News Release
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Chatham Lodging Trust Announces First Quarter 2021 Results
Cash Burn Erased with April RevPAR
First Quarter 2021 Operating Results
-
Portfolio Revenue Per Available Room (RevPAR) – Declined 42 percent to$55 , compared to the 2020 first quarter. Average daily rate (ADR) decreased 31 percent to$107 , and occupancy dropped 17 percent to 52 percent for the 39 comparable hotels owned as ofMarch 31, 2021 . All Chatham hotels have remained open throughout the pandemic.-
April RevPAR was
$75 on occupancy of 65 percent and ADR of$117
-
April RevPAR was
-
Net Income – Improved
$30.8 million to net income of$2.7 million from a net loss of$28.1 million in the 2020 first quarter. Net income per diluted share was$0.06 versus net loss per diluted share of$(0.59) for the same period last year. During the 2021 first quarter, Chatham recognized a gain of$23.8 million related to the sale of the Innkeepers joint venture. -
GOP Margin – Generated positive
GOP margins of 30 percent compared to 25 percent in the 2020 fourth quarter and 38 percent in the 2020 first quarter. -
Adjusted EBITDA – Produced positive Adjusted EBITDA for the third consecutive quarter, generating Adjusted EBITDA of
$1.2 million versus$0.2 million in the 2020 fourth quarter and$16.5 million in the 2020 first quarter. -
Adjusted FFO – Declined
$13.4 million to$(7.1) million . Adjusted FFO per diluted share was$(0.15) , compared to$0.13 in the 2020 first quarter. -
Cash Burn Before Capital Expenditures – First quarter 2021 cash burn was
$7.6 million versus$9.5 million in the 2020 fourth quarter,$5.1 million in the 2020 third quarter and$12.8 million in the 2020 second quarter. Cash burn includes$2.3 million of principal amortization per quarter. - Cash Flow Positive – Produced positive cash flow after interest expense and corporate overhead in March for the first time since the beginning of the pandemic. In April, Chatham is expected to produce positive cash flow after all debt service and overhead, reaching that mark the second fastest of all lodging REITs.
The following chart summarizes the consolidated financial results for the three months ended
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Three Months Ended |
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2021 |
|
2020 |
Net income (loss) |
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Diluted net income (loss) per common share |
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GOP Margin |
29.9% |
|
38.0% |
|
11.1% |
|
27.6% |
Adjusted EBITDA |
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AFFO |
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AFFO per diluted share |
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Dividends per share |
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The below chart summarizes key hotel financial statistics for the 39 comparable hotels owned as of
|
Q1 2021 RevPAR |
|
Q4 2020 RevPAR |
Occupancy |
52% |
|
45% |
ADR |
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RevPAR |
|
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% Change in RevPAR to Prior Year |
(42)% |
|
(60)% |
The below chart summarizes RevPAR statistics by month for the company’s 39 comparable hotels:
|
January |
|
February |
|
March |
|
April |
Occupancy - 2021 |
46% |
|
50% |
|
60% |
|
65% |
ADR - 2021 |
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RevPAR - 2021 |
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RevPAR - 2020 |
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% Change in RevPAR |
(55)% |
|
(57)% |
|
7% |
|
230% |
RevPAR Index |
132 |
|
127 |
|
122 |
|
~125 |
“Since RevPAR dipped to
RevPAR performance for Chatham’s six largest markets based on hotel EBITDA contribution over the last twelve months is presented below:
|
Q1 2021
|
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% Change
|
|
Q4 2020
|
|
Q3 2020
|
39 - |
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(42)% |
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(58)% |
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(15)% |
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Coastal |
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(34)% |
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(32)% |
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(13)% |
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(9)% |
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“Our meaningful RevPAR gains have been accomplished with very little contribution from our most important market,
Approximately 84 percent of Chatham’s hotel EBITDA over the last twelve months was generated from its
|
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Homewood Suites (7) |
|
Courtyard (5) |
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Occupancy - 2021 |
60% |
|
58% |
|
44% |
|
31% |
|
60% |
ADR – 2021 |
|
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RevPAR – 2021 |
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RevPAR – 2020 |
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% Change in RevPAR |
(38)% |
|
(39)% |
|
(52)% |
|
(60)% |
|
(28)% |
“Our strong performance is a testament to great portfolio attributes, high-quality, extended-stay hotels and premium-branded, select-service hotels in locations that generate room revenue from diverse demand sources,” Fisher added. “For years, we have touted the benefits of a portfolio such as ours through all phases of a lodging cycle, and our performance certainly proves that. We believed we would reach cash flow breakeven sooner than most other lodging REITs, and with April RevPAR of
