Q4 2024 Chatham Lodging Trust Earnings Call
<unk> answer session will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Yes.
Speaker Change: Greetings and welcome to the Chatham Lodging Trust fourth quarter 2024 financial results call.
As a reminder, this conference is being recorded.
Speaker Change: At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Speaker Change: I'd now like to turn the conference over to your host Mr. Chris Daly President of D. G. Public relations. Please go ahead.
Speaker Change: Thank you Melissa good afternoon, everyone and welcome to the Chatham Lodging Trust fourth quarter 2024 results Conference call. Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws. These statements are subject to risks and uncertainties, both known and unknown as described in our most recent Form 10-K and other SEC.
Speaker Change: As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Chris Daly President of D. G. Public relations. Please go ahead.
Speaker Change: Thank you Melissa good afternoon, everyone and welcome to the Chatham Lodging Trust fourth quarter 'twenty 'twenty four results conference call. Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws. These statements are subject to risks and uncertainties, both known and unknown as described in our most recent Form 10-K and other S E C.
Speaker Change: SEC filings.
Speaker Change: All information in this call is as of February 26, 2025, unless otherwise noted and the company undertakes no obligation to update any forward looking statements to conform the statements to actual results or changes in the companys expectations.
Speaker Change: You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures references is referenced in this call on our website at Chatham lodging Trust's Dot com.
Speaker Change: Filings.
Speaker Change: All information in this call is as of February 26, 2025, unless otherwise noted and the company undertakes no obligation to update any forward looking statements to conform the statement to actual results or changes in the companys expectations.
Speaker Change: Now to provide you with some insight in Chatham in 2020 for fourth quarter results allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer, Dennis Craven Executive Vice President and Chief operating Officer, and Jeremy Wegner, Senior Vice President and Chief Financial Officer, Let me turn the session over to Jeff Fisher Jeff.
Speaker Change: You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures references is referenced in this call on our website at Chatham lodging Trust's Dot com.
Speaker Change: Now to provide you with some insight in Chatham is 'twenty 'twenty four fourth quarter results allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer, Dennis Craven Executive Vice President and Chief operating Officer, and Jeremy Wegner, Senior Vice President and Chief Financial Officer, Let me turn the session over to Jeff Fisher Jeff.
Speaker Change: Alright, Thanks, Chris and I, certainly appreciate everyone joining us here for our call today before talking about the fourth quarter, specifically in our outlook for 2025 I'd like to spend just a few minutes highlighting some noteworthy accomplishments as we look back at the last year we.
Speaker Change: Alright, Thanks, Chris and I, certainly appreciate everyone joining us here for our call today before talking about the fourth quarter, specifically in our outlook for 2025 I'd like to spend just a few minutes highlighting some noteworthy accomplishments as we look back at the last year.
Speaker Change: We had revpar growth of 3% exceeding industry Revpar performance by 56%, we continue to be aggressive generating profits outside the room division.
Speaker Change: Division and we were able to drive other departmental profit, 8% higher this year after growth of 25% last year, we generated GOP margins of 43% minimizing the year over year margin decline to 70 basis points and as Revpar growth.
Speaker Change: We had revpar growth of 3% exceeding industry Revpar performance by 56%, we continue to be aggressive generating profits outside the room and division and we were able to drive other departmental profit is 8% higher this year after growth of 25%.
Speaker Change: Did we closed out the year with 150 basis points of margin expansion in the fourth quarter.
Speaker Change: Last year, we generated GOP margins of 43% minimizing the year over year margin decline to 70 basis points and as Revpar growth expanded we closed out the year with 150 basis points of margin expansion in the fourth quarter.
Speaker Change: So they are under contract to sell six hotels, averaging 24 years of age and with a revpar of $98 way below our average for net proceeds of $101 million at our pro forma capitalization rate of approximately 6%. When you include the.
Speaker Change: So they are under contract to sell six hotels, averaging 24 years of age and with a revpar of $98 way below our average for net proceeds of 101 million at our pro forma capitalization rate of approximately 6%. When you include the.
Speaker Change: Oregon capital improvements and.
Speaker Change: And in 'twenty 'twenty, four we repaid $297 million of debt maturing debt and reduced our net debt by $29 million in 2024, after reducing net debt by $26 million in 2023.
Speaker Change: Oregon capital improvements.
Speaker Change: And in 'twenty 'twenty, four we repaid $297 million of debt maturing debt and reduced our net debt by $29 million in 'twenty 'twenty four after reducing net debt by $26 million in 2023.
Speaker Change: We finally completed our multiyear balance sheet repositioning through the issuance of equity debt and asset sales and reduced our overall leverage ratio to 23% from 25% a year ago, and importantly down from almost 35% in 2019.
Speaker Change: We finally completed our multi year balance sheet repositioning through the issuance of equity debt and asset sales and reduced our overall leverage ratio to 23% from 25% a year ago, and importantly down from almost 35% in 2019.
Speaker Change: I would say that's quite an accomplishment, particularly during this period of time.
Speaker Change: And finally, we did participate in the global real estate sustainability benchmark grasp for the third time, achieving a great score of 83, earning four out of five stars.
Speaker Change: I'd say, that's quite an accomplishment, particularly during this period of time.
Speaker Change: <unk> awarded the Green Star.
Speaker Change: And finally, we did participate in the global real estate sustainability benchmark grasp for the third time, achieving a great score of 83, earning four out of five stars.
Speaker Change: We did returned $22 million of dividends to our preferred and common shareholders out of excess cash flow and we look forward to this year in an environment, where if we can achieve similar kinds of revpar growth, we look at our margins.
Speaker Change: And awarded the Green Star.
Speaker Change: We did returned $22 million of dividends to our preferred and common shareholders out of excess cash flow and we look forward to this year.
Speaker Change: Really back at what have always been the industry, leading EBITDA margins of all the select service Hotel Reits.
Speaker Change: In an environment, where if we can achieve.
Speaker Change: Our revpar growth has beaten industry performance for three consecutive years.
Speaker Change: Similar kinds of Revpar growth, we look at our margins.
Speaker Change: By far we got the highest Revpar vol select service lodging Reits, demonstrating the high quality of our portfolio and the markets. We're in.
Speaker Change: Really back at well have always been the industry, leading EBITDA margins of all the select service Hotel Reits.
Speaker Change: Our revpar growth has beaten industry performance for three consecutive years.
Speaker Change: As most of you know our success is more reliant on the health of the business traveler and business travel demand continues to grow in 2024, we saw the health of the business traveler really show up in the non seasonal month revpar growth numbers other than March that was impacted by religious holidays.
Speaker Change: By far we got the highest Revpar vol. Select service lodging reached demonstrating the high quality of our portfolio and the markets. We're in as most of you know our success is more reliant on the health of the business traveler and business travel demand continues to grow in 2024, we saw the health of the.
Speaker Change: Revpar growth was over 5% in April and May 4% in September and almost 7% in October and November to February eight months are slower BT and leisure months, but on the average our revpar growth was about 3% in those months during the heavy leisure months.
A business traveler really show up in the non seasonal month revpar growth numbers other than March that was impacted by religious holidays Revpar growth was over 5% in April and May 4% in September and almost 7% in October and November to February.
Speaker Change: Interestingly enough of June through August.
Speaker Change: Revpar growth was about 1%, which reflects the softening leisure travel offset by the higher and healthier business travel during those other months and even during those months.
Speaker Change: Alright months are slower D T and leisure months, but on the average our revpar growth was about 3% in those months during the heavy leisure months interestingly enough of June through August our Revpar growth was about 1%, which reflects the softening leisure travel offset.
Speaker Change: Turning our attention to the fourth quarter, which was a great quarter by all metrics, our revpar growth of 4% again beat industry performance in most peers performance also we increased our operating margins by a strong 150 basis points as labor and benefit costs continue to moderate at low single digit.
Speaker Change: Set by the higher and healthier business travel during those other months and even during those months.
Speaker Change: Turning our attention to the fourth quarter, which was a great quarter by all metrics, our revpar growth of 4% again beat industry performance in most peers performance also we increased our operating margins by a strong 150 basis points as labor and benefit costs continue to moderate at low single digit.
