,459            (894       )     985              (2,835     )
tax expense
Income tax
benefit           39             (61        )    (61        )    (75        )
(expense)
Net income       $ 1,498         $ (955       )   $ 924           $ (2,910     )
(loss)
                                                                    
Loss per
Common Share -
Basic:
Net income
(loss)
attributable     $ 0.10          $ (0.07      )   $ 0.05          $ (0.22      )
to common
shareholders
                                                                    
Loss per
Common Share -
Diluted:
Net income
(loss)
attributable     $ 0.10          $ (0.07      )   $ 0.05          $ (0.22      )
to common
shareholders
                                                                    
Weighted
average number
of common
shares
outstanding:
Basic              13,819,371       13,766,297       13,808,172       13,115,439
Diluted            13,908,907       13,766,297       13,896,486       13,115,439
                                                                    
Distributions
per common       $ 0.20           $ 0.175          $ 0.575          $ 0.525
share
                                                                    


CHATHAM LODGING TRUST
FFO and EBITDA
(In thousands, except share and per share data)
                                                                
                 For the three months ended          For the nine months ended
                 September 30,                       September 30,
                 2012             2011               2012             2011
                                                                      
Funds From
Operations
("FFO"):
Net income       $ 1,498          $ (955       )     $ 924            $ (2,910     )
(loss)
Loss (gain) on
the sale of
assets within
the                188              -                  (482       )     -
unconsolidated
real estate
entity
Depreciation       3,380            3,381              10,805           8,604
Adjustments
for
unconsolidated     1,262            -                  3,787            -
real estate
entity items
                                                                   
FFO                6,328            2,426              15,034           5,694
                                                                      
Hotel property
acquisition        24               2,104              108              3,587
costs and
other charges
Adjustments
for
unconsolidated    -              -                42             -          
real estate
entity items
Adjusted FFO     $ 6,352         $ 4,530           $ 15,184        $ 9,281      
                                                                      
Weighted
average number
of common
shares
Basic              13,819,371       13,766,297         13,808,172       13,115,439
Diluted            13,908,907       13,766,297         13,896,486       13,115,439
                                                                      
                                                                      
                                                                      
                 For the three months ended          For the nine months ended
                 September 30,                       September 30,
                 2012             2011               2012             2011
Earnings
Before
Interest,
Taxes,
Depreciation
and
Amortization
("EBITDA"):
Net income       $ 1,498          $ (955       )     $ 924            $ (2,910     )
(loss)
Interest           3,627            3,087              11,303           4,503
expense
Income tax
expense            (39        )     61                 61               75
(benefit)
Loss (gain) on
the sale of
assets within
the                188              -                  (482       )     -
unconsolidated
real estate
entity
Depreciation
and                3,399            3,399              10,861           8,647
amortization
Adjustments
for
unconsolidated     2,800            -                  8,236            -
real estate
entity items
                                                                   
EBITDA             11,473           5,592              30,903           10,315
                                                                      
Hotel property
acquisition        24               2,104              108              3,587
costs and
other charges
Adjustments
for
unconsolidated     -                -                  42               -
real estate
entity items
Share based        518              393                1,485            1,178
compensation
                                                                 
Adjusted        $ 12,015        $ 8,089          $ 32,538        $ 15,080     
EBITDA
                                                                      

Contact:

Chatham Lodging Trust
Dennis Craven (Company)
Chief Financial Officer
561-227-1386
or
Daly Gray, Inc. (Media)
Jerry Daly, 703-435-6293
 
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