Chatham Lodging Trust Stock

Good morning, ladies and gentlemen, and welcome to the Chatham Lodging Trust Second Quarter 2026 Financial Results Conference Call. this time all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. call is being recorded on August 4, 2026. I would now like to turn the conference over to Chris Daly. Please go ahead.

Thank you, Matthew. Good morning, everyone, and welcome to the Chatham Lodging Trust's second quarter 2026 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 subjects to risks and uncertainties, both known and unknown, as described in our most recent conference call. 10-K and other SEC filings. All information in this call is as of August 4th, 2026, 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 company's expectations. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at chathamlodgingtrust.com. Now, to provide you some insight into Chatham's 2026 second 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?.

Thanks, Chris. Appreciate that. And I also appreciate everybody who's joined us today on our call. Lots of good stuff to talk about here. It was a great second quarter, which followed a very good first quarter. And as a result, we have increased our guidance by approximately 20% since the start of the year. is a pretty simple equation to explain. We combined a great acquisition together with strong operating results and share repurchases. We believe the lodging industry is in the early stages of a protracted upcycle. Of course, we understand the Iran conflict makes the near-term choppy, but we really like the long-term dynamics.

Leisure travel remains strong and will continue that way as domestic travelers realize over the last five years. how much they value those experiences. And of course, for us, it's important to focus on business travel, which is the biggest driver of our portfolio and represents around 75% of our EBITDA. We are really seeing business travel accelerate even more than it has over the last few years at a faster pace. And that's no different than what you've been hearing from the airlines and the hotel brands. On their most recent calls, Delta and United reported corporate travel is up 20 to 35. With close-in bookings increasing and small to medium-sized businesses, recovery is surging. There's so much business investment happening around the country across many different industries, especially manufacturing and technology, and this is really starting to boost the upscale in medium-sized businesses. mid-scale hotels as these travelers are generally not staying in luxury hotels.

I'm sure many of you heard that Hilton on its conference call echo these same thoughts as they stated the biggest single change they have seen over the last couple of quarters strong growth in mid-week business transient travel, with very encouraging patterns in small to medium-sized businesses in terms of occupancy gains and their rate growth outstripping what they were seeing from the big corporates. These trends will benefit Chatter more than most of our peers and as you will hear in the next few minutes, we are seeing great results in our recently acquired six hotel portfolio that further validates the demand growth in the small to medium-sized businesses across the manufacturing belt in the Midwest and Southeast. On top of these, encouraging demand trends, the supply part of the equation should also benefit existing hotel owners. Construction costs remain quite high, and development is only justified in a few special markets, such as our downtown waterfront Portland, Maine location. On that note, we are excited to have commenced construction on our 130-suite Home 2 Suites on what was a surface parking lot adjacent to our Hampton Inn in the heart of the downtown waterfront. The development includes approximately 5,500 square feet of commercial space at the core of Middle Street and India Street that will be sold. This commercial space is ideally positioned in the heart of the most favorable area of downtown Portland.

Although we are very early in the project, we are anticipating the hotel will open just before the summer of 2028. Total construction costs costs are expected to be $45 million or $350,000 per room. through the sale of the commercial space will reduce our basis. We estimate our unlevered year two stabilized yield will be around 11% and will be meaningfully accretive upon its opening. Now let's talk about another great investment that's paying off for our shareholders, our share repurchase plan, which by the way, we launched in May 2025. We've repurchased another $3 million of stock in the quarter, bringing total purchases to date of over $18 million out of our $25 million plan. Since inception, we've repurchased 2.5 million shares, which equates to approximately 5% of our outstanding shares. and units at a price of $7.29 or a corporate NOI cap rate of of approximately 10 percent and hotel NOI cap rate of 11.3 percent and an almost 50 percent discount to our current trading level. Just a great use of free cash flow and obviously a tremendous return for our shareholders. repurchases now, whereas the current share price has rebounded and the valuation disconnect has compressed.