Speaker Change: Levels again, this moderation is different than a lot of our full service peers, who are facing much more pressure given their presence in larger markets and reliance on Union labor as a result of great operating performance, we were able to comfortably exceed the upper end of our guidance range.
Speaker Change: Levels again, this moderation is different than a lot of our full service peers, who are facing much more pressure given their presence in larger markets and reliance on Union labor.
Speaker Change: And consensus estimates.
Speaker Change: Additionally, if you look at our largest markets Revpar grew in six of our top eight markets with our New York area hotels flat to last year and only Dallas declining, but Dallas is decline is really due to the fact that our hotel is next door to the convention center, which is mostly close and undergoing major.
Speaker Change: As a result of great operating performance, we were able to comfortably exceed the upper end of our guidance range and consensus estimates. Additionally, if you look at our largest markets Revpar grew in six of our top eight markets with our New York area hotels flat to last year and only Dallas.
Speaker Change: Expansion over the next 24 months when you exclude Dallas average Revpar growth was approximately 7% across our top markets.
Speaker Change: Mining, but Dallas is decline is really due to the fact that our hotel is next door to the convention center, which is mostly close and undergoing major expansion over the next 24 months when you exclude Dallas average Revpar growth was approximately 7% across our top markets.
Speaker Change: Leading the way, where our technology dependent markets and the underlying strength in these markets is encouraging as we move forward into this year.
Speaker Change: Revpar growth at our four Silicon Valley hotels was up 14% in the quarter after posting posted 14% growth in the 2023 fourth quarter and the Bellevue market Revpar market Revpar was up 9% in the quarter and I utilized the market here.
Speaker Change: Leading the way, where our technology dependent markets and the underlying strength in these markets is encouraging as we move forward into this year.
Speaker Change: Revpar growth at our four Silicon Valley hotels was up 14% in the quarter after posting posted 14% growth in the 2023 fourth quarter and the Bellevue market Revpar market Revpar was up 9% in the quarter and I utilized the market here because.
Speaker Change: Our Bellevue residence Inn was under renovation during the quarter Chatham has the highest exposure to big Tech hotel demand, whether that's in Silicon Valley, Bellevue, or Austin, and tech investment, particularly around AI chip processing and Nextgen technology.
Speaker Change: Our Bellevue residence Inn was under renovation during the quarter Chatham has the highest exposure to big Tech hotel demand, whether that's in Silicon Valley, Bellevue or Austin and Tech investment, particularly around AI chip processing and next Gen technology is rapidly expand.
Speaker Change: Is rapidly expanding as we've all seen even just this past week and for example, Apple has announced a massive $500 billion further investment in the U S. Over the next five years with many of the markets that we have hotels in certainly found to benefit.
Speaker Change: As we've all seen even just this past week and for example, Apple has announced a massive $500 billion further investment in the U S. Over the next five years.
Speaker Change: Has that manufacturing and other business expansion continues on the operations front, we're really pleased and encouraged by our ability to drive this revenue growth to the bottom line as we pushed our operating margins 150 basis points higher to 41% the highest fourth quarter operating.
Speaker Change: Many of the markets that we have hotels and certainly found to benefit as that manufacturing and other business expansion continues on the operations front, we're really pleased and encouraged by our ability to drive this revenue growth to the bottom line as we pushed our operating margins.
Speaker Change: Margins in three years, our expense controls were really locked in especially regarding staffing levels and wage growth as we've stated in the last few quarters for us and this is an important distinction we've been the beneficiary of moderating wage pressures on a per occupied room basis growth in labor.
Speaker Change: 150 basis points higher to 41% the highest fourth quarter operating margins in three years, our expense controls were really locked in especially regarding staffing levels and wage growth as we've stated in the last few quarters for us and this is an important distinction we've been the beneficiary.
Speaker Change: Benefits was less than 1% year over year in the quarter and if you just consider only wages on a per occupied room. They were down year over year as we close out 2024 were in great financial position, having de levered over the past few years through the opportunistic sale of hotels and <unk>.
Speaker Change: Area of moderating wage pressures on a per occupied room basis growth in labor and benefits was less than 1% year over year in the quarter and if you just consider only wages on a per occupied room, they were down year over year.
Speaker Change: Now sit or our lowest leverage levels in over a decade, we've got the ability therefore to grow in several ways of course, most importantly through the outperformance of our existing portfolio, especially given that our largest assets have exhibited the strongest top line growth in the portfolio.
Speaker Change: As we close out 2024 were in great financial position, having delivered over the past few years through the opportunistic sale of hotels, and now sit or our lowest leverage levels in over a decade, we've got the ability therefore to grow in several ways of course, most importantly through the <unk>.
Speaker Change: Second we do expect to commence our Portland, Maine Hotel development later in the year. This looks like a very profitable investment in return for sure.
Speaker Change: Outperformance of our existing portfolio, especially given that our largest assets have exhibited the strongest top line growth in the portfolio second we do expect to commence our Portland, Maine Hotel development later in the year. This looks like a very profitable investment.
Speaker Change: And lastly, we are of course still seeking hotel acquisitions, we've got the financial ability to grow as I've said, we have successfully or will successfully complete the sale of the five hotels, our leverage levels are very low.
Speaker Change: In return for sure.
Speaker Change: And lastly, we are of course still seeking hotel acquisitions, we've got the financial ability to grow as I've said, we have successfully our will successfully complete the sale of the five hotels, our leverage levels are very low.
Speaker Change: Confidence in our future to continue to grow this company and our <unk>, particularly this year and we can grow accretively it doesn't take meaningful investment dollars to move the needle here at Chatham.
Speaker Change: Confidence in our future to continue to grow this company and our F. F O, particularly this year and we can grow accretively it doesn't take meaningful investment dollars to move the needle here at Chatham.
Speaker Change: And long term fundamentals are favorable as new supply is less than 1% across our portfolio and further increases in new supply are gonna be muted given that most new construction is too expensive and the returns, particularly in the markets that we operate in.
Speaker Change: And long term fundamentals are favorable as new supply is less than 1% across our portfolio and further increases in new supply are gonna be muted given that most new construction is too expensive and the returns, particularly in the markets that we operate in.
Speaker Change: Certainly don't appear to warrant the risk.
Speaker Change: We've emerged from a slew of maturing debt in a financially strong position and operationally I think we should continue to outperform the industry and many of our peers. So our ability to increase incremental free cash flow should enable us to return more money to our shareholders moving forward with that.
Speaker Change: Certainly don't appear to warrant the risk.
Speaker Change: We've emerged from a slew of maturing debt in a financially strong position and operationally I think we should continue to outperform the industry and many of our peers. So our ability to increase incremental free cash flow should enable us to return more money to our shareholders moving forward with that.
Dennis Craven: I'd like to turn it over to Dennis.
Dennis Craven: Thanks, Jeff Good morning, everyone.
Dennis Craven: Just a quick update on the on the hotels to be sold as Jeff talked about we have two remaining of the five that are expected to close by the end of the first quarter. The five hotels are among the sixth lowest revpar hotels in our portfolio.
Dennis Craven: I'd like to turn it over to Dennis.
Speaker Change: Okay.
Speaker Change: Yes, good morning, everyone.
Dennis Craven: That we have sold and are under contract to sell we believe the best value creation is to sell these hotels instead of investing incremental dollars without what we believe there's much incremental return and reinvest that money into higher yielding higher margin and higher growth assets.
Just a quick update on the on the hotels to be sold as Jeff talked about we have two remaining of the five that are expected to close by the end of the first quarter. The five hotels are among the sixth lowest revpar hotels in our portfolio.
Speaker Change: That we have sold and are under contract to sell we believe the best value creation is to sell these hotels instead of investing incremental dollars without what we believe as much incremental return and reinvest that money into higher yielding higher margin and higher growth assets.
Dennis Craven: With respect to our fourth quarter results, a few extra tidbits revpar at our seven predominantly leisure hotels, and our leisure hotels comprised approximately 20% of our fourth quarter EBITDA increased one 4% in the quarter, but when you take out our springhill suites in Savannah, which was under renovation for most of the quarter Rev.
