Chatham Lodging Trust (REIT) (CLDT)

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Chatham Lodging Trust. (CLDT)

Q4 2012 Results Earnings Call

February 20, 2013 11:30 ET

Executives

Jerry Daly - Investor Relations, Daly Gray, Inc.

Jeff Fisher - Chairman, President and CEO

Dennis Craven - Executive Vice President and CFO

Analysts

Nikhil Bhalla - FBR Capital Markets

Whitney Stevenson - JMP Securities

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Chatham Lodging Trust Fourth Quarter Earnings Conference call. During today's presentation all participants will be in a listen-only mode. Following the presentation the conference will be opened for your questions. (Operator Instructions)

Today's conference is being recorded, February 20, 2013. I would now like to turn the conference over to Jerry Daly of Daly Gray. Please go ahead.

Jerry Daly

Thank you, Alicia and good morning, everyone and welcome to the Chatham Lodging Trust's fourth quarter and full year 2012 results conference call. Yesterday after the close of the market Chatham released results for the fourth quarter and full year ended December 31, 2012 and I hope you've had a chance to review the press release. If you did not receive a copy of the release or you would like a copy, please call my office at 703-435-6293, and we'll be happy to email one to you. Or you may view the release online at Chatham's website www.chathamlodgingtrust.com.

Today's conference call is being transmitted live via telephone and by webcast over Chatham's website and streetevents.com. A recording of the call will be available by telephone until midnight on Wednesday February 27, 2013 by dialing 1800-406-7325. And a reference number of 4594716.

A replay of the conference call will be posted on Chatham's website. As a reminder this conference call is the property of Chatham Lodging Trust and any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Chatham is prohibited.

Before we begin management has asked me to remind you that in keeping with the SEC's Safe Harbor guidelines, today's conference call may contain forward-looking statements about Chatham Lodging Trust, including statements regarding future operating results and the timing and composition of revenues among others.

Except for historical information, these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially including the volatility of the national economy, economic conditions generally, and the hotel and real estate markets specifically.

International and geopolitical difficulties or health concerns governmental actions legislative and regulatory changes availability of debt and equity capital. Interest rates competition, weather conditions or natural disasters supply and demand for lodging facilities. And our current and proposed market areas and the company's ability to manage integration and growth.

Additional risks that are discussed in the company's filings with the Securities and Exchanges Commission. All information in this call is as of February 19, 2013 unless otherwise noted, 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.

During this call, we may refer to certain non-GAAP financial measures such as EBITDA and adjusted-EBITDA, which we believe to be common in the industry and helpful indicators of our performance. In keeping with SEC regulations we have provided and encourage you to refer to the reconciliations of these measures to GAAP resulting in our earnings release.

Now to provide you with some insights into Chatham's 2012 fourth quarter and full year results let me introduce you to Jeff Fisher, Chairman, President and Chief Executive Officer; and Dennis Craven, Executive Vice President and Chief Financial Officer. Jeff?

Jeff Fisher

Thanks, Jerry and good morning, everyone. Dennis and I again are happy to be here with you this morning to report stronger than expected earnings for the fourth quarter and talk a little bit about our continued bullish outlook moving forward this year.

Before Dennis and I talk specifically though about the fourth quarter, I wanted to spend a few minutes reflecting back on 2012. For us 2012 validated to many that our operating model is very strong and compelling as we saw operating performance and cash flow jump significantly.

RevPAR grew 8%, well above industry performance, adjusted EBITDA rose 81%, and FFO advanced 52% to $1.30 per share, one of the highest amongst all hotel REITs. We spent a lot of time, money and efforts in 2010 and 2011, improving the condition of our portfolio to profit from what we believe will be a protracted up cycle.

On the balance sheet side in late 2012 and early 2013 we executed some key refinancing initiatives that Dennis will talk to more specifically, but the goal here was to decrease our borrowing costs, make our capital structure more efficient and move out our maturities. We'll again – we'll walk you through that, but I am pleased to say we've accomplished all those goals.

Additionally, as our multiple came up through the back half of 2012 and in January this year we were able to access the public markets raising approximately $53 million, which we used to acquire two very high quality hotels and what I think are fantastic locations for approximately $53 million in total. These are two great additions to our portfolio given their brand, their location, their growth opportunity and also their very young age.

Additionally, we are in the process of converting our D.C. hotel to a Residence Inn, probably our favorite brand as you know, which we believe will provide much improved returns via better operating performance and certainly incremental real-estate value gains associated with that better brand for that asset. That hotel should show very substantial RevPAR and EBITDA gains as we move through the second half of this year and 2014 it should I think really, really improve nicely.

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