As always, we continually evaluate potential acquisitions and weigh whether to use our capital to acquire hotels or repurchase shares, and trust us, we understand the importance of investing our capital wisely. On the acquisition front, I have to highlight the outstanding performance of our recently acquired portfolio of six hotels in Missouri, Illinois, and Kentucky. Performance is surpassing our expectations. RevPar growth accelerated further in the second quarter, up nine percent on an even split between occupancy and ADR. Second quarter occupancy was 83%, 200 basis points higher than our portfolio average for the quarter. And July, RevPAR jumped another 13%, with occupancy up 9% to 86%, and ADR up 3%. Additionally, the portfolio produced GOP margins of 49.3% in the quarter, 250 basis points higher than our average portfolio average, even though REVPAR is about 20% below our portfolio average, which provides a great look-through into why we like this portfolio. as it combines a strong repair outlook with favorable labor dynamics and lower operating costs per room. Last quarter, we spoke about the recently announced nuclear uranium enrichment facility in Paducah, Kentucky, on the Department of Energy site.

And it was announced earlier this week that the Department of Energy is partnering with Brookfield, NextEra, Big Rivers Electric Power Company, and Jackson Purchase Energy Cooperative Energy. and the Paducah power system to invest over $100 billion into a new data center within that same complex. The project is expected to create 8,000 construction jobs and 600 permanent jobs and adds another demand generator for our hotels. Operationally, it was a great quarter for us with rev par, margins, EBITDA, and FFO easily beating our expectations for the quarter. Red Park grew 3%, and we were able to increase our pro forma GOP margins 170 basis points and our hotel EBITDA margins by 220 basis points. Dennis is going to talk about our other larger markets, and I'm going to talk a little bit about our largest market, Silicon Valley, which accounts for 17% of our EBITDA now. We've seen REVPAR grow 18 of the last 21 quarters and 10 of the last 11 quarters, but importantly, our projected 2021. Red Park growth would be our best gaining year since the pandemic.

Silicon Valley's rare part growth of 7% boosted our portfolio growth by 40 basis points. And as growth accelerates, given its significance to the portfolio, it amplifies our company's growth. Second quarter ADR was up 10% to a post-pandemic quarterly high of $212. That's for any quarter, not just the second quarter. And our quarterly rev par of $164 is our highest rev par over the last six years. These are great results and very encouraging, Again, especially considering the renovation at our Mountain View Hotel during the quarter. We are seeing strong corporate demand, especially within the corporate transient segment.

And as Dennis quoted in our release, since the beginning of the year, we have seen double digit demand growth from top accounts such as Applied Materials Palo Alto Networks, NVIDIA, and Google. And as good as our second quarter was in Silicon Valley, Live Rev Par at our four hotels was outstanding, accelerating 26%. And within that number, our two Sunnyvale hotels rose 41% in July. Of course, massive capital investment announcements continue into technology from all types of companies and, importantly, companies of all sizes, from the largest in the world to small and medium-sized companies, even startups. Of course, Silicon Valley is the heart of the tech world, and we are seeing a strong resurgence. Future announcements keep coming to our markets. For example, just last week, Databricks, the data and AI company, today continues its rapid growth in the Bay Area. with its expansion into a new 305,000 square foot office in downtown Sunnyvale, just two and a half miles from our two residence ends.

And just two weeks ago, Amazon announced that it had leased an entire 317,000 square foot building at the Moffett Towers in Sunnyvale and the towers are again only three and a half miles from both of our hotels. Elsewhere, OpenAI announced they're leasing a 450,000 square foot office complex less than four miles from our hotel in Mountain View and also Sunnyvale and General Motors that currently occupies about 1 million square feet across the valley is considering consolidating some of its auto talent into offices either in or near Stanford or Sunnyvale for more space. One more article. The San Francisco Business Times stated that companies are pursuing almost 11 million square feet of office and R&D space in Silicon Valley. Essex Properties, one of the largest multifamily REITs in the country, with a lot of exposure to Northern California, especially Silicon Valley and San Francisco, commented on their recent called that Northern California was their best performing market. These are just great trends for our four hotels, and given their significance, ultimately, our entire portfolio performance. Compared to 2019, there's still a lot of upside in Sunnyvale and Mountain View, and we fully expect RevPAR to get back to those hotels and then some. Our projected 26 San Mateo residents in RevPAR is about 10% higher than 2019 levels and still growing meaningfully.