Speaker Change: With respect to fourth our fourth quarter results a few extra tidbits revpar at our seven predominantly leisure hotels, and our leisure hotels comprised approximately 20% of our fourth quarter EBITDA increased one 4% in the quarter, but when you take out our springhill suites in Savannah, which was under renovation for most of the quarter Revpar.
Dennis Craven: <unk> was up approximately 6% for our leisure hotels with our Fort Lauderdale residence Inn, our Hampton, Portland, and our Hyatt place Pittsburgh, all producing double digit revpar growth in the fourth quarter.
Dennis Craven: Our top five Revpar hotels for the quarter were the residence Inn Fort Lauderdale with Revpar of $208 second was our residents in White plains with Revpar of $196 and then our Hampton Inn in Portland, and residence Inn, San Diego Gaslamp, both with Revpar of $180 and lastly, our resident in.
Speaker Change: <unk> was up approximately 6% for our leisure hotels with our Fort Lauderdale residence Inn, our Hampton, Portland, and our Hyatt place in Pittsburgh, all producing double digit revpar growth in the fourth quarter.
Speaker Change: Our top five Revpar hotels for the quarter were the residence Inn Fort Lauderdale with Revpar of $208 second was our residents in White plains with Revpar of $196 and then our Hampton Inn in Portland, and residence Inn, San Diego Gaslamp, both with Revpar of $180 and lastly, our residence Inn.
Dennis Craven: New Rochelle, New York at 176.
Dennis Craven: Over a third of our hotels experienced double digit revpar growth in the quarter.
Dennis Craven: Excluding the five tech driven hotels fourth quarter Revpar was up 3% over last year further supporting the breath of our Revpar performance and trajectory.
Speaker Change: New Rochelle, New York at 176.
Dennis Craven: Breaking down our Silicon Valley hotels underlying demand growth remains strong our silicon valley fourth quarter occupancy of 74% Mark the highest occupancy level since 2015.
Speaker Change: Over a third of our hotels experienced double digit revpar growth in the quarter.
Speaker Change: Excluding the five tech driven hotels fourth quarter Revpar was up 3% over last year further supporting the breath of our Revpar performance and trajectory.
Dennis Craven: Our two sunnyvale hotels experienced revpar growth of 16% in the quarter.
Speaker Change: Breaking down our Silicon Valley hotels underlying demand growth remains strong our silicon valley fourth quarter occupancy of 74% marks the highest occupancy level since 2015, our two sunnyvale hotels experienced revpar growth of 16% in the quarter.
Dennis Craven: And that includes a 14% increase in occupancy again proving out the surge in business demand in Sunnyvale, our San Matteo residence Inn had a great quarter with revpar growth of 19% with occupancy, finishing the quarter at 81% and lastly, Revpar grew 5% at our mountain view.
Speaker Change: And with the and that includes a 14% increase in occupancy again proving out the surge in business demand.
Dennis Craven: Your residence Inn.
Speaker Change: In Sunnyvale, our San Matteo residence Inn had a great quarter with Revpar growth of 19% with occupancy, finishing the quarter at 81% and lastly, Revpar grew 5% at our mountain view residence Inn.
Dennis Craven: On a portfolio basis, including all hotels owned during the quarter operating margins were up 150 basis points and hotel EBITDA margins were up 90 basis points at our 36 comparable hotels operating margins were up 110 basis points with EBITDA margins essentially flat.
Speaker Change: On a portfolio basis, including all hotels owned during the quarter operating margins were up 150 basis points and hotel EBITDA margins were up 90 basis points at our 36 comparable hotels operating margins were up 110 basis points with EBITDA margins essentially full.
Dennis Craven: Our biggest expense is by far labor wages and related benefits. These expenses account for approximately 40% of all operating expenses, we've been able to maintain our head count essentially flat the entire year. Despite occupancy rising 300 basis points in the quarter and 200 basis points for the full year additional.
Speaker Change: That our biggest expense is by far labor wages and related benefits. These expenses account for approximately 40% of all operating expenses, we've been able to maintain our head count essentially flat the entire year, despite occupancy rising 300 basis points in the quarter and 200 basis points for the full year.
Dennis Craven: Our fourth quarter average wage what was up just about 3% over last year.
Dennis Craven: This increased efficiency has enabled us to actually reduce wages on a per occupied room basis by 2%.
Dennis Craven: Offsetting a bit of this were increased payroll related costs, such as medical insurance workers' compensation and.
Speaker Change: Additionally, our fourth quarter average wage what was up just about 3% over last year. This increased efficiency has enabled us to actually reduce wages on a per occupied room basis by 2%.
Dennis Craven: Vacation and stuff like that which were up 19% in the fourth quarter and almost 25% for the entire year. The good news is that 2025 premiums for not only our medical insurance, but also our workers' compensation.
Speaker Change: Offsetting a bit of this were increased payroll related costs, such as medical insurance workers' compensation and.
Dennis Craven: Essentially flat compared to last year.
Speaker Change: Vacation and stuff like that which were up 19% in the fourth quarter and almost 25% for the entire year.
Dennis Craven: In the quarter property insurance was up and for the year was up approximately 15%.
Speaker Change: Good news is that 2025 premiums for not only our medical insurance, but also our workers' compensation.
Dennis Craven: But again good news is that our 2025 renewal for property insurance is down approximately 13% over 24 levels.
Speaker Change: Or essentially flat compared to last year.
Our top five producers of GOP in the quarter were led by our residence Inn Gaslamp with $2 3 million the 12th straight quarter. Its led our portfolio and second was our Sunnyvale two residence Inn.
Speaker Change: In the quarter property insurance was up and for the year was up approximately 15%.
Speaker Change: But again good news is that our 2025 renewal for property insurance is down approximately 13% over 24 levels.
Dennis Craven: With GOP of almost $2 million and rounding out our top five producers, where our embassy suites Springfield.
Speaker Change: Our top five producers of G O P. In the quarter were led by our residence Inn Gaslamp with $2 3 million the 12th straight quarter, It's let our portfolio and second was our Sunnyvale two residence Inn.
Dennis Craven: And our two and two of our New York residence Inns, and White Plains in New Rochelle, and again I would just add if you look at the geographic.
Speaker Change: With G O P of almost $2 million and rounding out our top five producers are where our embassy suites Springfield.
Dennis Craven: Production of those top five you essentially have one and one in Silicon Valley, one in San Diego, one outside of D. C and two in the Greater New York area. So again kind of broad demand showing up across the country in our portfolio on.
Speaker Change: In our two and two of our New York residence Inns, and White Plains in New Rochelle, and again I would just add if you look at the geographic.
Speaker Change: Production of those top five you essentially have one and one in Silicon Valley, one in San Diego, one outside of D. C and two in the Greater New York area. So again kind of broad demand showing up across the country in our portfolio on the Capex front on the Capex front, we spent approximately $6 million.
Dennis Craven: On the Capex front on the Capex front, we spent approximately $6 million in the quarter. We commenced renovations on three hotels that were completed either in the fourth quarter or will be completed early in the 25 first quarter and that includes renovations and Savannah, Bellevue, Washington, and the Hilton Garden Inn in Portsmouth, New Hampshire.
Speaker Change: The quarter, we commenced renovations on three hotels that were completed either in the fourth quarter or will be completed early in the 25 first quarter and that includes renovations and Savannah, Bellevue, Washington, and the Hilton Garden Inn in Portsmouth, New Hampshire, our Capex budget for 'twenty five is approximately 26.
Our capex budget for 'twenty five is approximately $26 million, which includes three renovations.
Dennis Craven: And with a cost of approximately $16 million the three hotels scheduled for renovation in 'twenty five.
Are the Hilton Garden Inn Portsmith during the first quarter the residents in Austin, Texas, and the residence Inn Mountain view during the fourth quarter, so with that I'll turn it over to Jeremy. Thanks, Dennis Good afternoon, everyone. Our Q4 2024 hotel EBITDA was $24 3 million adjusted EBITDA was <unk>.
Speaker Change: Dollars, which includes three renovations.
