CLDT - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to the Chatham Lodging Trust Third Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, the conference is being recorded. It is now my pleasure to introduce your host, Chris Daly, President of Daly Gray, Inc. Mr. you, Thank Daly.

begin. You may

Chris Daly

our Doug. Form statements and Good quarter happy you, uncertainties, and federal many and results statements known considered as both defined subject morning to the to everyone by of that welcome note third laws. call. Halloween today Chatham are conference forward-looking These Thank securities Please a comments are Lodging XXXX and as XX-K Trust risks in unknown, October and to SEC any actual as most changes the to described otherwise information is in forward-looking results statement filings. company obligation in unless this XXXX, company's recent call the undertakes of our XX, All statement And to expectations. the or other noted. conform no update

filings SEC and measures www.chathamlodgingtrust.com. our of earnings non-GAAP which reconciliations our copies find on can referenced website contain financial call to this on at release, You

with to Executive and Officer; results, introduce Wegner, President me Chief to quarter provide into Executive Senior and Now Financial Dennis third Chairman, Chief you Chatham's Chief XXXX Vice Operating allow President and and Officer; Fisher, some Jeff Jeremy insight Officer. President Vice Craven,

me session turn Jeff to Jeff? Let over Fisher. the

Jeff Fisher

Thanks, you us Earlier, the midpoint of being reported We everyone. today. quarter for Chris. updated third solid the with results our and full year morning, we quarter fourth Good raising appreciate forecasts, our guidance.

pleased certainly to be to that. We’re do able

a guidance range, X% by our X.X%. of finished of quarter, outperformance, up FFO RevPAR operating lower driven guidance our hotels down at $X.XX share adjusted rose of bit comparable offset of million RevPAR the of upper third towards end XX margins our at Looking by our end but EBITDA to per of range. and our little versus guidance the Adjusted XX.X X.X%

spend contributed markets talking few minutes to each a six hotel Our want approximately of XX% those. and about our I EBITDA of largest

pretty hotel Occupancy Inns strong increase was $XXX, residence both ADR Valley of X.X% driven our our in under occupancy. RevPAR one was during one Silicon stay hire with and in and growing the quarter of those valley some an the absolute sectors Mountain remains the into the still Residence off, in First an to of numbers period in business time fastest by and Obviously, extended in quarter. terms tech of our our hotels grow, in for up renovation, strong $XXX, really of ability economy XX% four the which hotels. new for drives to a was Inns ADR View

less the X.X%. rise positive and more of Additionally, us the the largest with year. more supply progressed year represents trending this for our a second San impact new absorption and we saw Diego market new in direction supply of is supply as has RevPAR

the has downtown been performance as with calendar and Downtown residence this event Inn year. significantly, combined up San Diego strong Our of almost supply good has a waned new downtown RevPAR X%, rose impact convention strong

the at least and corporate particular of inn business to direct a decided that at homewood government residence competitor rates come most of course Our open saw home be RevPAR numbers residence block inn better, within a residence Diego so San new homewood Inn a the and the some very exist our of X%, beginning, and undercut to in in and Valley our but to the overall appear with a decline in would our get suites penetration. Mission this market

right hotel again, there. back So strong this that stabilizes, is we to expect pop as as that

our Our of X.X%. DC third largest RevPAR and area area market DC is experienced hotels the growth three

quarter, three a summer, market to leisure market as Island in our their growth, X.X% great during RevPAR able X%. the RevPAR hotels had growth the quarter RevPAR but X%. Inn were Hospitality of obviously are they the at RevPAR down bit demand a areas our markets at Supply grow kudos acquired Our kind almost great had Embassy of Foggy overall These experience to unique Residence and that Springfield year Suites providing demand was that they derive last with northeastern Bottom our locations. jumped share mix team in given do with over high to to coastal proximity order in the advancing and urban quarter major upside

by Inn third led XX% were quarter. leading results Our district Downtown a our in was historic Portland Maine RevPAR the company to up Hampton where $XXX

so I pretty full had service that upscale that performance. RevPAR $XXX think a is hotels some seen please – certainly this never with number,

last hotels. Houston for Harvey the quarter, quarter down X.X% predicting the Houston’s difficult up those performance our quarter into due the for RevPAR from going we to be in was knew for versus guidance hotels to comps was Hurricane Going year. third tough X.X% the though of