“Chatham will emerge from the pandemic healthier than many of our lodging REIT peers who have burned significant amounts of cash and equity value, and we will be better positioned to be acquisitive and grow FFO in addition to the FFO that will be added with the opening of our
The below chart summarizes key hotel operating performance measures per month during the 2021 first quarter and for the three months ended
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January |
|
February |
|
March |
|
Q1 2021 |
|
Q4 2020 |
RevPAR – 2021 |
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Gross operating profit |
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23% |
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26% |
|
37% |
|
30% |
|
25% |
|
2% |
|
5% |
|
22% |
|
11% |
|
8% |
“Operationally, our platform working alongside Island Hospitality allows us to adjust top- and bottom-line driven operating strategies faster than our peers and generate high operating margins which ultimately translates to better cash flow,” commented
Corporate Update
The below chart summarizes key financial performance measures for the three months ended
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January |
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February |
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March |
|
Q1 2021 |
|
Q4 2020 |
RevPAR – 2021 |
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Corporate EBITDA |
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Debt service |
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Cash used before CAPEX |
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Chatham has estimated liquidity of
During the 2021 first quarter, the company incurred capital expenditures of
Chatham is developing a hotel in the Warner Center submarket of
During the quarter, Chatham sold its 10.3 percent interest in the Innkeepers joint venture with Colony Capital for
“This sale culminates a very successful joint venture investment for Chatham since we bought the Innkeepers portfolio out of bankruptcy in 2011,” Craven stated. “With this final payment, we generated total proceeds of more than
Capital Markets & Capital Structure
As of
Chatham’s leverage ratio was approximately 35.9 percent on
On
During the first quarter, Chatham issued 1.5 million common shares at an average price of
“We deeply understand our responsibility to protect long-term value for our equity holders,” commented
Dividend
Although not expected, any dividend required for Chatham to maintain its REIT status for 2021 will be declared in the 2021 fourth quarter and paid in
2021 Guidance
Due to uncertainty surrounding the impact of the pandemic on the hotel industry, the company is not providing guidance at this time.
Earnings Call
The company will hold its first quarter 2021 conference call later today at
About
Non-GAAP Financial Measures
Included in this press release are certain “non-GAAP financial measures,” within the meaning of
FFO As Defined by NAREIT and Adjusted FFO
The company calculates FFO in accordance with standards established by the
The company calculates Adjusted FFO by further adjusting FFO for certain additional items that are not addressed in NAREIT’s definition of FFO, including other charges, losses on the early extinguishment of debt and similar items related to its unconsolidated real estate entities that it believes do not represent costs related to hotel operations. The company believes that Adjusted FFO provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs that make similar adjustments to FFO.
EBITDA, EBITDAre, Adjusted EBITDA and
The company calculates EBITDA for purposes of the credit facility debt as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; (3) depreciation and amortization; and (4) unconsolidated real estate entity items including interest, depreciation and amortization excluding gains and losses from sales of real estate. The company believes EBITDA is useful to investors in evaluating and facilitating comparisons of its operating performance because it helps investors compare the company’s operating performance between periods and between REITs by removing the impact of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results. In addition, the company uses EBITDA as one measure in determining the value of hotel acquisitions and dispositions.
The company calculates EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated joint ventures. We believe that the presentation of EBITDAre provides useful information to investors regarding the Company's operating performance and can facilitate comparisons of operating performance between periods and between REITs.
The company calculates Adjusted EBITDA by further adjusting EBITDA for certain additional items, including other charges, losses on the early extinguishment of debt, amortization of non-cash share-based compensation and similar items related to its unconsolidated real estate entities, which it believes are not indicative of the performance of its underlying hotel properties entities. The company believes that Adjusted EBITDA provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs that report similar measures.
