(Save the date: RealShare Industrial 2012 comes to The Bankers Club, Miami, December 5 – 6.)
PALM BEACH, FL—Chatham Lodging Trust announced third quarter 2012 results this week. The hotel REIT reports a 48.5% increase in revenues year-over-year during the quarter to $12 million. Hotel RevPar rose 5.8% to $114.
Meanwhile, Chatham’s joint venture portfolio exceeded revenue and RevPar expectations. Chatham reports distributions of $1.7 million in the third quarter, bringing total distributions to $20.9 million or 56.5% of Chatham’s initial investment in the joint venture.
“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,” commented Jeffrey Fisher, Chatham’s president and CEO. “New supply growth in our markets remains at a minimum, and the barriers to new competition are high.”
Fisher said room rate increases now make up more than half of the improvement in RevPAR. As the hotel REIT moves into 2013, he expects the predominant driver of RevPAR advances to come from rates. That, he says, will enhance operating profit margins.
“Our joint-venture investment continues to outperform hotel industry averages and generate very strong returns,” says Fisher. “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.”
Fisher pledged to continue to opportunistically look at ways to grow Chatham’s returns without raising equity in the current market. He hinted at several funding sources, including using free cash flow generated from operations, distributions from the joint venture, and recycling capital profitably by selectively disposing assets.
“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,” said Dennis Craven, CFO at Chatham. “With this amendment, our credit facility borrowing costs decrease by approximately 250 basis points which certainly augments our earnings going forward.”