Mountain View was impacted by renovation in the first and second quarter, so comparing 26 to 19 really isn't relevant for them, but our projected Sunnyvale Rev Park is still about 18% shy of 2019 levels. So returning those two big hotels. to 2019 levels would add another $3 million of FFO or $0.06 per share. Wrapping up my proposed remarks, looking to the balance of the year, we have increased our annual guidance for the second quarter beat, as well as a modest increase to the second half of the year. Probably a bit of conservatism in our second half outlook, but given the ongoing conflict in the Middle East and little visibility past the next one or two months, we are assuming low single-digit rev power growth similar to Hilton's non-luxury projection.

With that, I'd like to turn it over to Dennis. Thanks, Jeff. Second quarter RevPAR finished strong, with RevPAR up 9% in June and July advancing 10%. July occupancy rose 5% with ADR up 4%. July RevPAR grew in 35 of our 39 hotels, and 14 of our 39 hotels saw RevPAR gains of over over 10%. In fact, June and July REF PAR of $175 and $169 are all-time high marks for each of those respective months. We continue to experience broad demand growth across our portfolio with approximately two-thirds of our hotels generating RevPar growth, three-fourths of our hotels pushing ADRs higher, and approximately one-fourth of our hotels experiencing double-digit RevPar gains. This is essentially the same trend from the first quarter and a signal of strength of our portfolio moving forward.

Adding to Jeff's commentary on Silicon Valley, July RevPar was fantastic with RevPar increasing 26% across all four hotels and our two Sunnyvale hotels were up 41% with growth attributable to primarily corporate transient demand as the World Cup really didn't have much of an impact there. hosted one game at Levi's Stadium in the month of July. Our top five Revpar hotels in the quarter were our residents in Washington, D.C. with Revpar of $236, our residents in White Plains with Revpar of $209, followed by our Marina Del Rey Hilton Garden Inn with Revpar of $206. and rounded out by our residence in San Diego Gas Lamp, and Embassy Suite Springfield, and our Hampton in Portland, all basically right around $198 for the quarter. The fact that two of our top five being in the DC Metroplex gives you a feeling for how well that market has rebounded after a really tough 2025. Five of our 39 hotels benefited from World Cup related demand. June RevPar was up almost 12% at these hotels. The impact of the quarter was only basis points to our entire portfolio. So our RevPar was still up 3% for the quarter, excluding any World Cup impact.

Our seven predominantly leisure hotels generated RevPar growth of approximately a half a point in the quarter. Our Savannah Spring Hill Suites continues its hot performance post-renovation last year with growth of 9% in the quarter, while our Hilton Garden in Portsmouth saw rev bar decline 8% in the quarter due to leisure and softness from Canada, obviously some wildfire impact, and a new Homewood Suites that opened earlier this year. Our three predominantly government-oriented hotels, all in the greater DC area, produce RevPar growth of 9% in the quarter, same as the first quarter production. As a group, these hotels represent approximately 9% of our EBITDA. Our Springfield Embassy Suites and our Tyson's Corner hotels produce RevPar growth of 14% and 13% respectively. Our five convention hotels saw RevPar decline 5% in the quarter. San Diego RevPar dropped 9%, which is about what we expected as the 2026 convention calendar for the balance of the year is soft in comparison to prior years.

In Texas, our Dallas and Austin hotels have felt the impact of convention demand fall off as well, with those convention centers being under renovation and for ongoing expansions. Revpar at our courtyard Dallas was down 3% in the quarter, much better than the 26% in the first quarter, and our comps get better over the last half of the year. Obviously we benefited some at that hotel from the World Cup. media center being located in the convention center downtown. RevPAR at Austin Hotels were down less than 3% in the quarter. And as I said, those comps start to get easier as we get through the balance of the year. Switching to our profitability, we had another great quarter managing expenses and maximizing employee productivity, as well as increasing our non-room profits and driving margins higher. We continue to focus on increasing that other operating department revenue and profits, and we were able to increase those profits by about 400,000 or 13% in the quarter.