RevPAR quarter, the XX% in July, August with September. comp down in was hurricane that and XX% up Within in XX%

advantage. Our quarter tied hotels hotels the Having RevPAR two medical the were center term to long performers during a center better X%. the up as we’ve is with said medical

for Diego, strong with RevPAR our San market rising quarter. continues LA hotels the us Angeles in to to addition X% In the be Los to

the quarters Anaheim market Inn being Disney up Residence year Anaheim rebound in around see this nice It's X%. Our two after was it of in and down consecutive supply eight of loss of RevPAR on primarily with the the to because and quarters, market. up that new last three

hotels and gained Florida XXXX. to hurricane Irma fourth faced in in business tough third two quarter the comps Our due

quarter, a For two the decline experienced RevPAR of X%. hotels our third

Another some was of X%, hotels to down weak where impact due of market the three supply as and was Boston, supply mostly quarter in well. new renovated the our RevPAR

very though GDP of GDP GDP healthy or growth between and very small acquisitions demand hotels. we encouraged outlook, to least We in quarter diligently a results continue portfolio our course Strategically, remain execute to of near X.X% the going and acquisitions. our expected and have we're RevPAR We’re continue of have are rising term third bunch the in be there's strategy, we at growth strong and in non-core overall to to picture, RevPAR expect and don't correlation hotels strong. a the course, and our to growth raised healthy forecasts acquired by looking at because rose bigger solo a

price, and months us limited still opportunistic our acquire fairly between wide know or on pretty hotels we course but that for pipeline and is is to on based are over a any that capital we've the spread basis outstanding ask, bid XX four managed we we pipeline, million. is thin market with front, $XXX recycling acquisition the working on difficult but last and So our invested discussed have of

sales hard hotels. hopeful will any the end another do acquire that by of been year. could We’re use to we we other acquire We've that proceeds from working hotel to and hotel the any

although to as I’d great XX% a of and turn over with continue will and in is like Jeremy that sheet, that leverage balance discuss, on will hotels Our acquiring level can basis With capital it value to recycling, we shape work limited that, for Dennis. accrete shareholders. less on to our than

Dennis Craven

Thanks, Jeff.

Our healthy RevPAR in XX%, to ADR the driven was X.X% while $XXX. quarter a down X.X% occupancy declined by X% to increase of slightly a increase in

Inn outlook very to has as we second lowest Our that, Island closed beat term, some at the it [Technical Hospitality. maximize opportunities to announcing yes, well two Difficulty] it’s X.X% a XXXX, good demand really Charleston the with the scheduled as to the fair as during remains dynamics our placing. evolved Longer brand a to markets Inn which is, at a yielding the going this our growth courtyard. long and things, ADR reiterating pretty was team in a I opens live term one supply We're price to Inn having production Jeff the by RevPAR going market, courtyard of that made, at acquire adjacent replacement to growth the the as say improving something be management that is us open at quarter, outstanding allow year Somerville, excited efforts and already time costs we in Residence of by is in positive the market's point think deal. The to higher plant the suite believe also revenue Residence we that the new quarter revenue is Residence XX think

which which carefully at a looking changes them For little thresholds system job be revenue Hospitality reservation has on the to show continuing our additional to respect opportunities. during is remain nights, bit great revenue on term. and dollars. making is and of trends revenue weekend the requiring pricing booking more sure terms on We're particular portfolio, this also up maximizing in to nimble hit recommendations corporate with certain aggressively at implement nights. we short a done Island that is Growth year quarter, side, pretty primarily X%

by parking overall or that in at revenue any which example, were comparable up our XX% was excludes which Island by increased XXXX, driven acquired managed hotels, XX% quarter, primarily the we year-over-year. For our hotels in XXXX or $XXX,XXX revenue, XX