Although the company presents FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and
-
FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and
Adjusted Hotel EBITDA do not reflect the company’s cash expenditures, or future requirements, for capital expenditures or contractual commitments;
-
FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and
Adjusted Hotel EBITDA do not reflect changes in, or cash requirements for, the company’s working capital needs;
-
FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and
Adjusted Hotel EBITDA do not reflect funds available to make cash distributions;
-
EBITDA, EBITDAre, Adjusted EBITDA and
Adjusted Hotel EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the company’s debts;
-
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may need to be replaced in the future, and FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and
Adjusted Hotel EBITDA do not reflect any cash requirements for such replacements;
- Non-cash compensation is and will remain a key element of the company’s overall long-term incentive compensation package, although the company excludes it as an expense when evaluating its ongoing operating performance for a particular period using adjusted EBITDA;
-
Adjusted FFO, Adjusted EBITDA and
Adjusted Hotel EBITDA do not reflect the impact of certain cash charges (including acquisition transaction costs) that result from matters the company considers not to be indicative of the underlying performance of its hotel properties; and
-
Other companies in the company’s industry may calculate FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and
Adjusted Hotel EBITDA differently than the company does, limiting their usefulness as a comparative measure.
In addition, FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and
Forward-Looking Statement Safe Harbor
Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements include those with regard to the potential future impact of the COVID-19 pandemic, within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include information about possible or assumed future results of the lodging industry and our business, financial condition, liquidity, results of operations, cash flow and plans and objectives. These statements generally are characterized by the use of the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Important factors that we think could cause our actual results to differ materially from expected results are summarized below.
One of the most significant factors, however, is the ongoing impact of the current outbreak of the COVID-19 pandemic on
Other risks include, but are not limited to: national and local economic and business conditions, including the effect on travel of potential terrorist attacks, that will affect occupancy rates at the company’s hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the company’s indebtedness and its ability to meet covenants in its debt agreements; relationships with property managers; the company’s ability to maintain its properties in a First-class manner, including meeting capital expenditure requirements; the company’s ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; the company’s ability to complete acquisitions and dispositions; and the company’s ability to continue to satisfy complex rules in order for the company to remain a REIT for federal income tax purposes and other risks and uncertainties associated with the company’s business described in the company's filings with the
Consolidated Balance Sheets (In thousands, except share and per share data) |
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|
(unaudited) |
|
|||||
Assets: |
|
|
|||||
Investment in hotel properties, net |
$ |
1,251,986 |
|
$ |
1,265,174 |
|
|
Investment in hotel properties under development |
52,540 |
|
43,651 |
|
|||
Cash and cash equivalents |
14,638 |
|
21,124 |
|
|||