As we mentioned in the release, when you take out the one-time workers' compensation refund, our GOP and our hotel EBITDA margins jumped 170 and 220 basis points respectively, with GOP and EBITDA flow through of approximately 60%. Taking out the refund, our department expenses were down almost 1% on a CPOR basis, and all hotel operating expenses were only up about 2% on a CPOR basis. Our employee productivity is excellent. For example, coming off a very efficient first quarter, our second quarter occupied rooms were up 13% over the first quarter with headcount only up 4%. There remains really no shortage of available labor. And as a reminder, we do reassess our employee pay every July and the increase for our employees across our hotels averaged approximately 2.5%. Below the GOP line, we received an approximate $300,000 in property tax refunds at our Sunnyvale and Fort Lauderdale hotels that enhanced our EBITDA margins even higher than our GOP margins. For the quarter, our top five producers of GOP were led by our residents in San Diego, our Embassy Suites Springfield, and followed by our Sunnyvale Residence Inn, then our Bellevue Residence Inn, and then finally and fifth was our Spring Hill Suites Savannah.

All three of the Silicon Valley hotels that were not under renovation were among our top 11 in EBITDA production. Using Hotel EBITDA, our Sunnyvale II Residence Inn led all hotels in all four Silicon Valley hotels hotels, as well as our Bellevue residence in, were ranked in our top 10. So clearly, tech hotels are gaining ground. GOP at our three non-renovation impacted Silicon Valley hotels were up, were approximately 51%, over 400 basis points higher than our portfolio average. Looking further at the comparable Silicon Valley hotels, which excludes the Mountain View Hotel, Hotel EBITDA grew a strong 29% year over year on a 9% rev increase. Of course, we did benefit from some property tax refunds, but EBITDA margins would still be about 20% higher, excluding those. We discussed last quarter that we'd most likely look to opportunistically sell an asset or two this year.

Thankfully, we don't have a lot that we want to get rid of, but I do want to let everybody know we are market one of our smaller hotels for sale with similar characteristics to the hotels we sold last year, and we would expect proceeds for that sale to be less than $20 million. We hope to have something to announce in that regard when we come back in November for our third quarter earnings call. On the CapEx front, we spent approximately $7 million in the quarter, with our full budget for the year being about $27 million, and we do have three hotels scheduled for renovation later this year, those being our Gaslamp Residence Inn, our Hyatt Place Pittsburgh, and our Farmington Homewood Suites. With that, I'll turn it over to Jeremy. Thanks, Dennis. Good morning, everyone. Our Q2 2026 Hotel EBITDA was $35.7 million.

adjusted EBITDA was $32.7 million, and adjusted FFO was 48 cents per share. We were able to generate a GOP margin of 46.8% and hotel EBITDA margin of 40.8% in Q2. GOP margins for the quarter were up 60 basis points from Q2 2020. 2025 and hotel EBITDA margins increased 220 basis points. As a reminder, we recorded a $900,000 workers comp benefit in Q2 2025, so excluding the impact of that, GOP margins would have been up 170 basis points and hotel EBITDA margins would have been up 330 basis points. The Midwest portfolio that we acquired in March generated rev par growth of 8.6 percent and $3.2 million of Hotel EBITDA in Q2. Chatham's overall rev par growth of 3.3 percent in Q2 exceeded our expectations going into the quarter, and performance accelerated significantly over the course of the quarter, with June REF PAR up 8.7%. This strong top-line performance has continued into July, where Chatham's REF PAR increased 9.7%.