Speaker Change: Got it and with a cost of approximately $16 million. The three hotels scheduled for renovation in 'twenty five.
Are the Hilton Garden Inn Fort Smith during the first quarter the residents in Austin, Texas, and the residence Inn Mountain view during the fourth quarter, so with that I'll turn it over to Jeremy.
Dennis Craven: $1 4 million and adjusted <unk> was <unk> 20 per share we were able to generate a GOP margin of 45% and hotel EBITDA margin of 32, 5% in Q4 GOP margins for the quarter were up 150 basis points from Q4.
Jeremy Wegner: Good afternoon, everyone. Our Q4 2024 hotel EBITDA was $24 3 million adjusted EBITDA was $21 4 million and adjusted <unk> was <unk> 20 per share we were able to generate a GOP margin of 45% and hotel EBITDA margin of 32, 5% in Q4.
Dennis Craven: 2023, which was due to the strong three 9% revpar growth for the quarter and outstanding expense control there.
Dennis Craven: Improvement in year over year margin trends relative to prior quarters reflects the continuing stabilization of key expenses, especially labor costs.
Speaker Change: GOP margins for the quarter were up 150 basis points from Q4 two.
Jeremy Wegner: 2023, which was due to the strong three 9% revpar growth for the quarter and outstanding expense control.
Dennis Craven: Over the past couple of years, we have taken significant steps to reduce leverage and address debt maturities with the repayment of the $16 million mortgage loan on the Hampton Houston in January 2025, we have now addressed all of our <unk> maturities.
Jeremy Wegner: This improvement in year over year margin trends relative to prior quarters reflects the continuing stabilization of key expenses, especially labor costs.
Over the past couple of years, we have taken significant steps to reduce leverage and address debt maturities with the repayment of the $16 million mortgage loan on the Hampton Houston in January 2025, we have now addressed all of our C. M. B S maturities.
Dennis Craven: In Q4, we closed on the sales of the Homewood Bloomington and Homewood Maitland.
Dennis Craven: For $29 $3 million and in January 2025, we closed on the sale of the Homewood Brentwood for $15 million the.
Dennis Craven: Agate sale price for these three hotels, including approximately $15 million of required renovation costs represents a cap rate of approximately six 3% on 2020 for NOI.
Jeremy Wegner: In Q4, we closed on the sale of the Homewood Bloomington and Homewood Maitland.
Jeremy Wegner: For $29 $3 million and in January 2025, we closed on the sale of the Homewood Brentwood for $15 million the aggregate sale price for these three hotels, including approximately $15 million of required renovation costs represents a cap rate of approximately six 3% on 2024.
Dennis Craven: As of December 31, <unk> net debt to LTM EBITDA was three nine times, which is significantly below our historical leverage which was generally in the five five to six times area.
Dennis Craven: Turning to our Q1 and full year 2025 guidance, we expect revpar growth of 3% to 4% adjusted EBITDA of $16 7 million to $18 3 million and adjusted <unk> per share of <unk> 12 to 15 in Q1, and Revpar growth of 1% to three.
Jeremy Wegner: Our NOI.
Jeremy Wegner: As of December 31, <unk> net debt to LTM EBITDA was three nine times, which is significantly below our historical leverage which was generally in the five and a half to six times area.
Jeremy Wegner: Turning to our Q1 and full year 2025 guidance, we expect revpar growth of 3% to 4% adjusted EBITDA of $16 7 million to $18 3 million and adjusted <unk> per share of 12 to 15 cents in Q1, and revpar growth of 1% to three.
Dennis Craven: 5% adjusted EBITDA of 92 million to $97 million and adjusted <unk> per share of $1 <unk> to $1 11 for the full year.
Dennis Craven: This guidance reflects the sales of the Homewood Bloomington, Homewood Maitland Homewood Brentwood in December 2024 in January 2025, and assumes two additional asset sales with the combined sale price of $39 million.
Jeremy Wegner: And a half percent adjusted EBITDA of 92 million to $97 million and adjusted <unk> per share of a dollar in one cents to $1 11 for the full year.
Dennis Craven: Close at the end of the first quarter.
Jeremy Wegner: This guidance reflects the sales of the Homewood Bloomington, Homewood Maitland Homewood Brentwood in December 2024 in January 2025, and assumes two additional asset sales with a combined sale price of $39 million a close.
Dennis Craven: In aggregate the net impact of these five asset sales on our expected 2025 EBITDA versus actual reported 2020 for EBITDA is approximately $6 $8 million and assuming the proceeds from these asset sales are used to repay bank debt with a cost of five 9% the impact unexpected too.
Jeremy Wegner: Closed at the end of the first quarter.
Jeremy Wegner: In aggregate the net impact of these five asset sales on our expected 2025 EBITDA versus actual reported 2020 for EBITDA is approximately $6 $8 million and assuming the proceeds from these asset sales are used to repay bank debt with a cost of five 9% the impact unexpected too.
Dennis Craven: 25, <unk> per share versus our actual 2024 <unk> per share is approximately <unk> <unk> per share.
Dennis Craven: While our guidance does not reflect any acquisition. Our plan is certainly to reinvest the sale proceeds and.
Dennis Craven: And foregone capital requirements from asset sales into accretive acquisitions, which should fully offset the lost <unk> from the asset sales.
Jeremy Wegner: 25, <unk> per share versus our actual 2024 <unk> per share is approximately <unk> <unk> per share.
Jeremy Wegner: While our guidance does not reflect any acquisition our plan is certainly to reinvest the sale proceeds.
Dennis Craven: Our room count, reflecting these completed asset sales is expected to be 5475 in Q1 and is expected to be 5168 for the remainder of the year, which assumes the close of the two pending asset sales at the end of Q1.
Jeremy Wegner: And foregone capital requirements from asset sales into accretive acquisitions, which should fully offset the lost <unk> from the asset sales.
Our room count, reflecting these completed asset sales is expected to be 5000, and 475 in Q1 and is expected to be 5168 for the remainder of the year, which assumes the close of the two pending asset sales at the end of Q1.
Dennis Craven: Reflect reflecting our recently completed and pending asset sales our 2020 for Revpar would have been $122 in Q1 $156 in Q2 $155 in Q3, $133 in Q4 and $142 for the full year.
Jeremy Wegner: Reflecting our recently completed and pending asset sales our 2020 for Revpar would have been $122 in Q1 $156 in Q2 $155 in Q3 hundred $33 in Q4 and $142 for the full year.
Dennis Craven: This concludes my portion of the call operator, please open the line for questions.
Dennis Craven: Okay.
Dennis Craven: If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: This concludes my portion of the call operator, please open the line for questions.
Dennis Craven: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is into question Kim you.
Speaker Change: Our first question comes from the line of Gaurav Mehta with Alliance Global Partners. Please proceed with your question.
Speaker Change: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of <unk> Mehta with Alliance Global Partners. Please proceed with your question.
Dennis Craven: Yes.
Dennis Craven: Thanks.
Speaker Change: I wanted to ask you on your some of your.
Dennis Craven: Comments around the asset recycling.
Dennis Craven: And wanted to get some more color on your expectations around redeploying that capital.
Dennis Craven: In the acquisition market.
Dennis Craven: You mentioned there is no acquisition included in the guidance, but I was hoping to get some more color on what you are seeing the market.
Speaker Change: Yes.
Speaker Change: Thanks.
Speaker Change: I wanted to ask you on your some of your comments around the asset recycling.
Dennis Craven: On the volume.
Dennis Craven: Pricing.
Speaker Change: And wanted to get some more color on your expectations around redeploying that capital in the acquisition market I know.
Dennis Craven: Yes, Gaurav, it's Jeff how are you today.
Speaker Change: I guess the way to characterize the acquisition market at least for what we're seeing and for what we want to buy is still pretty thin out there.
Speaker Change: You mentioned there is no acquisition included in the guidance, but I was hoping to get some more color on what youre seeing in the market.
Speaker Change: On the volume.
Speaker Change: Pricing.
Speaker Change: Yeah, Gaurav, it's Jeff how are you today.
Speaker Change: Further really really good assets in the kind of markets, we want to be in.