Restricted cash |
8,724 |
|
10,329 |
|
|||
Right of use asset, net |
20,480 |
|
20,641 |
|
|||
Hotel receivables (net of allowance for doubtful accounts of |
2,507 |
|
1,688 |
|
|||
Deferred costs, net |
4,990 |
|
5,384 |
|
|||
Prepaid expenses and other assets |
6,882 |
|
2,266 |
|
|||
Total assets |
$ |
1,362,747 |
|
$ |
1,370,257 |
|
|
Liabilities and Equity: |
|
|
|||||
Mortgage debt, net |
$ |
457,924 |
|
$ |
460,145 |
|
|
Revolving credit facility |
120,000 |
|
135,300 |
|
|||
Construction loan |
21,757 |
|
13,325 |
|
|||
Accounts payable and accrued expenses |
22,350 |
|
25,374 |
|
|||
Distributions and losses in excess of investments in unconsolidated real estate entities |
— |
|
19,951 |
|
|||
Lease liability, net |
23,103 |
|
23,233 |
|
|||
Distributions payable |
147 |
|
469 |
|
|||
Total liabilities |
645,281 |
|
677,797 |
|
|||
Commitments and contingencies |
|
|
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Equity: |
|
|
|||||
Shareholders’ Equity: |
|
|
|||||
Preferred shares, |
— |
|
— |
|
|||
Common shares, |
485 |
|
470 |
|
|||
Additional paid-in capital |
929,725 |
|
906,000 |
|
|||
Accumulated deficit |
(226,062 |
) |
(228,718 |
) |
|||
Total shareholders’ equity |
704,148 |
|
677,752 |
|
|||
Noncontrolling interests: |
|
|
|||||
Noncontrolling interest in |
13,318 |
|
14,708 |
|
|||
Total equity |
717,466 |
|
692,460 |
|
|||
Total liabilities and equity |
$ |
1,362,747 |
|
$ |
1,370,257 |
|
|
Consolidated Statements of Operations (In thousands, except share and per share data) (unaudited) |
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For the three months ended |
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|
2021 |
2020 |
|||||
Revenue: |
|
|
|||||
Room |
$ |
29,390 |
|
$ |
53,048 |
|
|
Food and beverage |
363 |
|
2,063 |
|
|||
Other |
1,574 |
|
3,518 |
|
|||
Reimbursable costs from unconsolidated real estate entities |
787 |
|
1,580 |
|
|||
Total revenue |
32,114 |
|
60,209 |
|
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Expenses: |
|
|
|||||
Hotel operating expenses: |
|
|
|||||
Room |
7,166 |
|
13,394 |
|
|||
Food and beverage |
284 |
|
1,889 |
|
|||
Telephone |
400 |
|
378 |
|
|||
Other hotel operating |
365 |
|
810 |
|
|||
General and administrative |
3,812 |
|
5,278 |
|
|||
Franchise and marketing fees |
2,598 |
|
4,720 |
|
|||
Advertising and promotions |
757 |
|
1,510 |
|
|||
Utilities |
2,287 |
|
2,516 |
|
|||
Repairs and maintenance |
2,461 |
|
3,462 |
|
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Management fees |
1,196 |
|
2,024 |
|
|||
Insurance |
648 |
|
360 |
|
|||
Total hotel operating expenses |
21,974 |
|
36,341 |
|
|||
Depreciation and amortization |
13,334 |
|
13,061 |
|
|||
Impairment loss on investment in unconsolidated real estate entities |
— |
|
15,282 |
|
|||
Property taxes, ground rent and insurance |
5,879 |
|
6,099 |
|
|||
General and administrative |
3,530 |
|
2,765 |
|
|||
Other charges |
55 |
|
2,768 |
|
|||
Reimbursable costs from unconsolidated real estate entities |
787 |
|
1,580 |
|
|||
Total operating expenses |
45,559 |
|
77,896 |
|
|||
Operating loss before (loss) gain on sale of hotel property |
(13,445 |
) |
(17,687 |
) |
|||
(Loss) gain on sale of hotel property |
(43 |
) |
1 |
|
|||
Operating loss |
(13,488 |
) |
(17,686 |
) |
|||
Interest and other income |
74 |
|
81 |
|
|||
Interest expense, including amortization of deferred fees |
(6,470 |
) |
(6,833 |
) |
|||
Loss from unconsolidated real estate entities |
(1,231 |
) |
(3,673 |
) |
|||
Gain on sale of investment in unconsolidated real estate entities |
23,817 |
|
— |
|
|||
Income (loss) before income tax expense |
2,702 |
|
(28,111 |
) |
|||
Income tax expense |
— |
|
— |
|
|||
Net income (loss) |
2,702 |
|
(28,111 |
) |
|||
Net income (loss) attributable to noncontrolling interests |
(46 |
) |
328 |
|
|||
Net income (loss) attributable to common shareholders |
$ |
2,656 |
|
