Chatham Lodging Trust (NYSE:CLDT) Q4 2022 Earnings Conference Call February 23, 2023 10:00 AM ET Company Participants Chris Daly - President, DG Public Relations, IR Jeff Fisher - Chairman, CEO & President Dennis Craven - EVP & COO Jeremy Wegner - SVP and CFO Conference Call Participants Anthony Powell - Barclays Ari Klein - BMO Capital Markets Tyler Batory - Oppenheimer Bryan Maher - B. Riley Securities FBR Operator Greetings and welcome to the Chatham Lodging Trust Fourth quarter 2022 Financial Results Co ...

PART I. Company Information This section outlines the company's business, operational structure, risk factors, and legal and property details [Item 1. Business Overview](index=5&type=section&id=Item%201.%20Business) Chatham Lodging Trust is a Maryland REIT investing in upscale extended-stay and premium-branded select-service hotels, owning 39 hotels managed by IHM - Chatham Lodging Trust is an internally-managed Maryland REIT, focusing on upscale extended-stay and premium-branded select-service hotels[22](index=22&type=chunk) - All hotels are managed by Island Hospitality Management Inc. (IHM), which is 100% owned by the Company's Chairman, President, and CEO, Jeffrey H. Fisher[25](index=25&type=chunk) Hotel Portfolio Summary (as of Dec 31, 2022) | Metric | Value | | :----- | :---- | | Hotels Owned | 39 | | Total Rooms | 5,914 | | States of Operation | 16 states and D.C. | [Overview](index=6&type=section&id=Overview) The company operates as a REIT, leasing hotels to TRS Lessees, and focuses on upscale extended-stay and premium-branded select-service hotels - The Company operates as a REIT, leasing its wholly-owned hotels to Taxable REIT Subsidiary (TRS) Lessees, which then contract third-party management companies for day-to-day operations[24](index=24&type=chunk) - The portfolio includes brands like Residence Inn by Marriott, Homewood Suites by Hilton, Courtyard by Marriott, and Hampton Inn, primarily focusing on upscale extended-stay and premium-branded select-service hotels[26](index=26&type=chunk) [Financial Information About Industry Segments](index=7&type=section&id=Financial%20Information%20About%20Industry%20Segments) All hotels are evaluated as a single industry segment due to similar economic characteristics and customer services - The Company evaluates all its hotels as a single industry segment due to similar economic characteristics and customer services, thus not reporting segment-specific information[29](index=29&type=chunk) [Business Strategy](index=7&type=section&id=Business%20Strategy) The primary objective is to generate attractive shareholder returns through disciplined acquisitions, aggressive asset management, and a prudent capital structure - Primary objective is to generate attractive shareholder returns through disciplined acquisition of hotel properties, opportunistic repositioning, aggressive asset management, selective hotel development, flexible management company selection, and selective investment in hotel debt[30](index=30&type=chunk) - The Company aims to maintain a prudent capital structure with a net debt to investment in hotels at cost ratio between the high 20s and low 50s, which was approximately **26.6% at December 31, 2022**, down from 30.6% in 2021[31](index=31&type=chunk) [Competition](index=7&type=section&id=Competition) The company faces intense competition for hotel property investments and within the lodging industry from various entities and alternative marketplaces - The Company faces competition for hotel property investments from institutional funds, private equity, REITs, and hotel companies, some with greater financial resources[32](index=32&type=chunk)[33](index=33&type=chunk) - The lodging industry is highly competitive, with hotels competing on factors like location, brand, rates, and services, including competition from alternative lodging marketplaces[33](index=33&type=chunk) [Seasonality](index=8&type=section&id=Seasonality) Hotel demand is seasonal, with lower revenue and cash flow in the first and fourth quarters, and higher in the second and third - Hotel demand is seasonal, with lower revenue, operating income, and cash flow expected in the first and fourth quarters, and higher in the second and third quarters[34](index=34&type=chunk) [Regulation](index=8&type=section&id=Regulation) Properties are subject to various regulations, including fire, safety, ADA, and environmental compliance, with ongoing assessments for hazardous substances - Properties are subject to various covenants, laws, ordinances, and regulations, including fire, safety, and ADA