XXX range and down our hotel margins XX.X%. XX XX points to Our of basis XX.X%, EBITDA comparable were XX.X%, hotels Managed our margins XX basis and points to operating Island basis or were our mere within down XX% a EBITDA hotel points were XX% down margins to guidance

were in a XX benefit occupied Breaking in on For in the up payroll the component down up basis, margin by dollars, this but the for quarter, payroll the were a as approximately detail margins a bps. basis, the X% more occupied basically up absolute accounted and impact per This our X%, per and X.X%. quarter. were X.X% to entire benefits in up our on reduced they costs in number bit quarter was room quarter costs

at the in $XXX,XXX rise behind working implemented policy these driver with changes another reduce as middle the of the quarter, these a per us save benefit talked a we excuse costs. forward. Again just programs and relationship in least we Island we primary which or adjustments costs Hospitality. move benefits during cleaning least As me about closed back of were year in should XXX,XXX bucks our rising we able the during the have at our August, make The is example to quarter to of benefits period jump

our distant our in XXX is margins Our the closest best a below EBITDA and basis points our of peer hotel lives remained REITs levels.

REITs. whopping in over the is platform. returns the our lodging by component margins most all Our a certainly quality income, superior REIT than of lodging well our dividend time combined meaningful XX% this of we driven are best of with The attribute to which higher operating We know. portfolio average class

generate can and to CapEx high meaningful we course pay the so cash margins Our relative after to dividend. of are and are strong flow able others

our per share Our on midpoint XX% of $X.XX annual to dividend guidance. AFFO the of equates of our based

in flat. rise related XXXX all hotels is Valley Silicon four that are With business over that, Within expected in significant guidance. four I’ll our with October growth quarter that and if RevPAR on projections, and note the one is covered. in somewhere RevPAR in range X% well fourth JVs, RevPAR just our between to pretty up of producing RevPAR is hurricane X% it's RevPAR up a X.X% things our fourth at both So be December we a few portfolios be quarter. in Inn, was our RevPAR that to the from expected month, you X% be down Residence for turn X% beginning Residence encouraging of we balance we to is to the tough relatively which it This the from to our projected hotels, Jeremy. November quarterly renovation is to approximately for the certainly kind Inns primarily Sunnyvale, as for due projected is comps renovation is X%. that to of again expected to exclude and in growth the up and range, quarter. quarter, look

Jeremy Wegner

Thanks, Dennis. Good morning, everyone.

million compared $X.XX $X.XX for share in income FFO quarter, XXXX. the Adjusted joint per Adjusted was in as income net of XXXX, primary million and was the or an or million compared quarter. the other QX per million $XX.X QX of quarter in EBITDA FFO increase million differences depreciation, generated compared XX.X FFO to within the relate between which diluted share XX.X ventures to income XX.X costs such X.X%. net in of XX.X was per X.X net approximately charges contributed $XX.X million items XXXX. ventures QX $X.XX to the X.X share to two to reported million of XX.X joint XXXX. million share per million FFO. the our in to quarter, Adjusted million the adjusted the our compared and QX adjusted $X.XX The EBITDA for diluted For X.X% company increased In we approximately of non-cash is share quarter, in and similar of X.X

will innkeepers the Third X.X This up at of Inland attractive equity ATM sheet million issued of stock through was provide to RevPAR our X.X% average portfolio. pursue growth $XX.XX. in JVs and price balance direct purchase us and from opportunities. the distributions with in our in In further portfolio quarter QX. capacity and programs strengthened the an X.X% additional QX, million received Chatham we up of XX.X

the guidance debt and Inn note in quarter the the $XXX million leverage it Inn was XXXX, the at account is Suites net and and Our Tysons ratio for Residence like our Transitioning to of QX takes year Sunnyvale into end QX. I'd to of Residence anticipated Homewood X, that Corner XX.X%. Farmington our renovations full

be XXXX to to growth flat. and RevPAR minus expect X% minus plus full We RevPAR X% X.X% year to QX be to