Speaker Change: I guess the way to characterize the acquisition market at least for what we're seeing and for what we want to buy is it still pretty thin out there. They're you know further really really good assets in the kind of markets, we want to be in theirs.
Speaker Change: There is still a 100 basis points, let's say bid ask kind of gap.
Speaker Change: But I will tell you that we've kind of redoubled our efforts.
Speaker Change: In terms of really wanting to get.
Speaker Change: Placement assets for these five hotels that we have successfully sold or will have sold shortly.
Speaker Change: There's still a 100 basis points, let's say bid ask kind of gap.
Speaker Change: But I will tell you that you know we've kind of redoubled our efforts.
Speaker Change: And I feel pretty confident that we'll get that done this year I don't think we will get it done.
Speaker Change: In terms of really wanting to get ripped.
Speaker Change: In the first quarter of this year.
Speaker Change: Replacement assets for these five hotels that we've successfully sold or will have sold shortly.
Speaker Change: But it's.
Speaker Change: It's really just sort of ferrying through and talking to prior folks that we've done business with and otherwise to try to find onesie twosies deals, which is probably the way it will occur as we move forward.
Speaker Change: And I feel pretty confident that we'll get that done this year I don't think we'll get it done.
Speaker Change: In the first quarter of this year.
Speaker Change: But you know, it's really just sort of ferrying through and talking to prior folks that we've done business with and otherwise to try to find onesie twosies deals, which is probably the way it'll occur as we move forward.
Speaker Change: Okay. Thanks, My second question on your comments around starting a development in Portland, Maine.
Speaker Change: I was hoping to get some more color on on on that asset where youre looking to construct maybe on your yield expectations for development.
Speaker Change: Okay. Thanks, My second question on your comments around starting a development in Portland, Maine.
Speaker Change: Yes, I mean, we're certainly looking for 150 to 200 basis points premium over let's say the eight cap number that you might be able to acquire existing hotels for.
Speaker Change: I was hoping to get some more color on on on that asset where you're looking to construct maybe on your yield expectations for development.
Speaker Change: And Portland, Maine Hampton Inn.
Speaker Change: Yeah, I mean, we're certainly looking for 150 to 200 basis points premium over let's say the eight cap number that you might be able to acquire existing hotels for.
Speaker Change: It has been our highest Revpar hotel.
Speaker Change: For several quarters, we're pretty excited about.
Speaker Change: The continued growth in the market city of Portland has recently enacted a hotel moratorium.
Speaker Change: And Portland, Maine, Hampton Inn is and has been our highest Revpar hotel.
Speaker Change: Rand fathered in because of the application that we have pending for entitlements. So we still have and we've talked about this for probably what I say is too long for two years, but it is that kind of market in the downtown waterfront district to build on our parking lot.
Speaker Change: For several quarters, we're pretty excited about.
Speaker Change: The continued growth in the market city of Portland has recently enacted a hotel moratorium we are grandfathered in because of the application that we have pending.
Speaker Change: Entitlement, so we still have and we've talked about this for probably what I say is too long for two years, but it is that kind of market in the downtown waterfront district to build on our parking lot next to our existing Hampton.
Speaker Change: Next to our existing Hampton.
Speaker Change: I think we'll certainly be very accretive.
Speaker Change: And when we get there, but we're still working with the city and with our engineers on.
Speaker Change: On getting this thing entitled Yes.
Speaker Change: Yes, Gaurav I think the only thing I would add is that just to add on from Jeff's comments is that that Hampton Inn in Portland for US has really been the highest yielding asset for us over the last essentially ownership period since 2012, when we bought it great market moratorium helps and we feel pretty good about it.
Speaker Change: I think we'll certainly be very accretive.
Speaker Change: If and when we get there, but we're still working with the city and with our engineers are.
Speaker Change: On getting this thing entitled Yes.
Yes, Gaurav I think the only thing I would add is that just add on from Jeff's comments is that that Hampton Inn in Portland for US has really been the highest yielding asset for us over the last essentially ownership period since 2012, when we bought it great market moratorium helps and we feel pretty good about it.
Speaker Change: Okay. Thank you that's all I had.
Speaker Change: Thank you.
Thank you. Our next question comes from the line of Ari Klein with BMO capital markets. Please proceed with your question.
Speaker Change: Thanks.
Speaker Change: There was a pretty sizable this saturday in.
Speaker Change: Okay. Thank you that's all I had.
Speaker Change: Thank you.
Speaker Change: Performance versus ADR.
Speaker Change: Thank you. Our next question comes from the line of Ari Klein with BMO capital markets. Please proceed with your question.
Speaker Change: In the quarter curious just what what drove that dynamic and then how you're thinking about the ability.
Speaker Change: To push rate with occupancy improving.
Speaker Change: Thanks.
Speaker Change: There was a pretty sizable disparity in performance versus ADR.
Speaker Change: Hey, Ari this is Dennis yes, listen I think the one thing that we.
Speaker Change: In the quarter curious just what what drove that dynamic and then how are you thinking about the ability.
Speaker Change: We highlighted in our comments is that.
Speaker Change: Overall demand for demand from business travel is really the is really the driver of that continued occupancy growth and in certain markets, whether that silicon valley or other markets, you really need to get it.
Speaker Change: To push rates are with occupancy improving.
Speaker Change: Hey, Ari this is Dennis Yeah listen I think the one thing that we highlighted in our comments is that.
Speaker Change: The seventies and into the <unk> to be able to have pricing power. So.
Speaker Change: Overall demand for demand from business travel is really the is really the driver of that continued occupancy growth and in certain markets, whether that silicon valley or other markets, you really need to get it.
Speaker Change: For us, we're really encouraged by the overall trend and just the overall.
Speaker Change: Demand growth in some of our major markets.
Speaker Change: Generally speaking ADR is a laggard to that.
Speaker Change: The seventies and into the ATM to be able to have pricing power. So you know for US we're really encouraged by the overall trend and just the overall.
Speaker Change: So it really I think just.
Speaker Change: Positive about where that's heading.
Speaker Change: Got it that's helpful and then maybe on the Revpar guide.
Speaker Change: Demand growth in some of our major markets and generally speaking ADR is a laggard to that.
Speaker Change: The widespread for the full year I'm curious if you could provide some color on some of the underlying assumption.
Speaker Change: So it really I think.
Speaker Change: At the high end low end of the range.
Speaker Change: Just positive about where that's heading.
Speaker Change: And then is there any reason to think the attacker interim business. This year will play out.
Speaker Change: Got it that's helpful and then maybe on the Revpar guide.
Speaker Change: Last year.
Speaker Change: For the full year I'm curious if you could provide some color just on some of the underlying assumption at.
Speaker Change: The last bit of that question was tech tuck insurance.
Speaker Change: The interim business below last year.
Speaker Change: At the high end low end of the range.
Speaker Change: And then is there any reason to think the attacker interim business. This year will play out.
Speaker Change: Yes, I mean, I think lesson.
Speaker Change: We're pretty we're taking a pretty cautious look as far as our overall guidance range of 1% to three and a half we're encouraged by what January did with Revpar up 5%.
Speaker Change: Last year.
Speaker Change: Well the last bit of that question was tech tuck insurance.
Speaker Change: The interim business below last year.
Speaker Change: February is doing well as well.
Speaker Change: Yes, I mean, I think lesson.
Speaker Change: I think what Jeff highlighted in his comments and if you look at kind of our monthly Revpar production is that the summer months, especially in 'twenty four as he talked about kind of showed.
Speaker Change: We're pretty we're taking a pretty cautious look as far as our overall guidance range of one to three and a half we're encouraged by what January he did with Revpar up 5%.
Speaker Change: He is doing well as well.
Speaker Change: An offset of leisure losing.
Speaker Change: I think what Jeff highlighted in his comments and if you look at kind of our monthly Revpar production is that you know the summer months, especially in 'twenty four as he talked about kind of showed you know.
Speaker Change: BT, gaining I think weather leisure has bottomed out or is bottoming out kind of as an industry I think it's too early to tell.
Speaker Change: But I think we're going to be cautious about those outer months.
