Chatham Plans Deal Execution in 2024 with Maturing CMBS Debt

February 29, 2024 | by


Chatham Lodging Trust (CLDT) is strategically positioning itself for deal execution in 2024 as it plans to take advantage of the maturing CMBS debt. With its Q4 2023 financial results showing a strong RevPAR growth of 6.1%, driven by both occupancy and ADR contributions, Chatham has successfully reduced net debt by $26 million and improved its leverage ratio to an impressive 25%. The company’s active participation in the GRESB has also increased its overall score and ranking. Benefiting from its high exposure to the booming tech industry, Chatham expects demand to rebound further as tech companies continue to expand, especially in the tech-driven markets of Silicon Valley and Bellevue, where the company holds significant internal growth potential. With prudently positioned balance sheets and low leverage levels, Chatham confidently anticipates executing deals in 2024 and even intends to develop a second hotel in Portland, Maine. With a solid foundation in the US lodging industry and a financing market more conducive to making deals, Chatham is well-equipped for success in the year ahead.

95paON4hdScokCN81ZxAmvSwy3KpQiLRNGBF4qemM 복사본

Chatham’s Q4 2023 Financial Results

Chatham Lodging Trust (CLDT) released its financial results for the fourth quarter of 2023 during an earnings conference call. The company demonstrated strong performance, achieving a RevPAR (Revenue per Available Room) growth of 6.1% in the year 2023. This growth was evenly contributed by an increase in occupancy by 2% and a less than 1% increase in Average Daily Rate (ADR).

Factors Driving Q4 RevPAR Increase

The increase in RevPAR during the fourth quarter of 2023 was primarily driven by the growth in occupancy by 2%. This indicates a higher demand for Chatham’s hotels, showcasing the company’s ability to attract and retain customers. Additionally, the marginal increase in ADR played a role in the overall RevPAR growth, providing a slight boost to the company’s financial performance.

Screenshot 2024 01 08 192459 1

Chatham’s Exposure to the Tech Industry

Chatham Lodging Trust has a high exposure to the tech industry, positioning itself to benefit from the anticipated rebound in demand as tech companies continue to expand. The ever-growing technology sector has a strong presence in various markets, and Chatham’s strategic positioning enables it to capitalize on this growth. Furthermore, the company expects continued improvement in tech-driven markets throughout the year 2024, further bolstering its prospects in this sector.

Chatham’s Prudent Balance Sheet Positioning

Chatham Lodging Trust maintains a prudent balance sheet with low leverage levels. This conservative approach to financial management provides the company with flexibility to repay its maturing debt and pursue potential acquisitions. By having a sound balance sheet position, Chatham can navigate challenging market conditions effectively while also taking advantage of growth opportunities that may arise.

Chatham’s Expansion Plans

Chatham Lodging Trust has announced plans for the development of a second hotel in Portland, Maine. This expansion project reflects the company’s commitment to strategically grow its portfolio and capitalize on emerging market opportunities. By expanding into a new location, Chatham aims to diversify its revenue streams and capture additional market share.

Opportunities in the Deal Market

Chatham Lodging Trust has identified favorable opportunities in the deal market, driven by narrowing bid-ask spreads and a conducive financing environment. The bid-ask spread, which represents the difference between the price a buyer is willing to pay and the price a seller is willing to accept, has become narrower, indicating a more balanced market. This presents attractive options for Chatham to execute deals and potentially enhance its portfolio holdings. Additionally, the current financing market conditions further support the company’s ability to pursue and complete transactions successfully.

Chatham’s Deal Execution Strategy

Chatham Lodging Trust’s deal execution strategy involves the integration of maturing CMBS (Commercial Mortgage-Backed Securities) debt. By taking advantage of maturing debt instruments, the company can enhance its financial structure and position itself for potential deals in 2024. This strategic approach ensures that Chatham effectively manages its debt obligations while actively pursuing growth opportunities to create value for its stakeholders.

Quarterly Guidance and Silicon Valley Hotels

Recognizing the short booking window for Silicon Valley hotels, Chatham Lodging Trust has committed to providing quarterly guidance to provide more accurate financial forecasts. This proactive approach allows stakeholders to have a better understanding of the company’s performance and outlook in a market known for its dynamic nature. With significant growth potential in Silicon Valley hotels, Chatham aims to capitalize on opportunities in this high-demand market.


Solid Fundamentals of the US Lodging Industry

The US lodging industry demonstrates strong fundamentals and a positive outlook for the foreseeable future. With muted supply expected in the coming years, demand for quality hotel accommodations is projected to remain robust. This favorable market condition bodes well for Chatham Lodging Trust, as the company continues to operate and expand its portfolio in a stable and growing industry.

Internal Growth Potential in Silicon Valley and Bellevue Hotels

Chatham Lodging Trust recognizes significant internal growth potential within its Silicon Valley and Bellevue hotels. These prime locations experience high demand due to their proximity to major tech hubs and thriving business centers. By capitalizing on the growing demand from the tech industry, Chatham can leverage its existing properties to enhance operational and financial performance, further solidifying its position in these valuable markets.

In conclusion, Chatham Lodging Trust’s Q4 2023 financial results showcase the company’s strong performance, with RevPAR growth, reduced net debt, and improved leverage ratio. With exposure to the tech industry, prudent balance sheet positioning, and expansion plans, Chatham is well-positioned to capitalize on growth opportunities and create value for its stakeholders. The company’s strategic approach to deal execution, quarterly guidance, and focus on internal growth potential further reinforce its position as a leading player in the US lodging industry.

420975661 930960805057803 3457597750388070468 n


View all

view all