UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2022


¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐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 Incorporation or Organization)

		(I.R.S. Employer Identification No.)

~~Maryland~~			~~27-1200777~~
~~(State or Other Jurisdiction of~~ ~~Incorporation or Organization)~~	~~(I.R.S. Employer~~ ~~Identification No.)~~

222 Lakeview Avenue, Suite 200
West Palm Beach ~~Florida~~		Florida		33401
(Address of Principal Executive Offices)				(Zip Code)

(561) 802-4477

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer		¨			Accelerated filer		x

~~Large accelerated filer~~		x	~~Accelerated filer~~	¨

Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~		Smaller reporting company			¨☐
					Emerging growth company		¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨☐ Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class			Outstanding at ~~October 31, 2017~~August 3, 2022
Common Shares of Beneficial Interest ($0.01 par value per share)			~~40,371,958~~48,806,505

TABLE OF CONTENTS


					Page
			PART I. FINANCIAL INFORMATION

				~~Page~~
Item1.	~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~	Financial Statements.	3
~~Item 2.~~Item2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations.		2621
~~Item 3.~~Item3.			Quantitative and Qualitative Disclosures about Market Risk.		4438
~~Item 4.~~Item4.			Controls and Procedures.		4539

			PART II. OTHER INFORMATION

~~Item 1.~~Item1.			Legal Proceedings.		4540
~~Item 1A.~~Item1A.			Risk Factors.		4540
~~Item 2.~~Item2.			Unregistered Sales of Equity Securities and Use of Proceeds.		4540
~~Item 3.~~Item3.			Defaults Upon Senior Securities.		4540
~~Item 4.~~Item4.			Mine Safety Disclosures.		4540
~~Item 5.~~Item5.			Other Information.		4540
~~Item 6.~~Item6.			Exhibits.		4641

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CHATHAM LODGING TRUST

Consolidated Balance Sheets

(In thousands, except share and per share data)

September 30,
2017 December 31,
2016
(unaudited)
Assets:
Investment in hotel properties, net $ 1,263,183
$ 1,233,094
Cash and cash equivalents 11,282
12,118
Restricted cash 27,693
25,083
Investment in unconsolidated real estate entities 25,448
20,424
Hotel receivables (net of allowance for doubtful accounts of $249 and $155, respectively) 7,691
4,389
Deferred costs, net 4,882
4,642
Prepaid expenses and other assets 4,350
2,778
Deferred tax asset, net —
426
Total assets $ 1,344,529
$ 1,302,954
Liabilities and Equity:
Mortgage debt, net $ 527,144
$ 530,323
Revolving credit facility 75,000
52,500
Accounts payable and accrued expenses 32,763
27,782
Distributions and losses in excess of investments of unconsolidated real estate entities 5,975
6,017
Distributions payable 5,217
4,742
Total liabilities 646,099
621,364
Commitments and contingencies (Note 13)

Equity:
Shareholders’ Equity:
Preferred shares, $0.01 par value, 100,000,000 shares authorized and unissued at September 30, 2017 and December 31, 2016 —
—
Common shares, $0.01 par value, 500,000,000 shares authorized; 39,839,476 and 38,367,014 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 395
380
Additional paid-in capital 752,148
722,019
Retained earnings (distributions in excess of retained earnings) (60,097 ) (45,657 )
Total shareholders’ equity 692,446
676,742
Noncontrolling Interests:
Noncontrolling interest in Operating Partnership 5,984
4,848
Total equity 698,430
681,590
Total liabilities and equity $ 1,344,529
$ 1,302,954


	June 30, 2022		December 31, 2021
	(unaudited)
Assets:
Investment in hotel properties, net	$	1,286,661	$	1,282,870
Investment in hotel properties under development	—		67,554
Cash and cash equivalents	17,750		19,188
Restricted cash	10,038		10,681

Right of use asset, net	19,645		19,985
Hotel receivables (net of allowance for doubtful accounts of $230 and $382, respectively)	7,276		3,003
Deferred costs, net	4,121		4,627
Prepaid expenses and other assets	8,269		2,791

Total assets	$	1,353,760	$	1,410,699
Liabilities and Equity:
Mortgage debt, net	$	434,940	$	439,282
Revolving credit facility	15,000		70,000
Construction loan	39,143		35,007
Accounts payable and accrued expenses	27,913		27,718

Lease liability, net	22,410		22,696
Distributions payable	1,656		1,803
Total liabilities	541,062		596,506
Commitments and contingencies (Note 15)	0		0
Equity:
Shareholders’ Equity:
Preferred shares, $0.01 par value, 100,000,000 shares authorized; 4,800,000 and 4,800,000 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	48		48
Common shares, $0.01 par value, 500,000,000 shares authorized; 48,806,107 and 48,768,890 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	488		487
Additional paid-in capital	1,046,980		1,048,070
Accumulated deficit	(255,372)		(251,103)
Total shareholders’ equity	792,144		797,502
Noncontrolling Interests:
Noncontrolling interest in Operating Partnership	20,554		16,691
Total equity	812,698		814,193
Total liabilities and equity	$	1,353,760	$	1,410,699

The accompanying notes are an integral part of these consolidated financial statements.

CHATHAM LODGING TRUST

Consolidated Statements of Operations

(In thousands, except share and per share data)

(unaudited)


	For the three months ended						For the nine months ended							For the three months ended				For the six months ended
	September 30,													June 30,				June 30,
	2017			2016			2017			2016				2022		2021		2022		2021
Revenue:													Revenue:
Room	$	76,221		$	74,736		$	213,415		$	211,438		Room	$	75,761	$	46,514	$	125,926	$	75,905
Food and beverage	1,378			1,494			4,353			4,728			Food and beverage	1,968		756		3,382		1,120
Other	3,052			2,699			8,465			7,689			Other	3,674		2,647		6,654		4,218
Cost reimbursements from unconsolidated real estate entities	753			804			2,302			2,728
Reimbursable costs from unconsolidated entities													Reimbursable costs from unconsolidated entities	358		327		684		1,114
Total revenue	81,404			79,733			228,535			226,583			Total revenue	81,761		50,244		136,646		82,357
Expenses:													Expenses:
Hotel operating expenses:													Hotel operating expenses:
Room	15,618			15,068			44,147			43,453			Room	14,480		9,486		26,074		16,653
Food and beverage	1,307			1,280			3,770			3,703			Food and beverage	1,429		491		2,476		775
Telephone	410			449			1,205			1,300			Telephone	359		348		760		748
Other hotel operating	737			563			2,047			1,790			Other hotel operating	879		544		1,611		909
General and administrative	5,906			5,652			17,534			16,848			General and administrative	6,804		5,056		12,153		8,870
Franchise and marketing fees	6,366			6,157			17,758			17,293			Franchise and marketing fees	6,559		4,091		10,966		6,688
Advertising and promotions	1,353			1,203			3,955			3,899			Advertising and promotions	1,230		835		2,419		1,592
Utilities	2,708			2,684			7,431			7,301			Utilities	2,784		2,352		5,673		4,638
Repairs and maintenance	3,467			3,084			9,898			9,443			Repairs and maintenance	3,347		2,720		6,792		5,180
Management fees	2,693			2,558			7,511			7,171			Management fees	2,727		1,760		4,645		2,956
Insurance	297			318			925			993			Insurance	747		707		1,457		1,356
Total hotel operating expenses	40,862			39,016			116,181			113,194			Total hotel operating expenses	41,345		28,390		75,026		50,365
Depreciation and amortization	10,944			11,997			34,662			36,753			Depreciation and amortization	15,277		13,353		30,313		26,687
Impairment loss	—			—			6,663			—

Property taxes, ground rent and insurance	5,349			5,417			15,710			15,454			Property taxes, ground rent and insurance	5,932		5,954		10,890		11,833
General and administrative	3,151			2,992			9,706			9,076			General and administrative	4,462		4,316		8,405		7,844
Hotel property acquisition costs and other charges	(15		)	49			—			359
Reimbursed costs from unconsolidated real estate entities	753			804			2,302			2,728
Other charges													Other charges	150		322		400		377
Reimbursable costs from unconsolidated entities													Reimbursable costs from unconsolidated entities	358		327		684		1,114
Total operating expenses	61,044			60,275			185,224			177,564			Total operating expenses	67,524		52,662		125,718		98,220
Operating income	20,360			19,458			43,311			49,019
Operating income (loss) before gain (loss) on sale of hotel properties													Operating income (loss) before gain (loss) on sale of hotel properties	14,237		(2,418)		10,928		(15,863)
Gain (loss) on sale of hotel properties													Gain (loss) on sale of hotel properties	2,020		28		2,020		(15)
Operating income (loss)													Operating income (loss)	16,257		(2,390)		12,948		(15,878)
Interest and other income	9			7			27			43			Interest and other income	1		28		1		102
Interest expense, including amortization of deferred fees	(7,065		)	(7,082		)	(20,830		)	(21,211		)	Interest expense, including amortization of deferred fees	(6,936)		(6,356)		(13,325)		(12,826)
Loss on early extinguishment of debt	—			—			—			(4		)
Income from unconsolidated real estate entities	1,189			1,051			2,031			1,346
Loss on sale from unconsolidated real estate entities	—			—			—			(8		)
Income before income tax benefit (expense)	14,493			13,434			24,539			29,185
Income tax benefit (expense)	—			12			(317		)	(167		)
Net income	14,493			13,446			24,222			29,018
Net income attributable to noncontrolling interests	(101		)	(91		)	(167		)	(195		)
Net income attributable to common shareholders	$	14,392		$	13,355		$	24,055		$	28,823

Income per Common Share - Basic:
Net income attributable to common shareholders (Note 11)	$	0.36		$	0.35		$	0.62		$	0.75
Income per Common Share - Diluted:
Net income attributable to common shareholders (Note 11)	$	0.36		$	0.35		$	0.61		$	0.74
Loss from unconsolidated real estate entities													Loss from unconsolidated real estate entities	—		—		—		(1,231)
Gain on sale of investment in unconsolidated real estate entities													Gain on sale of investment in unconsolidated real estate entities	—		—		—		23,817
Income (loss) before income tax expense													Income (loss) before income tax expense	9,322		(8,718)		(376)		(6,016)
Income tax expense													Income tax expense	—		—		—		—
Net income (loss)													Net income (loss)	9,322		(8,718)		(376)		(6,016)
Net (income) loss attributable to noncontrolling interests													Net (income) loss attributable to noncontrolling interests	(171)		160		82		114
Net income (loss) attributable to Chatham Lodging Trust													Net income (loss) attributable to Chatham Lodging Trust	9,151		(8,558)		(294)		(5,902)
Preferred dividends													Preferred dividends	(1,987)		—		(3,975)		—
Net income (loss) attributable to common shareholders													Net income (loss) attributable to common shareholders	$	7,164	$	(8,558)	$	(4,269)	$	(5,902)

Income (loss) per Common Share - Basic:													Income (loss) per Common Share - Basic:
Net income (loss) attributable to common shareholders (Note 12)													Net income (loss) attributable to common shareholders (Note 12)	$	0.15	$	(0.18)	$	(0.09)	$	(0.12)
Income (loss) per Common Share - Diluted:													Income (loss) per Common Share - Diluted:
Net income (loss) attributable to common shareholders (Note 12)													Net income (loss) attributable to common shareholders (Note 12)	$	0.15	$	(0.18)	$	(0.09)	$	(0.12)
Weighted average number of common shares outstanding:													Weighted average number of common shares outstanding:
Basic	39,298,974			38,307,382			38,731,900			38,293,704			Basic	48,795,348		48,637,484		48,791,455		47,935,130
Diluted	39,550,494			38,567,462			38,960,455			38,520,689			Diluted	49,017,184		48,637,484		48,791,455		47,935,130
Distributions declared per common share:	$	0.33		$	0.33		$	0.99		$	0.97		Distributions declared per common share:	$	—	$	—	$	—	$	—

The accompanying notes are an integral part of these consolidated financial statements.

CHATHAM LODGING TRUST

Consolidated Statements of Equity

(In thousands, except share and per share data)

(unaudited)


Three months ended June 30, 2021 and 2022
	Preferred Shares			Common Shares			Additional Paid - In Capital		Accumulated Deficit		Total Shareholders’ Equity		Noncontrolling Interest in Operating Partnership		Total Equity
	Shares	Amount		Shares	Amount
Balance, April 1, 2021	—	$	—	48,518,201	$	485	$	929,725	$	(226,062)	$	704,148	$	13,318	$	717,466
Issuance of preferred shares, net of offering costs of $3,780	4,800,000	48		—	—		116,172		—		116,220		—		116,220

Issuance of common shares, net of offering costs of $292	—	—		238,354	2		2,994		—		2,996		—		2,996



Amortization of share based compensation	—	—		—	—		7		—		7		1,088		1,095



Reallocation of noncontrolling interest	—	—		—	—		(592)		—		(592)		592		—
Net loss	—	—		—	—		—		(8,558)		(8,558)		(160)		(8,718)
Balance, June 30, 2021	4,800,000	$	48	48,756,555	$	487	$	1,048,306	$	(234,620)	$	814,221	$	14,838	$	829,059

Balance, April 1, 2022	4,800,000	$	48	48,804,585	$	488	$	1,047,031	$	(262,536)	$	785,031	$	19,108	$	804,139


Issuance of common shares, net of offering costs of $79	—	—		1,522	—		(61)		—		(61)		—		(61)



Amortization of share based compensation	—	—		—	—		10		—		10		1,275		1,285



Dividends accrued on preferred shares	—	—		—	—		—		(1,987)		(1,987)		—		(1,987)

Net income	—	—		—	—		—		9,151		9,151		171		9,322
Balance, June 30, 2022	4,800,000	$	48	48,806,107	$	488	$	1,046,980	$	(255,372)	$	792,144	$	20,554	$	812,698

Common Shares
Additional
Paid - In
Capital
Retained earnings (distributions in excess of retained earnings)
Total
Shareholders’
Equity

Noncontrolling
Interest in
Operating
Partnership

Total
Equity
Shares Amount
Balance, January 1, 2016 38,308,937
$ 379
$ 719,773
$ (27,281 ) $ 692,871
$ 4,131
$ 697,002
Issuance of shares pursuant to Equity Incentive Plan 26,488
—
550
—
550
—
550
Issuance of shares, net of offering costs of $8 16,454
1
336
—
337
—
337
Issuance of restricted time-based shares 7,851
—
—
—
—
—
—
Amortization of share based compensation —
—
963
—
963
916
1,879
Dividends declared on common shares ($0.97 per share) —
—
—
(37,266 ) (37,266 ) —
(37,266 )
Distributions declared on LTIP units ($0.97 per unit) —
—
—
—
—
(537 ) (537 )
Reallocation of noncontrolling interest —
—
11
—
11
(11 ) —
Net income —
—
—
28,823
28,823
195
29,018
Balance, September 30, 2016 38,359,730
$ 380
$ 721,633
$ (35,724 ) $ 686,289
$ 4,694
$ 690,983
Balance, January 1, 2017 38,367,014
$ 380
$ 722,019
$ (45,657 ) $ 676,742
$ 4,848
$ 681,590
Issuance of shares pursuant to Equity Incentive Plan 23,980
—
500
—
500
—
500
Issuance of shares, net of offering costs of $812 1,443,482
15
28,909
—
28,924
—
28,924
Issuance of restricted time-based shares 5,000
—
—
—
—
—
—
Amortization of share based compensation —
—
619
—
619
1,791
2,410
Dividends declared on common shares ($0.99 per share) —
—
—
(38,495 ) (38,495 ) —
(38,495 )
Distributions declared on LTIP units ($0.99 per unit) —
—
—
—
—
(721 ) (721 )
Reallocation of noncontrolling interest —
—
101
—
101
(101 ) —
Net income —
—
—
24,055
24,055
167
24,222
Balance, September 30, 2017 39,839,476
$ 395
$ 752,148
$ (60,097 ) $ 692,446
$ 5,984
$ 698,430



Six months ended June 30, 2021 and 2022
	Preferred Shares			Common Shares			Additional Paid - In Capital		Accumulated Deficit		Total Shareholders’ Equity		Noncontrolling Interest in Operating Partnership		Total Equity
	Shares	Amount		Shares	Amount
Balance, January 1, 2021	—	$	—	46,973,473	$	470	$	906,000	$	(228,718)	$	677,752	$	14,708	$	692,460
Issuance of preferred shares, net of offering costs of $3,780	4,800,000	48		—	—		116,172		—		116,220		—		116,220
Issuance of shares pursuant to Equity Incentive Plan	—	—		40,203	—		450		—		450		—		450
Issuance of common shares, net of offering costs of $811	—	—		1,742,879	17		23,754		—		23,771		—		23,771



Amortization of share based compensation	—	—		—	—		15		—		15		2,119		2,134


Forfeited distributions declared on LTIP units	—	—		—	—		—		—		—		40		40
Reallocation of noncontrolling interest	—	—		—	—		1,915		—		1,915		(1,915)		—
Net loss	—	—		—	—		—		(5,902)		(5,902)		(114)		(6,016)
Balance, June 30, 2021	4,800,000	$	48	48,756,555	$	487	$	1,048,306	$	(234,620)	$	814,221	$	14,838	$	829,059

Balance, January 1, 2022	4,800,000	$	48	48,768,890	$	487	$	1,048,070	$	(251,103)	$	797,502	$	16,691	$	814,193

Issuance of common shares pursuant to Equity Incentive Plan	—	—		34,672	1		486		—		487		—		487
Issuance of common shares, net of offering costs of $107	—	—		2,545	—		(74)		—		(74)		—		(74)



Amortization of share based compensation	—	—		—	—		19		—		19		2,424		2,443



Dividends accrued on preferred shares	—	—		—	—		—		(3,975)		(3,975)		—		(3,975)
Reallocation of noncontrolling interest	—	—		—	—		(1,521)		—		(1,521)		1,521		—
Net loss	—	—		—	—		—		(294)		(294)		(82)		(376)
Balance, June 30, 2022	4,800,000	$	48	48,806,107	$	488	$	1,046,980	$	(255,372)	$	792,144	$	20,554	$	812,698

The accompanying notes are an integral part of these consolidated financial statements.

CHATHAM LODGING TRUST

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

For the nine months ended
September 30,
2017 2016
Cash flows from operating activities:
Net income $ 24,222
$ 29,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 34,501
36,593
Amortization of deferred franchise fees 161
160
Amortization of deferred financing fees included in interest expense 394
812
Impairment loss 6,663
—
Loss on early extinguishment of debt —
4
Share based compensation 2,785
2,256
Income from unconsolidated real estate entities (2,031 ) (1,346 )
Changes in assets and liabilities:
Hotel receivables (3,285 ) (2,816 )
Deferred tax asset 426
—
Deferred costs (878 ) (94 )
Prepaid expenses and other assets (1,596 ) 741
Accounts payable and accrued expenses 5,246
4,532
Net cash provided by operating activities 66,608
69,860
Cash flows from investing activities:
Improvements and additions to hotel properties (21,523 ) (17,095 )
Acquisition of hotel properties, net of cash acquired (49,864 ) —
Distributions from unconsolidated entities 2,001
6,611
Investment in unconsolidated real estate entities (5,037 ) —
Restricted cash (2,611 ) (5,660 )
Net cash used in investing activities (77,034 ) (16,144 )
Cash flows from financing activities:
Borrowings on revolving credit facility 82,000
33,450
Repayments on revolving credit facility (59,500 ) (46,030 )
Payments on mortgage debt (3,094 ) (2,759 )
Principal prepayment of mortgage debt —
(5,954 )
Payment of financing costs —
(50 )
Payment of offering costs (812 ) (8 )
Proceeds from issuance of common shares 29,736
344
Distributions-common shares/units (38,740 ) (40,279 )
Net cash provided by (used in) financing activities 9,590
(61,286 )
Net change in cash and cash equivalents (836 ) (7,570 )
Cash and cash equivalents, beginning of period 12,118
21,036
Cash and cash equivalents, end of period $ 11,282
$ 13,466
Supplemental disclosure of cash flow information:
Cash paid for interest $ 19,878
$ 20,258
Cash paid for income taxes $ 684
$ 485

~~-continued-~~


	For the six months ended
	June 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(376)	$	(6,016)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	30,193		26,566
Amortization of deferred franchise fees	129		120
Amortization of deferred financing fees included in interest expense	720		984
(Gain) loss on sale of hotel properties	(2,020)		15
Gain on sale of investment in unconsolidated real estate entities	—		(23,817)



Share based compensation	2,713		2,351

Loss from unconsolidated real estate entities	—		1,231

Changes in assets and liabilities:
Right of use asset	340		324
Hotel receivables	(4,293)		(2,145)

Deferred costs	(243)		(22)
Prepaid expenses and other assets	(5,592)		(3,576)
Accounts payable and accrued expenses	428		2,080
Lease liability	(286)		(262)
Net cash provided by (used in) operating activities	21,713		(2,167)
Cash flows from investing activities:
Improvements and additions to hotel properties	(9,435)		(4,200)
Acquisition of hotel properties	(31,048)		—
Investment in hotel properties under development	(3,573)		(15,231)
Proceeds from sale of hotel properties, net	79,569		—
Proceeds from sale of unconsolidated real estate entity	—		2,800


Receipt of deferred key money	400		—
Net cash provided by (used in) investing activities	35,913		(16,631)
Cash flows from financing activities:
Borrowings on revolving credit facility	40,000		20,000
Repayments on revolving credit facility	(95,000)		(27,300)
Borrowings on construction loan	4,136		14,248
Payments on mortgage debt	(4,475)		(16,875)


Payment of financing costs	(172)		(144)
Payment of offering costs on common shares	(107)		(810)
Proceeds from issuance of common shares	33		24,583
Payment of offering costs on preferred shares	—		(3,780)
Proceeds from issuance of preferred shares	—		120,000

Distributions-common shares/units	(147)		(282)
Distributions-preferred shares	(3,975)		—
Net cash (used in) provided by financing activities	(59,707)		129,640
Net change in cash, cash equivalents and restricted cash	(2,081)		110,842
Cash, cash equivalents and restricted cash, beginning of period	29,869		31,453
Cash, cash equivalents and restricted cash, end of period	$	27,788	$	142,295
Supplemental disclosure of cash flow information:
Cash paid for interest	$	12,976	$	13,456
Capitalized interest	$	330	$	1,532
Cash paid for income taxes	$	600	$	166

-continued-

Supplemental disclosure of non-cash investing and financing ~~information:~~information (dollars in thousands):

On January ~~15, 2017,~~18, 2022, the Company issued ~~23,980~~34,672 shares to its independent trustees pursuant to the Company’s Equity Incentive Plan as compensation for services performed in ~~2016.~~2021. On January 15, ~~2016,~~2021, the Company issued ~~26,488~~40,203 shares to its independent trustees pursuant to the Company’s Equity Incentive Plan as compensation for services performed in ~~2015.~~2020.

As of ~~September~~June 30, ~~2017~~,2022, the Company had accrued distributions payable of ~~$5,217. These distributions were paid on October 27, 2017, except for~~ ~~$783~~ ~~related to accrued but unpaid distributions on unvested performance based shares and LTIP units (See Note 11).~~$1,656. As of ~~September~~June 30, ~~2016~~,2021, the Company had accrued distributions payable of ~~$4,746. These distributions were paid on October 28, 2016, except for~~ ~~$487~~ ~~related to accrued but unpaid distributions on unvested performance based shares.~~$147.

Accrued share based compensation of ~~$433~~$270 and ~~$377~~$200 is included in accounts payable and accrued expenses as of ~~September~~June 30, ~~2017~~2022 and ~~2016~~,2021, respectively.

Accrued capital improvements of ~~$1,797~~$802 and ~~$2,368~~$2,712 are included in accounts payable and accrued expenses as of ~~September~~June 30, ~~2017~~2022 and ~~2016~~,2021, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

CHATHAM LODGING TRUST

Notes to the Consolidated Financial Statements

~~(in thousands, except share and per share data, unless otherwise specified)~~

(unaudited)

1. Organization

Chatham Lodging Trust (“we,” “us” or the “Company”) was formed as a Maryland real estate investment trust ~~(“REIT”)~~ on October 26, 2009. The Company is internally-managed and invests primarily in upscale extended-stay and premium-branded select-service hotels.