Chatham's balance sheet remains in excellent condition and provides significant flexibility to fund opportunistic growth through accretive acquisitions and the development of the Home 2 Portland, Maine. of Q2, Chatham's leverage ratio as defined in our credit facility was only 31.2%, and the company had $225 million of availability under its revolving credit facility. Continuing strong EBITDA growth and meaningful free cash flow after dividends are expected to further enhance our financial flexibility. Turning to our 2026 guidance, we expect RevPAR growth of 1.5% to 3%, adjusted EBITDA of $99.2 to $102.3 million, and adjusted FFO per share of $1.28 to $1.34 for the full year. we generally expect Chatham's Q3 RevPar will increase approximately 4%. a reminder, our 2025 RevPAR pro forma for the impact of the Midwest acquisition would have been $149 in Q3, $129 in Q4, and $140 for the full year in 2025. This concludes my portion of the call. Operator, please open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, Press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any keys.

One moment, please, for your first question. And your first question comes from Gaurav Mehta of Alliance Global Partners. Please go ahead. Your line is open. Thank you. Good morning. I wanted to ask you on the expense management. You talked about labor and productivity. Can you maybe talk about other expense items, maybe insurance costs and any other expense items where you are looking at expense management. Hey, Gaurav. This is Dennis. Good morning.

I think if you look outside of labor and productivity, and I know we spend a lot of time talking about it, but it is, you know, between labor and benefits, almost 40% of our operating costs. I mean, obviously we have seen, and we've been, you know, seeing some benefits from property tax refunds. from really those are from prior years that are finally starting to that we're starting to get the refunds and hopefully You know those continue as we kind of catch up to where we are now at least with the local jurisdictions Property insurance for us. We were renewed, you know at the beginning of the year We've seen that down kind of in the around 10% range for the full year And if I look, you know Really, if you look at kind of a couple of the other things, utilities, I think we've done a pretty good job over the past of, depending on jurisdictions, we're able to market and to have competitive bids on pricing. We've done a good job of securing kind of longer term fixed rate contracts in certain markets that have helped mitigate kind of rising utility on the gas and electricity side. And then I think lastly, if you look at our R&M line in total for the year, I think we've done a very good job this year of kind of keeping and investing a lot of dollars in the past. And really, we've seen kind of the fruits of that and a little bit of a decline year over year that's benefited our margin. So just a lot of focus in that area as well.

Okay. Second question on the asset you are looking to sell. What's expected use of the proceeds and is that disposition included in the guidance?.

It's not included in the guidance. We typically don't treat it as, and keep it, we typically keep it in our guidance until literally it closes. But I think the short-term use of proceeds is going to be to pay down our credit facility. I think we have, you know, 60 or 70 million outstanding as we kind of sit here today. So we'll use the proceeds in the short-term to pay down the line.

All right, thank you. That's all I had. Thank you.

And your next question comes from Tyler Batori of Oppenheimer. Please go ahead. The line is open.

Thanks, good morning everyone. First question for me, I really wanted to double click on the July performance in terms of RevPAR up 10%. Is there anything unusual that's going on with the comp year over year? And if you could just go through really what was going on.

contributing to that very strong performance that would be helpful. Hey, Tyler. Good morning. I think, yes, I think, listen, it starts with Silicon Valley, and I think it's part of the answer to your second part of that question. If you recall last year when we were reporting on our third quarter earnings call in November, we talked about a decision that we had made regarding one of our top accounts terms of pricing for some business. And we declined that price reduction. So if you recall, we kind of had a weak third quarter in Silicon Valley last year. So the comps are easier there for Silicon Valley, but certainly, you know, a plus 26% in July, including plus 41% in Sunnyvale at the two hotels there was certainly a much bigger surprise. from where we would have thought we would have been and what we had underwritten for the balance of the year three months ago. I think we certainly have seen a good trend outside of that Mountain View Hotel of double digit increases.

But certainly, you know, a plus 26 in Silicon Valley just really helps our portfolio.

Okay, okay. Thank you for that. And then can you, I mean, I'm not sure if you can hear me. bridge for us, just where you are, REVPAR in terms of so far this year through July, and then connect the dots with the four year guide. Not sure if there's anything unique that's going on in the second half of the year. How much of the outlook is maybe a little bit of extra conservatism?.