Speaker Change: An offset of leisure losing.
Speaker Change: It feels good at the moment and then I think with respect to interns listen we.
Speaker Change: T gaining I think weather leisure has bottomed out or is bottoming out kind of as an industry I think it's too early to tell.
Speaker Change: I think as we talked about last year, we lost a lot in a majority of that business in 'twenty four because most of the tech companies went to a program where they were just giving stipends out for any type of interim and they can put it.
Speaker Change: But I think we're going to be cautious about those outer months.
Speaker Change: It feels good at the moment and then I think with respect to interns listen we I think as we talked about last year, we lost a lot in a majority of that business in 'twenty four because most of the tech companies went to a program where they were just giving stipends out for any type of in turn and they can put it.
Speaker Change: As many people as they wanted to and are in a room in an apartment or whatever it might be so we really didn't get much in turn business in 'twenty four we don't have work.
Kind of have similar levels baked in for 25, and obviously that if something how somehow that changed that would be great but.
Speaker Change: As many people as they wanted to and are in a room in an apartment or whatever it might be so we really didn't get much in turn business in 'twenty four we don't have you know.
Speaker Change: I think that stipend program, that's probably going to stick.
Speaker Change: Got it and then maybe just one last one just in terms of the <unk>.
Speaker Change: We're kind of have similar levels baked in for 25, and obviously that if something how somehow that changed that would be great, but I think that stipend program, that's probably going to stick.
Speaker Change: Transaction.
Speaker Change: That <unk> seem likely to pursue in 'twenty five.
Speaker Change: How much dry powder.
Speaker Change: Do you have or I guess, maybe how active you think you'll be.
Speaker Change: Got it and then maybe just one last one just in terms of the.
Speaker Change: Yes, Jeremy you want to talk about the balance sheet, yes, I mean from a dry powder perspective, I think we can easily by a couple of hundred million dollars of hotels or hotels and development of other investments and still be within the leverage parameters that we feel comfortable with.
Speaker Change: Transactions.
Speaker Change: That that you've seen likely to pursue in 'twenty five.
Speaker Change: How much dry powder, you think you have or I guess, maybe how active you think you'll be.
Speaker Change: Yes, Jeremy you want to talk about the balance sheet from a dry powder perspective, I think we could easily by a couple of hundred million dollars of hotels or hotels and development of other investments and still be within the leverage parameters that we feel comfortable with you know I don't know if it will be possible that one.
Speaker Change: I don't know if it will be possible that one off.
Speaker Change: Transactions to be able to buy $200 million.
Speaker Change: Hotels this year given how selective.
Speaker Change: We are in the strict underwriting criteria that we have but we definitely have balance sheet capacity to do quite a bit relative to our existing size.
Speaker Change: Off transactions to be able to buy $200 million of hotels, this year and given how selective.
Speaker Change: Got it and as the Portland development in the in the $26 million of Capex or is that separate.
Speaker Change: We are in the strict underwriting criteria that we have but we definitely have balance sheet capacity to do quite a bit relative to our existing size.
Speaker Change: No no it's not I mean, I think listen we're still working through city approvals I think if we ultimately get those in the next several months, you're probably talking about starting.
Speaker Change: Got it and is the Portland development in the in the $26 million of Capex or is that separate no no. It's not I mean, I think listen we're still working through city approvals I think if we ultimately get those in the next several months, you're probably talking about starting site work later this year so.
Speaker Change: Site work later this year, so any any actual cash dollars out the door be pretty minimal in 2025.
Speaker Change: Got it alright. Thank you thank.
Speaker Change: Thanks, Alright.
Speaker Change: Thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad. Our next question comes from the line of Jonathan Jenkins with Oppenheimer <unk> Company. Please proceed with your question.
Speaker Change: Any any actual cash dollars out the door would be pretty minimal in 2025.
Speaker Change: Got it alright, thank you.
Speaker Change: I'm sorry.
Jonathan Jenkins: Good afternoon, and thank you for taking my questions first one for me as a follow up or clarification question on the guidance.
Speaker Change: Thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad. Our next question comes from the line of Jonathan Jenkins with Oppenheimer and company. Please proceed with your question.
Given that previous commentary it sounds like we should expect the majority of Revpar growth this year to be driven by occupancy and rate compression component.
Jonathan Jenkins: Good afternoon, and thank you for taking my questions first one for me as a follow up or clarification question on the guidance.
Jonathan Jenkins: Because of a greater possibility in out years is that a fair.
Jonathan Jenkins: Read through on that.
Jonathan Jenkins: Given that previous commentary it sounds like we should expect the majority of Revpar growth this year to be driven by occupancy and rate compression component.
Jonathan Jenkins: I think in our in our forecast. So we have our revpar growth kind of built about half between occupancy and half between ADR. So we're still expecting some ADR growth, even though Q4 was was really.
Jonathan Jenkins: It becomes a greater possibility in out years is that fair.
Jonathan Jenkins: Read through on that.
Jonathan Jenkins: All the growth was driven by occupancy.
Jonathan Jenkins: I think in our in our forecast that we have our revpar growth kind of built about half between occupancy and half between ADR. So we're still expecting some ADR growth, even though Q4 was was really.
Jonathan Jenkins: And thats because of the nature of the seasonality of the portfolio and the hotels that we're talking about but we will get ADR growth.
Jonathan Jenkins: Those summer months, Yes, and then those heavy October for example business travel months for us.
Jonathan Jenkins: All of the growth was driven by occupancy.
Jonathan Jenkins: And that's because of the nature of the seasonality of the portfolio and the hotels that we're talking about but you know, we'll get ADR growth in those summer months, Yes, and then those heavy October for example business travel months for us.
Speaker Change: Okay. That's very helpful. And then switching gears to the capital recycling front you guys have obviously done a tremendous job are there any additional assets that could be potential targets for dispositions and Conversely are there any markets that you'd like to enter or is your preference to grow in the markets you are already in and.
Jonathan Jenkins: Okay.
Jonathan Jenkins: Very helpful. And then switching gears to the capital recycling front you guys have obviously done a tremendous job are there any additional assets that could be potential targets for dispositions.
Speaker Change: Should we expect to continued BT demand driver focus for potential acquisitions.
Speaker Change: I think for us.
Jonathan Jenkins: Conversely are there any markets that you'd like to enter or is your preference to grow in the markets, we're already in and should.
Speaker Change: And business focused on hotels and extended stay hotels.
Speaker Change: Where we live and.
Jonathan Jenkins: Should we expect a continued BT demand driver focus for potential acquisitions.
Speaker Change: And we feel.
Speaker Change: Comfortable and bullish about that part of the business. So.
Jonathan Jenkins: I think for us.
Speaker Change: I think we want to be opportunistic given the amount of dry powder that we have as Jeremy indicated.
Jonathan Jenkins: And business focused hotels and extended stay hotels.
Jonathan Jenkins: Where we live.
Speaker Change: So I think we've kind of got.
Jonathan Jenkins: And we feel you know.
Jeremy Wegner: Very comfortable and bullish about that part of the business. So I think we want to be opportunistic given the amount of dry powder that we have as Jeremy indicated.
Speaker Change: Open open view in terms of markets beyond markets that we're already in.
Speaker Change: So I would expect that we will.
Speaker Change: Just take a real hard look at at.
Jeremy Wegner: So I think we've kind of got a open open view in terms of markets beyond markets that we're already in.
Speaker Change: At many different opportunities.
Speaker Change: As we try to move forward and redeploy some of the money that we've got here, yes, I think the only thing I would add.
Jeremy Wegner: So I would expect that we will you know.
Speaker Change: With respect to dispositions, yes, we will continue to look at our portfolio and analyze it for any type of opportunities of selling assets, but I think what you will see.
Jeremy Wegner: Just take a real hard look at.
Jeremy Wegner: At many different opportunities as.
Jeremy Wegner: As we try to move forward and redeploy some of the money that we've got here, yes, I think the only thing I would add.
Speaker Change: From Chatham is continued recycling.
Jeremy Wegner: With respect to dispositions, yes, we will continue to look at our portfolio and analyze it for any type of opportunities of selling assets, but I think what you will see.