~~In January 2014, the~~ The Company established an At the Market Equity Offering ("ATM Plan") whereby, from time to time, we may publicly offer and sell our common shares having an aggregate maximum offering price of up to $50 million by means of ordinary brokers’ transactions on the New York Stock Exchange (the "NYSE"), in negotiated transactions or in transactions that are deemedhas elected to be ~~“at the market” offerings~~treated as ~~defined in Rule 415 under the Securities Act of 1933, with Cantor Fitzgerald & Co.~~a real estate investment trust for federal income tax purposes ("~~Cantor") acting as sales agent pursuant to a Sales Agreement (the “Cantor Sales Agreement”~~REIT"). On January 13, 2015, the Company entered into a Sales Agreement (the “Barclays Sales Agreement”) with Barclays Capital Inc. (“Barclays”) to add Barclays as an additional sales agent under the Company’s ATM Plan. During the three months ended September 30, 2017, we issued 464,454 shares under the ATM Plan at a weighted average price of $20.91, which generated $9.6 million of gross proceeds. As of ~~September 30, 2017, we had issued 1,993,199 shares under the ATM Plan at a weighted average price of $21.92. As of~~ ~~September 30, 2017, there was approximately $6.3 million available for issuance under the ATM Plan.~~

In January 2014, the Company established a $25 million dividend reinvestment and stock purchase plan ("DRSPP"). Under the DRSPP, shareholders may purchase additional common shares by reinvesting some or all of the cash dividends received on the Company's common shares. Shareholders may also make optional cash purchases of the Company's common shares subject to certain limitations detailed in the prospectus for the DRSPP. In January 2017, we filed a new $25 million registration statement for the DRSPP to replace the prior existing program. During the three months ended September 30, 2017, we issued 149,305 shares under the DRSPP at a weighted average price of $20.92, which generated $3.1 million of gross proceeds. As of ~~September 30, 2017, we had issued 360,436 shares under the DRSPP at a weighted average price of $20.54. As of~~ ~~September 30, 2017, there was approximately $17.6 million available for issuance under the DRSPP.~~

The net proceeds from ~~any~~our share offerings ~~or issuances~~ are contributed to Chatham Lodging, L.P., our operating partnership (the “Operating Partnership”), in exchange for partnership interests. Substantially all of the Company’s assets are held by, and all operations are conducted through, the Operating Partnership. ~~Chatham Lodging Trust~~The Company is the sole general partner of the Operating Partnership and owns 100% of the common units of limited partnership interest in the Operating ~~Partnership.~~Partnership ("common units"). Certain of the Company’s executive officers hold vested and unvested long-term incentive plan units in the Operating Partnership ("LTIP units"), which are presented as non-controlling interests on our consolidated balance sheets.

~~On January 1, 2016,~~As of June 30, 2022, the Company adopted accounting guidance under Accounting Standards Codification (ASC) Topic 810, "Consolidation,” modifying the analysis it must perform to determine whether it should consolidate certain types of legal entities. The guidance does not amend the existing disclosure requirements for variable interest entities ("VIEs") or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, the Operating Partnership is a VIE of the Company. As the Operating Partnership is already consolidated in the financial statements of the Company, the identification of this entity as a VIE has no impact on the consolidated financial statements of the Company. There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption. In addition, there were no other voting interest entities under prior existing guidance determined to be variable interest entities under the revised guidance.

~~As of~~ ~~September 30, 2017, the Company wholly~~ owned 39 hotels with an aggregate of ~~5,843~~5,914 rooms located in 1516 states and the District of Columbia. ~~As of~~Prior to September ~~30, 2017,~~23, 2021, the Company ~~also (i) held a~~ ~~10.3%~~ ~~noncontrolling interest in a joint venture (the “NewINK JV”) with affiliates of Colony NorthStar, Inc. ("CLNS"), which was formed in the second quarter of 2014 and acquired~~ 47 ~~hotels comprising an aggregate of 6,097 rooms from a joint venture (the "Innkeepers JV") between the Company and Cerberus Capital Management ("Cerberus") and (ii)~~ held a 10.0% noncontrolling interest in a ~~separate~~ joint venture (the "Inland JV") with affiliates of ~~CLNS,~~Colony Capital, Inc. ("CLNY"), which ~~was formed in the fourth quarter of 2014 and acquired~~owned 48 hotels acquired from Inland American Real Estate Trust, Inc. ("Inland"), comprising an aggregate of ~~6,401~~6,402 rooms. ~~We sometimes refer~~Chatham sold its interest in the Inland JV in September 2021. Prior to March 18, 2021, the Company also held a 10.3% noncontrolling interest in a joint venture (the “NewINK JV”) with affiliates of CLNY, which owned 46 hotels with an aggregate of 5,948 rooms. Chatham sold its interest in the NewINK JV ~~and Inland JV collectively as the ("JVs").~~in March 2021 for $2.8 million.

To qualify as a REIT, the Company cannot operate the hotels. Therefore, the Operating Partnership and its subsidiaries lease the Company's wholly owned hotels to taxable REIT subsidiary lessees (“TRS Lessees”), which are wholly owned by the Company’s taxable REIT subsidiary (“TRS”) ~~holding company. The Company indirectly (i) owns its 10.3% interest in all of the~~ 47 NewINK JV hotels and (ii) owns its 10% interest in all of the 48 Inland JV hotels through the Operating Partnership. All of the NewINK JV hotels and Inland JV hotels are leased to TRS Lessees, in which the Company indirectly owns noncontrolling interests through its TRS holding company. Each hotel is leased to a TRS Lessee under a percentage lease that provides for rental payments equal to the greater of (i) a fixed base rent amount or (ii) a percentage rent based on hotel revenue. The initial term of each of the TRS leases is 5 ~~years~~.years. Lease revenue from each TRS Lessee is eliminated in consolidation.

The TRS Lessees have entered into management agreements with a third-party management ~~companies~~company that ~~provide~~provides day-to-day management for the hotels. As of ~~September~~June 30, ~~2017~~,2022, Island Hospitality Management LLC (“IHM”), which is ~~51%~~100% owned by Jeffrey H. Fisher, the Company's Chairman, President and Chief Executive Officer, managed all 39of the Company’s ~~wholly owned~~ hotels. ~~As of~~ ~~September 30, 2017, all of the NewINK JV hotels were managed by IHM. As of~~ ~~September 30, 2017, 34 of the Inland JV hotels were managed by IHM and 14 of the Inland JV hotels were managed by Marriott International, Inc. ("Marriott").~~

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. These unaudited consolidated financial statements, in the opinion of management, include all adjustments consisting of normal, recurring adjustments which are considered necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of equity, and consolidated statements of cash flows for the periods presented. Interim results are not necessarily indicative of full year performance due to seasonal and other factors, including the timing of the acquisition or sale of hotels.

The consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited financial statements prepared in accordance with GAAP, and the related notes thereto as of December 31, ~~2016,~~2021, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2021.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

3. Recently Issued Accounting Standards

~~On May 28, 2014,~~In March 2020, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04 Reference Rate Reform (Topic 848). ASU ~~2014-09 ("ASU 2014-09"),~~ ~~Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled~~2020-04 contains practical expedients for ~~the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition~~reference rate reform-related activities that impact debt, leases, derivatives and other contracts. The guidance in ~~GAAP when it becomes effective. The standard permits~~ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. As of June 30, 2022, the use of either the retrospective or modified retrospective approach. In July 2015, the FASB voted to defer the effective date to January 1, 2018 with early adoption beginning January 1, 2017. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. The Company is finalizing its evaluation of each of its revenue streams under the new model and because of the short-term, day-to-day nature of the Company's hotel revenues, the pattern of revenue recognition is not expected to change significantly. The Company does not expect adoption of this standard will have a material impact on its consolidated financial statements. We expect to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment, if any, as of the date of adoption. The new standard is effective for us beginning with the first quarter of 2018.

~~On February 25, 2016, the FASB issued ASU 2016-02 (“ASU 2016-02”),~~ ~~Leases~~, which relates to the accounting for leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. Leases with a term of 12 months or less will be accounted for similarly to existing guidance for operating leases today. The Company is the lessee on certain air/land rights arrangements and an office lease and expects to record right of use assets and lease liabilities for these leases under the new standard. This guidance is effective for the Company on January 1, 2019, however, early adoption is permitted. The standard requires a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is evaluating the impact that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

~~On August 26, 2016, the FASB issued ASU 2016-15 ("ASU 2016-15"),~~ ~~Classification of Certain Cash Receipts and Cash Payments,~~ which clarifies and provides specific guidance on eight cash flow classification issues with an objective to reduce the current diversity in practice. This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with earlier adoption permitted. The Company has certain cash payments and receipts related to debt extinguishment and distributions from equity method investments that will be affected by the new standard. The Company does not anticipate that this guidance will have a material impact ~~the adoption of ASU 2016-15 to our~~on its consolidated financial ~~statements.~~

~~On November 17, 2016,~~statements; however, the ~~FASB issued~~Company will continue to evaluate the impact that ASU ~~2016-18 ("ASU 2016-18"),~~ ~~Restricted Cash,~~ which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. This standard will be effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and all other entities for fiscal years beginning after December 15, 2018. This standard addresses presentation of restricted cash in the consolidated statements of cash flows only and will2020-04 may have ~~no effect~~ on ~~our reported~~its consolidated financial ~~condition or results of operations.~~statements and related disclosures.

~~On January 5, 2017, the FASB issued ASU 2017-01 ("ASU 2017-01"),~~ ~~Definition of a Business,~~ which will likely result in more acquisitions being accounted for as asset acquisitions across all industries, particularly real estate, pharmaceutical and oil and gas. Application of the changes would also affect the accounting for disposal transactions. The changes to the definition of a business will likely result in more of the Company's property acquisitions qualifying as asset acquisitions, which will permit capitalization of acquisition costs. This standard will be effective for public business entities with a calendar year end in 2018 and all other entities have an additional year to adopt. The Company has adopted this guidance as of 2017. The adoption did not have a material impact on our consolidated financial statements.

4.3. Acquisition of Hotel Properties

~~Hotel Purchase Price Allocation~~

WeOn March 8, 2022, the Company acquired the Hilton Garden Inn ~~Portsmouth~~Destin Miramar Beach ("~~Portsmouth"~~HGI Destin") hotel property in Miramar Beach, FL for ~~$43.4 million on September 20,2017.~~$31.0 million. The ~~allocation of~~Company allocated the purchase price ~~was (dollars in thousands):~~

Portsmouth
Acquisition date 9/20/2017
Number of Rooms 131
Land $ 3,600
Building and improvements 37,630
Furniture, fixtures and equipment 2,120
Cash 8
Accounts receivable 32
Prepaid expenses and other assets 12
Accounts payable and accrued expenses (27 )
Net assets acquired $ 43,375
Net assets acquired, net of cash $ 43,367

~~The Company incurred~~of the hotel based on the estimated fair values of the assets on the date of acquisition. Property acquisition costs of ~~$0.4~~$48 thousand were capitalized in 2022.

On August 3, 2021, the Company acquired both the Residence Inn Austin Northwest/The Domain Area ("RI Austin") hotel property in Austin, TX for $37.0 million and ~~$0.4~~the TownePlace Suites Austin Northwest/The Domain Area ("TPS Austin") hotel property in Austin, TX for $34.3 million. The Company allocated the purchase price of each hotel based on the estimated fair values of the assets on the date of acquisition. Property acquisition costs of $0.1 million ~~respectively, during~~were capitalized in 2021.

4. Disposition of Hotel Properties

On May 6, 2022, the ~~three and nine months ended September 30, 2017 and $0.6~~Company sold the Hilton Garden Inn Boston-Burlington ("HGI Burlington") hotel property in Burlington, MA for $23.2 million and ~~$1.4~~recognized a gain on sale of the hotel property of $0.5 million. Proceeds from the sale were used to repay amounts outstanding on the Company's revolving credit facility.

On May 13, 2022, the Company sold a portfolio of 3 hotels, the Homewood Suites Dallas-Market Center ("HWS Dallas") hotel property in Dallas, TX, the Courtyard Houston West University ("CY Houston West U") hotel property in Houston, TX, and the Residence Inn Houston West University ("RI Houston West U") hotel property in Houston, TX, for $57.0 million, ~~respectively, during~~and recognized a gain on sale of the ~~three and nine months ended September 30, 2016.~~hotel properties of $1.5 million. Proceeds from the sale were used to repay amounts outstanding on the Company's revolving credit facility.

The ~~amount of revenue~~sales did not represent a strategic shift that had or will have a major effect on the Company's operations and ~~operating income from the hotel acquired in 2017 from its respective date of acquisition through September 30, 2017 is~~financial results and did not qualify to be reported as ~~follows (in thousands):~~discontinued operations.

For the three months ended September 30, For the nine months ended September 30,
2017 2016 2017 2016
Revenue Operating Income Revenue Operating Income Revenue Operating Income Revenue Operating Income

Hilton Garden Inn Portsmouth $ 392
$ 241
$ —
$ —
$ 392
$ 241
$ —
$ —
Total $ 392
$ 241
$ —
$ —
$ 392
$ 241
$ —
$ —

5. Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts at a level believed to be adequate to absorb estimated probable losses. That estimate is based on past loss experience, current economic and market conditions and other relevant factors. The allowance for doubtful accounts was $0.2 million and ~~$0.2~~$0.4 million as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively.

6. Investment in Hotel Properties

Investment in hotel properties,net

Investment in hotel properties, net as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 consisted of the following (in thousands):


	June 30, 2022		December 31, 2021
Land and improvements	$	289,569	$	291,768
Building and improvements	1,264,693		1,258,845
Furniture, fixtures and equipment	97,508		91,110
Renovations in progress	8,496		7,869
	1,660,266		1,649,592
Less: accumulated depreciation	(373,605)		(366,722)
Investment in hotel properties, net	$	1,286,661	$	1,282,870

September 30, 2017 December 31, 2016
Land and improvements $ 284,655
$ 274,554
Building and improvements 1,087,046
1,045,880
Furniture, fixtures and equipment 59,040
50,495
Renovations in progress 14,807
10,067
1,445,548
1,380,996
Less: accumulated depreciation (182,365 ) (147,902 )
Investment in hotel properties, net $ 1,263,183
$ 1,233,094
Investment in hotel properties under development

~~During the nine months ended September 30, 2017,~~

On January 24, 2022, the Company ~~identified indicators~~opened the newly developed Home2 Suites by Hilton Woodland Hills Los Angeles ("Home2 Woodland Hills"). We incurred $71.4 million of ~~impairment at its Washington SHS, PA hotel, primarily due~~costs to decreased operating performance and continued economic weakness. As such, the Company was required to perform a test of recoverability. This test compared the sum of the estimated future undiscounted cash flow attributable todevelop the hotel, ~~over its remaining anticipated holding period~~which included $6.6 million of land acquisition costs and to its disposition. The Company determined that the estimated undiscounted future cash flow attributable to the hotel did not exceed its carrying value and an impairment existed. As a result, the Company recorded a $6.7$64.8 million ~~impairment charge in the consolidated statements~~ of operations during the nine months ended September 30, 2017. Fair value was determined based on a discounted cash flow model using third-party market data, considered Level 3 inputs. We may record additional impairment charges if operating results of this hotel are materially different from our forecasts, the economy and lodging industry weakens, or we shorten our contemplated holding period.other development costs.

7. Investment in Unconsolidated Entities

On June 9, 2014, the Company acquired a 10.3% interest in the NewINK JV, a joint venture between affiliates of NorthStar Realty Finance Corp. ("NorthStar") and the Operating Partnership. ~~The Company accounts for this investment under the equity method.~~ NorthStar merged with Colony Capital, Inc. ("Colony") on January 10, 2017 to form a new company, ~~CLNS,~~CLNY, which ~~owns~~owned a 89.7% interest in the NewINK JV. ~~As of September 30, 2017 and 2016, the Company’s share of partners’ capital~~Chatham sold its interest in the NewINK JV ~~was approximately $52.8~~in March 2021 for $2.8 million ~~and $11.0 million, respectively, and the total difference between the carrying amount~~which resulted in Chatham recording a gain on sale of investment ~~and~~in unconsolidated real estate entities of $23.8 million during the Company’s share of partners’ capital was approximately $58.7 million and $16.3 million, respectively, (for which the basis difference related to amortizing assets is being recognized over the life of the related assets as a basis difference adjustment). The value of NewINK JV assets and liabilities were adjusted to reflect estimated fair market value at the time Colony merged with NorthStar.six months ended June 30, 2021. The Company ~~serves as managing member of~~accounted for this investment under the ~~NewINK JV. During the three and nine months ended September 30, 2017 and~~ ~~2016, the Company received cash distributions from the NewINK JV as follows (in thousands):~~equity method.

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Cash generated from other activities and excess cash $ 1,182
$ 1,542
$ 1,901
$ 4,111
Total $ 1,182
$ 1,542
$ 1,901
$ 4,111

On November 17, 2014, the Company acquired a 10.0% interest in the Inland JV, a joint venture between affiliates of NorthStar and the Operating Partnership. ~~The Company accounts for this investment under the equity method.~~ NorthStar merged with Colony ~~Capital, Inc. ("Colony")~~ on January 10, 2017 to form a new company, ~~CLNS,~~CLNY, which ~~owns~~owned a ~~90.0%~~90% interest in the Inland JV. ~~As of September 30, 2017 and 2016, the Company's share of partners' capital~~Chatham sold its interest in the Inland JV was approximately $36.6 million and $20.9 million, respectively, and the total difference between the carrying amount of the investment and the Company's share of partners' capital is approximately $11.2 million and $0.0 million, respectively (for which the basis difference related to amortizing assets is being recognized over the life of the related assets as a basis difference adjustment). The value of Inland JV assets and liabilities were adjusted to reflect estimated fair market value at the time Colony merged with NorthStar.for $0 in September 2021. The Company ~~serves as managing member of the Inland JV. During the three and nine months ended September 30, 2017 and~~ ~~2016, the Company received cash distributions from the Inland JV as follows (in thousands):~~

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Cash generated from other activities and excess cash $ 100
$ 1,000
100
$ 2,500
Total $ 100
$ 1,000
100
$ 2,500

~~On May 9, 2017, the NewINK JV refinanced the $840.0 million loan collateralized by the 47 hotels with a new~~ ~~$850.0 millionloan.~~ ~~The new non-recourse loan is~~ ~~with Morgan Stanley Bank, N.A. The new loan bears interest at a rate of LIBOR plus a spread of 2.79%, has an initial maturity of June 7, 2019 and three one-year extension options.~~

~~On June 9, 2017, the Inland JV refinanced the $817.0 million loan collateralized by the 48 hotels with a new~~ ~~$780.0 millionnon-recourse loan with Column Financial, Inc. On June 9, 2017, the Company contributed an additional~~$5.0 million of capital related to its share in the Inland JV to reduce the debt collateralized by the 48 hotels. The new loan bears interest at a rate of LIBOR plus a spread of 3.3%, has an initial maturity of July 9, 2019 and three one-year extension options.

~~The Company’s ownership interests in the JVs are subject to change in the event that either the Company or CLNS calls~~accounted for additional capital contributions to the respective JVs necessary for the conduct of business, including contributions to fund costs and expenses related to capital expenditures. In connection with (i) the non-recourse mortgage loan secured by the NewINK JV properties and the related non-recourse mezzanine loan secured by the membership interests in the owners of the NewINK JV properties and (ii) the non-recourse mortgage loan secured by the Inland JV properties, the Operating Partnership provided the applicable lenders with customary environmental indemnities, as well as guarantees of certain customary non-recourse carveout provisions such as fraud, material and intentional misrepresentations and misapplication of funds. In some circumstances, such as the bankruptcy of the applicable borrowers, the guarantees are for the full amount of the outstanding debt, but in most circumstances, the guarantees are capped at 15% of the debt outstanding at the time in question (in the case of the NewINK loans) or 20% of the debt outstanding at the time in question (in the case of the Inland loans). In connection with each of the NewINK and Inland loans, the Operating Partnership has entered into a contribution agreement with its JV partner whereby the JV partner is, in most cases, responsible to cover such JV partner’s pro rata share of any amounts due by the Operating Partnershipthis investment under the ~~applicable guarantees and environmental indemnities.~~ The Company manages the JVs and will receive a promote interest in each applicable JV if it meets certain return thresholds for such JV. CLNS may also approve certain actions by the JVs without the Company’s consent, including certain property dispositions conducted at arm’s length, certain actions related to the restructuring of the applicable JV and removal of the Company as managing member in the event the Company fails to fulfill its material obligations under the applicable joint venture agreement.equity method.

~~The Company's investment in the NewINK JV and the Inland JV were $(6.0) million and $25.4 million, respectively, at~~ ~~September 30, 2017~~ ~~and $(6.0) million and $20.4 million, respectively, at December 31, 2016.~~

The following table sets forth the combined components of net ~~income,~~loss, including the Company’s share, related to the NewINK JV and the Inland JV for the three and six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (in thousands):


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenue	$	—	$	—	$	—	$	24,690
Total hotel operating expenses	—		—		—		24,106
Hotel operating income	$	—	$	—	$	—	$	584

Loss from continuing operations	$	—	$	—	$	—	$	(13,109)

Net loss	$	—	$	—	$	—	$	(13,109)

Loss allocable to the Company	$	—	$	—	$	—	$	(1,347)
Basis difference adjustment	—		—		—		116
Total loss from unconsolidated real estate entities attributable to the Company	$	—	$	—	$	—	$	(1,231)

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Revenue $ 134,048
$ 132,991
$ 372,813
$ 372,251
Total hotel operating expenses 78,107
75,948
221,366
218,400
Operating income $ 55,941
$ 57,043
$ 151,447
$ 153,851
Net income from continuing operations $ 7,721
$ 8,794
$ 8,282
$ 8,673
Net income $ 7,721
$ 8,794
$ 8,282
$ 8,673

Income allocable to the Company $ 790
$ 901
$ 855
$ 896
Basis difference adjustment 399
150
1,176
450
Total income from unconsolidated real estate entities attributable to the Company $ 1,189
$ 1,051
$ 2,031
$ 1,346

8. Debt

The Company’s mortgage loans are collateralized by first-mortgage liens on certain of the Company’s properties. The ~~mortgages~~mortgage loans are non-recourse except for instances of fraud or misapplication of funds. Mortgage and ~~senior unsecured~~ revolving credit facility debt consisted of the following (dollars in thousands):

Collateral
Interest
Rate
Maturity Date 9/30/17
Property
Carrying
Value Balance Outstanding on Loan as of
September 30, 2017 December 31,
2016
Senior Unsecured Revolving Credit Facility⁽¹⁾
4.03 % November 25, 2019 $ —
$ 75,000
$ 52,500
Residence Inn by Marriott New Rochelle, NY 5.75 % September 1, 2021 19,381
13,859
14,141
Residence Inn by Marriott San Diego, CA 4.66 % February 6, 2023 45,257
28,612
29,026
Homewood Suites by Hilton San Antonio, TX 4.59 % February 6, 2023 32,074
16,336
16,575
Residence Inn by Marriott Vienna, VA 4.49 % February 6, 2023 30,419
22,365
22,699
Courtyard by Marriott Houston, TX 4.19 % May 6, 2023 32,381
18,473
18,758
Hyatt Place Pittsburgh, PA 4.65 % July 6, 2023 35,036
22,546
22,864
Residence Inn by Marriott Bellevue, WA 4.97 % December 6, 2023 67,833
45,653
46,206
Residence Inn by Marriott Garden Grove, CA 4.79 % April 6, 2024 38,984
33,291
33,674
Residence Inn by Marriott Silicon Valley I, CA 4.64 % July 1, 2024 80,296
64,800
64,800
Residence Inn by Marriott Silicon Valley II, CA 4.64 % July 1, 2024 87,836
70,700
70,700
Residence Inn by Marriott San Mateo, CA 4.64 % July 1, 2024 63,527
48,600
48,600
Residence Inn by Marriott Mountain View, CA 4.64 % July 6, 2024 55,668
37,900
37,900
SpringHill Suites by Marriott Savannah, GA 4.62 % July 6, 2024 36,535
30,000
30,000
Hilton Garden Inn Marina del Rey, CA 4.68 % July 6, 2024 42,145
21,859
22,145
Homewood Suites by Hilton Billerica, MA 4.32 % December 6, 2024 11,435
16,225
16,225
Homewood Suites by Hilton Carlsbad CA 4.32 % December 6, 2024 29,185
19,950
19,950
Hampton Inn & Suites Houston Medical Center, TX 4.25 % January 6, 2025 15,170
18,300
18,300

Total debt before unamortized debt issue costs $ 723,162
$ 604,469
$ 585,063
Unamortized mortgage debt issue costs (2,325 ) (2,240 )
Total debt outstanding $ 602,144
$ 582,823


Collateral	Interest Rate		Maturity Date	June 30, 2022 Property Carrying Value		Balance Outstanding on Loan as of
						June 30, 2022		December 31, 2021
Revolving Credit Facility (1)	3.38	%	March 8, 2023	$	613,584	$	15,000	$	70,000


Construction loan (2)	7.98	%	August 4, 2024	68,786		39,143		35,007


Homewood Suites by Hilton San Antonio, TX	4.59	%	February 6, 2023	27,711		14,606		14,808
Residence Inn by Marriott Vienna, VA	4.49	%	February 6, 2023	29,368		19,963		20,243
Courtyard by Marriott Houston, TX	4.19	%	May 6, 2023	28,896		16,438		16,673
Hyatt Place Pittsburgh, PA	4.65	%	July 6, 2023	32,135		20,247		20,515
Residence Inn by Marriott Bellevue, WA	4.97	%	December 6, 2023	60,411		41,615		42,089
Residence Inn by Marriott Garden Grove, CA	4.79	%	April 6, 2024	38,795		30,514		30,839
Residence Inn by Marriott Silicon Valley I, CA	4.64	%	July 1, 2024	69,856		61,830		62,374
Residence Inn by Marriott Silicon Valley II, CA	4.64	%	July 1, 2024	77,697		67,459		68,054
Residence Inn by Marriott San Mateo, CA	4.64	%	July 1, 2024	58,382		46,372		46,781
Residence Inn by Marriott Mountain View, CA	4.64	%	July 6, 2024	43,778		36,163		36,481
SpringHill Suites by Marriott Savannah, GA	4.62	%	July 6, 2024	32,031		28,620		28,873
Hilton Garden Inn Marina del Rey, CA	4.68	%	July 6, 2024	36,713		19,781		20,024
Homewood Suites by Hilton Billerica, MA	4.32	%	December 6, 2024	11,823		14,960		15,114

Hampton Inn & Suites Houston Medical Center, TX	4.25	%	January 6, 2025	14,850		16,883		17,058

Total debt before unamortized debt issue costs				$	1,244,816	$	489,594	$	544,933
Unamortized mortgage debt issue costs						(511)		(644)
Total debt outstanding						$	489,083	$	544,289

~~(1)~~

~~The interest rate for the senior unsecured~~

1.The interest rate for the $250.0 million revolving credit facility is variable and based on LIBOR (subject to a 0.5% floor) plus a spread of 2.5% if borrowings remain at or below $200 million and a spread of 3.0% if borrowings exceed $200 million. At June 30, 2022 and ~~based on either LIBOR plus an applicable margin ranging from 1.55% to 2.3%, or prime plus an applicable margin of 0.55% to 1.3%.~~

At ~~September 30, 2017~~ ~~and~~ December 31, ~~2016~~,2021, the Company had ~~$75.0~~$15.0 million and ~~$52.5~~$70.0 million,, respectively, of outstanding borrowings under ~~its senior unsecured~~the revolving credit facility. At ~~September 30, 2017~~,Credit facility lenders representing $227.5 million of commitments have provided 2 six-month extension options that would extend the ~~maximum borrowing availability under the senior unsecured revolving~~final maturity to March 8, 2024, if exercised. The credit facility ~~was~~ ~~$250.0~~is currently secured by equity pledges in hotel properties that do not serve as collateral for other secured debt.