$ |
(27,783 |
) |
|
Income (loss) per Common Share - Basic: |
|
|
|||||
Net income (loss) attributable to common shareholders |
$ |
0.06 |
|
$ |
(0.59 |
) |
|
Income (loss) per Common Share - Diluted: |
|
|
|||||
Net income (loss) attributable to common shareholders |
$ |
0.06 |
|
$ |
(0.59 |
) |
|
Weighted average number of common shares outstanding: |
|
|
|||||
Basic |
47,224,972 |
|
46,948,533 |
|
|||
Diluted |
47,368,518 |
|
46,948,533 |
|
|||
Distributions declared per common share: |
$ |
— |
|
$ |
0.22 |
|
|
FFO and EBITDA (In thousands, except share and per share data) |
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|
For the three months ended |
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|
|
||||||
|
2021 |
2020 |
|||||
Funds From Operations (“FFO”): |
|
|
|||||
Net income (loss) |
$ |
2,702 |
|
$ |
(28,111 |
) |
|
Loss (gain) on sale of hotel property |
43 |
|
(1 |
) |
|||
Loss on sale of assets within the unconsolidated real estate entities |
— |
|
8 |
|
|||
Gain on sale of investment in unconsolidated real estate entities |
(23,817 |
) |
— |
|
|||
Depreciation |
13,274 |
|
13,000 |
|
|||
Impairment loss on investment in unconsolidated real estate entities |
— |
|
15,282 |
|
|||
Impairment loss from unconsolidated real estate entities |
— |
|
1,388 |
|
|||
Adjustments for unconsolidated real estate entity items |
568 |
|
1,926 |
|
|||
FFO attributable to common share and unit holders |
(7,230 |
) |
3,492 |
|
|||
Other charges |
55 |
|
2,768 |
|
|||
Adjustments for unconsolidated real estate entity items |
46 |
|
2 |
|
|||
Adjusted FFO attributable to common share and unit holders |
$ |
(7,129 |
) |
$ |
6,262 |
|
|
Weighted average number of common shares and units |
|
|
|||||
Basic |
48,019,747 |
|
47,496,006 |
|
|||
Diluted |
48,019,747 |
|
47,607,096 |
|
|||
|
For the three months ended |
||||||
|
|
||||||
|
2021 |
2020 |
|||||
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”): |
|
|
|||||
Net income (loss) |
$ |
2,702 |
|
$ |
(28,111 |
) |
|
Interest expense |
6,470 |
|
6,833 |
|
|||
Depreciation and amortization |
13,334 |
|
13,061 |
|
|||
Adjustments for unconsolidated real estate entity items |
1,184 |
|
4,075 |
|
|||
EBITDA |
23,690 |
|
(4,142 |
) |
|||
Impairment loss on investment in unconsolidated real estate entities |
— |
|
15,282 |
|
|||
Impairment loss from unconsolidated real estate entities |
— |
|
1,388 |
|
|||
Loss (gain) on sale of hotel property |
43 |
|
(1 |
) |
|||
Loss on the sale of assets within unconsolidated real estate entities |
— |
|
8 |
|
|||
Gain on sale of investment in unconsolidated real estate entities |
(23,817 |
) |
— |
|
|||
EBITDAre |
(84 |
) |
12,535 |
|
|||
Other charges |
55 |
|
2,768 |
|
|||
Adjustments for unconsolidated real estate entity items |
46 |
|
— |
|
|||
Share based compensation |
1,156 |
|
1,206 |
|
|||
Adjusted EBITDA |
$ |
1,173 |
|
$ |
16,509 |
|
ADJUSTED HOTEL EBITDA (In thousands, except share and per share data) |
||||||||
|
|
For the three months ended |
||||||
|
|
|
||||||
|
|
2021 |
2020 |
|||||
|
|
|
|
|||||
Net income (loss) |
|
$ |
2,702 |
|
$ |
(28,111 |
) |
|
Add: |
Interest expense |
6,470 |
|
6,833 |
|
|||
|
Depreciation and amortization |
13,334 |
|
13,061 |
|
|||
|
Corporate general and administrative |
3,530 |
|
2,765 |
|
|||
|
Other charges |
55 |
|
2,768 |
|
|||
|
Loss from unconsolidated real estate entities |
1,231 |
|
3,673 |
|
|||
|
Impairment loss on investment in unconsolidated real estate entities |
— |
|
15,282 |
|
|||
|
Loss on sale of hotel property |
43 |
|
— |
|
|||
Less: |
Interest and other income |
(74 |
) |
(81 |
) |
|||
|
Gain on sale of hotel property |
— |
|
(1 |
) |
|||
|
Gain on sale of investment in unconsolidated real estate entities |
(23,817 |
) |
— |
|
|||
|
|
$ |
3,474 |
|
$ |
16,189 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005375/en/
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