requirements[35](index=35&type=chunk)[36](index=36&type=chunk) - Compliance with environmental regulations, including potential liability for hazardous substances, is an ongoing concern, with Phase I environmental site assessments conducted for all investments[38](index=38&type=chunk)[41](index=41&type=chunk) [Tax Status](index=9&type=section&id=Tax%20Status) The company maintains REIT taxation status, exempting it from federal income tax on distributed income, while its TRS is subject to corporate income tax - The Company elected REIT taxation status from 2010, which generally exempts it from federal income tax on distributed REIT taxable income, provided it meets specific requirements, including distributing at least 90% of its taxable income annually[42](index=42&type=chunk) - The Company's TRS is subject to federal, state, and local corporate income tax, and is currently under examination by the IRS for 2016 and by New Hampshire for 2018-2019[42](index=42&type=chunk)[43](index=43&type=chunk) [Hotel Management Agreements](index=10&type=section&id=Hotel%20Management%20Agreements) Management agreements with IHM have five-year terms with renewal options, including base fees of 3.0% of gross room revenue and incentive fees - Management agreements with IHM have an initial five-year term, automatically renewing for two successive five-year periods, with early termination options upon hotel sale without fee[45](index=45&type=chunk) - Base management fees are **3.0% of gross room revenue**, with an incentive fee of 10% of net operating income (less fixed costs, base fees, and a return threshold), capped at **1% of gross hotel revenues**[45](index=45&type=chunk)[47](index=47&type=chunk) Management Fees (in thousands) | Year Ended Dec 31, | Management Fees | | :----------------- | :-------------- | | 2022 | $10,133 | | 2021 | $7,156 | | 2020 | $5,289 | [Hotel Franchise Agreements](index=12&type=section&id=Hotel%20Franchise%20Agreements) Franchise fees are calculated as a percentage of gross room revenue, varying by brand, alongside marketing and program fees - Franchise fees are calculated as a specified percentage of gross room revenue, varying by brand (e.g., Hilton brands typically **4.0% franchise/royalty** and **4.0% marketing/program fees**; Marriott brands vary, e.g., Residence Inn **5.5% franchise** and **2.5% marketing**)[50](index=50&type=chunk)[452](index=452&type=chunk) Franchise and Marketing/Program Fees (in thousands) | Year Ended Dec 31, | Fees | | :----------------- | :----- | | 2022 | $23,674 | | 2021 | $16,560 | | 2020 | $11,608 | [Operating Leases](index=13&type=section&id=Operating%20Leases) The company is a lessee under various operating lease agreements for ground, air rights, garage, and office spaces, with significant future payments - The Company is a lessee under ground, air rights, garage, and office lease agreements, all qualifying as operating leases as of December 31, 2022[54](index=54&type=chunk)[430](index=430&type=chunk) - Notable leases include the Residence Inn San Diego Gaslamp (ground lease expiring **2065**) and Hilton Garden Inn Marina del Rey (ground lease expiring **2067**), with monthly and percentage rent payments[52](index=52&type=chunk)[53](index=53&type=chunk)[445](index=445&type=chunk)[404](index=404&type=chunk) Total Future Lease Payments (in thousands) | Year | Amount | | :--- | :----- | | 2023 | $2,093 | | 2024 | $2,115 | | 2025 | $2,186 | | 2026 | $1,894 | | 2027 | $1,272 | | Thereafter | $63,553 | | **Total** | **$73,113** | [Human Capital](index=14&type=section&id=Human%20Capital) The company had 17 employees as of February 2023, focusing on attracting, developing, and retaining diverse talent through competitive pay and benefits - As of February 23, 2023, the Company had **17 employees**, with day-to-day hotel operations managed by third-party companies[61](index=61&type=chunk) - Human capital objectives focus on attracting, developing, and retaining diverse talent through competitive pay, benefits, and a culture of diversity and inclusion[62](index=62&type=chunk) [Corporate Responsibility](index=14&type=section&id=Corporate%20Responsibility) The company is committed to ESG issues, publishing annual reports, implementing energy efficiency initiatives, and promoting diversity, equity, and inclusion - The Company is committed to ESG issues, publishing its annual Corporate Responsibility Report (latest in May 2022) aligned with GRI, SASB, and TCFD standards[63](index=63&type=chunk)[65](index=65&type=chunk) - Initiatives include improving energy efficiency (e.g., LED lighting, smart thermostats, low-flow systems) and