2.On August 4, 2020, a subsidiary of Chatham entered into an agreement with affiliates of Mack Real Estate Credit Strategies to obtain a $40 million loan to fund the remaining construction costs of the Home2 Woodland Hills hotel development. The loan has an initial term of 4 years and there are 2 six-month extension options. The interest rate on the loan is LIBOR, subject to a 0.25% floor, plus a spread of 7.5%.

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates. All of the Company's mortgage loans are fixed-rate. Rates take into consideration general market conditions, quality and estimated value of collateral and maturity of debt with similar credit terms and are classified within level 3 of the fair value hierarchy. The estimated fair value of the Company’s fixed rate debt as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 was ~~$534.1~~$417.6 million and ~~$516.0~~$443.4 million,, respectively.

The Company estimates the fair value of its variable rate debt by taking into account general market conditions and the estimated credit terms it could obtain for debt with similar maturity and is classified within level 3 of the fair value hierarchy. As of ~~September~~June 30, ~~2017,~~2022, the Company’s ~~only~~ variable rate debt ~~is under~~consisted of its ~~senior unsecured~~ revolving credit ~~facility.~~facility and construction loan. The estimated fair value of the Company’s variable rate debt as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 was ~~$75.0~~$54.2 million and ~~$52.5~~$105.0 million,, respectively.

~~As of~~ ~~September 30, 2017~~,Our credit facility contains financial covenants that require us to maintain secured leverage and total leverage below certain levels and maintain fixed charge coverage above certain levels. On October 26, 2021, the Company ~~was~~executed an amendment to its credit facility which extended a waiver of financial covenants until June 30, 2022. The Company exited its credit facility covenant waiver period as of the end of the second quarter of 2022 and is in compliance with the covenants in the credit facility agreement.

Our mortgage debt agreements contain “cash trap” provisions that are triggered when the hotel’s operating results

fall below a certain debt service coverage ratio or debt yield. When these provisions are triggered, all of ~~its financial covenants. At~~ ~~September 30, 2017~~, the ~~Company’s consolidated fixed charge~~excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio ~~was 3.29 and~~or debt yield is reached. Such provisions do not allow the ~~bank covenant is 1.5.~~ lender the right to accelerate repayment of the underlying debt. As of June 30, 2022, the debt service coverage ratios or debt yields for 7 of our mortgage loans were below the minimum thresholds such that the cash trap provision of each respective loan could be enforced. As of June 30, 2022, one of our mortgage debt lenders has enforced cash trap provisions. We do not expect that such cash traps will affect our ability to satisfy our short-term liquidity requirements.

Future scheduled principal payments of debt obligations as of ~~September~~June 30, ~~2017~~,2022, for the current year and each of the next ~~four~~five calendar years and thereafter are as follows (in thousands):


	Amount
2022 (remaining six months)	$	4,773
2023	132,919
2024	335,955
2025	15,947
2026	—
Thereafter	—
Total debt before unamortized debt issue costs	$	489,594
Unamortized mortgage debt issue costs	(511)
Total debt outstanding	$	489,083

Accounting for Derivative Instruments

The Company has entered into interest rate cap agreements to hedge against interest rate fluctuations related to the construction loan for the Home2 Woodland Hills hotel. The Company records its derivative instruments on the balance sheet at their estimated fair values. Changes in the fair value of the derivatives are recorded each period in current earnings or in other comprehensive income, depending on whether a derivative is designated as part of a hedging relationship and, if it is, depending on the type of hedging relationship. The Company's interest rate caps are not designated as a hedge but to eliminate the incremental cost to the Company if the one-month LIBOR were to exceed 3.5%. Accordingly, the interest rate caps are recorded on the balance sheet under prepaid expenses and other assets at the estimated fair value and realized and unrealized changes in the fair value are reported in the consolidated statement of operations. As of June 30, 2022, the fair value of the interest rate caps were $0.4 million.

Amount
2017 (remaining three months) $ 1,239
2018 5,374
2019 82,340
2020 9,899
2021 22,308
2022 10,350
Thereafter 472,959
Total debt before unamortized debt issue costs $ 604,469
Unamortized mortgage debt issue costs (2,325 )
Total debt outstanding $ 602,144

9.�� Income Taxes

The Company’s TRS is subject to federal and state income taxes.

~~The components of income~~ Income tax expense was zero for the ~~following periods are as follows (in thousands):~~

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Federal $ —
$ (10 ) $ 271
$ 142
State —
(2 ) 46
25
Tax expense (benefit) $ —
$ (12 ) $ 317
$ 167
three and six months ended June 30, 2022 and 2021.

As of each reporting date, the Company's management considers new evidence, both positive and negative, that could impact management's view with regard to future realization of deferred tax assets. The Company's TRS is expecting ~~increased~~continued taxable losses in ~~2017.~~2022. As of ~~September~~June 30, ~~2017 and during the period,~~2022, the TRS continues to recognize a full valuation allowance equal to 100% of the ~~gross~~net deferred tax ~~asset~~assets due to the uncertainty of the TRS's ability to utilize these net deferred tax assets. Management will continue to monitor the need for a valuation ~~allowance on a quarterly basis.~~allowance.

10. Dividends Declared and Paid

Common Dividends

The Company ~~declared total~~suspended common dividends beginning after the payment of the March 27, 2020 dividend due to a decline in operating performance caused by the COVID-19 pandemic. There were no common share dividends declared during the three and six months ended June 30, 2022 and 2021.

Preferred Dividends

During the three and six months ended June 30, 2022, the Company declared dividends of ~~$0.33~~$0.41406 and $0.82812, respectively, per share of 6.625% Series A Cumulative Redeemable Preferred Shares. There were no preferred share dividends declared during the three and ~~distributions~~six months ended June 30, 2021. The preferred share dividends paid were as follows:

Record Date

Payment Date

Dividend per Preferred Share

March

3/31/2022

4/18/2022

0.41406

June

6/30/2022

7/15/2022

0.41406

Total 2022

0.82812

11. Shareholders' Equity

Common Shares

The Company is authorized to issue up to 500,000,000 common shares of beneficial interest, $0.01 par value per share ("common shares"). Each outstanding common share entitles the holder to 1 vote on ~~LTIP units~~all matters submitted to a vote of ~~$0.33 per unit for~~shareholders. Holders of the Company’s common shares are entitled to receive dividends when authorized by the Company's Board of Trustees. As of June 30, 2022, 48,806,107 common shares were outstanding.

In January 2021, we established an "at-the-market" equity offering program (the "ATM Program") whereby, from time to time, we could publicly offer and sell our common shares having an aggregate offering price of up to $100 million by means of ordinary brokers transactions on the New York Stock Exchange (the "NYSE"), in negotiated transactions or in transactions deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Cantor Fitzgerald & Co., Barclays Capital Inc., BMO Capital Markets Corp., BofA Securities, Inc., BTIG, LLC, Citigroup Global Markets Inc., Regions Securities LLC, Stifel, Nicolaus & Company, Incorporated and Wells Fargo Securities act as sales agents under the ATM Program. The Company did not issue any shares under the ATM Program during the three months ended ~~September~~June 30, 2022. As of June 30, 2022, there was approximately $77.5 million in common shares available for issuance under the ATM Program.

In December 2017, we established a $50 million dividend reinvestment and ~~$0.99~~stock purchase plan. We filed a new $50 million shelf registration statement for the dividend reinvestment and stock purchase plan (the "DRSPP") on December 22, 2020 to replace the prior plan. Under the DRSPP, shareholders may purchase additional common shares by reinvesting some or all of the cash dividends received on common shares. Shareholders may also make optional cash purchases of the Company's common shares subject to certain limitations detailed in the prospectuses for the DRSPP. During the three months ended June 30, 2022, the Company issued 1,522 common shares under the DRSPP at a weighted average price of $12.47, which generated $19 thousand of proceeds. As of June 30, 2022, there was approximately $47.9 million in common shares available for issuance under the DRSPP.

Preferred Shares

The Company is authorized to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share, in one or more series.

On June 30, 2021, the Company issued 4,800,000 6.625% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the “Series A Preferred Shares”), and received net proceeds of approximately $115.9 million. The Series A Preferred Shares rank senior to common shares with respect to the payment of dividends and

distributions of assets in the event of a liquidation, dissolution, or winding up. The Series A Preferred Shares do not have any maturity date and are not subject to mandatory redemptions or sinking fund requirements. The distribution rate is 6.625% per annum of the $25.00 liquidation preference, which is equivalent to $1.65625 per annum per Series A Preferred Share. Distributions on the Series A Preferred Shares are payable quarterly in arrears with the first distribution on the Series A Preferred Shares paid on October 15, 2021. The Company may not redeem the Series A Preferred Shares before June 30, 2026 except in limited circumstances to preserve the Company's status as a REIT for federal income tax purposes and upon the occurrence of a change of control. On and after June 30, 2026, the Company may, at its option, redeem the Series A Preferred Shares, in whole or from time to time in part, by paying $25.00 per share, plus any accrued and unpaid distributions to, but not including, the date of redemption. Upon the occurrence of a change of control, as defined in the Company's declaration of trust, the result of which common shares and the common securities of the acquiring or surviving entity are not listed on the New York Stock Exchange, the NYSE MKT or NASDAQ, or any successor exchanges, the Company may, at its option, redeem the Series A Preferred Shares in whole or in part within 120 days following the change of control by paying $25.00 per share, plus any accrued and unpaid distributions through the date of redemption. If the Company does not exercise its right to redeem the Series A Preferred Shares upon a change of control, the holders of Series A Preferred Shares have the right to convert some or all of their shares into a number of common shares based on defined formulas subject to share caps. The share cap on each Series A Preferred Share is 3.701 common shares. As of June 30, 2022, 4,800,000 Series A Preferred Shares were issued and outstanding. During the three months ended June 30, 2022, the Company accrued preferred share dividends of $2.0 million.

Operating Partnership Units

Holders of common units in the Operating Partnership, if and when issued, will have certain redemption rights, which will enable the unit holders to cause the Operating Partnership to redeem their units in exchange for, at the Company’s option, cash per unit equal to the market price per common share at the time of redemption or for common shares on a 1-for-one basis. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of share splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of limited partners or shareholders. As of June 30, 2022, there were 1,214,759 vested Operating Partnership LTIP units ~~of $0.99 per unit for the nine months ended September 30, 2017. The dividends~~held by current and ~~distributions were as follows:~~former employees.

Record
Date

Payment
Date

Common
share
distribution
amount

LTIP
unit
distribution
amount
January 1/31/2017 2/24/2017 $ 0.11
$ 0.11
February 2/28/2017 3/31/2017 0.11
0.11
March 3/31/2017 4/28/2017 0.11
0.11
1st Quarter 2017 $ 0.33
$ 0.33

April 4/28/2017 5/26/2017 $ 0.11
$ 0.11
May 5/26/2017 6/30/2017 0.11
0.11
June 6/30/2017 7/28/2017 0.11
$ 0.11
2nd Quarter 2017 $ 0.33
$ 0.33

July 7/31/2017 8/25/2017 $ 0.11
$ 0.11
August 8/31/2017 9/29/2017 0.11
0.11
September 9/29/2017 10/27/2017 0.11
0.11
3rd Quarter 2017 $ 0.33
$ 0.33

Total 2017 $ 0.99
$ 0.99

~~11.~~12. Earnings Per Share

The two-class method is used to determine earnings per share because unvested restricted shares and unvested LTIP units are considered to be participating shares. The LTIP units held by the non-controlling interest holders, which may be converted to common shares, ~~of beneficial interest,~~ have been excluded from the denominator of the diluted earnings per share calculation as there would be no effect on the amounts since limited partners' share of income or loss would also be added back to net income or loss. Unvested restricted shares, unvested long-term incentive plan units and unvested Class A Performance LTIP units that could potentially dilute basic earnings per share in the future would not be included in the computation of diluted loss per share, for the periods where a loss has been recorded, because they would have been anti-dilutive for the periods presented. The following is a reconciliation of the amounts used in calculating basic and diluted net income per share (in thousands, except share and per share data):


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Numerator:
Net income (loss) attributable to common shareholders	$	7,164	$	(8,558)	$	(4,269)	$	(5,902)
Dividends paid on unvested shares and units	—		—		—		—

Net income (loss) attributable to common shareholders	$	7,164	$	(8,558)	$	(4,269)	$	(5,902)
Denominator:
Weighted average number of common shares - basic	48,795,348		48,637,484		48,791,455		47,935,130

Unvested shares and units	221,836		—		—		—
Weighted average number of common shares - diluted	49,017,184		48,637,484		48,791,455		47,935,130
Basic income (loss) per Common Share:
Net income (loss) attributable to common shareholders per weighted average basic common share	$	0.15	$	(0.18)	$	(0.09)	$	(0.12)
Diluted income (loss) per Common Share:
Net income (loss) attributable to common shareholders per weighted average diluted common share	$	0.15	$	(0.18)	$	(0.09)	$	(0.12)

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Numerator:
Net income attributable to common shareholders $ 14,392
$ 13,355
$ 24,055
$ 28,823
Dividends paid on unvested shares and units (64 ) (48 ) (171 ) (141 )
Undistributed earnings allocated to unvested shares and units —
—
—
—
Net income attributable to common shareholders $ 14,328
$ 13,307
$ 23,884
$ 28,682
Denominator:
Weighted average number of common shares - basic 39,298,974
38,307,382
38,731,900
38,293,704
Unvested shares 251,520
260,080
228,555
226,985
Weighted average number of common shares - diluted 39,550,494
38,567,462
38,960,455
38,520,689
Basic income per Common Share:
Net income attributable to common shareholders per weighted average basic common share $ 0.36
$ 0.35
$ 0.62
$ 0.75
Diluted income per Common Share:
Net income attributable to common shareholders per weighted average diluted common share $ 0.36
$ 0.35
$ 0.61
$ 0.74

~~12.~~13. Equity Incentive Plan

The Company maintains its Equity Incentive Plan to attract and retain independent trustees, executive officers and other key ~~employees and service providers.~~employees. The plan provides for the grant of options to purchase common shares, share awards, share appreciation rights, performance units and other equity-based awards. The plan was amended ~~and restated as of~~on May ~~17, 2013~~24, 2022 to increase the maximum number of shares available under the plan by 1,600,000 shares and extend the term of the plan to ~~3,000,000 shares.~~March 22, 2032. Share awards under this plan generally vest over three to five years, though compensation for the Company’s independent trustees includes share grants that vest immediately. The Company pays dividends on unvested shares and units, except for ~~performance based~~performance-based shares and outperformance based units, for which dividends on unvested ~~performance based~~performance-based shares and units are accrued and not paid until those shares or units vest. Certain awards may provide for accelerated vesting if there is a change in control. In January ~~2017~~2022 and ~~2016,~~2021, the Company issued ~~23,980~~34,672 and ~~26,488~~40,203 common shares, respectively, to its independent trustees as compensation for services performed in ~~2016~~2021 and ~~2015,~~2020, respectively. The quantity of shares was calculated based on the average of the closing price for the Company’s common shares on the NYSE for the last ten trading days of 2016. The Company would have distributed 17,745 common shares for services performed in 2017 had this liability classified award been satisfied as of September 30, 2017. As of ~~September~~June 30, ~~2017,~~2022, there were ~~1,871,942~~1,765,149 common shares available for issuance under the Equity Incentive Plan.

Restricted Share Awards

~~A summary of~~From time to time, the Company may award restricted shares ~~granted to executive officers that have not fully vested pursuant to~~under the Equity Incentive Plan as of ~~September 30, 2017~~ ~~is as follows:~~

Award Type Award Date Total Shares Granted Vested as of September 30, 2017
2014 Time-based Awards 1/31/2014 48,213
48,213
2014 Performance-based Awards 1/31/2014 38,805
12,935
2015 Time-based Awards 1/30/2015 40,161
26,774
2015 Performance-based Awards 1/30/2015 36,144
—
2015 Time-based Awards 6/1/2015 8,949
5,966
2017 Restricted Board Awards 1/11/2017 5,000
—

~~Time-based share awards vest over a~~ ~~three-year period. The performance-based share awards will be issued~~compensation to officers, employees and vest over a three-year period only if and to the extent that long-term performance criteria established by the Board of Trustees are met and the recipient remains employed by the Company through the vesting date.

non-employee trustees. The Company ~~measures~~recognizes compensation expense for ~~time-based share awards based upon~~ the ~~fair market value of its common~~restricted shares at the date of grant. For the performance-based shares granted in 2014 and 2015, compensation expense is based on a valuation of $13.17 and $21.21, respectively, per performance share granted, which takes into account that some or all of the awards may not vest if long-term performance criteria are not met during the vesting period. The 2014 performance-based shares did not meet the vesting criteria for 2015 or 2016 causing those shares not to be eligible for future vesting.

~~The grant date fair values of the performance-based share awards were determined using a Monte Carlo simulation method with the following assumptions:~~

Performance Award Risk Free Interest
Grant Date Volatility Dividend Yield Rate
1/31/2014 27% —% 0.71%
1/30/2015 29% —% 0.84%

~~Compensation expense is recognized~~ on a straight-line basis over the vesting period and is included in general and administrative expense in the accompanying consolidated statements of operations. The Company pays dividends on unvested time-based restricted shares. Dividends for performance-based shares are accrued and paid annually only if and to the extent that long-term performance criteria established by the Board of Trustees are met and the recipient remains employed by the Companybased on the ~~vesting date.~~fair market value of the shares on the date of issuance.

A summary of the Company’s restricted share awards for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and the year ended December 31, ~~2016~~2021 is as follows:


	For the six months ended			For the year ended
	June 30, 2022			December 31, 2021
	Number of Shares	Weighted-Average Grant Date Fair Value		Number of Shares	Weighted-Average Grant Date Fair Value
Non-vested at beginning of the period	10,000	$	11.47	1,667	$	17.40
Granted	—	—		10,000	11.47
Vested	—	—		(1,667)	17.40
Forfeited	—	—		—	—
Non-vested at end of the period	10,000	$	11.47	10,000	$	11.47

Nine Months Ended Year Ended
September 30, 2017 December 31, 2016

Number of
Shares

Weighted -
Average Grant
Date Fair
Value

Number of
Shares

Weighted -
Average Grant
Date Fair
Value
Non-vested at beginning of the period 110,825
$ 22.05
170,480
$ 21.38
Granted 5,000
20.20
—
—
Vested (32,441 ) 25.77
(59,655 ) 20.14
Forfeited (25,870 ) $ 13.17
—
$ —
Non-vested at end of the period 57,514
$ 23.78
110,825
$ 22.05

As of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~,2021, there were ~~$0.3 million~~$81 thousand and ~~$0.9 million~~,$100 thousand, respectively, of unrecognized compensation costs related to restricted share awards. As of ~~September~~June 30, ~~2017~~,2022, these costs were expected to be recognized over a ~~weighted–average~~weighted-average period of approximately ~~0.8 years~~.2.1 years. For the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~,2021, the Company recognized approximately ~~$0.2 million~~$10 thousand and ~~$0.3 million~~,$7 thousand, respectively, and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, the Company recognized approximately ~~$0.6 million~~$19 thousand and ~~$1.0 million,~~$14 thousand, respectively, of expense related to the restricted share awards. ~~This expense is included in general and administrative expenses in the accompanying consolidated statements of operations.~~

Long-Term Incentive Plan ~~Units~~Awards

~~The Company recorded~~ ~~$0.7 million~~ ~~and~~ ~~$0.3 million~~ ~~in compensation expense related to the~~ LTIP units ~~for the~~ ~~three months ended September 30, 2017~~ ~~and~~ ~~2016, respectively, and for the nine months ended September 30, 2017 and 2016, the Company recognized approximately $1.8 million and $0.9 million, respectively. As~~are a special class of ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, there was~~ ~~$5.1 million~~ ~~and~~ ~~$2.6 million, respectively, of total unrecognized compensation cost related to LTIP units. This cost is expected to be recognized over approximately~~ ~~2.1 years~~, which represents the weighted average remaining vesting period of the LTIP units. Upon the closing of the Company's equity offering on September 30, 2013, the Company determined that a revaluation event occurred, as definedpartnership interests in ~~the Internal Revenue Code of 1986, as amended (the "Code"), and~~ ~~26,250~~ ~~LTIP units awarded in 2010 and held by one of the officers of the Company had achieved full parity with the common units of~~ the Operating Partnership ~~with respect~~which may be issued to ~~liquidating distributions and all other purposes.~~ ~~100%~~eligible participants for the performance of ~~these units have vested as of September 30, 2017. As of June 4, 2014,~~services to or for the ~~Company determined that a revaluation event occurred, as defined in the Code, and 231,525 LTIP units awarded in 2010 and held by two other officers~~benefit of the ~~Company had achieved full parity with~~Company. Under the Equity Incentive Plan, each LTIP unit issued is deemed equivalent to an award of one common ~~units~~share thereby reducing the number of ~~the Operating Partnership with respect to liquidating distributions and all~~shares available for other ~~purposes. As of September 30, 2017, 100% of these units have vested. As of June 1, 2017, the Company determined that~~equity awards on a revaluation event occurred, as defined in the Code, and 118,791 and 128,859 LTIP units awarded in 2016 and 2017, respectively, and held by six officers of the Company had achieved full parity with the common units of the Operating Partnership with respect to liquidating distributions and all other purposes. As of September 30, 2017, 33% and 0% of these units awarded in 2016 and 2017, respectively, have vested. Accordingly, these LTIP units awarded in 2010, 2016 and 2017 are allocated their pro-rata share of the Company's net income.1-for-one basis.

