Chatham Lodging Trust (REIT) (CLDT)

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Chatham Lodging Trust (CLDT)

Q1 2013 Earnings Call

May 8, 2013 11:00 am ET

Executives

Jerry Daly – Daly Gray, Inc.

Jeffrey H. Fisher – Chairman, President and Chief Executive Officer

Dennis M. Craven – Executive Vice President and Chief Financial Officer

Analysts

Will Marks – JMP Securities

Nikhil Bhalla – FBR Capital Markets

Presentation

Operator

Welcome to the Chatham Lodging Trust First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session, and instructions will be provided at that time. (Operator Instructions)

I would like to remind everyone that this conference call is being recorded today May 8, 2013. I will now turn the conference over to Jerry Daly with the Daly Gray. Please go ahead.

Jerry Daly

Thank you, Angel, and good morning everyone and welcome to Chatham Lodging Trust first quarter 2013 results conference call. Yesterday, after the close of the market Chatham will release results for the first quarter ended March 31, 2013, and I hope you’ve got a chance to review the press release. If for any reason, you did not receive a copy or would like a copy, please call my office at 703-435-6293 and we’ll be happy to e-mail 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 at streetevents.com. A recording of the call will be available by telephone until midnight on Wednesday, May 15, 2013, by dialing 1-800-406-7325, with a reference number of 4616125. 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 expressed 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, geo-political 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 in our current and proposed market areas and the company’s ability to manage integration and growth.

Additional risks are discussed in the company’s filings with the Securities and Exchange Commission. All information in this call is as of May 07, 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 reconciliation of these measures to GAAP results in our earnings release.

Now, to provide you with some insights into Chatham’s 2013 first quarter results, let me introduce Jeff Fisher, Chairman, President and Chief Executive Officer; and Dennis Craven, Executive Vice President and Chief Financial Officer. Jeff?

Jeffrey H. Fisher

Thanks, Jerry, and good morning, everyone. Dennis and I again are happy to be here with you, talk about our first quarter and our prospects for the rest of the year. Again to reiterate, for the first quarter earnings two sets higher than consensus, and very strong operating results within Chatham and the joint venture properties.

On the balance sheet side, we had a very successful offering in January, the money was put to work within 30 days, and we acquired two great hotels. Additionally, always working on the balance sheet and the debt side, we’re pleased with our refinance on additional hotel as that we accomplished during the first quarter as well.

Taking a look at the numbers, RevPAR grew 6.3% at our comparable 19 hotels in line with industry RevPAR growth of 6.4%. We had solid double digit RevPAR gains in our Houston hotels, our Pennsylvania hotels, and our New York area hotels in White Plains, New York and Holtsville, New York, which was aided by the residual Superstorm Sandy business.

Our new Portland, Maine hotel also had a great quarter as we discussed at the year end, in terms of the prospects there with RevPAR growth of 14%. These strong results more than offset the effects of having two Residence Inns, under renovation in Anaheim, California and New Rochelle, New York.

As we moved out of the quarter, in April RevPAR growth accelerated up 7.2% at our comparable 19 hotels, and 5.6% when you look at all 20 of the hotels. Adjusted EBITDA increased 10% to $9.4 million, adjusted FFO increased 55% to $4.5 million, and adjusted FFO per share jumped 24% to $0.26 per share $0.02 higher than consensus at a penny above the range we provided.

Results benefited from outstanding performance by the two recently acquired hotels in Houston and Portland, very strong operating results in the JV, and reduced interest expense due to the refinancings in late 2012 and early 2013.

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