community engagement through charitable activities[66](index=66&type=chunk)[67](index=67&type=chunk) - Diversity, Equity, and Inclusion efforts include increasing board diversity (**25% female**, **12.5% underrepresented group members**) and participating in the CEO Action for Diversity and Inclusion™ pledge[68](index=68&type=chunk) [Available Information](index=15&type=section&id=Available%20Information) Annual, quarterly, and current reports are available free of charge on the company's and SEC's websites - Annual, quarterly, and current reports (10-K, 10-Q, 8-K) are available free of charge on the Company's website (www.chathamlodgingtrust.com) and the SEC's website (www.sec.gov)[70](index=70&type=chunk) [Item 1A. Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from pandemics, financing

Financial Data and Key Metrics Changes - Q3 2022 RevPAR was $150, a 34% increase compared to Q3 2021 and up 1% from Q3 2019, driven by strong leisure demand and business travel recovery [40][41] - Operating margins for same-store hotels reached 50.5%, up 160 basis points from 2019, indicating strong operational efficiency [7][34] - Free cash flow for the quarter was nearly $25 million, up 25% from Q2 2022 and 150% from Q3 2021 [8] Business Line Data and Key Metrics Changes - The portfolio excluding Silicon Valley and Bellevue saw a 4% increase in RevPAR compared to 2019, with ADR growth of 11% offset by a 7% decline in occupancy [26] - Tech-driven hotels in Silicon Valley and Seattle are still recovering, with expectations to surpass 2019 levels in the future [25] Market Data and Key Metrics Changes - Strong demand was noted in primary business travel markets such as Silicon Valley, Seattle, Dallas, and Austin, with group demand also increasing in Dallas, San Diego, and San Antonio [14][27] - Weekday occupancy rose to 79% in Q3, up from 76% in Q2, indicating a recovery in business travel [28] Company Strategy and Development Direction - The company is exploring hotel acquisitions but faces challenges due to a wide bid-ask spread in the current market [10] - Plans for a new hotel development in Portland, Maine, are underway, although the project is expected to take a couple of years to complete [11][52] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of business travel and the potential for continued strong ADR growth in 2023 [13][20] - The company is well-positioned with a strong balance sheet and plans to reinstate dividends in the near future [21][58] Other Important Information - The company has reduced net debt by approximately 40% since the pandemic, achieving the lowest leverage levels in over a decade [8][42] - Capital expenditures for the quarter were $3 million, with plans for renovations at three hotels costing approximately $11 million [39] Q&A Session Summary Question: Trends in Silicon Valley post-intern business - Management noted that while demand is lower than during the intern season, tech clients are still generating room demand, albeit at reduced levels [45][46] Question: Incremental costs and labor costs outlook - Management indicated that headcount remains down about 20% compared to pre-pandemic levels, with expectations for mid-single-digit wage increases in 2023 [47][48] Question: Intern business sustainability and backfilling options - Management is confident that the intern business will continue, and if necessary, they would revert to attracting non-business travel segments [51] Question: Portland development project details - The project is expected to take a couple of years to complete, with significant opportunities anticipated [52] Question: October performance and seasonality - October RevPAR was down compared to September, with expectations for a typical seasonal decline in November and December [54][55] Question: Acquisition opportunities and market conditions - Management highlighted the need for pressure on hotel owners to narrow the bid-ask spread for acquisition opportunities to arise [56] Question: Dividend reinstatement expectations - Management confirmed plans to reinstate dividends, with calculations ongoing to determine the appropriate level [58]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-34693 CHATHAM LODGING TRUST (Exact Name of Registrant as Specified in Its Charter) Maryland 27-1200777 (State or Other Jurisdiction of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Shares of Beneficial Interest, $0.01 par value CLDT New York Stock Exchange 6.625% Series A Cumulative Redeemable Preferred Shares CLDT-PA New York Stock Exchange FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ...