A summary of the Company's LTIP ~~Unit~~unit awards for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and the year ended December 31, ~~2016~~2021 is as follows:


	For the six months ended			For the year ended
	June 30, 2022			December 31, 2021
	Number of Units	Weighted-Average Grant Date Fair Value		Number of Units	Weighted-Average Grant Date Fair Value
Non-vested at beginning of the period	764,178	$	15.00	669,609	$	15.73
Granted	380,004	16.08		330,945	14.55
Vested	(238,657)	16.61		(219,451)	16.39
Forfeited	—	—		(16,925)	17.02
Non-vested at end of the period	905,525	$	15.03	764,178	$	15.00

Nine Months Ended Year Ended
September 30, 2017 December 31, 2016
Number of
Shares Weighted -
Average Grant
Date Fair
Value Number of
Shares Weighted -
Average Grant
Date Fair
Value
Non-vested at beginning of the period 295,551
$ 14.36
183,300
$ 14.13
Granted 223,922
19.20
112,251
14.73
Vested (37,417 ) 14.73
—
—
Non-vested at end of the period 482,056
$ 16.58
295,551
$ 14.36

On June 1, 2015, the Company's Operating Partnership granted 183,300 Class A Performance LTIP units, as recommended by the Compensation Committee of the Board (the “Compensation Committee”), pursuant to a long-term, multi-year performance plan (the “Outperformance Plan”). The awards granted pursuant to the Outperformance Plan are subject to two separate performance measurements, with 60% of the award (the "Absolute Award") based solely on the Company's total shareholder return ("TSR") (the "Absolute TSR Component") and 40% of the award (the "Relative Award") measured by the Company's TSR (the "Relative TSR Component") relative to the other companies (the "Index Companies") that were constituents of the SNL US REIT Hotel Index (the "Index") during the entire measurement period. Under the Absolute TSR Component, 37.5% of the Absolute Award is earned if the Company achieves a 25% TSR over the measurement period. That percentage increases on a linear basis with the full Absolute Award being earned at a 50% TSR over the measurement period. For TSR performance below 25%, no portion of the Absolute Award will be earned. Under the Relative TSR Component, 37.5% of the Relative Award is earned if the Company is at the 50th percentile of the Index Companies at the end of the measurement period. That percentage increases on a linear basis with the full Relative Award earned if the Company is at the 75th percentile of the Index Companies at the end of the measurement period. If the Company is below the 50th percentile of the Index Companies at the end of the measurement period, no portion of the Relative Award will be earned. Compensation expense is based on an estimated value of $14.13 per Class A Performance LTIP unit, which takes into account that some or all of the awards may not vest if long-term performance criteria are not met during the vesting period. Awards earned under the Outperformance Plan will vest 50% at the end of the three-year measurement period on June 1, 2018 and 25% each on the one-year and two-year anniversaries of the end of the three-year measurement period, or June 1, 2019 and 2020, respectively, and provided that the recipient remains employed by the Company through the vesting dates. In the event of a Change in Control (as defined in the executive officers’ employment agreements), Outperformance Plan awards will be earned contingent upon the attainment of a pro rata TSR hurdle for the Absolute Award and achievement of the relative TSR percentile for the Relative Award based upon the in-place formula and using the Change of Control as the end of measurement period. Vesting continues to apply to awards earned upon a Change of Control, subject to full acceleration upon termination without cause or resignation for good reason within 18 months of the Change of Control. Prior to vesting, holders of Class A Performance LTIP Units will not be entitled to vote their Class A Performance LTIP units. In addition, under the terms of the Class A Performance LTIP units, a holder of a Class A Performance LTIP unit will generally (i) be entitled to receive 10% of the distributions made on a common unit of the Operating Partnership during the period prior to vesting of such Class A Performance LTIP unit (the “Pre-Vesting Distributions”), (ii) be entitled, upon the vesting of such Class A Performance LTIP unit, to receive a special one-time “catch-up” distribution equal to the aggregate amount of distributions that were paid on a common unit during the period prior to vesting of such Class A Performance LTIP unit minus the aggregate amount of Pre-Vesting Distributions paid on such Class A Performance LTIP unit, and (iii) be entitled, following the vesting of such Class A Performance LTIP unit, to receive the same amount of distributions paid on a common unit of the Operating Partnership.

Time-Based ~~Equity Incentive~~LTIP Awards

On ~~January 28, 2016,~~March 1, 2022, the Company’s Operating Partnership, upon the recommendation of the Compensation Committee, granted ~~72,966~~152,004 time-based ~~LTIP unit~~ awards (the ~~“2016~~“2022 Time-Based LTIP Unit Award”). The grants were made pursuant to award agreements that provide for time-based ~~vesting.~~vesting (the "LTIP Unit Time-Based Vesting Agreement").

~~The 2016 Time-Based~~Time-based LTIP ~~Unit Awards~~unit awards will vest ratably ~~on each of January 28, 2017, January 28, 2018 and January 28, 2019 (provided~~provided that the recipient remains employed by the Company through the applicable vesting date, subject to acceleration of vesting in the event of the recipient’s death, disability, termination without cause or resignation with good reason, or in the event of a change of control of the ~~Company~~).Company. Prior to vesting, a holder is entitled to receive distributions on the LTIP ~~Units~~units that comprise the ~~2016~~2022 Time-Based LTIP Unit ~~Awards. Compensation expense is based on an estimated value of $16.69 per 2016 Time-Based~~Awards and the prior year LTIP ~~Unit Award.~~unit awards set forth in the table above.

Performance-Based LTIP Awards

On March 1, ~~2017,~~2022, the Company's Operating Partnership, upon recommendation of the Compensation Committee, granted 89,574 time-based awards (the "2017 Time-Based LTIP Unit Award"). The grants were made pursuant to the award agreements that provide for time-based vesting.

The 2017 Time-based LTIP Unit Awards will vest ratably on each of March 1, 2018, March 1, 2019 and March 1, 2020 (provided that the recipient remains employed by the Company through the applicable vesting date, subject to acceleration of vesting in the event of the recipient’s death, disability, termination without cause or resignation with good reason, or in the event of a change of control of the Company). Prior to vesting, a holder is entitled to receive distributions on the LTIP Units that comprise the 2017 Time-Based LTIP Unit Awards. Compensation expense is based on an estimated value of $18.53 per 2017 Time-Based LTIP Unit Award.

~~Performance-Based Equity Incentive Awards~~

~~On January 28, 2016, the Company’s Operating Partnership,~~ upon the recommendation of the Compensation Committee, also granted ~~39,285~~228,000 performance-based ~~LTIP unit~~ awards (the ~~"2016~~"2022 Performance-Based LTIP Unit Awards"). The grants were made pursuant to award agreements that ~~provide for performance-based vesting.~~ have market based vesting conditions. The ~~2016~~ Performance-Based LTIP Unit Awards are comprised of Class A Performance LTIP Units that will vest only if and to the extent that (i) the Company achieves certain long-term ~~performance~~market based TSR criteria established by the Compensation Committee and (ii) the recipient remains employed by the Company through the applicable vesting date, subject to acceleration of vesting in the event of the recipient’s death, disability, termination without cause or resignation with good reason, or in the event of a change of control of the Company. Compensation expense is based on an estimated value of ~~$11.09~~$18.58 per ~~2016~~2022 Performance-Based LTIP Unit Award, which takes into account that some or all of the awards may not vest if long-term ~~performance~~market based TSR criteria are not met during the vesting period.

The ~~2016~~ 2022 Performance-Based LTIP Unit Awards ~~shall vest based on the following:~~

(a) The number of Class A Performance LTIP Units that most nearly equals (but does not exceed) one-third of the Class A Performance LTIP Units issued pursuant to such 2016 Performance-Based LTIP Unit Award shall vest on January 28, 2017, if the Total Shareholder Return for the 12-month period beginning January 28, 2016 and ending on January 27, 2017 is 8% or more.

(b) The number of Class A Performance LTIP Units that most nearly equals (but does not exceed) one-third of the Class A Performance LTIP Units issued pursuant to such 2016 Performance-Based LTIP Unit Award shall vest on January 28, 2018, if the Total Shareholder Return for the 12-month period beginning January 28, 2017 and ending on January 27, 2018 is 8% or more.

(c) The number of Class A Performance LTIP Units that most nearly equals (but does not exceed) one-third of the Class A Performance LTIP Units issued pursuant to such 2016 Performance-Based LTIP Unit Award shall vest on January 28, 2019, if the Total Shareholder Return for the 12-month period beginning January 28, 2018 and ending on January 27, 2019 is 8% or more.

(d) All of the Class A Performance LTIP Units issued pursuant to such 2016 Performance-Based LTIP Unit Award (less any Class A Performance LTIP Units that previously vested under paragraphs (a), (b) or (c) above), shall vest on January 28, 2019, if the average Total Shareholder Return for the 36-month period ending on January 27, 2019 is 8% or more.

For purposes of the 2016 Performance-Based LTIP Unit Awards, "Total Shareholder Return" means, with respect to the measurement periods described in paragraphs (a), (b), (c) and (d) above, the total percentage return per common share of the Company based on the closing price of the Company’s common shares on the NYSE on the last trading day immediately preceding the first day of the applicable measurement period compared to the closing price of the Company’s common shares on the NYSE on the last trading day of such measurement period and assuming contemporaneous reinvestment in Company common shares of all dividends and other distributions at the closing price of the Company’s common shares on the date such dividend or other distribution was paid.

On March 1, 2017, the Company's Operating Partnership, upon the recommendation of the Compensation Committee, also granted 134,348 performance-based awards (the "2017 Performance-Based LTIP Unit Awards"). The grants were made pursuant to award agreements that provide for performance-based vesting. The ~~2017~~ ~~Performance-Based LTIP Unit Awards are comprised of Class A Performance LTIP Units~~ that will vest only if and to the extent that (i) the Company achieves certain long-term performance criteria established by the Compensation Committee and (ii) the recipient remains employed by the Company through the vesting date, subject to acceleration of vesting in the event of the recipient’s death, disability, termination without cause or resignation with good reason, or in the event of a change of control of the Company. Compensation expense is based on an estimated value of $19.65 per 2017 Performance-Based LTIP Unit Award, which takes into account that some or all of the awards may not vest if long-term performance criteria are not met during the vesting period.

~~The 2017~~ ~~Performance-Based LTIP Unit Awards~~ may be earned based on the Company’s relative TSR performance for the three-year period beginning on March 1, ~~2017~~2022 and ending on February 28, ~~2020.~~2025. The ~~2017~~ 2022 Performance-Based LTIP Unit Awards, if earned, will be paid out between 50% and ~~150%~~200% of target value as follows:



	Relative TSR Hurdles (Percentile)		Payout Percentage
Threshold	25th		50%
Target	~~50th~~55th		100%
Maximum	~~75th~~80th	~~150%~~	200%

Payouts at performance levels in between the hurdles will be calculated by straight-line interpolation. ~~The TSR hurdles are based on the Company’s performance relative to the average TSR for the companies included in the SNL US Hotel REIT Index.~~ ~~TSR will be calculated to include share price appreciation plus dividends assuming the reinvestment of dividends as calculated by a third-party such as SNL Financial.~~

The Company ~~will estimate~~estimated the aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC 718, excluding the effect of estimated forfeitures, ~~and will calculate the value at the grant date based on the probable outcome of the performance conditions.~~

A holder of a Class A Performance LTIP Unit will generally (i) only be entitled, during the period prior to the vesting of such Class A Performance LTIP Unit, to receive 10% of the distributions made on a common unit of limited partnership interest (“Common Unit”) in the Operating Partnership (the “Pre-Vesting Distributions”), and (ii) be entitled, upon the vesting of such Class A Performance LTIP Unit, to a special one-time “catch-up” distribution equal to the aggregate amount of distributions that were paid on a Common Unit during the period prior to vesting of such Class A Performance LTIP Unit minus the aggregate amount of Pre-Vesting Distributions paid on such Class A Performance LTIP Unit. In addition, prior to the vesting of a Class A Performance LTIP Unit, the holder of such Class A Performance LTIP Unit will not be entitled to vote on such Class A Performance LTIP Unit.

~~The LTIP units' fair value was determined~~ using a Monte Carlo approach. In determining the discounted value of the LTIP units, the Company considered the inherent uncertainty that the LTIP units would never reach parity with the other common units of the Operating Partnership and thus have an economic value of zero to the grantee. Additional factors considered in ~~reaching~~estimating the ~~assumptions~~value of ~~uncertainty~~LTIP units included discounts for ~~illiquidity;~~illiquidity, expectations for future dividends; limited or no operations history as of the date of the grant; significant dependency on the efforts and services of our executive officers and other key members of management to implement the Company's business plan; available acquisition opportunities;dividends, risk free interest rates, stock price volatility, and economic environment and market conditions.

The grant date fair ~~value~~values of the ~~performance~~LTIPs and the assumptions used to estimate the values are as follows:


	Grant Date	Number of Units Granted	Estimated Value Per Unit	Volatility	Dividend Yield	Risk Free Interest Rate
2017 Time-Based LTIP Unit Awards	3/1/2017	89,574	$18.53	24%	—%	0.92%
2017 Performance-Based LTIP Unit Awards	3/1/2017	134,348	$19.65	25%	5.8%	1.47%
2018 Time-Based LTIP Unit Awards	3/1/2018	97,968	$16.83	26%	—%	2.07%
2018 Performance-Based LTIP Unit Awards	3/1/2018	146,949	$17.02	26%	6.2%	2.37%
2019 Time-Based LTIP Unit Awards	3/1/2019	88,746	$18.45	21%	—%	2.57%
2019 Performance-Based LTIP Unit Awards	3/1/2019	133,107	$18.91	21%	6.2%	2.55%
2020 Time-Based LTIP Unit Awards	3/1/2020	130,206	$13.05	20%	—%	1.06%
2020 Performance-Based LTIP Unit Awards	3/1/2020	195,301	$13.66	20%	8.1%	0.90%
2021 Time-Based LTIP Unit Awards	3/1/2021	132,381	$12.52	78%	—%	0.08%
2021 Performance-Based LTIP Unit Awards	3/1/2021	198,564	$15.91	64%	3.4%	0.30%
2022 Time-Based LTIP Unit Awards	3/1/2022	152,004	$12.33	80%	—%	1.01%
2022 Performance-Based LTIP Unit Awards	3/1/2022	228,000	$18.58	66%	3.5%	1.44%

The Company recorded $1.3 million and $1.1 million in compensation expense related to the LTIP ~~awards were determined using a Monte Carlo simulation method with~~units for the ~~following assumptions (based on~~three months ended June 30, 2022 and 2021, respectively, and $2.4 million and $2.1 million in compensation expense related to the ~~three-year risk free U.S. Treasury yield~~LTIP units for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022 and December 31, 2021, there was $9.1 million and $5.4 million, respectively, of total unrecognized compensation cost related to LTIP units. This cost is expected to be recognized over approximately 2.2 years, which represents the ~~measurement~~weighted average remaining vesting period of the LTIP ~~awards):~~units.

Grant Date Volatility Dividend Yield Risk Free Interest Rate Discount
Outperformance Plan 6/1/2015 26% 4.5% 0.95% —%
2016 Time-Based LTIP Unit Awards 1/28/2016 28% —% 0.79% 7.5%
2016 Performance-Based LTIP Unit Awards 1/28/2016 30% 5.8% 1.13% —%
2017 Time-Based LTIP Unit Awards 3/1/2017 24% —% 0.92% 7.5%
2017 Performance-Based LTIP Unit Awards 3/1/2017 25% 5.8% 1.47% —%

14. Leases

~~13. Commitments and Contingencies~~

~~Litigation~~

The nature of the operations of the Company's hotels exposes those hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. The Company is not presently subject to any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company or its properties.

~~Hotel Ground Rent~~

The Courtyard Altoona hotel is subject to a ground lease with an expiration date of April 30, 2029 with an extension option by the Company of up to 12 additional terms of five years each. Monthly payments are determined by the quarterly average room occupancy of the hotel. Rent is currently equal to approximately $8,000 per month when monthly occupancy is less than 85% and can increase up to approximately $20,000 per month if occupancy is 100%, with minimum rent increased by two and one-half percent (2.5%) on an annual basis.

The Residence Inn Gaslamp hotel property is subject to a ground lease with an expiration date of January 31, 2065 with an extension option by the Company of up to ~~three~~3 additional terms of ten years each. Monthly payments are currently approximately ~~$40,000~~$44,400 per month and increase 10% every five years. The hotel is subject to annual supplemental rent payments calculated as 5% of gross revenues during the applicable lease year, minus 12 times the monthly base rent scheduled for the lease year.

The Residence Inn New Rochelle hotel property is subject to an air rights lease and garage lease that each expire on December 1, ~~2104~~.2104. The lease agreements with the City of New Rochelle cover the space above the parking garage that is occupied by the hotel as well as 128 parking spaces in a parking garage that is attached to the hotel. The annual base rent for the garage lease is the hotel’s proportionate share of the city’s adopted budget for the operations, management and maintenance of the garage and established reserves to fund for the cost of capital repairs. Aggregate rent for ~~2017~~2022 is approximately ~~$26,000~~$31,000 per quarter.

The Hilton Garden Inn Marina del Rey hotel property is subject to a ground lease with an expiration date of December 31, 2067. Minimum monthly payments are currently approximately ~~$43,000~~$47,500 per month and a percentage rent payment less the minimum rent is due in arrears equal to 5% to 25% of gross income based on the type of ~~income less the minimum rent is due in arrears.~~

~~Office Lease~~income.

The Company entered into a ~~new~~ corporate office lease in September 2015. The lease is for a term of 11 years and includes a 12-month rent abatement period and certain tenant improvement allowances. The Company has a renewal option of up to ~~two~~2 successive terms of ~~five~~5 years each. The Company shares the space with a related ~~parties~~party and is reimbursed for the pro-rata share of rentable space occupied by the related ~~parties.~~party.

~~Future minimum rental payments under the terms of all non-cancellable operating ground leases and the office lease under which the~~

The Company is the lessee under ground, air rights, garage and office lease agreements for certain of its properties, all of which qualify as operating leases as of June 30, 2022. These leases typically provide multi-year renewal options to extend term as lessee at the Company's option. Option periods are ~~expensed~~included in the calculation of the lease obligation liability only when options are reasonably certain to be exercised.

In calculating the Company's lease obligations under the various leases, the Company uses discount rates estimated to be equal to what the Company would have to pay to borrow on a ~~straight-line~~collateralized basis ~~regardless of when~~over a similar term, for an amount equal to the lease payments, ~~are due.~~ in a similar economic environment.

The following is a schedule of the minimum future payments required under the ground, air rights, ~~garages~~garage leases and office lease as of ~~September~~June 30, ~~2017, for the remainder of~~ ~~2017~~ ~~and~~2022, for each of the next five calendar years and thereafter (in thousands):


Total Future Lease Payments
	Amount

2022 (remaining six months)	$	1,040
2023	2,093
2024	2,115
2025	2,186
2026	1,894
Thereafter	64,825
Total lease payments	$	74,153
Less: Imputed interest	(51,743)
Present value of lease liabilities	$	22,410

The Company incurred $0.6 million of fixed lease payments and $0.3 million of variable lease payments for the six months ended June 30, 2022, which are included in property taxes, ground rent and insurance in our consolidated statement of operations.

The following table includes information regarding the right of use assets and lease liabilities of the Company as of June 30, 2022 (in thousands):


	Right of Use Asset		Lease Liability
Balance as of January 1, 2022	$	19,985	$	22,696
Amortization	(340)		(286)

Balance as of June 30, 2022	$	19,645	$	22,410


Lease Term and Discount Rate			June 30, 2022

Weighted-average remaining lease term (years)			40.57
Weighted-average discount rate			6.62%

Other Leases⁽¹⁾
Office Lease
Amount
2017 (remaining three months) $ 304
$ 192
2018 1,217
772
2019 1,220
792
2020 1,267
812
2021 1,273
832
2022 1,276
853
Thereafter 68,178
3,310
Total $ 74,735
$ 7,563

15. Commitments and Contingencies

~~(1) Other leases includes ground, garage~~

Litigation

The Company is subject to various claims, lawsuits and ~~air rights leases at~~legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of its hotels, its managers and other Company matters. While it is not possible to ascertain the ultimate outcome of such matters, the Company believes that the aggregate identifiable amount of such liabilities, if any, will not have a material adverse impact on its financial condition or results of operations.

Chatham RIMV LLC (a wholly owned subsidiary of the Company) is a defendant in a lawsuit brought by the City of San Diego and other related entities, San Diego Housing Commission et al. v. Neil et al. (Superior Court of California, County of San Diego, Case No. 37-2021-00033006-CU-BC-CTL), filed in connection with the sale of the Residence Inn Mission Valley to the City of San Diego. The City of San Diego is seeking a return of monies spent on the acquisition as well as a declaration that the purchase agreement executed in connection with the acquisition is void. At the time of this filing, the City of San Diego and the other Plaintiffs have made no allegations of wrongdoing by Chatham RIMV LLC or any other Company entity. We believe this lawsuit is without merit and we are defending our ~~hotels.~~

case vigorously. For the six months ended June 30, 2022, we have incurred $143 thousand of legal costs related to this matter. At this time we believe potential future costs related to this lawsuit are not probable and estimable.

Management Agreements

~~The management agreements with Concord Hospitality Services Company ("Concord") had an initial~~ ~~ten~~-year term that would have expired on February 28, 2017. The management agreements with Concord were terminated as of December 31, 2016. The company entered into management agreements with IHM for the hotels previously managed by Concord beginning January 1, 2017.

The management agreements with IHM have an initial term of five years and automatically renew for ~~twofive-year~~2 five-year periods unless IHM provides written notice to us no later than 90 days prior to the then current term’s expiration date of ~~their~~its intent not to renew. The IHM management agreements provide for early termination at the Company’s option upon sale of any IHM-managed hotel for no termination fee, with six months advance notice. The IHM management agreements may be terminated for cause, including the failure of the managed hotel to meet specified performance levels. Base management fees are calculated as a percentage of the hotel's gross room revenue. If certain financial thresholds are met or exceeded, an incentive management fee is calculated as 10% of the hotel's net operating income less fixed costs, base management fees and a specified return threshold. The incentive management fee is capped at 1% of gross hotel revenues for the applicable calculation.

In addition to entering into agreements with IHM to manage two of the hotels formerly managed by Concord, upon renewal in July 2016, five management agreements related to the Residence Inns were amended to be consistent with the remainder of the hotel portfolio. The updated agreements are summarized as follows:

Property Courtyard Altoona Springhill Suites Washington Residence Inn Garden Grove Residence Inn San Diego Residence Inn San Antonio Residence Inn Vienna Residence Inn Washington D.C.

Original Management Fee 4.0 % 4.0 % 2.5 % 2.5 % 2.5 % 2.5 % 2.5 %
Amended Management Fee 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 %
Original Monthly Accounting Fee 1,211
991
1,000
1,000
1,000
1,000
1,000
Amended Monthly Accounting Fee 1,500
1,200
1,200
1,200
1,200
1,200
1,200
Original Monthly Revenue Management Fee —
—
—
—
—
—
—
Amended Monthly Revenue Management Fee 1,000
1,000
1,000
1,000
1,000
1,000
1,000

~~The company renewed six management agreements in 2017. The updated agreements are summarized as follows:~~

Property Homewood Suites Billerica Homewood Suites Bloomington Homewood Suites Maitland Homewood Suites Dallas Homewood Suites Brentwood Homewood Suites Farmington

Renewal Date 4/1/2017
4/1/2017
5/1/2017
5/1/2017
6/1/2017
8/1/2017
Original Management Fee 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 %
Amended Management Fee 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 %
Original Monthly Accounting Fee 1,000
1,000
1,000
1,000
1,000
1,000
Amended Monthly Accounting Fee 1,200
1,200
1,200
1,200
1,200
1,200
Original Monthly Revenue Management Fee 550
550
550
550
550
550
Amended Monthly Revenue Management Fee 1,000
1,000
1,000
1,000
1,000
1,000

~~Terms of the Company's management agreements entered into during the three and nine months ended September 30, 2017 are as follows:~~

Property Management Company Base Management Fee Monthly Accounting Fee Monthly Revenue Management Fee Incentive Management Fee
Hilton Garden Inn Portsmouth IHM 3% $1,500 $1,000 1%

Management fees totaled approximately $2.7 million and ~~$2.6~~$1.8 million~~, respectively,~~ for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~,2021, respectively, and ~~approximately $7.5~~$4.6 million and ~~$7.2~~$3.0 million ~~respectively,~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021, respectively.

Franchise Agreements

The fees associated with the franchise agreements are calculated ~~on the~~as a specified percentage of the hotel's gross room revenue. ~~Terms of the Company's franchise agreements entered into during the three and nine months ended September 30, 2017 are as follows:~~

Property Franchise Company Franchise/Royalty Fee Marketing Program Fee Expiration
Hilton Garden Inn Portsmouth Hilton Franchise Holding LLC 5.5% 4% 2037

Franchise and marketing fees totaled approximately ~~$6.4~~$6.6 million and ~~$6.2~~$4.1 million~~, respectively,~~ for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021, respectively, and ~~approximately $17.8~~$11.0 million and ~~$17.3~~$6.7 million ~~respectively,~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021, respectively. The initial term of the agreements range from 10 to 30 years with the weighted average expiration being December 2034.

~~14.~~16. Related Party Transactions

Prior to March 18, 2021, Mr. Fisher owned 52.5% of IHM. During the six months ended June 30, 2021, Mr. Fisher acquired the remaining 47.5% ownership interest and as of June 30, 2022, Mr. Fisher owns ~~51%~~100% of IHM. As of ~~September~~June 30, ~~2017,~~2022, the Company had hotel management agreements with IHM to manage all 39 of its ~~wholly owned~~ hotels. ~~As of September 30, 2017, all 47 hotels owned by the NewINK JV and 34 of the 48 hotels owned by the Inland JV are managed by IHM.~~ Hotel management, revenue management and accounting fees accrued or paid to IHM for the hotels owned by the Company for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 were $2.7 million and ~~$2.5~~$1.8 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 were ~~$7.5~~$4.6 million and ~~$7.0~~$3.0 million, respectively. At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the amounts due to IHM were ~~$1.3~~$0.8 million and ~~$0.9~~$0.3 million, respectively.

Cost reimbursements from unconsolidated ~~real estate~~ entities revenue represent reimbursements of costs incurred on behalf of the NewINK JV, Inland JV, and ~~an entity, Castleblack Owner Holding, LLC ("Castleblack"), which is 97.5% owned by affiliates of CLNS and 2.5% owned by Mr. Fisher.~~IHM. These costs relate primarily to corporate payroll costs at the NewINK JV and Inland JV where the Company is the ~~employer.~~employer and office expenses shared with these entities and IHM. Various shared office expenses and rent are paid by the Company and allocated to IHM based on the amount of square footage occupied by each entity. As the Company records cost reimbursements based upon costs incurred with no added markup, the revenue and related expense has no impact on the Company’s operating income or net income. Cost reimbursements ~~from the JVs~~ are recorded based upon the occurrence of a reimbursed activity.

