Chatham Lodging Trust (REIT) (CLDT)

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Chatham Lodging Trust (CLDT)

Q2 2013 Earnings Call

August 6, 2013 11:00 AM ET

Executives

Chris Daly – IR

Jeffrey Fisher – Chairman, President and CEO

Dennis Craven – EVP and CFO

Analysts

Nikhil Bhalla – FBR Capital Markets & Co.

Patrick Scholes – SunTrust Robinson Humphrey

Robert Salisbury – V3 Capital

Presentation

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Chatham Lodging Trust Second Quarter Earnings 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 given at that time. (Operator Instructions).

I would like to remind everyone that this conference call is being recorded today August 6, 2013 at 11:00 AM Eastern Time.

I will now turn the presentation over to Chris Daly, President of Daly Gray. Please go ahead, sir.

Chris Daly

Thanks, John. Good morning everyone and welcome to the Chatham Lodging Trust second quarter 2013 results conference call. Yesterday, after the close of the market Chatham released results for the second quarter June 30, 2013, and I hope you had a chance to review the press release. If you did not receive a copy of the release or you would still like one, please call my office at 703-435-6293 and we’ll be happy to email you a copy or you may review the release online at Chatham’s website, www.chathamlodgingtrust.com.

Today’s conference call is being transmitted live via telephone by webcast over Chatham’s website and at streetevents.com. Recording of the call will be available by telephone until midnight on Tuesday, August 13, 2013 by dialing 1-800-406-7325, reference number 4630897. 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 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 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 August 6, 2013 unless otherwise noted, and the company undertakes no obligation to update any forward-looking statement to conform these statements 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 a reconciliation of these measures to GAAP results in our earnings release.

Now to provide you with some insight into Chatham’s 2013 second quarter results, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer; and Dennis Craven, Executive Vice President and Chief Financial Officer. Without further ado let me turn the session over to Jeff?

Jeffrey Fisher

Thanks, Chris. Well my usual enthusiasm might sound pretty bad compared to yours. But thanks for the intro this morning. And thank you all for joining us here again, happy to be back at our second quarter earnings call.

Since our IPO in 2010, as you know, we’ve set out to build the premier lodging REIT making high quality hotel investments, generating strong earnings via high operating margins, facilitated through our aggressive asset management and producing significant cash flow to pay meaningful dividends to our REIT investors

We know to build another successful lodging REIT that we have to be patient and grow as equity and debt markets allow and where proceeds can be used to purchase value enhancing hotels. We also know we have to be patient as we analyze growth opportunities to determine the best deals to consummate. We have executed very well on our strategic initiatives to-date and the result is an investment portfolio that produces high FFO per share, high operating margins and allows us to pay one of the best dividends in the lodging space.

I am real pleased with the hotels that we have acquired to-date and particularly the hotels that we’ve been able to buy in 2013. I am going to shed some light on some of the performance of those assets. Just to highlight I think how well our patience have paid off in so far as targeting specific assets with specific owners, almost all in direct relationship purchases that really have produced I think some great cash flow and dividends for the company and will continue to do so going forward.

In pursuit of our continued growth as a premier lodging REIT during the second quarter we had a very successful offering in June raising approximately $80 million at a price of 16.35 per share 11% higher than the offering price of 14.70 per share in January of this year. We used the operating proceeds to acquire a great Hyatt Place hotel in downtown Pittsburgh adjacent to the P&C Park at Heinz Field fields for $40 million and we’ve entered into another agreement to acquire another great hotel in the North East for about $15 million.

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