Chatham Lodging Trust: No Hard Time To Convince Investors

Chatham Lodging Trust (NYSE: CLDT) has had an easy time convincing investors that it ranks among the best performing select-service hotel REITs. The company universe is not broad, but Chatham demonstrates itself a better stock to Summit Hotel Properties (NYSE:INN), Apple Hospitality REIT (NYSE:APLE), Hersha Hospitality Trust Class A (NYSE: HT) and RLJ Lodging Trust (NYSE:RLJ) in several respects.

It is not surprising that the positive macroeconomic fundamentals have aided the lodging sector, pressuring occupancy rates and opening opportunities for rises in room rates and higher profit margins. Here is how Chatham performed vis-à-vis its peers during the first quarter of 2015:

  • Revenue per available room increased 7.9 percent, compared to 5.3 to 11.9 for peers.

revpar

  • Chatham’s occupancy rate is among the highest. Occupancy has been higher and outperformed the U.S. lodging sector and upscale sub-sector, where Chatham operates.

occupancy

  • The EBITDA margin went from 34.9 to 40.7 percent over a year from the first quarter of 2014 to 2015.

ebitda

  • Adjusted funds from operations have increased more than those of any peer over the past five years.

affo

  • Dividend yield, not the highest, has been reasonable— 4.5 percent—and dividend per share has steadily increased since the 2011 IPO.

div yield

The best news is that Chatham’s price-to-FFO ratio has been trading close to its historic norm and presents a buy opportunity in the Lodging REIT sector.

More about Chatham

Chatham also has 35 upscale extended-stay or select-service hotels. Most of its portfolio is located on the West Coast (51%) and in the Northeast (23%). The business invests primarily in hotels whose brands are Courtyard (Marriott), Hampton Inn & Suites, Hyatt Place, Hilton Garden Inn and Residence Inn (Marriott).

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Source: Chatham Lodging Trust, Fast Graphs


Written by Heli Brecailo

Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.​