Various shared office expenses and rent are paid by the Company and allocated to the NewINK JV, the Inland JV, Castleblack and IHM based on the amount of square footage occupied by each entity. Insurance expense for medical, workers compensation and general liability are paid by the NewINK JV and allocated back to the hotel properties or applicable entity for the three months ended September 30, 2017 and 2016 were $1.4 million and $1.5 million, respectively, and for the nine months ended September 30, 2017 and 2016 were $4.5 million and $4.6 million, respectively.

~~15. Subsequent Events~~

~~Subsequent to~~ ~~September 30, 2017, the Company sold additional shares from its ATM and DRSPP plans. The Company issued~~ ~~154,496~~ ~~shares under the ATM Plan at a weighted average price of~~ ~~$21.27, which generated~~ ~~$3.3~~ ~~million of gross proceeds. We issued~~ ~~377,192~~ ~~shares under the DRSPP at a weighted average price of~~ ~~$21.41, which generated~~ ~~$8.1 million~~ of gross proceeds. Proceeds from the shares sold were used to pay down borrowings under the Company's senior unsecured revolving credit facility, including debt incurred in connection with the acquisition of the Portsmouth hotel.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~Dollar amounts presented in this Item 2 are in thousands, except per share data, unless otherwise specified.~~

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021. In this report, we use the terms “the Company," “we” or “our” to refer to Chatham Lodging Trust and its consolidated subsidiaries, unless the context indicates otherwise.

COVID-19 Pandemic

The lodging industry has been significantly impacted by the COVID-19 pandemic, which began in early 2020, but travel trends are improving and we expect strong growth in 2022 relative to 2021. The full impact of the COVID-19 pandemic on the lodging industry will depend on future developments including the continuing severity and duration of the pandemic, and the possibility of additional subsequent widespread outbreaks and variant strains and the impact of actions taken in response, people's willingness to travel and the strength of the U.S., regional and global economies. The Company took actions to mitigate the operating and financial impact of the COVID-19 pandemic, including suspending common share dividends, reducing capital expenditures, obtaining credit facility covenant waivers through June 30, 2022 and temporarily reducing executive compensation through December 31, 2020. The Company exited its credit facility covenant waiver period as of the end of the second quarter of 2022 and is in compliance with the covenants in the credit facility agreement. There remains significant uncertainty regarding the trends and outlook as a result of new variants and individual and government responses.

Statement Regarding Forward-Looking Information

The following information contains forward-looking statements 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. Some factors that might cause such a difference include the following: the continuing and future impact of the COVID-19 pandemic (including its effect on the ability or desire of people to travel), local, national and global economic conditions, increased direct competition, changes in government regulations or accounting rules, changes in local, national and global real estate conditions, declines in lodging industry fundamentals, increased operating costs, seasonality of the lodging industry, our ability to obtain debt and equity financing on satisfactory terms, changes in interest rates, our ability to identify suitable investments, our ability to close on identified investments, ~~and~~ inaccuracies of our accounting ~~estimates.~~estimates, the uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events, such as the ongoing COVID-19 pandemic, the impact of and changes to various government programs, including in response to COVID-19, and our ability to dispose of selected hotel properties on the terms and timing we expect, if at all. Given these uncertainties, undue reliance should not be placed on such statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. The forward-looking statements should also be read in light of the risk factors identified in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 as updated by the Company's subsequent filings with the SEC under the Exchange Act.

Overview

We are a self-advised hotel investment company organized in October 2009 that commenced operations in April 2010. Our investment strategy is to invest in upscale extended-stay and premium-branded select-service hotels in geographically diverse markets with high barriers to entry near strong demand generators. We may acquire portfolios of hotels or single hotels. We expect that a significant portion of our portfolio will consist of hotels in the upscale extended-stay or select-service categories, including brands such as Homewood Suites by Hilton^®, Residence Inn by Marriott^®, Hyatt Place^®, Courtyard by Marriott^®, SpringHill Suites by Marriott®, Hilton Garden Inn by Hilton^®, Embassy Suites®, Hampton Inn^® ~~and~~, Hampton Inn and Suites^®, Home2 Suites by Hilton® and TownePlace Suites by Marriott®.

The Company's future hotel acquisitions may be funded by issuances of both common and preferred shares or the issuance of partnership interests in our operating partnership, Chatham Lodging, L.P. (the "Operating Partnership"), draw-downs under our ~~senior unsecured~~ revolving credit facility, the incurrence or assumption of debt, available cash, or proceeds from dispositions of assets or distributions from our 10.3% investment in a joint venture with affiliates of Colony NorthStar, Inc. (“CLNS”) that owns 47 hotels (the "NewINK JV") or distributions from our 10.0% investment in a joint venture with CLNS that owns 48 hotels (the "Inland JV" and together with the NewINK JV, the "JVs").assets. We intend to acquire quality assets at attractive prices and improve their returns through knowledgeable asset management and seasoned, proven hotel management while remaining prudently leveraged.

At ~~September~~June 30, ~~2017,~~2022, our leverage ratio was ~~39.5% based on~~28.4% measured as the ratio of our net debt (total debt outstanding before deferred financing costs less unrestricted cash and cash equivalents) to hotel investments at ~~cost, including the JV investments.~~cost. Over the past several years, we have maintained a leverage ratio between the ~~mid-30s~~high 20s and the low ~~50s to fund our acquisitions and JV investments.~~50s. As of ~~September~~June 30, ~~2017,~~2022, we have total debt of ~~$604.5~~$489.6 million at an average interest rate of approximately ~~4.6%~~4.9%. Accordingly, our debt coverage ratios currently are favorable and, as a result, we are comfortable in this leverage range and believe we have the capacity and flexibility to take advantage of acquisition opportunities as they arise. We intend to continue to fund our investments with a prudent balance of debt and equity.

We are a real estate investment trust (“REIT”) for federal income tax purposes. In order to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), we cannot operate our hotels. Therefore, ~~our~~the Operating Partnership and its subsidiaries lease our hotel properties to taxable REIT subsidiary lessees (“TRS Lessees”), who in turn engage eligible independent contractors to manage the hotels. Each of the TRS Lessees is treated as a taxable REIT subsidiary for federal income tax purposes and is consolidated within our financial statements for accounting purposes. However, since we control both the Operating Partnership and the TRS Lessees, our principal source of funds on a consolidated basis is from the operations of our hotels. The earnings of the TRS Lessees are subject to taxation as regular C corporations, as defined in the Code, potentially reducing the TRS Lessees’ cash available to pay dividends to us, and therefore our funds from operations and the cash available for distribution to our shareholders.

~~Financial Condition and~~Key Indicators of Operating Performance ~~Metrics~~

and Financial Condition

We measure ~~our~~ financial condition and hotel operating performance by evaluating non-financial and financial metrics and measures such as:

•Average Daily Rate (“ADR”), which is the quotient of room revenue divided by total rooms sold,

•Occupancy, which is the quotient of total rooms sold divided by total rooms available,

•Revenue Per Available Room (“RevPAR”), which is the product of occupancy and ADR, and does not include food and beverage revenue, or other operating revenue,

~~Average Daily Rate (“ADR”),~~

~~Occupancy,~~

•Funds From Operations (“FFO”),

•Adjusted FFO,

•Earnings before interest, taxes, depreciation and amortization (“EBITDA”),

•EBITDAre,

•Adjusted EBITDA, and

•Adjusted Hotel ~~EBITDA~~

EBITDA.

We evaluate the hotels in our portfolio and potential acquisitions using these metrics to determine each hotel’s contribution toward providing income to our shareholders through increases in distributable cash flow and increasing long-term total returns through appreciation in the value of our common shares. RevPAR, ADR and Occupancy are hotel industry measures commonly used to evaluate operating performance. ~~RevPAR, which is calculated as total room revenue divided by total number of available rooms, is an important metric for monitoring hotel operating performance, and more specifically hotel revenue.~~

~~“Non-GAAP~~See “Non-GAAP Financial Measures” ~~herein provides a detailed~~for further discussion ~~of our use~~ of FFO, Adjusted FFO, EBITDA, ~~Adjusted~~ EBITDA ~~and Hotel EBITDA and a reconciliation of FFO, Adjusted FFO, EBITDA,~~re, Adjusted EBITDA and Adjusted Hotel ~~EBITDA to net income or loss, measurements recognized by generally accepted accounting principles in the United States (“GAAP”).~~EBITDA.

Results of Operations

Industry Outlook

~~We believe that the~~The lodging industry’s performance is correlated to the performance of the economy overall, and specifically, key economic indicators such as GDP growth, employment trends, corporate travel and corporate profits. Trends for many of these indicators appear to be moderating. GDP growth is currently modest, with growth of 2.2% forecasted for 2017. Lodging industry ~~performance is also~~has been impacted by ~~room supply growth, which is currently increasing. Overall U.S. room supply increased 1.6%~~the COVID-19 pandemic and there has been a decline in ~~2016,~~travel relative to 2019, but ~~supply in the Upscale segment, in which most of our hotels operate, increased by 5.6% in 2016. Year to date in 2017 overall U.S. room supply growth was 1.8%~~trends are improving and ~~supply~~we expect continued strong growth in ~~the Upscale segment was 6.0%.~~2022 relative to 2021. Smith Travel Research ~~is projecting~~reported that U.S. ~~hotel supply growth~~lodging industry RevPAR increased 38.8% for the three months ended June 30, 2022, with RevPAR up 54.5% in April 2022, up 39.6% in May 2022 and up 26.8% in June 2022. We expect that over the remainder of 2022, RevPAR will continue to increase ~~2.0%~~significantly versus 2021 and 2020, and that in ~~2017. Continued supply growth, especially when coupled with slowing corporate demand, could negatively impact~~some markets RevPAR ~~growth. We are currently projecting a 2017 RevPAR change of 0.9% to +1.0% as compared to 2016.~~may exceed levels achieved in 2019.

Comparison of the three months ended ~~September~~June 30, ~~2017~~2022 to the three months ended ~~September~~June 30, ~~2016~~2021

Results of operations for the three months ended ~~September~~June 30, ~~2017~~2022 include the operating activities of our 39 wholly owned hotels that were owned for the entire period and operating activities for four hotels sold during the period during the periods of our ~~investments~~ownership. We sold one hotel located in ~~the NewINK JV~~Burlington, MA on May 6, 2022, and ~~Inland JV.~~sold three hotels located in Dallas, TX and Houston, TX on May 13, 2022. We ~~wholly owned 38~~acquired one hotel located in Miramar Beach, FL on March 8, 2022. We developed and opened on January 24, 2022 one hotel located in Los Angeles, CA. We acquired two hotels ~~at July 1, 2016. Accordingly, the~~located in Austin, TX on August 3, 2021. The comparisons below are influenced by the ~~fact that we acquired~~COVID-19 pandemic, the sales of four hotels, the acquisition of three hotels, and the opening of one ~~hotel in Portsmouth, NH on September 20, 2017 during the third quarter of 2017.~~hotel.

Revenues

Revenue, which consists primarily of room, food and beverage and other operating revenues from our wholly owned hotels, was as follows for the periods indicated (dollars in thousands):


	For the three months ended							For the three months ended
	September 30, 2017		September 30, 2016		% Change			June 30, 2022		June 30, 2021		% Change
Room	$	76,221	$	74,736	2.0	%	Room	$	75,761	$	46,514	62.9	%
Food and beverage	1,378		1,494		(7.8	)%	Food and beverage	1,968		756		160.3	%
Other	3,052		2,699		13.1	%	Other	3,674		2,647		38.8	%
Cost reimbursements from unconsolidated real estate entities	753		804		(6.3	)%
Cost reimbursements from unconsolidated entities							Cost reimbursements from unconsolidated entities	358		327		9.5	%
Total revenue	$	81,404	$	79,733	2.1	%	Total revenue	$	81,761	$	50,244	62.7	%

Total revenue was ~~$81.4~~$81.8 million for the quarter ended ~~September~~June 30, ~~2017,~~2022, up ~~$1.7~~$31.6 million compared to total revenue of ~~$79.7~~$50.2 million for the corresponding ~~2016~~2021 period. ~~Total~~The increase in total revenue primarily was related to the ~~one hotel acquired~~recovery from the COVID-19 pandemic. Four hotels owned during the ~~third quarter of 2017~~three months ended June 30, 2022 which were not owned during the three months ended June 30, 2021 contributed ~~$0.4~~$7.8 million of revenue during the ~~increase.~~three months ended June 30, 2022. Four other hotels which were sold during the three months ended June 30, 2022 contributed $1.7 million of revenue during the three months ended June 30, 2022, down $1.5 million from the $3.2 million these hotels contributed during the three months ended June 30, 2021. Since all of our hotels are select-service or limited-service hotels, room revenue is the primary revenue source as these hotels do not have significant food and beverage revenue or large group conference facilities. Room revenue comprised ~~93.6%~~92.7% and ~~93.7%, respectively,~~92.6% of total revenue for the ~~quarters~~three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021, respectively. Room revenue was ~~$76.2~~$75.8 million and ~~$74.7~~$46.5 million for the ~~quarters~~three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively, ~~with $0.3 million of~~and the increase in ~~2017 attributable~~room revenue primarily was related to the ~~one hotel acquired during~~recovery from the ~~third quarter of 2017. At the 38 comparable hotels owned by the Company throughout the 2016 and 2017 periods, room revenue was up $1.1 million or 1.5%, driven primarily by RevPar growth of 1.0%.~~COVID-19 pandemic.

Food and beverage revenue was ~~$1.4~~$2.0 million for the quarter ended ~~September~~June 30, ~~2017, down $0.1~~2022, up $1.2 million compared to ~~$1.5~~$0.8 million for the corresponding ~~2016~~2021 period. The increase in food and beverage revenue primarily was related to an increase in occupancies at our hotels due to the recovery from the COVID-19 pandemic.

Other operating revenue, comprised of parking, meeting room, gift shop, in-room movie and other ancillary amenities revenue, was up $0.4 million three months ended September 30, 2017. Other operating revenue was $3.1 million and $2.7 million for the quarters ended September 30, 2017 and 2016, respectively. Increases were primarily due to increases in parking, restaurant lease income and miscellaneous room income.

Cost reimbursements from unconsolidated real estate entities, comprised of payroll costs at the JVs and an entity which is 97.5% owned by affiliates of CLNS and 2.5% by Mr. Fisher, where the Company is the employer, were $0.8 million and $0.8$1.1 million for the three months ended ~~September~~June 30, ~~2017~~2022. Other operating revenue was $3.7 million and ~~2016,~~$2.6 million for the quarters ended June 30, 2022 and 2021, respectively. The increase in other operating revenue primarily was related to an increase in occupancies at our hotels due to the recovery from the COVID-19 pandemic.

Reimbursable costs from unconsolidated entities were $0.4 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively. The cost reimbursements were offset by the reimbursed costs from unconsolidated ~~real estate~~ entities included in operating expenses.

As reported by Smith Travel Research, U.S. lodging industry RevPAR for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 increased ~~1.9%~~38.8% and ~~3.3%~~increased 160.4%, respectively, in the ~~2017~~2022 and ~~2016~~2021 periods as compared to the respective prior periods. Smith Travel Research reported that U.S. lodging industry RevPAR ~~at our wholly owned hotels~~ increased ~~1.0%~~54.5% in April 2022, increased 39.6% in May 2022 and ~~decreased 2.1%, respectively,~~increased 26.8% in June 2022. We expect that over the ~~2017~~remainder of 2022, U.S. lodging industry RevPAR will continue to increase significantly versus 2021 and ~~2016 periods as compared to the respective prior periods primarily due to increased RevPAR index at our hotels and the increased demand in the Houston market in the third quarter of 2017.~~2020.

In the table below, we present both actual and same property room revenue metrics. Actual Occupancy, ADR and RevPAR metrics reflect the performance of the hotels for the actual days such hotels were owned by the Company during the periods presented. Same property Occupancy, ADR, and RevPAR reflect results for the 3937 hotels wholly owned by the Company as of ~~September~~June 30, ~~2017 reflect the performance of the hotels during the entire period,~~2022 that have been in operation for a full year regardless of our ownership during the period presented, which is a non-GAAP financial measure. Results for the hotels for periods prior to our ownership were provided to us by prior owners and have not been adjusted by us.


	For the three months ended June 30,
	2022						2021						Percentage Change
	Same Property (37 hotels)			Actual (43 hotels)			Same Property (37 hotels)			Actual (39 hotels)			Same Property (37 hotels)		Actual (43 / 39 hotels)
Occupancy	77.2		%	76.8		%	70.0		%	68.2		%	10.3	%	12.6	%
ADR	$	178.62		$	176.33		$	131.24		$	127.06		36.1	%	38.8	%
RevPAR	$	137.93		$	135.35		$	91.86		$	86.63		50.2	%	56.2	%

For the three months ended September 30,
2017 2016 Percentage Change
Same Property (39 hotels) Actual (39 hotels) Same Property (39 hotels) Actual (38 hotels) Same Property (39 hotels) Actual (39/38 hotels)
Occupancy 84.6 % 84.6 % 84.2 % 84 % 0.5 % 0.7 %
ADR $ 172.77
$ 172.77
$ 171.92
$ 170.25
0.5 % 1.5 %
RevPAR $ 146.23
$ 146.23
$ 144.79
$ 143.02
1.0 % 2.2 %

For the three months ended June 30, 2022 same property RevPAR increased ~~1.0% primarily~~50.2% due to an increase in ADR of ~~0.5%~~36.1% and aan increase in occupancy of ~~0.5%.~~10.3% primarily related to the recovery from the COVID-19 pandemic. Same property RevPAR increased 55.4% in April 2022, increased 43.2% in May 2022, and increased 52.6% in June 2022. Same property RevPAR was $123.42 in April 2022, $132.95 in May 2022, and $157.60 in June 2022.

Hotel Operating Expenses

Hotel operating expenses consist of the following for the periods indicated (dollars in thousands):


	For the three months ended
	June 30, 2022		June 30, 2021		% Change
Hotel operating expenses:
Room	$	14,480	$	9,486	52.6	%
Food and beverage	1,429		491		191.0	%
Telephone	359		348		3.2	%
Other hotel operating	879		544		61.6	%
General and administrative	6,804		5,056		34.6	%
Franchise and marketing fees	6,559		4,091		60.3	%
Advertising and promotions	1,230		835		47.3	%
Utilities	2,784		2,352		18.4	%
Repairs and maintenance	3,347		2,720		23.1	%
Management fees	2,727		1,760		54.9	%
Insurance	747		707		5.7	%
Total hotel operating expenses	$	41,345	$	28,390	45.6	%

For the three months ended
September 30, 2017 September 30, 2016 % Change
Hotel operating expenses:
Room $ 15,618
$ 15,068
3.7 %
Food and beverage 1,307
1,280
2.1 %
Telephone 410
449
(8.7 )%
Other 737
563
30.9 %
General and administrative 5,906
5,652
4.5 %
Franchise and marketing fees 6,366
6,157
3.4 %
Advertising and promotions 1,353
1,203
12.5 %
Utilities 2,708
2,684
0.9 %
Repairs and maintenance 3,467
3,084
12.4 %
Management fees 2,693
2,558
5.3 %
Insurance 297
318
(6.6 )%
Total hotel operating expenses $ 40,862
$ 39,016
4.7 %

Hotel operating expenses increased ~~$1.9~~$12.9 million, or ~~4.7%~~45.6%, to ~~$40.9~~$41.3 million for the three months ended ~~September~~June 30, ~~2017~~2022 from ~~$39.0~~$28.4 million for the three months ended ~~September~~June 30, ~~2016.~~2021. The primary cause of the increase in hotel operating expenses was related to the increase in revenues and occupancy caused by the recovery from the COVID-19 pandemic. Four hotels owned during the three months ended June 30, 2022 that were not owned during the three months ended June 30, 2021 contributed $4.0 million of operating expenses during the three months ended June 30, 2022. Four other hotels that were sold during the three months ended June 30, 2022 contributed $1.3 million of operating expenses during the three months ended June 30, 2022, down $0.7 million from the $2.0 million these hotels contributed during the three months ended June 30, 2021.

Room expenses, which are the most significant component of hotel operating expenses, increased ~~$0.5~~$5.0 million ~~or 3.7%~~ from ~~$15.1~~$9.5 million ~~in 2016~~for the three months ended June 30, 2021 to ~~$15.6~~$14.5 million infor the ~~third quarter of 2017.~~three months ended June 30, 2022. The increase in room expenses primarily was ~~primarily~~related to an increase in occupancies and revenues at our hotels due to ~~commissions and guest reward programs.~~the recovery from the COVID-19 pandemic.

The remaining hotel operating expenses increased ~~$1.3~~$8.0 million, from ~~$23.9~~$18.9 million for the three months ended June 30, 2021 to $26.9 million for the three months ended June 30, 2022. The increase in other remaining expenses primarily was related to an increase in occupancies and revenues at our hotels due to the ~~third quarter of 2016~~recovery from the COVID-19 pandemic.

Depreciation and Amortization

Depreciation and amortization expense increased $1.9 million from $13.4 million for the three months ended June 30, 2021 to ~~$25.2~~$15.3 million infor the ~~third quarter of 2017.~~three months ended June 30, 2022. The increase was primarily due to ~~increases in utility costs, repairs and management fees.~~

~~Depreciation and Amortization~~

~~Depreciation and amortization~~higher depreciation expense ~~decreased $1.1 million~~ from ~~$12.0 million for~~the four hotels owned during three months ended June 30, 2022 that were not owned during than the three months ended ~~September~~June 30, ~~2016 to $10.9 million for~~2021 than the depreciation expense from four other hotels which were sold during the three months ended ~~September~~June 30, ~~2017. The decrease is due to lower depreciation due to some assets being fully depreciated.~~2022. Depreciation is generally recorded on our assets over 40 years for buildings, 20 years for land improvements, 15 years for building improvements and one to ten years for furniture, fixtures and equipment from the date of acquisition on a straight-line basis. Depreciable lives of hotel furniture, fixtures and equipment are generally assumed to be the difference between the date of acquisition and the date that the furniture, fixtures and equipment will be replaced. Amortization of franchise fees is recorded on a straight-line basis over the term of the respective franchise agreement.

Property Taxes, Ground Rent and Insurance

Total property taxes, ground rent and insurance expenses decreased from $6.0 million for the three months ended June 30, 2021 to $5.9 million for the three months ended June 30, 2022.

General and Administrative

General and administrative expenses principally consist of employee-related costs, including base payroll, bonuses and amortization of restricted stock and awards of long-term incentive plan units. These expenses also include corporate operating costs, professional fees and trustees’ fees. Total general and administrative expenses (excluding amortization of stock based compensation of $1.4 million and $1.2 million for the three months ended June 30, 2022 and 2021, respectively) was $3.0 million for the three months ended June 30, 2022 versus $3.1 million for the three months ended June 30, 2021.

Other Charges

Other charges decreased from $0.3 million for the three months ended June 30, 2021 to $0.2 million for the three months ended June 30, 2022. Other charges for both periods primarily relate to the payment of insurance deductibles.

Reimbursable Costs from Unconsolidated Entities

Reimbursable costs from unconsolidated entities, comprised of corporate payroll and rent costs were $0.4 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively. The cost reimbursements were offset by the cost reimbursements from unconsolidated entities included in revenues.

Gain on Sale of Hotel Properties

Gain on sale of hotel properties increased $2.0 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 due to the sale of the HGI Burlington hotel property on May 6, 2022, and the sale of the HWS Dallas hotel property, CY Houston West U hotel property, and RI Houston West U hotel property on May 13, 2022.

Interest Expense, Including Amortization of Deferred Fees

Interest expense increased $0.5 million from $6.4 million for the three months ended June 30, 2021 to $6.9 million for the three months ended June 30, 2022 and is comprised of the following (dollars in thousands):


	For the three months ended
	June 30, 2022		June 30, 2021		% Change
Mortgage debt interest	$	5,107	$	5,268	(3.1)	%
Credit facility interest and unused fees	689		1,065		(35.3)	%
Interest rate cap	(45)		(4)		1025.0	%
Construction loan interest	817		495		65.1	%
Capitalized interest	—		(842)		(100.0)	%
Amortization of deferred financing costs	368		374		(1.6)	%
Total	$	6,936	$	6,356	9.1	%

The increase in interest expense for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 is primarily due to an increase in construction loan interest and decrease in capitalized interest due to the opening of the Home2 Woodland Hills on January 24, 2022. This was partially offset by a decrease in revolving credit facility interest due to the decreased outstanding principal amount compared to the prior period.

Income Tax Expense

Income tax expense for the three months ended June 30, 2022 and 2021 was $0 and $0, respectively. We are subject to income taxes based on the taxable income of our TRS Lessees at a combined federal and state tax rate of approximately 25%. The Company’s TRS is expecting taxable losses in 2022 and recognizes a full valuation allowance equal to 100% of the gross deferred tax assets due to the uncertainty of the TRS's ability to utilize these deferred tax assets.

Net Income (Loss)

Net income was $9.3 million for the three months ended June 30, 2022, compared to a net loss of $8.7 million for the three months ended June 30, 2021. The change in net income (loss) was primarily due to an improvement in performance at our hotels due to the continued recovery from the COVID-19 pandemic, and the sale of four hotels which resulted in a gain on sale of hotel properties of $2.0 million during the three months ended June 30, 2022, combined with the other factors discussed above.

