Chatham Lodging Trust Shares Q4 2021 Results

cash crunch

WEST PALM BEACH—Chatham Lodging Trust announced results for the fourth quarter ended December 31, 2021.

Fourth Quarter 2021 Operating Results
  • Portfolio RevPAR increased 93 percent to $92 compared to the 2020 fourth quarter. ADR accelerated 36 percent to $141, and occupancy jumped 43 percent to 65 percent for the 40 comparable hotels owned as of December 31, 2021 (excludes one Austin hotel acquired in August 2021 that opened in June 2021).
  • Net loss incurred an $11.4 million net loss compared to a net loss of $3.4 million in Q4 2020. Net loss per diluted common share was $0.27 versus a net loss per diluted common share of $0.07 for the same period last year.
  • GOP margin grew 64 percent to a portfolio-wide GOP margin of 41 percent in Q4 2021 compared to 25 percent in Q4 2020.
  • Adjusted EBITDA jumped to $15.2 million from $0.2 million in Q4 2020.
  • Adjusted FFO swung from a negative FFO of $8.7 million in Q4 2020 to a positive adjusted FFO of $6.1 million in 2021. Adjusted FFO per diluted share was $0.12, compared to an FFO loss of $(0.18) in Q4 2020.
  • Cash flow/burn before capital expenditures generated Q4 2021 cash flow before capital expenditures of $5.1 million, which compares to $10.0 million in Q3 2021, $4.0 million in Q2 2021, and cash burn of $7.6 million in Q1 2021. Cash flow/burn includes $2.2 million of principal amortization per quarter.
  • Amended and extended revolving credit facility successfully extended the maturity date to March 2024, including extension options and waived key financial covenants through June 30, 2022.

Jeffrey H. Fisher, Chatham’s president and CEO, said, “Prior to the adverse impact on travel as a result of fears related to the COVID-19 Omicron variant, we were starting to see the return of the business traveler. Although that is going to impact our first quarter, we are starting to see trends rebound and believe we will experience a meaningful recovery in the business traveler starting in the spring and accelerating throughout 2022. Silicon Valley, our most significant market, is coming back to life in February, and we know some of our top clients there are resuming travel, opening offices, and bringing back in-person internships this summer.”

“Despite the recent sluggish RevPAR trend owing to the Omicron variant, I am really pleased with our operating margin performance and what that means for our best-in-class operating model moving forward. Our fourth quarter GOP margins were a strong 41 percent on RevPAR of $92, which is only down 100 basis points compared to our 2019 fourth quarter when RevPAR was 22 percent higher at $118. In December, our GOP margins were 330 basis points higher than our December 2019 GOP margins even though RevPAR was $17 lower. As we move forward, we certainly believe same store operating margins will be higher compared to pre-pandemic levels,” Fisher said.

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Post-Pandemic Balance Sheet Strength

Chatham minimized cash burn throughout the pandemic by generating operating results. Chatham was the second-fastest hotel REIT to become corporate cash flow positive. In 2021, Chatham generated positive cash flow before capital expenditures of $12 million, and, excluding principal amortization, cash flow was $20 million. Since April 2020, cumulative cash burn before capital expenditures was $16 million, but when excluding principal amortization, cash burn was zero.

Chatham preserved its capital structure and enhanced its liquidity by generating increased liquidity of $185 million since the start of the pandemic through the issuance of $120 million of preferred equity in June 2021, the issuance of $25 million of common equity, the issuance of a $40 million loan on the Warner Center Development, and getting multiple amendments to its credit facility.

Since April 2020, Chatham has repaid a $13 million mortgage, paid principal amortization of almost $16 million and paid down borrowings on its credit facility by $103 million. In 2021, the company acquired two extended-stay hotels in Austin, Texas, for $71 million. Additionally, Chatham completed and recently opened the Home2 Suites Woodland Hills Los Angeles.

“It’s been an uncertain and tumultuous time in the lodging industry since early 2020. As we turn the page to 2022 healthier than most of our peers, I am thankful for the remarkable efforts of our teams at Chatham and Island, as well as their significant accomplishments that placed us in a great position moving forward with an outstanding portfolio. I am more energized than ever to deliver great results and meaningfully enhance shareholder value,” said Fisher.

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