Chatham IPO Raises $150 Million in Fisher’s Return

Chatham Lodging Trust, the hotel- property fund operated by Jeffrey Fisher, became the first U.S. real estate investment trust this year to raise as much as it sought from buyers in its initial public offering.

Chatham sold $150 million of shares at $20 each, the company said in a statement yesterday. The Palm Beach, Florida- based REIT has agreements to buy six Homewood Suites by Hilton extended-stay hotels from Billerica, Massachusetts, to Brentwood, Tennessee, and is in negotiations to acquire four more properties, according to a filing with the Securities and Exchange Commission.

Investors earned 316 percent in Innkeepers USA Trust, Fisher’s last hotel REIT, from the company’s 1994 IPO through its sale to Apollo Investment Corp. in June 2007, just before property prices started to tumble and wiped out 78 percent of the new owner’s value. With the U.S. economy improving, the Bloomberg REIT Hotels Index has climbed 26 percent this year.

“It’s a start-up company but it’s not a start-up management team,” said Michael Yoshikami, who oversees about $1 billion as chief investment strategist for YCMNet Advisors in Walnut Creek, California. “People are buying the expertise of the operators.”

Photographer: Tom Ervin/The Smart Business Network via Bloomberg

Jeffrey Fisher, president and chief executive officer of Chatham Lodging Trust, is seen in this undated handout photo provided to the media on April 15, 2010. Close

Jeffrey Fisher, president and chief executive officer of Chatham Lodging Trust, is seen... Read More

Photographer: Tom Ervin/The Smart Business Network via Bloomberg

Jeffrey Fisher, president and chief executive officer of Chatham Lodging Trust, is seen in this undated handout photo provided to the media on April 15, 2010.

Chatham’s shares gained 2.5 percent to $20.50 today in New York Stock Exchange trading.

Barclays Plc of London and Arlington, Virginia-based FBR Capital Markets Corp. arranged the sale.

Chesapeake Lodging

Chatham was the first initial offering of a U.S. hotel REIT since Fairfield, New Jersey-based Chesapeake Lodging Trust raised 40 percent less than it originally sought on Jan. 21.

IPOs stumbled at the start of 2010 as the first 14 U.S. deals were reduced by 22 percent on average, Bloomberg data show. Terreno Realty Corp. of San Francisco and Johns Creek, Georgia-based Piedmont Office Realty Trust Inc., the two other real-estate companies that completed IPOs this year, were among those that cut the size of their offerings to attract buyers.

All 10 IPOs except one in the past month have priced within or above their forecast range as the Standard & Poor’s 500 Index rebounded 15 percent from its 2010 low in February.

Fisher, 54, who will serve as chairman, president and chief executive officer of Chatham, also planned to buy 500,000 shares at the offer price, the filing showed.

Six Hotels

The company entered into an agreement to buy the six extended-stay hotels from billionaire entrepreneur Robert L. Johnson, the founder of Black Entertainment Television, for $73.5 million.

Chatham plans to qualify as a REIT, making it exempt from corporate taxes if it distributes 90 percent of income as dividends. The IPO gives Chatham a market capitalization of $162 million, or 1.1 times shareholder equity of $147.5 million, according to the SEC filing. The median price-to-book ratio for 23 publicly traded hotel REITs is 1.06, Bloomberg data show.

Fisher’s previous hotel REIT rewarded investors with bigger gains than U.S. stocks last decade.

Innkeepers USA returned 215 percent from the start of 2000 until it was sold to Apollo Investment, the fund advised by Leon Black’s New York-based private equity firm, four months after prices for hotel REITs peaked in February 2007. The S&P 500 rose 16 percent, including dividends.

The value of Apollo Investment’s common and preferred equity stakes is now worth about 22 cents per dollar originally spent, its quarterly SEC filing as of Dec. 31 showed. Palm Beach-based Innkeepers USA said this week that it had defaulted on some debt and may miss future obligations.

‘Timed the Market’

“The fact that deal has gone as far as it has is a testament to management’s track record,” said James Corl, managing director of real-estate investments at Siguler Guff & Co., a New York-based investment firm that manages about $9 billion. “He sold his last company at an opportunistic time and timed the market well.”

The Bloomberg REIT Hotels Index, which fell 88 percent from February 2007 through March 2009, has erased almost half its loss. The measure rose more than three times as much as the S&P 500’s 6.9 percent gain this year as the economy rebounded from the worst recession in seven decades.

Commercial real-estate prices have recovered 6.3 percent after dropping to a seven-year low in October, according to the Moody’s/REAL Commercial Property Price Index. Property values plunged from a 2007 record as the collapse of U.S. subprime mortgages froze credit markets.

Biggest 2010 IPOs

Americold Realty Trust, the operator of temperature- controlled warehouses owned by billionaire Ron Burkle’s Los Angeles-based Yucaipa Cos., said yesterday it plans to raise $688 million in an IPO. The offering of the Atlanta-based company would be the second-largest in the U.S. this year. Eindhoven, Netherlands-based NXP Semiconductors NV filed today to sell as much as $1.15 billion.

“That a REIT IPO has gone through is obviously a sign real estate looks pretty good to investors right now,” said Walter Todd, who helps manage $800 million at Greenwood Capital in Greenwood, South Carolina. “It’s a good time to do a deal. As long as there’s appetite, they’re pumping stocks out there.”

To contact the reporters on this story: Michael Tsang in New York at; Inyoung Hwang in New York at

To contact the editor responsible for this story: Daniel Hauck at

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