Comparison of the six months ended June 30, 2022 to the six months ended June 30, 2021

Results of operations for the six months ended June 30, 2022 include the operating activities of our 37 wholly owned hotels that were owned for the entire period and operating activities for one hotel that was opened during the period, one hotel that was acquired during the period and four hotels sold during the period during the periods of our ownership of these hotels. We sold one hotel located in Burlington, MA on May 6, 2022, and sold three hotels located in Dallas, TX and Houston, TX on May 13, 2022. We acquired one hotel located in Miramar Beach, FL on March 8, 2022. We developed and opened on January 24, 2022 one hotel located in Los Angeles, CA. We acquired two hotels located in Austin, TX on August 3, 2021. We sold our investment in the NewINK JV on March 18, 2021 and sold our investment in the Inland JV on September 23, 2021. The comparisons below are influenced by the COVID-19 pandemic, the sale of four hotels, the acquisition of three hotels, the opening of one hotel, and the sale of our investments in the NewINK JV and the Inland JV.

Revenues

Revenue, which consists primarily of room, food and beverage and other operating revenues from our wholly owned hotels, was as follows for the periods indicated (dollars in thousands):


	For the six months ended
	June 30, 2022		June 30, 2021		% Change
Room	$	125,926	$	75,905	65.9	%
Food and beverage	3,382		1,120		202.0	%
Other	6,654		4,218		57.8	%
Cost reimbursements from unconsolidated entities	684		1,114		(38.6)	%
Total revenue	$	136,646	$	82,357	65.9	%

Total revenue was $136.6 million for the six months ended June 30, 2022, up $54.2 million compared to total revenue of $82.4 million for the corresponding 2021 period. The increase in total revenue primarily was related to the recovery from the COVID-19 pandemic. Four hotels owned during the six months ended June 30, 2022 that were not owned during the six months ended June 30, 2021 contributed $11.7 million of revenue during the six months ended June 30, 2022. Four other hotels that were sold during the six months ended June 30, 2022 contributed $4.9 million of revenue during the six months ended June 30, 2022, down $0.4 million from the $5.3 million these hotels contributed during the six months ended June 30, 2021. Since all of our hotels are select-service or limited-service hotels, room revenue is the primary revenue source as these hotels do not have significant food and beverage revenue or large group conference facilities. Room revenue comprised 92.2% and 92.2% of total revenue for the six months ended June 30, 2022 and 2021, respectively. Room revenue was $125.9 million and $75.9 million for the six months ended June 30, 2022 and 2021, respectively, and the increase in room revenue primarily was related to the recovery from the COVID-19 pandemic.

Food and beverage revenue was $3.4 million for the six months ended June 30, 2022, up $2.3 million compared to food and beverage revenue of $1.1 million for the corresponding 2021 period. The increase in food and beverage revenue primarily was related to an increase in occupancies at our hotels due to the recovery from the COVID-19 pandemic.

Other operating revenue, comprised of parking, meeting room, gift shop, in-room movie and other ancillary amenities revenue was up $2.5 million for the six months ended June 30, 2022. Other operating revenue was $6.7 million and $4.2 million for the six months ended June 30, 2022 and June 30, 2021, respectively. The increase in other operating revenue primarily was related to an increase in occupancies at our hotels due to the recovery from the COVID-19 pandemic.

Reimbursable costs from unconsolidated real estate entities were $0.7 million and $1.1 million for the six months ended June 30, 2022 and 2021, respectively. The cost reimbursements were offset by the reimbursed costs from unconsolidated real estate entities included in operating expenses. The decrease in cost reimbursements primarily was related to the sale of the NewINK JV.

As reported by Smith Travel Research, U.S. lodging industry RevPAR for the six months ended June 30, 2022 and 2021 increased 49.4% and increased 27.4%, respectively, in the 2022 and 2021 periods as compared to the respective prior year periods. We expect that over the remainder of 2022, U.S. lodging industry RevPAR will continue to increase significantly versus 2021 and 2020.

In the table below, we present both actual and same property room revenue metrics. Actual Occupancy, ADR and RevPAR metrics reflect the performance of the hotels for the actual days such hotels were owned by the Company during the periods presented. Same property Occupancy, ADR, and RevPAR reflect results for the 37 hotels wholly owned by the Company as of June 30, 2022 that have been in operation for a full year regardless of our ownership during the period presented, which is a non-GAAP financial measure. Results for the hotels for periods prior to our ownership were provided to us by prior owners and have not been adjusted by us.


	For the six months ended June 30,
	2022						2021						Percentage Change
	Same Property (37 hotels)			Actual (43 hotels)			Same Property (37 hotels)			Actual (39 hotels)			Same Property (37 hotels)		Actual (43 / 39 hotels)
Occupancy	69.2		%	68.2		%	61.7		%	60.0		%	12.2	%	13.7	%
ADR	$	165.57		$	162.94		$	121.53		$	118.38		36.2	%	37.6	%
RevPAR	$	114.54		$	111.19		$	74.96		$	71.08		52.8	%	56.4	%

For the six months ended June 30, 2022 same property RevPAR increased 52.8% due to an increase in ADR of 36.2% and an increase in occupancy of 12.2% primarily related to the recovery from the COVID-19 pandemic.

Hotel Operating Expenses

Hotel operating expenses consist of the following for the periods indicated (dollars in thousands):


	For the six months ended
	June 30, 2022		June 30, 2021		% Change
Hotel operating expenses:
Room	$	26,074	$	16,653	56.6	%
Food and beverage	2,476		775		219.5	%
Telephone	760		748		1.6	%
Other hotel operating	1,611		909		77.2	%
General and administrative	12,153		8,870		37.0	%
Franchise and marketing fees	10,966		6,688		64.0	%
Advertising and promotions	2,419		1,592		51.9	%
Utilities	5,673		4,638		22.3	%
Repairs and maintenance	6,792		5,180		31.1	%
Management fees	4,645		2,956		57.1	%
Insurance	1,457		1,356		7.4	%
Total hotel operating expenses	$	75,026	$	50,365	49.0	%

Hotel operating expenses increased $24.6 million to $75.0 million for the six months ended June 30, 2022 from $50.4 million for the six months ended June 30, 2021. The primary cause of the increase in hotel operating expenses was related to the increase in revenues and occupancy caused by the recovery from the COVID-19 pandemic.

Room expenses, which are the most significant component of hotel operating expenses, increased $9.4 million from $16.7 million for the six months ended June 30, 2021 to $26.1 million for the six months ended June 30, 2022. The increase in room expenses primarily was related to an increase in occupancies and revenues at our hotels due to the recovery from the COVID-19 pandemic.

The remaining hotel operating expenses increased $15.3 million, from $33.7 million for the six months ended June 30, 2021 to $49.0 million for the six months ended June 30, 2022. The increase in other remaining expenses primarily was related to an increase in occupancies and revenues at our hotels due to the recovery from the COVID-19 pandemic and the contribution from four additional hotels owned during the six months ended June 30, 2022.

Depreciation and Amortization

Depreciation and amortization expense increased $3.6 million from $26.7 million for the six months ended June 30, 2021 to $30.3 million for the six months ended June 30, 2022. The increase was primarily due to higher depreciation expense from the four hotels owned during six months ended June 30, 2022 that were not owned during than the six months ended June 30, 2021 than the depreciation expense from four other hotels which were sold during the six months ended June 30, 2022. Depreciation is generally recorded on our assets over 40 years for buildings, 20 years for land improvements, 15 years for building improvements and one to ten years for furniture, fixtures and equipment from the date of acquisition on a straight-line basis. Depreciable lives of hotel furniture, fixtures and equipment are generally assumed to be the difference between the date of acquisition and the date that the furniture, fixtures and equipment will be replaced. Amortization of franchise fees is recorded on a straight-line basis over the term of the respective franchise agreement.

Property Taxes, Ground Rent and Insurance

Total property taxes, ground rent and insurance expenses decreased ~~$0.1~~$0.9 million from ~~$5.4~~$11.8 million for the ~~three~~six months ended ~~September~~June 30, ~~2016~~2021 to ~~$5.3~~$10.9 million for the ~~three~~six months ended ~~September~~June 30, ~~2017.~~2022. The decrease iswas primarily ~~attributed to decreased real estate taxes at our hotels during the quarter~~ related to ~~successful real estate~~reductions in property tax ~~appeals at some~~assessments as a result of ~~our properties.~~the COVID-19 pandemic.

General and Administrative

General and administrative expenses principally consist of employee-related costs, including base payroll, bonuses and amortization of restricted stock and awards of long-term incentive plan (“LTIP”) units in the Operating Partnership. These expenses also include corporate operating costs, professional fees and trustees’ fees. Total general and administrative expenses (excluding amortization of stock based compensation of $1.0 million and $0.8 million for the three months ended September 30, 2017 and 2016, respectively) remained static from $2.2 million for the three months ended September 30, 2017 to $2.2 million in the three months ended September 30, 2016.

~~Hotel Property Acquisition Costs and Other Charges~~

Hotel property acquisition costs and other charges decreased from $49 thousand for the three months ended September 30, 2016 to $(15) thousand for the three months ended September 30, 2017. Acquisition costs are capitalized starting in 2017 compared to expensing them in previous years due to the adoption of Financial Accounting Standards Board ("FASB") ASU 2017-01.

~~Reimbursed Costs from Unconsolidated Real Estate Entities~~

Reimbursed costs from unconsolidated real estate entities, comprised of corporate payroll costs at the NewINK and Inland JVs and an entity which is 97.5% owned by affiliates of CLNS and 2.5% by Mr. Fisher, where the Company is the employer, were $0.8 million and $0.8 million for the three months ended September 30, 2017 and 2016, respectively. The cost reimbursements were offset by the cost reimbursements from unconsolidated real estate entities included in revenues.

~~Interest and Other Income~~

Interest on cash and cash equivalents and other income increased $2 thousand from $7 thousand for the three months ended September 30, 2016 to $9 thousand for the three months ended September 30, 2017.

~~Interest Expense, Including Amortization of Deferred Fees~~

Interest expense remained static from $7.1 million for the three months ended September 30, 2016 to $7.1 million for the three months ended September 30, 2017 and is comprised of the following (dollars in thousands):

For the three months ended
September 30, 2017 September 30, 2016 % Change
Mortgage debt interest $ 6,231
$ 6,345
(1.8 )%
Credit facility interest and unused fees 579
469
23.5 %
Amortization of deferred financing costs 255
268
(4.9 )%
Total $ 7,065
$ 7,082
(0.2 )%

The decrease in interest expense for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 is primarily due to lower principal balances on our mortgage debt. Interest expense on the Company's senior unsecured revolving credit facility increased due to an increase in LIBOR for the three months ended September 30, 2017 compared to the three months ended September 30, 2016.

~~Income from Unconsolidated Real Estate Entities~~

Income from unconsolidated real estate entities was $1.1 million for the three months ended September 30, 2016 and $1.2 million for the three months ended September 30, 2017. The primary source of the difference is due to activity at the JVs.

~~Income Tax Expense~~

~~Income tax expense for the three months ended September 30, 2017 and 2016 was $0.0 million and $0.0 million, respectively.~~

~~Net Income~~

Net income was $14.5 million for the three months ended September 30, 2017, compared to net income of $13.4 million for the three months ended September 30, 2016. The change in net income was due to the factors discussed above.

~~Material Trends or Uncertainties~~

We are not aware of any material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either the capital resources or the revenues or income to be derived from the acquisition and operation of properties, loans and other permitted investments, other than those referred to in this report and in the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2016.

~~Comparison of the nine months ended September 30, 2017 to the nine months ended September 30, 2016~~

Results of operations for the nine months ended September 30, 2017 include the operating activities of our 39 wholly owned hotels and our investments in the NewINK JV and Inland JV. Accordingly, the comparisons below are influenced by the fact that we acquired one hotel in Portsmouth, NH on September 20, 2017 during the third quarter of 2017.

~~Revenues~~

~~Revenue, which consists primarily of room, food and beverage and other operating revenues from our wholly owned hotels, was as follows for the periods indicated (dollars in thousands):~~

Nine Months Ended
September 30, 2017 September 30, 2016 % Change
Room $ 213,415
$ 211,438
0.9 %
Food and beverage 4,353
4,728
(7.9 )%
Other 8,465
7,689
10.1 %
Cost reimbursements from unconsolidated real estate entities 2,302
2,728
(15.6 )%
Total revenue $ 228,535
$ 226,583
0.9 %

Total revenue was $228.5 million for the nine months ended September 30, 2017, up $1.9 million compared to total revenue of $226.6 million for the corresponding 2016 period. Total revenue related to the one hotel acquired during the third quarter of 2017 contributed $0.4 million of the increase. Since all of our hotels are select-service or limited-service hotels, room revenue is the primary revenue source as these hotels do not have significant food and beverage revenue or large group conference facilities. Room revenue comprised 93.4% and 93.3% of total revenue for the nine months ended September 30, 2017 and 2016, respectively. Room revenue was $213.4 million and $211.4 million for the nine months ended September 30, 2017 and 2016, respectively, with $0.3 million of the increase in 2017 attributable to the one hotel acquired during the third quarter of 2017. For the 38 comparable hotels owned by us throughout the 2016 and 2017 periods, room revenue was up $1.6 million or 1.5%, driven primarily by RevPar growth of 0.6%.

~~Food and beverage revenue was $4.4 million, for the nine months ended September 30, 2017, down $0.3 million, compared to $4.7 million for the corresponding 2016 period.~~

Other operating revenue, comprised of meeting room, gift shop, in-room movie and other ancillary amenities revenue, was $8.5 million and $7.7 million for the nine months ended September 30, 2017 and 2016, respectively. The increase in other operating revenue related primarily to guaranteed no show bookings, restaurant lease income, meeting rooms, miscellaneous room revenue and parking.

Cost reimbursements from unconsolidated real estate entities, comprised of payroll costs at the JVs and an entity which is 97.5% owned by affiliates of CLNS and 2.5% by Mr. Fisher, where the Company is the employer, were $2.3 million and $2.7 million for the nine months ended September 30, 2017 and 2016, respectively. Cost reimbursements decreased in 2017 due to a change in percentage of costs reimbursed for construction employees based on changes in the number of properties being renovated from 2016 to 2017 at the various portfolios. The decline in cost reimbursements was offset by the decline in reimbursed costs from unconsolidated real estate entities included in operating expenses.

As reported by Smith Travel Research, industry RevPAR for the nine months ended September 30, 2017 and 2016 increased 2.6% and 3.2%, respectively, in the 2017 and 2016 periods as compared to the respective prior year periods. RevPAR at our wholly owned hotels increased 0.8% and 0.2%, respectively, in the 2017 and 2016 periods as compared to the respective prior year periods.

In the table below, we present both actual and same property room revenue metrics. Actual Occupancy, ADR and RevPAR metrics reflect the performance of the hotels for the actual days such hotels were owned by the Company during the periods presented. Same property Occupancy, ADR, and RevPAR results for the 39 hotels wholly owned by the Company as of September 30, 2017 reflect the performance of the hotels during the entire period, regardless of our ownership during the period presented, which is a non-GAAP financial measure. Results for the hotels for periods prior to our ownership were provided to us by prior owners and have not been adjusted by us.

For the nine months ended September 30,
2017 2016 Percentage Change
Same Property (39 hotels) Actual (39 hotels) Same Property (39 hotels) Actual (38 hotels) Same Property (39 hotels) Actual (39/38 hotels)
Occupancy 79.5 % 79.5 % 80.6 % 82.5 % (1.4 )% (3.6 )%
ADR $ 172.77
$ 172.77
$ 169.14
$ 164.75
2.1 % 4.9 %
RevPAR $ 137.40
$ 137.40
$ 136.34
$ 135.87
0.8 % 1.1 %

~~The RevPAR increase of 0.8% was due to an increase in ADR of 2.1% and an decrease in occupancy of 1.4%.~~

~~Hotel Operating Expenses~~

~~Hotel operating expenses consist of the following for the periods indicated (dollars in thousands):~~

For the nine months ended
September 30, 2017 September 30, 2016 % Change
Hotel operating expenses:
Room $ 44,147
$ 43,453
1.6 %
Food and beverage 3,770
3,703
1.8 %
Telephone 1,205
1,300
(7.3 )%
Other 2,047
1,790
14.4 %
General and administrative 17,534
16,848
4.1 %
Franchise and marketing fees 17,758
17,293
2.7 %
Advertising and promotions 3,955
3,899
1.4 %
Utilities 7,431
7,301
1.8 %
Repairs and maintenance 9,898
9,443
4.8 %
Management fees 7,511
7,171
4.7 %
Insurance 925
993
(6.8 )%
Total hotel operating expenses $ 116,181
$ 113,194
2.6 %

~~Hotel operating expenses increased $3.0 million to $116.2 million for the nine months ended September 30, 2017 from $113.2 million for the nine months ended September 30, 2016.~~

Room expenses, which are the most significant component of hotel operating expenses, increased $0.6 million from $43.5 million for the nine months ended September 30, 2016 compared to $44.1 million for the nine months ended September 30, 2017. The increase was primarily due to increased housekeeping salaries and commissions.

The remaining hotel operating expenses increased $2.3 million, from $69.7 million for the nine months ended September 30, 2016 to $72.0 million for the nine months ended September 30, 2017. The increase in remaining hotel operating expenses is mainly attributable to franchise fees related to increased revenues, utilities costs, repair costs and management fees.

~~Depreciation and Amortization~~

Depreciation and amortization expense decreased $2.1 million from $36.8 million for the nine months ended September 30, 2016 to $34.7 million for the nine months ended September 30, 2017. The decrease is due to lower depreciation due to some assets being fully depreciated. Depreciation is generally recorded on our assets over 40 years for buildings, 20 years for land improvements, 15 years for building improvements and one to ten years for furniture, fixtures and equipment from the date of acquisition on a straight-line basis. Depreciable lives of hotel furniture, fixtures and equipment are generally between the date of acquisition and the date that the furniture, fixtures and equipment will be replaced. Amortization of franchise fees is recorded on a straight-line basis over the term of the respective franchise agreement.

~~Property Taxes, Ground Rent and Insurance~~

Total property taxes and insurance expenses increased $0.2 million from $15.5 million for the nine months ended September 30, 2016 to $15.7 million for the nine months ended September 30, 2017. The increase is primarily attributed to increased real estate taxes at our hotels.

~~General and Administrative~~

General and administrative expenses principally consist of employee-related costs, including base payroll, bonuses and amortization of restricted stock and awards of LTIP units. These expenses also include corporate operating costs, professional fees and trustees’ fees. Total general and administrative expenses (excluding amortization of stock based compensation of ~~$2.8~~$2.7 million and ~~$2.3~~$2.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively) increased ~~$0.1~~$0.2 million to ~~$6.9~~$5.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 from ~~$6.8~~$5.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016, with the increase primarily due to salaries, professional fees and travel expenses.~~2021.

~~Hotel Property Acquisition Costs and~~

Other Charges

~~Hotel property acquisition costs and other~~

Other charges ~~decreased~~were $0.4 million ~~from~~and $0.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016 to $0.0~~2022 and 2021, respectively. Other charges for ~~the nine months ended September 30, 2017. Acquisition costs are capitalized starting in 2017 compared to expensing them in previous years due~~both periods primarily relate to the ~~adoption~~payment of ~~Financial Accounting Standards Board ("FASB") ASU 2017-01.~~insurance deductibles.

~~Reimbursed~~

Reimbursable Costs from Unconsolidated ~~Real Estate~~ Entities

~~Reimbursed~~

Reimbursable costs from unconsolidated ~~real estate~~ entities, comprised of corporate payroll and rent costs ~~at the JVs and an entity which is 97.5% owned by affiliates of CLNS and 2.5% by Mr. Fisher, where the Company is the employer,~~ were ~~$2.3~~$0.7 million and ~~$2.7~~$1.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Reimbursed costs decreased in 2017 due to a change in percentage of costs reimbursed for construction employees based on changes in the number of properties being renovated from 2016 to 2017 at the various portfolios. The ~~decline in costs~~cost reimbursements ~~was~~were offset by the ~~decline in~~ cost reimbursements from unconsolidated ~~real estate~~ entities included in revenues. The decrease in cost reimbursements primarily was related to the sale of the NewINK JV.

~~Interest and Other Income~~

~~Interest~~Gain (Loss) on ~~cash and cash equivalents and other income decreased $16.0 thousand from $43.0 thousand~~Sale of Hotel Properties

Gain on sale of hotel properties increased $2.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 compared to ~~$27.0 thousand for~~ the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2021 due to the sale of the HGI Burlington hotel property on May 6, 2022, and the sale of the HWS

Dallas hotel property, CY Houston West U hotel property, and RI Houston West U hotel property on May 13, 2022.

Interest Expense, Including Amortization of Deferred Fees

Interest expense ~~decreased $0.4~~increased $0.5 million from ~~$21.2~~$12.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2021 to ~~$20.8~~$13.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and is comprised of the following (dollars in thousands):


	For the six months ended
	June 30, 2022		June 30, 2021		% Change
Mortgage debt interest	$	10,184	$	10,624	(4.1)	%
Credit facility interest and unused fees	1,703		2,168		(21.4)	%
Interest rate cap	(289)		(44)		556.8	%
Construction loan interest	1,355		845		60.4	%
Capitalized interest	(330)		(1,532)		(78.5)	%
Amortization of deferred financing costs	702		765		(8.2)	%
Total	$	13,325	$	12,826	3.9	%

For the nine months ended
September 30, 2017 September 30, 2016 % Change
Mortgage debt interest $ 18,723
$ 18,921
(1.0 )%
Credit facility interest and unused fees 1,711
1,478
15.8 %
Amortization of deferred financing costs 396
812
(51.2 )%
Total $ 20,830
$ 21,211
(1.8 )%

The ~~decrease~~increase in interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2021 is primarily ~~due to lower principal balances on our mortgage debt. Interest expense on the Company's senior unsecured revolving credit facility increased~~ due to an increase in ~~LIBOR~~construction loan interest and decrease in capitalized interest due to the ~~nine months ended September 30, 2017~~opening of the Home2 Woodland Hills on January 24, 2022. This was partially offset by a decrease in revolving credit

facility interest due to the decreased outstanding principal amount compared to the ~~nine months ended September 30, 2016.~~prior period.

~~Impairment Loss~~

Impairment loss was $6.7 million for the nine months ended September 30, 2017, compared to $0.0 for the nine months ended September 30, 2016. The Company recorded an impairment at our Washington SHS, PA hotel during the nine months ended September 30, 2017.

Loss ~~on Early Extinguishment of Debt~~

Loss on early extinguishment of debt was zero for the nine months ended September 30, 2017, compared to $4.0 thousand for the nine months ended September 30, 2016, due to paying off the loan associated with the Altoona hotel in January 2016 instead of at the maturity date of April 2016.

~~Income~~ from Unconsolidated Real Estate Entities

Income from unconsolidated real estate entities increased $0.7 million from income of $1.3 million for the nine months ended September 30, 2016 to income of $2.0 million for the nine months ended September 30, 2017. The increase is due primarily to a loss on the Inland JV of $1.3 million and income on the NewINK JV of $9.6 million for the nine months ended September 30, 2017, compared to a loss of $1.7 million on the Inland JV, which was conducting renovations at multiple hotels, and income of $10.4 million on the NewINK JV for the nine months ended September 30, 2016 and a difference in the basis adjustments related to the purchase price allocation from $0.4 million in 2016 to $1.2 million in 2017.

Loss ~~on Sale from Unconsolidated Real Estate Entities~~

~~Loss on sale~~ from unconsolidated real estate entities decreased ~~$8.0 thousand~~$1.2 million from ~~$8.0 thousand~~a loss of $1.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2021 to ~~zero~~$0 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022. The loss in 2021 is primarily due to losses within the ~~finalizing the~~NewINK JV prior to sale.

Gain on Sale of Investment in Unconsolidated Real Estate Entities

Gain on sale ~~prorations~~ of ~~Torrance JV. There were no sales of~~investment in unconsolidated real estate entities decreased $23.8 million from a gain of $23.8 million for the six months ended June 30, 2021 to $0 for the six months ended June 30, 2022. The gain in ~~2017.~~2021 is due to the sale of the NewINK JV.

Income Tax Expense

Income tax expense ~~increased $0.1 million from $0.2~~for the six months ended June 30, 2022 and 2021 was $0 and $0, respectively. We are subject to income taxes based on the taxable income of our TRS Lessees at a combined federal and state tax rate of approximately 25%. The Company’s TRS is expecting taxable losses in 2022 and recognizes a full valuation allowance equal to 100% of the gross deferred tax assets due to the uncertainty of the TRS's ability to utilize these deferred tax assets.

Net Loss

Net loss was $0.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022, compared to ~~$0.3~~a net loss of $6.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~

~~Net Income~~

~~Net income was $24.2 million for the nine months ended September 30, 2017, compared to net income of $29.0 million for the nine months ended September 30, 2016.~~2021. The change in net ~~income~~loss was primarily due to an increase in occupancies and revenues at our hotels due to the recovery from the COVID-19 pandemic, the sale of four hotels which resulted in a gain on sale of hotel properties of $2.0 million during the six months ended June 30, 2022, and the sale of the NewINK JV in 2021 which resulted in a large gain on sale of investment in unconsolidated real estate entities, combined with the factors discussed above.