As XXXX. a growth in Florida, four and hotels RevPAR increased hurricanes by comps demand impacted reminder, September our Houston difficult which Irma from starting be our benefited Harvey QX will in after two and in hotels for

Houston in and XXXX in an XX% XXXX, be our expect Our overall increased generated impact approximately on growth XXXX, in RevPAR four X.X% hotels would X.X% to in in down Chatham’s four QX of Houston the which which RevPAR QX growth by hotels XXXX. growth QX of overall approximately QX in we XX.X% RevPAR have

Our for XX.X full full million million XX.X of On to million FFO. is year to G&A year million $XX.X cash forecast million. the corporate X.X and to expected X.X contribute JVs a are EBITDA of two basis,

and point, at operator, questions. that up it concludes we’ll think our for open remarks I this

Operator

the Our comes Instructions] line Tyler [Operator Markets. from first with Batory Janney Capital question of

Tyler Batory

of So for here. couple questions a just me

bit outperformance versus you ask some your in a you but First, Obviously, RevPAR of to just what variance more your little how broad were about of significant was you mean, obviously big I based portfolio? bit versus Houston looked expectations the out more did other third any markets. quarter a guys quarter, it played a the or growth the want strong. can very across expecting, talk kind see on the little like

Dennis Craven

of the based This the one to is outperformance. portfolio, major was contributors Dennis. little but bit It’s certainly a Houston across broad the

up. relatively our If we percent. other you Washington us, we quarter you were markets, be – in be Diego It up that -- had to finished of I it which came major look And weak think been look down were third at other was slightly have a then market some that few DC, X peers RevPAR expecting we expecting obviously, market, to San relatively plus in market and at flat. our when for

Those came. are those six when really really three at, look So you where are the outperformance of top our markets.

Tyler Batory

the exclude Houston, And little there talk as up more to just supply follow really little but comps any can well? I seeing obviously, corporate you weather don’t Houston whatnot, know did and on a bit thoughts a on if have you want about on bit you're and then you side, in tricky I the with if what on the demand,

Dennis Craven

year hotels year over that the a at the medical Not the at there center of slightly the the one Well, of supply. a It outlook. going we within to supply but don't more open up is where the next decent like punitive we sized more is center. certainly couple still are forward or and certainly are, only markets there's projected especially at Downtown, medical

X.X%. bit. might Hampton And of was we’re those the assets where center up a our X% we where with market very there market, the at listen, as as especially August in center RevPAR and little courtyard So medical a quarter up medical far medical the July with medical the center then the that the occur health RevPAR of actually was end at have surprised our center and itself,

center, So, that went around as were the proximity the we is the a than into that XXXX area lot I has of events prior market. this think the medical there --

better. around be Medical still the is terms to going business Center. a a think, little supply in I it’s listen, of But headwind bit generally So,

Tyler Batory

your RevPAR And a question a more for well. big very Bethylene bullish I paints me, of X% definitely picture think, question, then commentary October last positive of in as picture

I to is business, picking that there out investors little even guys things maybe slowing maybe any be and think things mean growth do guys. are about it mean, at you I out a like when slowing probably up within your lot be I of maybe just look concerned there you your for see clear, you generally, lodging. bit a economy, I indications certainly are portfolio does look slowing that mean, might

Jeff Fisher

is This Jeff.