CHATHAM LODGING TRUST Investor Presentation June 2022 Safe Harbor Disclosure 2 We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, cash flow and plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expr ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $55 million, up 75% compared to $31 million in Q1 2021 [29] - Adjusted EBITDA was $13.3 million, compared to approximately $1 million last year [32] - FFO per share was $0.07, up from a loss of $0.15 per share in the same quarter last year [32] - RevPAR for Q1 2022 was $88, representing a 56% increase from $57 in Q1 2021, but a 27.2% decline from $146 in Q1 2019 [39] Business Line Data and Key Metrics Changes - The five tech-driven hotels in Silicon Valley and Bellevue, which historically contributed 25% to 30% of EBITDA, saw a significant recovery with April RevPAR up 45% compared to Q1 figures [7][18] - GOP margins for Q1 2022 were 38% on RevPAR of $88, compared to 44% in Q1 2019 when RevPAR was $33 higher [30] Market Data and Key Metrics Changes - Weekday occupancy rose from 48% in January to 72% in April, indicating a strong recovery in business travel [15] - RevPAR in Austin increased from $115 in Q1 to $140 in April, driven by tech company expansions [21] Company Strategy and Development Direction - The company plans to close the sale of four older hotels for approximately $80 million, reallocating funds to pay down debt and pursue new acquisitions [8][10] - The focus remains on acquiring business-driven hotels, particularly in tech-centric markets, while also considering multifamily conversions for underperforming assets [9][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of business travel, particularly in tech markets, and noted a significant uptick in weekday demand [15][46] - The company anticipates continued improvement in performance metrics, with expectations for Q2 to show sequential growth [47] Other Important Information - The company has $158 million in liquidity, with no debt maturing in 2022 and only $114 million in 2023 [42][43] - Capital expenditures for the quarter were $4.1 million, with plans to reduce the total budget to approximately $19 million post-hotel sales [37] Q&A Session Summary Question: Have you seen any decline in leisure travel demand relative to 2021? - Management indicated that leisure demand remains strong, particularly in Northeastern hotels [50][51] Question: What is the outlook for occupancy recovery through the remainder of the year? - Management expects occupancy to approach 2019 levels in the second half of the year, driven by robust demand from corporate clients [60][62] Question: How do you feel about staffing levels as occupancy ramps up? - Management noted that the intern program will allow for high occupancy with reduced housekeeping needs, positioning them well for high-margin business [71] Question: Can you discuss the pricing valuations for the hotels being sold? - The four hotels generated $2.2 million of EBITDA in 2021, with attractive pricing based on a 6% cap rate on 2019 NOI [76] Question: What are the key metrics for reinstating the dividend? - Management stated that taxable income will drive the decision, considering various performance metrics [80]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Shares of Beneficial Interest, $0.01 par value CLDT New York Stock Exchange 6.625% Series A Cumulative Redeemable Preferred Shares CLDT-PA New York Stock Exchange FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ...

Financial Data and Key Metrics Changes - Chatham Lodging Trust reported a Q4 2021 RevPAR of $92, representing a 93% increase compared to Q4 2020, but a 22.7% decline versus Q4 2019 [31] - The company generated total revenue of $57 million in Q4 2021, nearly double the $29 million from the previous year [27] - Adjusted EBITDA for Q4 2021 was $15.2 million, with FFO per share of $0.12, up from a loss of $0.18 per share in the same quarter last year [31][28] Business Line Data and Key Metrics Changes - The Residence Inn in San Diego Gaslamp and Residence Inn Anaheim were among the top producers of GOP in Q4 2021, indicating strong performance in specific locations [28] - The newly opened Home2 Suites at Warner Center has shown promising early results, achieving over 50% occupancy shortly after opening [12][20] Market Data and Key Metrics Changes - Silicon Valley, which comprised almost 25% of EBITDA in 2019, lagged with a RevPAR of $74 in Q4 2021, while occupancy was 61% [21] - The overall portfolio occupancy was 65% in Q4 2021, outperforming the industry average of 58% [24] Company Strategy and Development Direction - The company aims to focus on acquiring high-quality hotels in markets with strong growth potential while recycling capital from lower-tier hotels [35] - Chatham plans to maintain a portfolio that is approximately 80% extended stay, indicating a strategic focus on this segment [47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of business travel, particularly in tech-driven markets like Silicon Valley and Bellevue, Washington [7][33] - The company has significantly improved its balance sheet, reducing net debt by $250 million since March 2020, positioning itself well for future investments [34] Other Important Information - The company has committed to sustainability and corporate governance, forming an ESG committee and participating in GRESB assessments [16][17] - Chatham's capital expenditures for 2022 are budgeted at $23.5 million, including $17.5 million for renovations [30] Q&A Session Summary Question: Recovery trajectory in Silicon Valley and San Francisco - Management noted that Silicon Valley and San Francisco have different demand generators, with recovery in Silicon Valley being more dependent on tech companies [38][39] Question: Details on asset acquisitions and dispositions - The focus is on selling older hotels with lower RevPAR while considering acquisitions based on asset age and cash flow potential [40][41] Question: Labor situation and wage growth expectations - The company is in a good position regarding labor and anticipates mid single-digit increases in labor costs for 2022 [42] Question: Drivers of GOP margins in December - The majority of GOP margin improvements were attributed to labor savings [45] Question: Future portfolio reshaping - The company aims to diversify its portfolio geographically while maintaining a focus on extended stay properties [47] Question: Performance of Home2 in LA - The hotel is performing according to pro forma expectations, with positive feedback from guests [50][51]

