WEST PALM BEACH, Fla. - Chatham Lodging Trust (NYSE: NYSE:CLDT), a hotel real estate investment trust, has reported a notable 5 percent growth in Revenue per Available Room (RevPAR) for the quarter to date through May, surpassing its second quarter projections of 2.5 to 4.0 percent. The company, which specializes in upscale, extended-stay and premium-branded, select-service hotels, has seen RevPAR increases of 5 percent in both April and May.
The uptick in April occupancy reached 83 percent, a 6 percent rise, despite a slight 1 percent drop in average daily rate (ADR) to $177. May followed a similar pattern, with occupancy climbing 4 percent to 82 percent and ADR rising by 1 percent to $182.
Notably, Chatham's Silicon Valley and Belleville hotels experienced a surge in RevPAR of 11 percent through May, driven by an approximate 6 percent increase in occupancy to 77 percent and a 6 percent lift in ADR to $188.
The company has credited the resurgence of business travel in the United States for the robust performance, with 14 of its 38 comparable hotels achieving double-digit RevPAR growth through May. Chatham's CEO, Jeffrey H. Fisher, highlighted that weekday and weekend occupancies were the highest since 2019, and both weekday and weekend portfolio ADR exceeded 2019 levels. Fisher expressed optimism for accelerated rate growth as the company approaches its busiest season.
On the financial front, Chatham has been active in managing its capital structure during the second quarter. The company repaid a $29 million mortgage for the Residence Inn Anaheim on April 5th and borrowed an additional $50 million on its term loan on May 3rd.
It also acquired the newly opened Home2 Suites by Hilton Phoenix Downtown for $43 million on May 30th and issued $23 million of CMBS debt secured by the Hyatt Place Pittsburgh North Shore on May 31st. Moreover, it repaid the Residence Inn Mountain View's $35 million mortgage on May 31st and anticipates issuing approximately $37 million of CMBS debt in June.
Chatham's CFO, Jeremy Wegner, projected that post-transactions, the company expects to have about $50 million in cash with no outstanding debt on its $260 million credit facility as of June 30th. Following the repayment of $189 million of maturing debt in July, the company plans to have around $140 million outstanding on its credit facility with 29 unencumbered hotels.
This news is based on a press release statement from Chatham Lodging Trust, which owns 39 hotels across 17 states and the District of Columbia. The company has positioned itself with a strengthened balance sheet and reduced leverage, setting the stage for future operations without the burden of significant debt overhead.
InvestingPro Insights
Chatham Lodging Trust (NYSE: CLDT) has shown a promising uptick in Revenue per Available Room (RevPAR), which is an encouraging sign for investors tracking the company's performance. Delving deeper into the financial health and market valuation of the company with InvestingPro data, we observe a market capitalization of $413.7 million, which is reflective of the company's size in the competitive hotel REIT market.
An important metric to consider is the Price to Earnings (P/E) ratio, which currently stands at a negative figure of -70.92, indicating that investors are facing losses per share. When adjusted for the last twelve months as of Q1 2024, the P/E ratio improves slightly to -23.23, yet it still suggests that the company is not generating positive earnings at the moment. Additionally, the company's Revenue Growth over the same period is modest at 1.48%, which, while positive, indicates a slow pace in increasing its top-line earnings.
InvestingPro Tips highlight that Chatham Lodging Trust is trading at a low EBITDA valuation multiple, which could suggest that the company is undervalued based on its earnings before interest, taxes, depreciation, and amortization. This could be an attractive point for value investors. Moreover, the company is also trading at a low revenue valuation multiple, which might appeal to those looking to invest in a company with potential for revenue growth at a discounted price.
However, potential investors should be aware of the volatility in stock price movements, as noted by InvestingPro Tips. This volatility could impact short-term investment strategies. Additionally, it's worth noting that analysts do not anticipate the company to be profitable this year, which aligns with the negative P/E ratios observed.
For those interested in further insights and tips, InvestingPro offers a range of additional analyses. There are 7 more InvestingPro Tips available for Chatham Lodging Trust, which can be accessed by visiting https://www.investing.com/pro/CLDT. Readers looking to deepen their research can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing a more comprehensive investment analysis toolkit.
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