Non-GAAP Financial Measures

We consider the following non-GAAP financial measures useful to investors as key supplemental measures of our operating performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (4) EBITDAre, (5) Adjusted EBITDA and ~~(5)~~(6) Adjusted Hotel EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as prescribed by GAAP as a measure of our operating performance.

FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not represent cash generated from operating activities under GAAP and should not be considered as alternatives to net income or loss, cash flows from operations or any other operating performance measure prescribed by GAAP. FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA are not measures of our liquidity, nor are FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA indicative of funds available to fund our cash needs, including our ability to make cash distributions. These measurements do not reflect cash expenditures for long-term assets and other items that have been and will be incurred. FFO, Adjusted FFO, EBITDA, EBITDAre,Adjusted EBITDA and Adjusted Hotel EBITDA may include funds that may not be available for management’s discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties.

We calculate FFO in accordance with standards established by ~~the National Association of Real Estate Investment~~

~~Trusts ("NAREIT"),~~Nareit, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding gains or losses from sales of real estate, impairment write-downs, the cumulative effect of changes in accounting principles, plus depreciation and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures following the same approach. We believe that the presentation of FFO provides useful information to investors regarding our operating performance because it measures our performance without regard to specified non-cash items such as real estate depreciation and amortization, gain or loss on sale of real estate assets and certain other items that we believe are not indicative of the property level performance of our hotel properties. We believe that these items reflect historical cost of our asset base and our acquisition and disposition activities and are less reflective of our ongoing operations, and that by adjusting to exclude the effects of these items, FFO is useful to investors in comparing our operating performance between periods and between REITs that also report FFO using the ~~NAREIT~~Nareit definition.

We calculate Adjusted FFO by further adjusting FFO for certain additional items that are not addressed in ~~NAREIT’s~~Nareit’s definition of FFO, including ~~hotel property acquisition costs and~~ other charges, losses on the early extinguishment of debt and similar items related to our unconsolidated real estate entities that we believe do not represent costs related to hotel operations. We believe 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.

The following is a reconciliation of net income to FFO and Adjusted FFO for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (in thousands, except share data):


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Funds From Operations (“FFO”):
Net income (loss)	$	9,322	$	(8,718)	$	(376)	$	(6,016)
Preferred dividends	(1,987)		—		(3,975)		—
Net income (loss) attributable to common shares and common units	7,335		(8,718)		(4,351)		(6,016)


(Gain) loss on sale of hotel properties	(2,020)		(28)		(2,020)		15

Gain on sale of investment in unconsolidated real estate entities	—		—		—		(23,817)
Depreciation	15,223		13,292		30,193		26,566


Adjustments for unconsolidated real estate entity items	—		—		—		568
FFO attributable to common share and unit holders	20,538		4,546		23,822		(2,684)
Other charges	150		322		400		377

Adjustments for unconsolidated real estate entity items	—		—		—		46
Adjusted FFO attributable to common share and unit holders	$	20,688	$	4,868	$	24,222	$	(2,261)
Weighted average number of common shares and units
Basic	50,010,107		49,613,586		49,928,420		48,823,781
Diluted	50,231,943		49,794,765		50,139,358		48,823,781

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Funds From Operations (“FFO”):
Net income $ 14,493
$ 13,446
$ 24,222
$ 29,018
Loss on sale from unconsolidated real estate entities —
—
—
8
Depreciation 10,890
11,944
34,501
36,593
Impairment loss —
—
6,663
—
Adjustments for unconsolidated real estate entity items 1,668
2,052
4,902
6,028
FFO attributable to common share and unit holders 27,051
27,442
70,288
71,647
Hotel property acquisition costs and other charges (15 ) 49
—
359
Loss on early extinguishment of debt —
—
—
4
Adjustments for unconsolidated real estate entity items —
2
15
26
Adjusted FFO attributable to common share and unit holders $ 27,036
$ 27,493
$ 70,303
$ 72,036
Weighted average number of common shares and units
Basic 39,594,166
38,565,157
39,006,396
38,551,479
Diluted 39,845,686
38,825,237
39,234,951
38,778,464

Diluted weighted average ~~number of~~ common share and unit count used for calculation of adjusted FFO per share may differ from diluted weighted average common share count used for calculation of GAAP Net Income per share bydue to the inclusion of LTIP units, which may be converted to common shares of beneficial interest if Net Income per share is negative and Adjusted FFO is positive. Unvested restricted shares and unvested LTIP units that could potentially dilute basic earnings per share in the future would not be included in the computation of diluted loss per share for the periods where a loss has been recorded because they would have been anti-dilutive for the periods presented.

~~We calculate EBITDA for purposes of the credit facility debt covenants~~Earnings before interest, taxes, depreciation and amortization ("EBITDA") is defined as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to ~~sale~~sales of assets; (3) depreciation and amortization; and (4) unconsolidated real estate entity items including interest, depreciation and amortization excluding gains orand losses from sales of real estate. We ~~believe~~consider EBITDA is useful to ~~investors~~an investor in evaluating ~~our operating performance because it helps investors compare~~and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results. In addition, ~~we use~~ EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions.

~~We calculate Adjusted~~In addition to EBITDA, ~~by further adjusting~~we present EBITDA ~~for certain additional items, including hotel property acquisition costs~~re in accordance with Nareit guidelines, which defines EBITDAre as net income or loss excluding interest expense, income tax expense, depreciation and ~~other charges, impairment write downs,~~amortization expense, gains or losses ~~on the sale~~from sales of real estate, ~~losses on the early extinguishment of debt, amortization of non-cash share-based compensation~~impairment, and ~~similar items related to our~~adjustments for unconsolidated ~~real estate entities which we believe are not indicative of the performance of our underlying hotel properties entities.~~joint ventures. We believe that ~~Adjusted~~the presentation of EBITDAre provides useful information to investors ~~with another financial measure that may~~regarding the Company's operating performance and can facilitate comparisons of operating performance between periods and between ~~REITs~~REITs.

We also present Adjusted EBITDA, which includes additional adjustments for items such as other charges, gains or losses on extinguishment of indebtedness, the amortization of share-based compensation, and certain other expenses that ~~report similar measures.~~we consider outside the normal course of operations. We believe that Adjusted EBITDA provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income, EBITDA and EBITDAre, is beneficial to an investor's understanding of our performance.

The following is a reconciliation of net income to EBITDA, EBITDAreand Adjusted EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (in thousands):


	For the three months ended						For the nine months ended					For the three months ended				For the six months ended
	September 30,						September 30,					June 30,				June 30,
	2017			2016			2017		2016			2022		2021		2022		2021
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”):											Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”):
Net income	$	14,493		$	13,446		$	24,222	$	29,018
Net income (loss)											Net income (loss)	$	9,322	$	(8,718)	$	(376)	$	(6,016)
Interest expense	7,065			7,082			20,830		21,211		Interest expense	6,936		6,356		13,325		12,826
Income tax (benefit) expense	—			(12		)	317		167

Depreciation and amortization	10,944			11,997			34,662		36,753		Depreciation and amortization	15,277		13,353		30,313		26,687
Adjustments for unconsolidated real estate entity items	3,708			3,934			10,844		11,884		Adjustments for unconsolidated real estate entity items	—		—		—		1,184
EBITDA	36,210			36,447			90,875		99,033		EBITDA	31,535		10,991		43,262		34,681
Hotel property acquisition costs and other charges	(15		)	49			—		359
Impairment loss	—			—			6,663		—
Loss on early extinguishment of debt	—			—			—		4

(Gain) loss on sale of hotel properties											(Gain) loss on sale of hotel properties	(2,020)		(28)		(2,020)		15

Gain on sale of investment in unconsolidated real estate entities											Gain on sale of investment in unconsolidated real estate entities	—		—		—		(23,817)
EBITDAre											EBITDAre	29,515		10,963		41,242		10,879
Other charges											Other charges	150		322		400		377

Adjustments for unconsolidated real estate entity items	13			4			55		40		Adjustments for unconsolidated real estate entity items	—		—		—		46
Loss on sale from unconsolidated real estate entities	—			—			—		8

Share based compensation	999			759			2,785		2,256		Share based compensation	1,419		1,194		2,713		2,351
Adjusted EBITDA	$	37,207		$	37,259		$	100,378	$	101,700	Adjusted EBITDA	$	31,084	$	12,479	$	44,355	$	13,653

Adjusted Hotel EBITDA is defined as net income before interest, income taxes, depreciation and amortization, corporate general and administrative, ~~hotel property acquisition costs,~~impairment loss, loss on early extinguishment of debt, other charges, interest and other income, losses on sales of hotel properties and income or loss from unconsolidated real estate entities. We present Adjusted Hotel EBITDA because we believe it is useful to investors in comparing our hotel operating performance between periods and comparing our Adjusted Hotel EBITDA margins to those of our peer companies. Adjusted Hotel EBITDA represents the results of operations for our wholly owned hotels only.

The following is a presentation of Adjusted Hotel EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (in thousands):


		For the three months ended				For the six months ended
		June 30,				June 30,
		2022		2021		2022		2021

Net income (loss)		$	9,322	$	(8,718)	$	(376)	$	(6,016)
Add:	Interest expense	6,936		6,356		13,325		12,826

	Depreciation and amortization	15,277		13,353		30,313		26,687
	Corporate general and administrative	4,462		4,316		8,405		7,844
	Other charges	150		322		400		377
	Loss from unconsolidated real estate entities	—		—		—		1,231


	Loss on sale of hotel property	—		—		—		15

Less:	Interest and other income	(1)		(28)		(1)		(102)


	Gain on sale of hotel properties	(2,020)		(28)		(2,020)		—
	Gain on sale of investment in unconsolidated real estate entities	—		—		—		(23,817)
	Adjusted Hotel EBITDA	$	34,126	$	15,573	$	50,046	$	19,045

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016

Net Income $ 14,493
$ 13,446
$ 24,222
$ 29,018
Add: Interest expense 7,065
7,082
20,830
21,211
Income tax expense —
—
317
167
Depreciation and amortization 10,944
11,997
34,662
36,753
Corporate general and administrative 3,151
2,992
9,706
9,076
Hotel property acquisition costs and other charges —
49
—
359
Impairment loss —
—
6,663
—
Loss on early extinguishment of debt —
—
—
4
Loss on sale from unconsolidated real estate entities —
—
—
8
Less: Interest and other income (9 ) (7 ) (27 ) (43 )
Hotel property acquisition costs and other charges (15 ) —
—
—
Income tax benefit —
(12 ) —
—
Income from unconsolidated real estate entities (1,189 ) (1,051 ) (2,031 ) (1,346 )
Adjusted Hotel EBITDA $ 34,440
$ 34,496
$ 94,342
$ 95,207

Although we present FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA because we believe they are useful to investors in comparing our operating performance between periods and between REITs that report similar measures, these measures have limitations as analytical tools. Some of these limitations are:

•FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect our 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, our 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 our 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 our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our 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 we consider not to be indicative of the underlying performance of our hotel properties; and

•Other companies in our industry may calculate FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA differently than we do, limiting their usefulness as a comparative measure.

In addition, FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA do not represent cash generated from operating activities as determined by GAAP and should not be considered as alternatives to net income or loss, cash flows from operations or any other operating performance measure prescribed by GAAP. FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA are not measures of our liquidity. Because of these limitations, FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA and Adjusted Hotel EBITDA only supplementally. Our consolidated financial statements and the notes to those statements included elsewhere are prepared in accordance with GAAP.

Sources and Uses of Cash

Our principal sources of cash include net cash from operations, ~~and~~availability under our revolving credit facility, proceeds from debt and equity ~~issuances.~~issuances, and proceeds from the sale of hotel properties. Our principal uses of cash include acquisitions, capital expenditures, operating costs, corporate expenditures, interest costs, debt repayments and distributions to equity holders.

Cash, cash equivalents, and restricted cash totaled $27.8 million as of ~~September~~June 30, ~~2017~~ ~~and~~ 2022, a decrease of $2.1 million from December 31, ~~2016, we had~~2021, primarily due to net cash ~~and~~provided by operating activities of $21.7 million, net cash ~~equivalents~~provided by investing activities of ~~approximately $11.3~~$35.9 million, and ~~$12.1~~net cash used in financing activities of $59.7 million.

Cash from Operations

Net cash flows provided by operating activities increased $23.9 million ~~respectively. Additionally, we had $175.0~~to $21.7 million ~~available under~~during the six months ended June 30, 2022 compared to ($2.2) million during the six months ended June 30, 2021. The increase in cash from operating activities was primarily due to improving operating results from our ~~$250.0~~hotels which generated RevPAR growth of 52.5% during the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Investing Activities Cash Flows

Net cash flows provided by investing activities increased $52.5 million ~~senior unsecured revolving credit facility as of~~ ~~September~~to $35.9 million during the six months ended June 30, ~~2017~~.

2022 compared to ($16.6) million during the six months ended June 30, 2021. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, net cash flows provided by ~~operations were $66.6~~investing activities of $35.9 million ~~driven by~~consisted of $79.6 million in net ~~income~~proceeds related to the sale of ~~$24.2 million, $42.5~~four hotel properties, $0.4 million of ~~non-cash items including $35.0 million~~deferred key money received for the development of ~~depreciation and amortization, $6.7 million of impairment loss, $2.8 million of share-based compensation expense,~~the Home2 Woodland Hills, partially offset by ~~$2.0~~$31.0 million related to ~~income from unconsolidated entities. In addition, changes in operating assets and liabilities due to~~ the timing of cash receipts, payments for real estate taxes, payments of corporate compensation and payments from our hotels resulted in net cash inflow of $0.1 million. Net cash flows used in investing activities were $77.0 million, primarily related the purchaseacquisitions of the ~~Hilton Garden Inn Portsmouth for $43.4~~HGI Destin hotel, $9.4 million ~~and the purchase of a parcel of land in Los Angeles for $6.5 million,~~related to capital improvements on our 39 wholly owned hotels, ~~of $21.5 million~~ and ~~$5.0~~$3.6 million related to ~~our Inland JV investment and $2.6~~the development of the Home2 Woodland Hills. For the six months ended June 30, 2021, net cash flows used in investing activities of $16.6 million consisted of $4.2 million related to ~~required escrow deposits~~capital improvements on our 39 wholly owned hotels, $15.2 million related to the development of ~~restricted cash~~the Home2 Woodland Hills, partially offset by ~~distributions~~$2.8 million of ~~$2.0 million~~proceeds from the sale of an unconsolidated real estate ~~entities.~~ entity (the NewINK JV).

We expect to invest approximately $10.2 million on renovations, discretionary and emergency expenditures on our existing hotels during the remainder of 2022, including improvements required under any brand PIP.

Financing Activities Cash Flows

Net cash flows used in financing activities increased $189.3 million to ($59.7) million during the six months ended June 30, 2022 compared to $129.6 million during the six months ended June 30, 2021. For the six months ended June 30, 2022, net cash flows used in financing activities of ($59.7) million were comprised of net repayments of our senior unsecured revolving credit facility of $55.0 million, principal payments on mortgage debt of $4.5 million, payments of deferred financing and offering costs of $0.3 million, distributions to unit holders of $0.1 million, and distributions on preferred shares of $4.0 million, partially offset by net borrowings on our construction loan of $4.1 million. For the six months ended June 30, 2021, net cash flows provided by financing activities of $129.6 million were ~~$9.6~~comprised $116.2 million ~~comprised~~ of ~~$29.7~~net proceeds from our Series A Preferred Shares offering, $24.6 million of common equity proceeds raised through sales under our ~~at-the-market plan ("~~DRSPP and ATM ~~Plan")~~Plan, and ~~dividend reinvestment and share purchase plan ("DRSPP"),~~ net borrowings on our construction loan of $14.2 million, partially offset by net repayments of our senior unsecured revolving credit facility of ~~$22.5~~$7.3 million, principal payments ~~or payoffs~~ on mortgage debt of ~~$3.1~~$16.9 million which included the repayment of the $12.5 million mortgage loan on the Residence Inn New Rochelle, payments of ~~deferred~~ financing and offering costs of ~~$0.8~~$1.0 million, and distributions to ~~shareholders of $38.7 million.~~

~~For the~~ ~~nine months ended September 30, 2016~~, net cash flows provided by operations were $69.9 million, driven by net income of $29.0 million, $38.5 million of non-cash items including $37.6 million of depreciation and amortization and $2.3 million of share-based compensation expense, a $4 thousand loss on early extinguishment of debt, offset by $1.4 million related to income from unconsolidated entities. In addition, changes in operating assets and liabilities due to the timing of cash receipts, payments for real estate taxes, payments of corporate compensation and payments from our hotels resulted in net cash inflow of $2.4 million. Net cash flows used in investing activities were $16.1 million, primarily related to capital improvements on our 38 wholly owned hotels of $17.1 million and $5.6 million related to required escrow deposits of restricted cash, reduced by distributions of $6.6 million from unconsolidated real estate entities. Net cash flows used by financing activities were $61.3 million, comprisedunit holders of $0.3 million raised through our DRSPP, net repayments on our senior unsecured revolving credit facility of $12.5 million, principal payments or payoffs on mortgage debt of $8.7 million, payments of deferred financing and offering costs of $0.1 million, and distributions to shareholders of $40.3 million.

~~In March 2016, we changed the monthly dividend and distribution from $0.10 to $0.11 per common share and LTIP unit.~~

We declared total dividends of ~~$0.99~~$0 and ~~$0.97~~$0 per common share and LTIP unit, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, and ~~2016,~~$0 and $0 per common share and LTIP unit, respectively, for the six months ended June 30, 2021. We declared total dividends of $0.82812 and $0 per Series A preferred share for the six months ended June 30, 2022 and 2021, respectively.

Material Cash Requirements

Our material cash requirements include the following contractual obligations:

•At June 30, 2022, we had total debt principal and interest obligations of $532.0 million with $97.2 million of principal and interest payable within the next 12 months from June 30, 2022. $64.9 million of debt principal obligations payable during the next 12 months relate to the Company's credit facility which has an initial maturity date of March 8, 2023 and the Company's mortgage loans secured by the Homewood Suites San Antonio, Residence Inn Tysons, and Courtyard Houston Medical Center hotel properties. The Company has options to extend the maturity of the credit facility to March 8, 2024. See Note 8, “Debt” to our consolidated financial statements for additional information relating to our property loans and revolving credit facility.

•Lease payments due within the next 12 months from June 30, 2022 total $2.1 million. See Note 14, “Leases” to our consolidated financial statements for additional information relating to our corporate office and ground leases.

Liquidity and Capital Resources

At ~~September~~June 30, ~~2017,~~2022, our leverage ratio was ~~39.5% based on~~approximately 28.4% measured as the ratio of our net debt (total debt outstanding before deferred financing costs less unrestricted cash and cash equivalents) to hotel investments at ~~cost, including our JV investments.~~cost. Over the past several years, we have maintained a leverage ratio between the ~~mid-30s~~high 20s and the low ~~50s to fund our acquisitions and investments in joint ventures.~~50s. At ~~September~~June 30, ~~2017,~~2022, we have total debt of ~~$604.5~~$489.6 million at an average interest rate of approximately ~~4.6%~~4.9%. Accordingly, our debt coverage ratios are currently favorable and we are comfortable in this leverage range and believe we have the capacity and flexibility to take advantage of acquisition opportunities as they arise. We intend to continue to fund our investments with a prudent balance of debt and equity. We will pay down borrowings on our senior unsecured revolving credit facility with excess cash flow until we find other uses of cash such as investments in our existing hotels, hotel acquisitions or further joint venture investments.

At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, we had ~~$75.0~~$15.0 million and ~~$52.5~~$70.0 million, respectively, in outstanding borrowings under our ~~senior unsecured~~$250.0 million revolving credit facility. ~~At September~~We had $39.1 million and $35.0 million, respectively, in outstanding borrowings under our $40 million construction loan for the Home2 Woodland Hills hotel development at June 30, ~~2017, the maximum borrowing availability under the senior unsecured revolving credit facility was $250.0 million.~~2022 and December 31, 2021. We also had mortgage debt on individual hotels aggregating ~~$529.5~~$435.5 million and ~~$532.6~~$439.9 million at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively.

Our ~~senior unsecured~~revolving credit facility contains representations, warranties, covenants, terms and conditions customary for ~~transactions~~credit facilities of this type, including a maximum leverage ratio, a minimum fixed charge coverage ratio and minimum net worth financial covenants, limitations on (i) liens, (ii) incurrence of debt, (iii) investments, (iv) distributions, and (v) mergers and asset dispositions, covenants to preserve corporate existence and comply with laws, covenants on the use of proceeds of the ~~senior unsecured~~ revolving credit facility and default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants, cross-defaults and guarantor defaults. We were in compliance with all financial covenants at ~~September~~June 30, ~~2017~~.2022.

Our mortgage debt agreements contain “cash trap” provisions that are triggered when the hotel’s operating results fall below a certain debt service coverage ratio or debt yield. When these provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio or debt yield is reached. Such provisions do not allow the lender the right to accelerate repayment of the underlying debt. As of June 30, 2022, the debt service coverage ratios or debt yields for seven of our mortgage loans were below the minimum thresholds such that the cash trap provision of each respective loan could be enforced. As of June 30, 2022, one of our mortgage debt lenders has enforced cash trap provisions. We do not expect that such cash traps will affect our ability to ~~meet~~satisfy our short-term liquidity requirements.

In December 2017, we established a $50 million dividend reinvestment and stock purchase plan. We filed a new $50 million shelf registration statement for the dividend reinvestment and stock purchase plan (the "DRSPP") on December 22, 2020 to replace the prior plan. Under the DRSPP, shareholders may purchase additional common shares by reinvesting some or all ~~financial covenants~~of the cash dividends received on common shares. Shareholders may also make optional cash purchases of common shares subject to certain limitations detailed in the prospectuses for the DRSPP. During the three months ended June 30, 2022, the Company issued 1,522 common shares under the DRSPP at a weighted average price of $12.47, which generated $19 thousand of proceeds. As of June 30, 2022, there was approximately $47.9 million in common shares available for issuance under the DRSPP.

In January 2021, we established an "at-the-market" offering program (the "ATM Program") whereby, from time to time, we may publicly offer and sell our common shares having an aggregate maximum offering price up to $100 million by means of ordinary brokers transactions on the New York Stock Exchange (the "NYSE"), in negotiated transactions or in transactions that are deemed to be "at-the-market" offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Cantor Fitzgerald & Co., Barclays Capital Inc., BMO Capital Markets Corp., BofA Securities, Inc., BTIG, LLC, Citigroup Global Markets Inc., Regions Securities LLC, Stifel, Nicolaus & Company, Incorporated and Wells Fargo Securities act as sales agents under the ATM Program. The Company did not issue any shares under the ATM Program during the ~~remainder~~three months ended June 30, 2022. As of ~~2017~~ ~~based upon our current projections.~~June 30, 2022, there was approximately $77.5 million in common shares available for issuance under the ATM Program.

We expect to meet our short-term liquidity requirements generally through ~~net cash provided by operations,~~ existing cash balances and ~~if necessary, short-term borrowings~~availability under our ~~senior unsecured revolving~~ credit ~~facility or through the encumbrance of any unencumbered hotels.~~facility. We believe that our ~~net~~existing cash ~~provided by operations~~balances and availability under our credit facility will be adequate to fund operating obligations, pay interest on any borrowings and fund dividends in accordance with the requirements for qualification as a REIT under the Code. We expect to meet our long-term liquidity requirements, such as hotel property acquisitions and debt maturities or repayments through additional long-term secured and unsecured borrowings, the issuance of additional equity or debt securities or the possible sale of existing assets.

~~Through~~

The COVID-19 pandemic has caused, and is continuing to cause, significant disruption in the financial markets both globally and in the United States, and will continue to impact, possibly materially, our ~~$25 million DRSPP,~~business, financial condition and results of operations. We cannot predict the degree, or duration, to which ~~was established~~our operations will continue to be affected by the COVID-19 outbreak, and the effects could be material. While we believe the liquidity provided by our unrestricted cash and credit facility availability, and aggressive cost reduction initiatives, will enable us to fund our current obligations for the foreseeable future, COVID-19 has resulted in ~~January 2014, shareholders may purchase additional common shares by reinvesting some or all~~significant disruption of ~~the cash dividends received~~global financial markets, which could have a negative impact on our ~~common shares. Shareholders may also make optional cash purchases of our common shares subject~~ability to ~~certain limitations detailed~~access capital in the ~~prospectus for the DRSPP. As of~~ ~~September 30, 2017, we had issued 360,436 shares under the DRSPP at a weighted average price of $20.54. As of~~ ~~September 30, 2017, there was approximately $17.6 million available for issuance under the DRSPP.~~future.