Speaker Change: Of older assets with.
Speaker Change: Higher capex spend requirements into newer higher growth investments.
Speaker Change: Over time, so certainly we will look for that that's the goal.
Jeremy Wegner: From Chatham is continued recycling.
Speaker Change: Okay. That's excellent. Thank you for all the color everybody that's all for me.
Jeremy Wegner: Of older assets with.
Jeremy Wegner: Higher capex spend requirements into newer higher growth investments.
Speaker Change: Thank you. Our next question comes from the line of Manish Modi with Millennium. Please proceed with your question.
Jeremy Wegner: Over time, so certainly we will look for that that's the goal.
Manish Modi: Yes. Good afternoon. Thank you for your time I just have a couple of quick questions. One is just to get a sense of any impact on the Los Angeles area with the properties.
Jeremy Wegner: Okay. That's excellent. Thank you for all the color everybody that's all for me.
Jeremy Wegner: Thank you. Our next question comes from the line of Manish Modi with Millennium. Please proceed with your question.
Speaker Change: On the wildfires, that's the first one.
Speaker Change: And the second one is.
Manish Modi: Yes. Good afternoon. Thank you for your time I just have a couple of quick questions. One is just to get a sense of any impact on the Los Angeles area with the properties with.
Speaker Change: As he invest.
Speaker Change: Investment portfolio, we have been looking at that.
Speaker Change: The performance of your stock and I am sure you always do too which is that there's been literally.
Jeremy Wegner: The wildfires that's the first one.
Speaker Change: No upward movement at all at least over the last 12 to 18 months, how do you look at the valuation that the market of course, you don't control it but how do you vision.
Manish Modi: And the second one is if any.
Jeremy Wegner: Investment portfolio, we have been looking at.
Jeremy Wegner: The performance of your stock and I'm sure you all do too which is that there has been literally.
Speaker Change: Visualize the market.
Speaker Change: Valuation for your stock.
Jeremy Wegner: No upward movement at all at least over the last 12 to 18 months, how do you look at the valuation that the market of course, you don't control it.
Speaker Change: Yeah.
Speaker Change: Hey, Matt This is Dennis I'll answer the first part of it.
Dennis Craven: We had thankfully we had no physical damage to any of our assets.
Jeremy Wegner: How do you vision.
Jeremy Wegner: Visualize the market.
Dennis Craven: Related to the fires in southern in the la in the La area.
Jeremy Wegner: Valuation for your stock.
Jeremy Wegner: Yes.
Dennis Craven: We have three hotels in the area are home too.
Dennis Craven: Hey, Matt This is Dennis I'll answer the first part of it.
Dennis Craven: Our home two suites in woodland Hills.
Dennis Craven: We had you know thankfully, we had no physical damage to any of our assets.
Speaker Change: Has has been the beneficiary of a lot of.
Dennis Craven: Related to the fires in southern and the law and the L. A area.
Speaker Change: Whether it's displaced residents or people affiliated with insurance companies there.
Dennis Craven: We have three hotels in the area are home to.
Speaker Change: That is benefiting the hotel the other two hotels, our Hilton Garden Inn in Marina del Rey and our residence Inn in Anaheim, So I'll kind of initial pop.
Dennis Craven: Our home two suites in woodland Hills.
Dennis Craven: Has has been the beneficiary of a lot of weather.
Dennis Craven: Whether it's displaced residents or people affiliated with insurance companies there.
Speaker Change: Right after the wildfires, but really have kind of settled back into normal normal what I would call a normal businesses. If you will so.
Dennis Craven: That is benefiting the hotel the other two hotels, our Hilton Garden Inn in Marina del Rey and our residence Inn in Anaheim, So I'll kind of initial pop.
Speaker Change: Really we had one of the three hotels that benefited.
Speaker Change: And then on the stock price here.
Dennis Craven: Right. After the wildfires that really have kind of settled back into normal normal what I would call a normal business. If you will so you know.
Speaker Change: Jeremy our expert on that pine.
Speaker Change: Look I think.
Speaker Change: It would always be nice to have your stock valued higher.
Dennis Craven: Really we had one of the three hotels that benefited.
Speaker Change: And I appreciate obviously, there's been headwinds over the last few years in terms of.
Dennis Craven: And then on the stock price here.
Jeremy Wegner: Jeremy our expert on that alpine well.
Speaker Change: Expense increases across the sector and cost of capital across the sector.
Speaker Change: Look I think it would always be nice to have your stock valued higher.
Speaker Change: I think if you look just on a relative valuation basis.
Speaker Change: And I too appreciate obviously, there's been headwinds over the last few years in terms of.
Speaker Change: On a price to <unk> basis, I think we're roughly in line with most of our peers, we may be a little bit of a discount on an EV to EBITDA basis, and I think a lot of that's probably due to the fact that we've refinanced a lot of our debt we've reset the pricing on a lot of our debt so all of our.
Speaker Change: Expense increases across the sector and cost of capital across the sector.
Speaker Change: I think if you look just on a relative valuation basis on a price to <unk> basis, I think we're roughly in line with most of our peers, we maybe add a little bit of a discount on an EV to EBITDA basis, and I think a lot of that's probably due to the fact.
Speaker Change: That is sort of market priced.
Speaker Change: Which is more expensive than people, who have legacy fixed rate debt at 4% of all of our debt kind of in that six 5% to 7% range right now.
Speaker Change: We've refinanced a lot of our debt we've reset the pricing on a lot of our debt. So all of our debt is sort of market priced you know, which is more expensive than people, who have legacy fixed rate debt in at 4% of all of our debt is kind of in that six 5% to 7% range right now.
Speaker Change: So there is higher interest burden.
Speaker Change: So that's reflected in our <unk> that doesn't impact the EBITDA, which is probably why we're really right in line with peers on an <unk> basis, and EBITDA is a little bit of a discount but again.
Speaker Change: Higher interest costs hopefully.
Speaker Change: So there is higher interest burden.
Speaker Change: Over to overtime the EBIT, the EBITDA gap will shrink relative to any any any peer multiples as they kind of refinance their balance sheets as well.
Speaker Change: That's reflected in our <unk> not it doesn't impact the EBITDA, which is probably why we're really right in line with peers on an <unk> basis, and Ebitdas moment of a discount, but again, there's higher interest costs hopefully.
Speaker Change: Part of it I would say is.
Speaker Change: I still think and we've heard from some investors.
Speaker Change: Over the over time, the EV to EBITDA gap will shrink relative to any any any peer multiples as they kind of refinanced their balance sheets as well.
Speaker Change: That silicon Valley.
Speaker Change: We keep coming back to it but.
Speaker Change: A major portion of our portfolio obviously.
Speaker Change: The other part of it I would say is I.
Speaker Change: It is a question mark for the company.
Speaker Change: I still think and we've heard from some investors that Silicon Valley.
Speaker Change: And even in our guidance for the year, it's very difficult for us to and our operators, who have lived and breathed in that market in some cases for over 20 years.
Speaker Change: You know, we keep coming back to it but it is a major portion of our portfolio obviously.
Speaker Change: Is a question Mark for the company.
Speaker Change: Put your finger on what kind of Revpar increase and what kind of return.
Speaker Change: And even in our guidance for the year, it's very difficult for us and our operators, who have lived and breathed in that market in some cases for over 20 years to put your finger on what kind of Revpar increase and what kind of return.
Speaker Change: Two our 2019 EBITDA levels and Revpar levels, we're going to get there and I think that keeps sort of a lid on our share price.
Speaker Change: Until we really have sort of a what I would characterize as double digit revpar growth quarter after quarter for a couple of years in a row here that we feel is pretty consistent as we look forward to be able to get those numbers back towards.
Speaker Change: Our 2019, EBITDA levels and Revpar levels, we're going to get there and I think that keeps sort of a lid on our share price.
Speaker Change: Until we really have sort of a what I would characterize as double digit revpar growth quarter after quarter for a couple of years in a row here that we feel is pretty consistent as we look forward to be able to get those numbers back towards some.
Speaker Change: <unk> level as to where they were so look where we are.