hotels paying when view it’s occupancy $XXX, last I because at to of always But one, for and think got in run growth looking for our ADR you think people too. tied I and important look think attention and people XX% it’s to Valley that we’re example absolute you’ve Silicon some hotels and that's drives number select because I growth and multiple. that know that at numbers, directly and stuff you how RevPAR service RevPAR are growth, when earnings that your it

just I overall whether occupancy XX% ADRs upon got of normalized part it RevPAR coming fairly that the is not at but lodging numbers. weak we've that think a in the it in that amount whether supply rate the when is averages, is you a XX% seas historical portfolio, based look cycle, of of and cycle a the strong the and depending has and lodging part tilted want of their This is upon develop hotel to most lot where customers we’re say in our where which tilted the and more evidenced service service and and where their the no development little put focus the in of dollar or urban brands success want to is in, are. full they markets, as a then because part. by towards the hotels Lots hotels that big areas the that’s further select more a for

and to I for flat up I we've even I commented we're growth any of to expect fact why were but we some best RevPAR the we're in going still in of Long therefore that downtown be hit demand for we that's the in to on think times new companies move better and which forward. that. XXXX. look seeing of absorption markets I as and States for the some follow, the markets that the think to some rooms may that direction that and earlier a terms those hotel we starting to going RevPAR we’re some sorry of other in think back supply reason with that of change – see abate don't our of that, into a few in see us markets the that XXXX, end little our a momentum would bit we’re the United I growth answer, forward as in moving So, is in bodes to and course you that,

Operator

Our next with Powell Barclays. the of question comes from line Anthony

Anthony Powell

amount why Hey, time the so demand think years, first in deliberate supply comps was the of of without your or just of occupancy in and to add more that is quarter? quarter to growth a couple the that or for kind lapping a system good up the I a strategy much in just was up

Dennis Craven

is things. it think two I

I reallocated diminishing on for think a some you resources of and internally, really examining is number think, portfolio remarks we that, lot my to in revenue has prepared and the spent that maximize in that quarter. we it and time as supply that analyzing occupancy have some and well of the children are night, secondly, has seeing weekend dollars Hospitality ensure nights our Island our impact is what of I

hotels little a those on table a weekends over there. As we our we at that and of performance nights bit look children left the took the

Jeff Fisher

sit day revenue it’s course the star here down look opportunity mid-week be and the them the the nights you've at and on say Jeff. of analyze we XX, this to it – week definition, with is And in portfolio for look in at and and company looking the we're let's got managers upper by opportunities, means again, hotels XXs, management of occupancy, where and really a the certainly reports to and runs the by I children is is really above full able in and have in that it’s beauty weekends. When think of

to direct mid-week those business the seeing And those the corporate company to efforts this in I continue results. made results and focus you're towards see therefore I are that business and think because be you'll so we and think our the weekend I and excellent shifted sales needed results shift would for expect

Anthony Powell

to think hanging the harder hearing harder start their are be seeing you not pipeline, we're them, them more is find for transaction that on to their they're And guess are able new developers hotels, finished in to that making backfill because it's they've to market I deals? you construction to and I or for

Jeff Fisher

you're absolute strong the line story you construction a numbers build the mean, for what as increased have ADR pipeline the seeing had then that don't to and I years. to flat to their into and of to have down, the pretty as really and because few because their the whose need growth like, overall, the if fast projected but ability of recycle they is the is your they harvest you course the new hotel, that last it's numbers look, around to capital as construction ramp a occupancy are Sure. don't equity and long goes are just guys over it ramp otherwise because the as they the they the tells if and with hotels the in commentary markets think which costs I quickly, is probably as said, can you pretty shrinking sell in which that big number strong or absolute slows get top existing desire RevPAR markets

Anthony Powell

been that the something do to to harder that appreciation what's deals getting is bit deals? main between or is pricing and it's sellers main a why you or impediment still just reason the wide So, or

Jeff Fisher

course sell owners existing cases for good incentive in big developer, so and debt their look, very experiencing to have strong, market mean cash an for of course have I there harvest flow really deals gets free. he not good is equity of and particularly source of debt, out the the because source is been just CMBS refinance that cash returns and many availability alternative and from deals is of are hotels Yeah. don't stabilized this and strong that of to the still just the owner has a a is

So, provides problem really it’s us. another the landing for environment that

Anthony Powell

think lending you more markets a volatile weeks, do picture changed have regarding past guess uncertainty macro I the environment lot and of been more, all as that over as been there's the more, one has I been the at the more Just few guess, cycle? equity and

Jeff Fisher

We we haven't seen the weeks, the with I lot a in of refis last overall changes super few strong. either, but been has market mean, haven’t in hat been recently market but

Operator

[Operator Instructions] Our next question comes from the line of Bryan Maher with B. Riley FBR.