Company Overview - As of December 31, 2021, the company owned 41 hotels with a total of 6,169 rooms located in 16 states and the District of Columbia[22]. - The company primarily invests in upscale extended-stay hotels and premium-branded select-service hotels, focusing on the 25 largest metropolitan markets in the U.S.[29]. - The company is internally managed and has a management agreement with Island Hospitality Management Inc. for day-to-day operations of its hotels[24]. - As of December 31, 2021, all 41 hotels are managed by a single management company, increasing operational risk concentration[89]. Financial Performance - The company's leverage ratio was approximately 30.6% as of December 31, 2021, down from 35.8% at December 31, 2020[30]. - The company anticipates lower revenue and operating income in the first and fourth quarters, with higher performance expected in the second and third quarters[33]. - Management fees totaled approximately $7.2 million, $5.3 million, and $10.8 million for the years ended December 31, 2021, 2020, and 2019, respectively[48]. - Franchise and marketing/program fees totaled approximately $16.6 million, $11.6 million, and $25.9 million for the years ended December 31, 2021, 2020, and 2019, respectively[50]. - The company has suspended dividends during the first quarter of 2020 and continued this suspension through 2021 due to reduced cash flows[80]. - Future growth is contingent on obtaining new financing, as the company must distribute at least 90% of its REIT taxable income each year[85]. - The company is required to distribute at least 90% of its REIT taxable income to shareholders, which may be impacted by downturns in operating results or unexpected capital improvements[95]. - The company’s ability to make distributions may be adversely affected by unanticipated expenses and decreases in asset values[205]. Investment Strategy - The company plans to maintain a prudent capital structure, financing growth with free cash flow, debt, and issuances of common shares and/or preferred shares[30]. - The company employs value-added strategies such as re-branding and renovating to increase the operating results and values of acquired hotels[29]. - The company operates under franchise agreements, which may expose it to risks associated with concentrating hotel properties in specific brands[91]. - The company is developing a hotel in Los Angeles, facing risks such as construction delays, cost overruns, and environmental issues[118]. Regulatory and Compliance Risks - The company elected to be taxed as a REIT for federal income tax purposes, requiring a distribution of at least 90% of REIT taxable income[41]. - The company must meet various complex requirements under the Internal Revenue Code to maintain its REIT status[41]. - The company is currently undergoing tax examinations by the IRS and the State of New Hampshire for prior tax years, which could materially impact financial results[42]. - Compliance with environmental regulations may require additional capital investments, impacting financial performance[151]. - The company may incur additional costs to comply with the Americans with Disabilities Act (ADA) during acquisitions and in the future, potentially affecting financial results[158]. Market and Economic Conditions - The COVID-19 pandemic has significantly impacted the U.S. lodging industry, leading to reduced occupancy rates at some hotels[76]. - The lodging industry is sensitive to economic conditions, and declines in corporate budgets or consumer demand could lower revenues and profitability of hotel properties[120]. - The performance of the lodging industry is closely linked to U.S. GDP growth and discretionary spending levels, which could impact the company's business strategy[119]. - Increased operating expenses and competition from new hotels could reduce hotel revenues, affecting cash available for distribution to shareholders[98]. Environmental and Operational Risks - Environmental regulations may impose liabilities for hazardous substances, potentially exceeding the value of the property[37]. - The company requires a Phase I environmental site assessment prior to investment, but these assessments may not uncover all hazardous substances[40]. - The presence of hazardous substances may adversely affect the company's ability to sell real estate or borrow funds[37]. - The presence of harmful mold in hotel properties could lead to liability and costly remediation efforts[167]. - Climate change poses risks such as severe weather events and increased operating costs, which could materially affect hotel operations and financial results[150]. Competition and Market Dynamics - The company faces competition from institutional investors and other REITs, which may affect occupancy rates and revenue per available room (RevPAR)[32]. - Competition for acquisitions may limit the number of hotel properties that can be acquired, potentially increasing costs and reducing profitability[125]. - The cyclical nature of the lodging industry can lead to returns that are substantially below expectations, particularly during economic downturns[127]. - Increased use of Internet travel intermediaries and alternative lodging marketplaces could reduce demand for conventional hotel rooms, impacting profitability[134]. Risk Management - The company faces risks related to potential increases in property taxes, which could adversely affect shareholder distributions[71]. - The ongoing need for capital expenditures at hotel properties may negatively impact the company's business[71]. - The concentration of operational risk in one hotel management company could materially affect the company's financial condition and results of operations[89]. - The company may incur additional costs due to franchisors requiring upgraded operating standards, reducing cash available for distributions[90]. - The company is vulnerable to fluctuations in financial performance and capital expenditure requirements, which could affect its ability to make distributions[1].