Speaker Change: Certainly encouraged by what we see and what we talked about on our call for the fourth quarter.
Speaker Change: At our January and February numbers out there.
Speaker Change: Particularly given January and February seasonality of being very little real BT travel.
Speaker Change: <unk> level as to where they were so you look where we're certainly encouraged by what we see and what we talked about on our call for the fourth quarter.
Speaker Change: Pretty darn strong as well so.
Speaker Change: We'll continue to have our focus and our operating team and our sales teams out there.
Speaker Change: At our January and February numbers out there.
Speaker Change: Particularly given January and February seasonality of being <unk>.
Speaker Change: Doubling down on the efforts to make those hotels fly.
Speaker Change: Very little real BT travel.
Speaker Change: And with our ability and our operator's ability to flow the incremental revenue at levels that are in.
Speaker Change: Were pretty darn strong as well so we'll.
Speaker Change: We'll continue to have our focus and our operating team and our sales teams out there.
Speaker Change: In some cases, well over 50% I think we can get the <unk> and the EBITDA and therefore, the share price moving again.
Speaker Change: Doubling down on the efforts to make those hotels fly.
Speaker Change: And with our ability and our operator's ability to flow the incremental revenue at levels that are in some cases, well over 50% I think we can get the <unk> and the EBITDA and therefore the share price moving again.
No I appreciate it and then you suddenly delever the balance sheet substantially.
Speaker Change: The last couple of years.
Speaker Change: Interesting that when you look at it that.
Speaker Change: Our growth in Silicon Valley.
Speaker Change: It has been.
Speaker Change: Double digits compared to last year, but your revpar growth in Dallas in the Seattle market as high of a small contributors there seem to be more negative. So it's interesting you made that.
Speaker Change: No I appreciate it and then you suddenly delever the balance sheet substantially over the last couple of years.
Speaker Change: Interestingly when you look at it that way.
Speaker Change: Revpar growth in Silicon Valley.
Speaker Change: And Ah.
Speaker Change: That point across.
Speaker Change: It has been in double digits compared to last year, but your revpar growth in Dallas in the Seattle market as high of a small contributors they seem to be more negative. So it's interesting you've made that.
Speaker Change: Well Dallas as I mentioned.
Speaker Change: Has been a great performing hotel for us in that downtown market if that is nothing more.
Speaker Change: Frankly than the convention center being.
Speaker Change: No.
Speaker Change: That point across.
Speaker Change: And most conventions sort of for the next couple of years.
Speaker Change: Dallas as I mentioned as it has been a great performing hotel for us in that downtown market if that is nothing more.
Being nonexistent in that market I know that in 2024, we substantially exceeded the operator budget for 2024.
Speaker Change: Frankly than the convention center being.
Speaker Change: Because starting in I think it was March or April.
Speaker Change: And most conventions sort of for the next couple of years being nonexistent in that market I know that in 'twenty 'twenty four we substantially exceeded the operator budget for 2024.
Speaker Change: Took the numbers way down and we still because of what's happening generally in Dallas and the quality of that hotel is location sort of outperformed the budget numbers, but.
Speaker Change: Because starting in I think it was March or April.
Speaker Change: It's still going to comp on a difficult basis Bellevue Dennis purely renovation there that should be finished what the next we're going to see it next week.
Speaker Change: We took the numbers way down and we still because of what's happening generally in Dallas and the quality of that hotel is location sort of outperformed the budget numbers, but you know it's still got a comp on a difficult basis Bellevue Dennis purely renovation there that should be fit.
Speaker Change: And.
Speaker Change: So that should be done here and again, a tech heavy and rely on but you've got those players.
Speaker Change: Back to the office, even I think with a declaration being a little bit sooner than some of the Silicon Valley companies and Bellevue is a sub market really strong and benefiting <unk>.
Speaker Change: What the next we're going to see it next week right.
Speaker Change: So that should be done here and again tech heavy and rely on but you've got you know those players.
Speaker Change: Over downtown Seattle, when you look at if you look at the start.
Speaker Change: Back to the office, even I think with a declaration being a little bit sooner than some of the Silicon Valley companies and Bellevue is a sub market really strong and benefiting.
Speaker Change: Smith travel numbers for the market to anyway, Yes, I think the only thing I would add regarding Silicon Valley is yes, we've had a good run here and we're confident and we're optimistic about where we see 25 out there.
Speaker Change: Over a downtown Seattle when you look at if you look at the Star Smith travel numbers for the market to anyway, Yes, I think the only thing I would add regarding Silicon Valley is yes, we've had a good run here and we're confident and we're optimistic about where we see 25 out there.
Speaker Change: But you should still take it take take a look at that.
Speaker Change: The table in our release.
Speaker Change: That compares it to 2019 levels Revpar for those four hotels is still over 20%.
Speaker Change: Short of 2019 level. So there is still a good ways to go and I think a lot of our investors, who know us well and is known as well.
Speaker Change: But you should still take it take take a look at it at the table in our release.
Speaker Change: That compares it to 2019 levels Revpar for those four hotels is still over 20%.
Speaker Change: We got to get a little bit more out of there to really.
Speaker Change: To start pushing that number to the bottom line, so, especially when it comes to ADR as we were talking about on a prior question and the incremental flow.
Speaker Change: Short of 2019 level. So there is still a good ways to go and I think a lot of our investors, who know us well and is known as well.
Speaker Change: It comes from high ADR.
Speaker Change: <unk>.
Speaker Change: We got to get a little bit more out of there to really.
Speaker Change: I certainly appreciate it.
Speaker Change: Pushing that number to the bottom line so.
Speaker Change: Certainly invested in kind of the ownership.
Speaker Change: Especially when it comes to ADR as we were talking about on a prior question and the incremental flow.
Speaker Change: Chatham lodging trust.
Speaker Change: It's interesting that highlight as I thought I'd just had made one observation, which is that there were two filings from Blackrock that happened literally two days of each other.
Speaker Change: It comes from high ADR.
Speaker Change: I certainly appreciate I mean, certainly invested into the ownership of Chatham lodging Trust it was interesting that.
Speaker Change: And the most recent filing showed a reduction of about five or 6% of the ownership literally within the span of two days and just didn't know if you have something substantially that happened that would reduce their ownership.
Speaker Change: As I thought I just had made one observation, which is that there were two filings from Blackrock that happened literally two days of each other and the most recent filing showed a reduction of about five or 6% of the ownership literally within the span of two days and just didn't know if you have something substantially that happen.
Speaker Change: By a few million shares.
Speaker Change: We saw those same filings I think we don't have any active dialogue with them, whether that was a mistake or something else not sure.
Speaker Change: And that would reduce their ownership.
Speaker Change: They bought a bunch and then sold a bunch right something like that yes, we don't but we don't know.
Speaker Change: By a few million shares.
Speaker Change: We saw those same filings I think we don't have any active dialogue with them, whether that was a mistake or something else not sure.
Speaker Change: Okay.
Speaker Change: Thank you very much for your time and patience with the question.
Speaker Change: Thank you. Thank you.
Speaker Change: Okay.
Speaker Change: They bought a bunch and then sold a bunch right something like that yeah, we don't but we don't know.
Speaker Change: Thank you Mr. Fischer there are no further questions at this time I'll turn this back to you for final comments.
Speaker Change: Okay.
Speaker Change: Thank you very much for your time and patience with the question.
Speaker Change: Well, we certainly appreciate the questions and everybody's attendance. This morning, so let's continue to sit tight here and have this quarter evolve.
Speaker Change: Thank you. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you Mr. Fischer there are no further questions at this time I'll turn the floor back to you for final comments.
Speaker Change: We will we will continue to I think put up some pretty strong numbers.
Mr. Fischer: Well, we certainly appreciate the questions and everybody's attendance. This morning, so let's continue to sit tight here and have this quarter evolve.
Speaker Change: Work on growing our free cash flow in 2025. Thank you.
Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.
Mr. Fischer: And we will we will continue to I think put up some pretty strong numbers.
Mr. Fischer: And work on growing our free cash flow in 2025. Thank you.
Mr. Fischer: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.