Bryan Maher

Just bit line comments Jeffrey a you the of sticking to say consider capital of being being and capital are in the recycling are that would spread that you to with selling recycle and question ask strategic currently there non-strategic any little bid on on marketed? many how and portfolio, earlier those many too the would currently wide -- your hotels not

Dennis Craven

Hey, mean, Yeah. the out Dennis. are waters. listen, This there have is we're I Bryan. where we a hotels that testing do few

and believe we kind of what matches non-core. probably that consider think I

fit thought certainly it's kind PA we character bit out portfolio. we think, is lot about least well So fall our terms have $XXX I that not with portfolio their along for at of Western out a a RevPAR, assets, little with in below our of of within few certainly them, the

think a So growth, those two one say, those ironically, outside able the had asset it’s and that I an but were be be kind some listen, in able non-core having RevPAR I terms And, to like is year. portfolio. of acquire to think to the hopefully to the capital within of if that, before I’d year of three end we'd you assets, or recycle of say great probably two of of

Bryan Maher

then the number? the room. X%, benefits up And you total have being those with was then, down think it benefits. payroll And and payroll Do being shifting payroll metrics, X.X% said commentary, breakdown you upon further per handy? you occupied but based to X% two total gears have about the broke I and Do you X.X wages

Dennis Craven

for the, period time? For what of

Bryan Maher

third For the quarter?

Dennis Craven

for, Total think are payroll disclosure exactly I out the was dollars, was -- for hotels. What for And for? you XX well for you talking that, are gave it I our X%. absolute looking because for

Bryan Maher

Yeah.

benefits. total room X.X You gave broke two payroll broken the the to X% the for metrics? X.X% have and and X.X those occupied increase further with you down per you that then Do down

Dennis Craven

benefit of the on was Oh, exact I first don’t it so X% was you X% range. a decimal up point, costs, that to payroll about increase, it the in looked X% yes, if but remember cost the X% the is for quarter at number to total and around,

Bryan Maher

That's coming down you per to from seeing, out does the room down come occupied XXXX, kind further. of you're believe even number, get do that looking what XXXX,

Dennis Craven

listen, going labor a in normalized kind think of still to with I be in faced in Well, you're tight crude X% market that range.

So, I X.X% coming from to much down coming don't see down further, it X.X%. but now

little hopefully it closer to I think X%. bit the gets a

not last of seen XXXX. certainly have We even year and year year and within in were the, some the increases that we approving earlier this

we us we forward gives comfort increase fairly normalized So, market we a I move a at bit hopefully that line see should least at as And, are more of with in little that wages. inflationary type think least hopefully.

Bryan Maher

see housekeeping issuance but it those Jeremy the a the to in numbers release, you for ATM. give quarter? of earnings Can didn't item And then just I lastly might I again this, under have you the the commented third us shares and think

Jeremy Wegner

Yes.

So overall, XX.XX. XXX,XXX an it price was S $XX.X call it million at average was it of shares.

Operator

back the further call questions I’d management in no closing hand for like are the to to queue. comments. There

Jeff Fisher

our everybody look and on you. you We Thank for call. thank the that being on call. Chatham side forward sharing with to on success next continued We

Operator

participation. today's you Thank conclude does your this gentlemen, for and teleconference. Ladies

this You may a disconnect wonderful day. and your at have time lines

Chatham Lodging Trust (CLDT) 31 Oct 182018 Q3 Earnings call transcript