In January 2014, we also established our ATM Plan whereby, from time to time, we may publicly offer and sell our common shares having an aggregate maximum offering price of up to $50 million of our common shares by means of ordinary brokers’ transactions on the NYSE, in negotiated transactions or in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act with Cantor Fitzgerald & Co. acting as sales agent pursuant to a Sales Agreement (the “Cantor Sales Agreement”). On January 13, 2015, the Company entered into a Sales Agreement (the “Barclays Sales Agreement”) with Barclays Capital Inc. (“Barclays”) to add Barclays as an additional sales agent under the Company’s ATM Plan. Total shares issued under the ATM Plan since the inception of the plan are 1,993,199 at a weighted average price of $21.92 raising gross proceeds of approximately $43.7 million. As of ~~September 30, 2017, there was approximately $6.3 million available for issuance under the ATM Plan.~~

We intend to continue to invest in hotel properties as suitable opportunities arise. We intend to finance our future investments with free cash flow, the net proceeds from additional issuances of common and preferred shares, issuances of

common units in our Operating Partnership or other securities, borrowings or asset sales. The success of our acquisition strategy depends, in part, on our ability to access additional capital through other sources. There can be no assurance that we will continue to make investments in properties that meet our investment criteria. Additionally, we may choose to dispose of certain hotels as a means to provide liquidity.

We had no material off-balance sheet arrangements at June 30, 2022.

Dividend Policy

Our ~~current~~ common share dividend policy ~~is generally~~has been to distribute, annually, approximately 100% of our annual taxable income. We suspended common share dividends after the March 2020 payment due to the decline in operating performance caused by the COVID-19 pandemic. We plan to pay dividends required to maintain REIT status. There were no dividends and distributions declared for the six months ended June 30, 2022 per common share and LTIP unit. The amount of any dividends is determined by our Board of Trustees. ~~Our current monthly dividend and distribution rate is $0.11~~

Chatham declared total dividends of $0.82812 per ~~common~~ share ~~and LTIP unit. The aggregate amount~~ of ~~dividends and distributions declared for~~6.625% Series A Cumulative Redeemable Preferred Shares during the ~~nine~~six months ended ~~September~~June 30, ~~2017 was $0.99 per common share and LTIP unit.~~2022.

~~Capital Expenditures~~

We intend to maintain each hotel property in good repair and condition and in conformity with applicable laws and regulations and in accordance with the franchisors' standards and any agreed-upon requirements in our management and loan agreements. After we acquire a hotel property, we may be required to complete a property improvement plan (“PIP”) in order to be granted a new franchise license for that particular hotel property. PIPs are intended to bring the hotel property up to the franchisors' standards. Certain of our loans require that we escrow, for property improvement purposes, at the hotels collateralizing these loans, amounts up to 5% of gross revenue from such hotels. We intend to spend amounts necessary to

comply with any reasonable loan or franchisor requirements and otherwise to the extent that such expenditures are in the best interest of the hotel. To the extent that we spend more on capital expenditures than is available from our operations, we intend to fund those capital expenditures with available cash and borrowings under our senior unsecured revolving credit facility.

For the three months ended September 30, 2017 and 2016, we invested approximately $8.5 million and $4.7 million, respectively, and for the nine months ended September 30, 2017 and 2016, we invested approximately $23.5 million and $22.8 million, respectively, on capital investments in our hotels. We expect to invest an additional $3.5 million on renovations, discretionary and emergency expenditures on our existing hotels for the remainder of 2017.

The Company is continuing with plans to expand two Residence Inns located in Sunnyvale, CA. The expansions are expected to include a new lobby and public spaces in each location. We are not certain when the expansions of the two Sunnyvale Residence Inns will commence. It is possible that one or both of these projects will commence in 2018, but the timing is uncertain due to potential delays related to finalizing plans, obtaining approvals from local authorities and ensuring costs to complete the expansions justify the investment. While we do not have final budgets for these projects, we currently anticipate that total expenditures will be approximately $75 million to $80 million, but these costs are subject to change.

~~Contractual Obligations~~

The following table sets forth our contractual obligations as of September 30, 2017 and the effect these obligations are expected to have on our liquidity and cash flow in future periods (in thousands). We had no material off-balance sheet arrangements at September 30, 2017, other than non-recourse debt associated with the NewINK JV and the Inland JV as discussed below.

Payments Due by Period
Contractual Obligations Total Less Than
One Year One to Three
Years Three to Five
Years More Than Five
Years
Corporate office lease (1) $ 7,563
$ 192
$ 1,564
$ 1,644
$ 4,163
Revolving credit facility, including interest (2) 87,066
1,774
7,094
78,198
—
Ground leases 74,735
304
2,437
2,540
69,454
Property loans, including interest (2) 665,129
7,368
61,690
80,484
515,587
Total $ 834,493
$ 9,638
$ 72,785
$ 162,866
$ 589,204


~~(1)~~	~~The Company entered into a new corporate office lease in 2015. The lease is for~~ ~~eleven~~ years and includes a 12-month rent abatement period and certain tenant improvement allowances. The Company shares the space with related parties and is reimbursed for the pro-rata share of rentable space occupied by related parties.


~~(2)~~	Does not reflect paydowns or additional borrowings under the senior unsecured revolving credit facility after September 30, 2017. Interest payments are based on the interest rate in effect as of September 30, 2017. See Note 8, “Debt” to our unaudited consolidated financial statements for additional information relating to our property loans.

~~In addition to the above listed obligations, we pay management and franchise fees to our hotel management companies and franchisors based on the revenues of our hotels.~~

The Company’s ownership interests in the JVs are subject to change in the event that either we or CLNS calls for additional capital contributions to the respective JVs necessary for the conduct of that JV's business, including contributions to fund costs and expenses related to capital expenditures. We manage the NewINK JV and Inland JV and will receive a promote interest in the applicable JV if it meets certain return thresholds. CLNS may also approve certain actions related to the JVs without the Company’s consent, including certain property dispositions conducted at arm’s length, certain actions related to the restructuring of the JVs and removal of the Company as managing member in the event the Company fails to fulfill its material obligations under the respective joint venture agreements.

In connection with certain non-recourse mortgage loans in either the NewINK JV or Inland JV, our Operating Partnership could require us to repay our pro rata share of portions of each respective JVs indebtedness in connection with certain customary non-recourse carve-out provisions such as environmental conditions, misuse of funds and material misrepresentations.

Inflation

Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. However, competitive pressures may limit the ability of our management companies to raise room rates. Inflation may also affect our expenses and costs of capital investments by increasing, among other things, the costs of construction, labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities.

Seasonality

Demand for our hotels is affected by recurring seasonal patterns. Generally, we expect that we will have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters. These general trends are, however, influenced by overall economic cycles and the geographic locations of our hotels. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, we expect to utilize cash on hand or borrowings under our credit facility to pay expenses, debt service or to make distributions to our equity holders.

Critical Accounting ~~Policies~~Estimates

Our consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and on various other assumptions that are believed to be reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting ~~policies,~~estimates, are disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

~~Recently Issued Accounting Standards~~

~~Refer to Note 3, Recently Issued Accounting Standards for all new recently issued accounting standards.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We may be exposed to interest rate changes primarily as a result of our assumption of long-term debt in connection with our acquisitions and upon refinancing of existing debt. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we seek to borrow primarily at fixed rates or variable rates with the lowest margins available and, in some cases, with the ability to convert variable rates to fixed rates. With respect to variable rate financing, we will assess interest rate risk by identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates. Rates take into consideration general market conditions, maturity and fair value of the underlying collateral. The estimated fair value of the Company’s fixed rate debt at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 was ~~$534.1~~$417.6 million and ~~$516.0~~$443.4 million, respectively.

At ~~September~~June 30, ~~2017,~~2022, our consolidated debt was comprised of floating and fixed interest rate debt. The fair value of our fixed rate debt indicates the estimated principal amount of debt having the same debt service requirements that could have been borrowed at the date presented, at then current market interest rates. The following table provides information about the maturities of our financial instruments as of ~~September~~June 30, ~~2017~~2022 that are sensitive to changes in interest rates (dollars in thousands):


	2022	2023		2024	2025	2026	Thereafter	Total/ Weighted Average	Fair Value
Floating rate:
Debt	—	$	15,000	$39,143	—	—	—	$54,143	$	54,181
Average interest rate	—	3.38%		7.98%	—	—	—	6.71%
Fixed rate:
Debt	$4,773	$117,919		$296,812	$15,947	—	—	$435,451	$417,623
Average interest rate	4.63%	4.66%		4.64%	4.25%	—	—	4.63%

2017 2018 2019 2020 2021 2022 Thereafter Total/ Weighted Average Fair Value
Floating rate:

Debt —
—
$ 75,000
$ —
—
—
—
$ 75,000
$ 75,000
Average interest rate (1) —
—
4.03 % —
—
—
—
4.03 %
Fixed rate:

Debt $1,239 $5,374 $7,340 $ 9,899
$ 22,308
$ 10,350
$472,959 $ 529,469
$ 534,104
Average interest rate 4.75 % 4.69 % 4.68 % 4.67 % 5.25 % 4.62 % 4.62 % 4.65 %

~~(1) Weighted average interest rate based on borrowings at~~Our credit facility is currently subject to a 0.5% LIBOR ~~of 1.24% plus~~floor and our construction loan is subject to a ~~margin of 1.95% and prime rate of 4.25% plus a margin of 0.95% at~~ ~~September~~0.25% LIBOR floor. At June 30, ~~2017~~2022, 1-month LIBOR was 1.80%.

We estimate that a hypothetical 100 basis points increase ~~on the variable interest rate~~in LIBOR would result in additional interest ~~expense~~ of approximately ~~$0.8~~$0.5 million annually. This assumes that the amount ~~outstanding under our~~of floating rate debt outstanding on our revolving credit facility remains ~~$75.0~~$15.0 million and the amount outstanding on our construction loan remains $39.1 million, the ~~balance~~balances as of ~~September~~June 30, ~~2017.~~ 2022.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

~~The nature of the operations of the Company's hotels exposes those hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business.~~ The Company is ~~not presently~~ subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of its hotels, its managers and other Company matters. While it is not possible to ascertain the ultimate outcome of such matters, the Company believes that the aggregate identifiable amount of such liabilities, if any, will not have a material ~~litigation nor,~~adverse impact on its financial condition or results of operations.

As previously disclosed in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, Chatham RIMV LLC (a wholly owned subsidiary of the Company) is a defendant in a lawsuit brought by the City of San Diego and other related entities, San Diego Housing Commission et al. v. Neil et al. (Superior Court of California, County of San Diego, Case No. 37-2021-00033006-CU-BC-CTL), filed in connection with the sale of the Residence Inn Mission Valley to the ~~Company’s knowledge,~~City of San Diego. The City of San Diego is seeking a return of monies spent on the acquisition as well as a declaration that the purchase agreement executed in connection with the acquisition is void. At the time of this filing, the City of San Diego and the other Plaintiffs have made no allegations of wrongdoing by Chatham RIMV LLC or any ~~material litigation threatened against~~other Company entity. We believe this lawsuit is without merit and we are defending our case vigorously. For the ~~Company or its properties.~~six months ended June 30, 2022, we have incurred $143 thousand of legal costs related to this matter. At this time we believe potential future costs related to this lawsuit are not probable and estimable.

Item 1A. Risk Factors.

~~There have been no material changes in the risk factors described in Item 1A of the Company’s~~Our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021 includes detailed discussions of our risk factors under the heading “Risk Factors.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are filed as part of this report:



Exhibit Number		Description of Exhibit


3.1		Articles of Amendment and Restatement of Chatham Lodging Trust ⁽¹⁾

3.2*		Second Amended and Restated Bylaws of Chatham Lodging Trust^{as amended May 26, 2022}

3.3		Articles Supplementary to the Company's Declaration of Trust designating the 6.625% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (2)

10.1*†		Chatham Lodging Trust Equity Incentive Plan, Amended and Restated as of May 17, 2013, as amended on May 24, 2022

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to ~~Section 302~~Section302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to ~~Section 302~~Section302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to ~~Section 906~~Section906 of the Sarbanes-Oxley Act of 2002

~~101.INS~~	~~XBRL Instance Document~~

~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~



*101.INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File - the cover page interactive data file does not appear in the interactive date file because its XBRL tags are embedded within the inline XBRL document.


*		Filed herewith.

**		Furnished herewith. Such certification shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

(1†		)Denotes management contract or compensation plan or arrangement in which trustees or officers are eligible to participate.

(1)		Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K filed with the SEC on February 29, 2016 (File No. 001-34693).

(2(2)	)	Incorporated by reference to Exhibit ~~3.2 to~~3.3 of the Company's ~~Current Report~~Registration Statement on Form ~~8-K~~8-A filed with the SEC on ~~April 21, 2015~~June 25, 2021 (File No. 001-34693).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			CHATHAM LODGING TRUST

Dated:		August 3, 2022	~~CHATHAM LODGING TRUST~~

~~Dated:~~	~~October 31, 2017~~	By: /s/ JEREMY B. WEGNER
			Jeremy B. Wegner
			Senior Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer and duly authorized officer of the registrant)



	September 30, 2017			December 31, 2016
	(unaudited)
Assets:
Investment in hotel properties, net	$	1,263,183		$	1,233,094
Cash and cash equivalents	11,282			12,118
Restricted cash	27,693			25,083
Investment in unconsolidated real estate entities	25,448			20,424
Hotel receivables (net of allowance for doubtful accounts of $249 and $155, respectively)	7,691			4,389
Deferred costs, net	4,882			4,642
Prepaid expenses and other assets	4,350			2,778
Deferred tax asset, net	—			426
Total assets	$	1,344,529		$	1,302,954
Liabilities and Equity:
Mortgage debt, net	$	527,144		$	530,323
Revolving credit facility	75,000			52,500
Accounts payable and accrued expenses	32,763			27,782
Distributions and losses in excess of investments of unconsolidated real estate entities	5,975			6,017
Distributions payable	5,217			4,742
Total liabilities	646,099			621,364
Commitments and contingencies (Note 13)
Equity:
Shareholders’ Equity:
Preferred shares, $0.01 par value, 100,000,000 shares authorized and unissued at September 30, 2017 and December 31, 2016	—			—
Common shares, $0.01 par value, 500,000,000 shares authorized; 39,839,476 and 38,367,014 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	395			380
Additional paid-in capital	752,148			722,019
Retained earnings (distributions in excess of retained earnings)	(60,097		)	(45,657		)
Total shareholders’ equity	692,446			676,742
Noncontrolling Interests:
Noncontrolling interest in Operating Partnership	5,984			4,848
Total equity	698,430			681,590
Total liabilities and equity	$	1,344,529		$	1,302,954



	Common Shares			Additional Paid - In Capital		Retained earnings (distributions in excess of retained earnings)			Total Shareholders’ Equity			Noncontrolling Interest in Operating Partnership			Total Equity
	Shares	Amount		Additional Paid - In Capital					Total Shareholders’ Equity			Noncontrolling Interest in Operating Partnership			Total Equity
Balance, January 1, 2016	38,308,937	$	379	$	719,773	$	(27,281	)	$	692,871		$	4,131		$	697,002
Issuance of shares pursuant to Equity Incentive Plan	26,488	—		550		—			550			—			550
Issuance of shares, net of offering costs of $8	16,454	1		336		—			337			—			337
Issuance of restricted time-based shares	7,851	—		—		—			—			—			—
Amortization of share based compensation	—	—		963		—			963			916			1,879
Dividends declared on common shares ($0.97 per share)	—	—		—		(37,266		)	(37,266		)	—			(37,266		)
Distributions declared on LTIP units ($0.97 per unit)	—	—		—		—			—			(537		)	(537		)
Reallocation of noncontrolling interest	—	—		11		—			11			(11		)	—
Net income	—	—		—		28,823			28,823			195			29,018
Balance, September 30, 2016	38,359,730	$	380	$	721,633	$	(35,724	)	$	686,289		$	4,694		$	690,983
Balance, January 1, 2017	38,367,014	$	380	$	722,019	$	(45,657	)	$	676,742		$	4,848		$	681,590
Issuance of shares pursuant to Equity Incentive Plan	23,980	—		500		—			500			—			500
Issuance of shares, net of offering costs of $812	1,443,482	15		28,909		—			28,924			—			28,924
Issuance of restricted time-based shares	5,000	—		—		—			—			—			—
Amortization of share based compensation	—	—		619		—			619			1,791			2,410
Dividends declared on common shares ($0.99 per share)	—	—		—		(38,495		)	(38,495		)	—			(38,495		)
Distributions declared on LTIP units ($0.99 per unit)	—	—		—		—			—			(721		)	(721		)
Reallocation of noncontrolling interest	—	—		101		—			101			(101		)	—
Net income	—	—		—		24,055			24,055			167			24,222
Balance, September 30, 2017	39,839,476	$	395	$	752,148	$	(60,097	)	$	692,446		$	5,984		$	698,430



	Portsmouth
Acquisition date	9/20/2017
Number of Rooms	131
Land	$	3,600
Building and improvements	37,630
Furniture, fixtures and equipment	2,120
Cash	8
Accounts receivable	32
Prepaid expenses and other assets	12
Accounts payable and accrued expenses	(27		)
Net assets acquired	$	43,375
Net assets acquired, net of cash	$	43,367



	For the three months ended September 30,								For the nine months ended September 30,
	2017				2016				2017				2016
	Revenue		Operating Income		Revenue		Operating Income		Revenue		Operating Income		Revenue		Operating Income

Hilton Garden Inn Portsmouth	$	392	$	241	$	—	$	—	$	392	$	241	$	—	$	—
Total	$	392	$	241	$	—	$	—	$	392	$	241	$	—	$	—



	September 30, 2017			December 31, 2016
Land and improvements	$	284,655		$	274,554
Building and improvements	1,087,046			1,045,880
Furniture, fixtures and equipment	59,040			50,495
Renovations in progress	14,807			10,067
	1,445,548			1,380,996
Less: accumulated depreciation	(182,365		)	(147,902		)
Investment in hotel properties, net	$	1,263,183		$	1,233,094



Collateral	Interest Rate		Maturity Date	9/30/17 Property Carrying Value		Balance Outstanding on Loan as of
Collateral	Interest Rate		Maturity Date	9/30/17 Property Carrying Value		September 30, 2017			December 31, 2016
Senior Unsecured Revolving Credit Facility⁽¹⁾	4.03	%	November 25, 2019	$	—	$	75,000		$	52,500
Residence Inn by Marriott New Rochelle, NY	5.75	%	September 1, 2021	19,381		13,859			14,141
Residence Inn by Marriott San Diego, CA	4.66	%	February 6, 2023	45,257		28,612			29,026
Homewood Suites by Hilton San Antonio, TX	4.59	%	February 6, 2023	32,074		16,336			16,575
Residence Inn by Marriott Vienna, VA	4.49	%	February 6, 2023	30,419		22,365			22,699
Courtyard by Marriott Houston, TX	4.19	%	May 6, 2023	32,381		18,473			18,758
Hyatt Place Pittsburgh, PA	4.65	%	July 6, 2023	35,036		22,546			22,864
Residence Inn by Marriott Bellevue, WA	4.97	%	December 6, 2023	67,833		45,653			46,206
Residence Inn by Marriott Garden Grove, CA	4.79	%	April 6, 2024	38,984		33,291			33,674
Residence Inn by Marriott Silicon Valley I, CA	4.64	%	July 1, 2024	80,296		64,800			64,800
Residence Inn by Marriott Silicon Valley II, CA	4.64	%	July 1, 2024	87,836		70,700			70,700
Residence Inn by Marriott San Mateo, CA	4.64	%	July 1, 2024	63,527		48,600			48,600
Residence Inn by Marriott Mountain View, CA	4.64	%	July 6, 2024	55,668		37,900			37,900
SpringHill Suites by Marriott Savannah, GA	4.62	%	July 6, 2024	36,535		30,000			30,000
Hilton Garden Inn Marina del Rey, CA	4.68	%	July 6, 2024	42,145		21,859			22,145
Homewood Suites by Hilton Billerica, MA	4.32	%	December 6, 2024	11,435		16,225			16,225
Homewood Suites by Hilton Carlsbad CA	4.32	%	December 6, 2024	29,185		19,950			19,950
Hampton Inn & Suites Houston Medical Center, TX	4.25	%	January 6, 2025	15,170		18,300			18,300

Total debt before unamortized debt issue costs				$	723,162	$	604,469		$	585,063
Unamortized mortgage debt issue costs						(2,325		)	(2,240		)
Total debt outstanding						$	602,144		$	582,823



	Amount
2017 (remaining three months)	$	1,239
2018	5,374
2019	82,340
2020	9,899
2021	22,308
2022	10,350
Thereafter	472,959
Total debt before unamortized debt issue costs	$	604,469
Unamortized mortgage debt issue costs	(2,325		)
Total debt outstanding	$	602,144



	Record Date	Payment Date	Common share distribution amount		LTIP unit distribution amount
January	1/31/2017	2/24/2017	$	0.11	$	0.11
February	2/28/2017	3/31/2017	0.11		0.11
March	3/31/2017	4/28/2017	0.11		0.11
1st Quarter 2017			$	0.33	$	0.33

April	4/28/2017	5/26/2017	$	0.11	$	0.11
May	5/26/2017	6/30/2017	0.11		0.11
June	6/30/2017	7/28/2017	0.11		$	0.11
2nd Quarter 2017			$	0.33	$	0.33

July	7/31/2017	8/25/2017	$	0.11	$	0.11
August	8/31/2017	9/29/2017	0.11		0.11
September	9/29/2017	10/27/2017	0.11		0.11
3rd Quarter 2017			$	0.33	$	0.33

Total 2017			$	0.99	$	0.99



Award Type	Award Date	Total Shares Granted	Vested as of September 30, 2017
2014 Time-based Awards	1/31/2014	48,213	48,213
2014 Performance-based Awards	1/31/2014	38,805	12,935
2015 Time-based Awards	1/30/2015	40,161	26,774
2015 Performance-based Awards	1/30/2015	36,144	—
2015 Time-based Awards	6/1/2015	8,949	5,966
2017 Restricted Board Awards	1/11/2017	5,000	—



Performance Award			Risk Free Interest
Grant Date	Volatility	Dividend Yield	Rate
1/31/2014	27%	—%	0.71%
1/30/2015	29%	—%	0.84%



	Nine Months Ended				Year Ended
	September 30, 2017				December 31, 2016
	Number of Shares		Weighted - Average Grant Date Fair Value		Number of Shares		Weighted - Average Grant Date Fair Value
Non-vested at beginning of the period	110,825		$	22.05	170,480		$	21.38
Granted	5,000		20.20		—		—
Vested	(32,441	)	25.77		(59,655	)	20.14
Forfeited	(25,870	)	$	13.17	—		$	—
Non-vested at end of the period	57,514		$	23.78	110,825		$	22.05



	Other Leases⁽¹⁾		Office Lease
	Amount
2017 (remaining three months)	$	304	$	192
2018	1,217		772
2019	1,220		792
2020	1,267		812
2021	1,273		832
2022	1,276		853
Thereafter	68,178		3,310
Total	$	74,735	$	7,563



Property	Courtyard Altoona		Springhill Suites Washington		Residence Inn Garden Grove		Residence Inn San Diego		Residence Inn San Antonio		Residence Inn Vienna		Residence Inn Washington D.C.

Original Management Fee	4.0	%	4.0	%	2.5	%	2.5	%	2.5	%	2.5	%	2.5	%
Amended Management Fee	3.0	%	3.0	%	3.0	%	3.0	%	3.0	%	3.0	%	3.0	%
Original Monthly Accounting Fee	1,211		991		1,000		1,000		1,000		1,000		1,000
Amended Monthly Accounting Fee	1,500		1,200		1,200		1,200		1,200		1,200		1,200
Original Monthly Revenue Management Fee	—		—		—		—		—		—		—
Amended Monthly Revenue Management Fee	1,000		1,000		1,000		1,000		1,000		1,000		1,000



Property	Homewood Suites Billerica		Homewood Suites Bloomington		Homewood Suites Maitland		Homewood Suites Dallas		Homewood Suites Brentwood		Homewood Suites Farmington

Renewal Date	4/1/2017		4/1/2017		5/1/2017		5/1/2017		6/1/2017		8/1/2017
Original Management Fee	2.0	%	2.0	%	2.0	%	2.0	%	2.0	%	2.0	%
Amended Management Fee	3.0	%	3.0	%	3.0	%	3.0	%	3.0	%	3.0	%
Original Monthly Accounting Fee	1,000		1,000		1,000		1,000		1,000		1,000
Amended Monthly Accounting Fee	1,200		1,200		1,200		1,200		1,200		1,200
Original Monthly Revenue Management Fee	550		550		550		550		550		550
Amended Monthly Revenue Management Fee	1,000		1,000		1,000		1,000		1,000		1,000



Property	Management Company	Base Management Fee	Monthly Accounting Fee	Monthly Revenue Management Fee	Incentive Management Fee
Hilton Garden Inn Portsmouth	IHM	3%	$1,500	$1,000	1%



Property	Franchise Company	Franchise/Royalty Fee	Marketing Program Fee	Expiration
Hilton Garden Inn Portsmouth	Hilton Franchise Holding LLC	5.5%	4%	2037



	Payments Due by Period
Contractual Obligations	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Corporate office lease (1)	$	7,563	$	192	$	1,564	$	1,644	$	4,163
Revolving credit facility, including interest (2)	87,066		1,774		7,094		78,198		—
Ground leases	74,735		304		2,437		2,540		69,454
Property loans, including interest (2)	665,129		7,368		61,690		80,484		515,587
Total	$	834,493	$	9,638	$	72,785	$	162,866	$	589,204