Yes, I mean, I think I'm not sure I can verbally connect the dots, but I will say that, yes, I think we're, you know, and as Jeff talked about in his prepared remarks, listen, I think we're a little, you know, we're going to be a little conservative here. Obviously, July plus 10 is just is fantastic. You know, early, you know, early thoughts into August are good. But, you know, we are. kind of just taking the assumption that the rest of the year from September to December is kind of low single digits. So I We sure hope that we outperform that, but I think just given that, you know, just the relative risk that's out there and limited visibility will be a little conservative to start.

Okay. And then a bigger picture question for me, and Jeff or Dennis, I'm not sure who wants to take this. I mean, I just look at the lodging industry, I look at Red Park Performance, really over the last decade or so, there have been periods of time where where the business looks like it's really trending in the right direction. It turns out to be a head fake, and certainly nobody has a crystal ball. But, Jeff, in the prepared remarks, you did talk about a protracted upcycle for lodging. So if you could just talk a little bit more about that comment, what gives you that confidence, and when you look at the strengths. so far this year. What's, from your view, you think really going to contribute to that continuing over the next couple of years?.

Yes, this is Jeff. I think it really revolves around simple supply-demand economics. And in all the years I've been in this business, and I would have to, you know, pull up some charts to validate this, but... We are in, you know, or starting to approach the longest period of time where construction starts have really been as low as they have been. since the pandemic really, or shortly thereafter. So I think that fundamentally has always meant, as we've seen, RevPAR increases in the upper single digit, as you can remember probably, our double digit range. Very little supply generally yields to pricing power. You could see our portfolio auction Occupancy is around 81. I think that in our peak, guys, wasn't it around 83 maybe? So, you know, we're getting to a level here where the ability to charge more, I think, and get the kind of ADR increases that will really push the rev par, you know, is coming or already partially in some markets already there.

Fundamental GDP and manufacturing growth, highlighted by our Midwest stuff and the performance there being double digit gainers, obviously feels good. I don't see that slowing down anytime soon. whether you think AI is a bubble or a non-bubble, guess what? It certainly seems that our Silicon Valley presence is paying off. And I don't really think that that's going to pull back anytime soon, nor do I think a 40% red part game. is sustainable either. So it's really lack of construction, prices are high. Other developer friends that I've known for 20, 30 and some 40 years used to build 10, 12, 15 hotels a year as franchisees. most are building one or two if that. So in the select service arena, I think that fundamentally.

really paints a pretty positive picture for us. And Tyler, just to add to Jeff's comment about occupancy, if you kind of look over the last 16 years as a public company, our annual occupancy kind of peaked at 81.5% back in 2014. And if you look at kind of the busiest months of the year, which are generally the summer months in October, portfolio occupancy was kind of in the upper 80s and, you know, occasionally might have hit like 90%, but generally speaking, upper 80s. So as Jeff talked about with kind of occupancies now getting into the low to mid 80s, that should continue to gain with that lack of new supply.

Okay, appreciate that. Last one for me, just on the transaction market, just given that positive fundamental outlook, what's the opportunity set look like for acquisitions? What are you seeing in terms of valuations? What are you seeing in terms of the volume or the number of assets that are out there just overall?.

activity. Yes, I think that, this is Jeff again, I think that as Jeremy indicated, The balance sheet here is pretty strong. We have been very, very careful and always will be, as we said in our prepared remarks, to measure what kind of yield in the longer term we'll get from making an acquisition versus buying our own stock, but those economics have certainly shifted a bit here as the stock price for us and some others has come up so I think in my short 40-year history doing this I think that generally means that the pipeline ought to increase. I think that rev part trends, if they should continue to be in a positive manner, overall across the country will sort of encourage owners that were on the fence about perhaps recycling their capital or selling property or getting out from under debt maturities that are still out there, or generating money to still do renovations that may be behind as a result still of the post-COVID hangover. end up putting their hotels on the market, and people get, as buyers, a little more bullish. But I'm more or less looking into the future as opposed to saying that all of a sudden, people have put hundreds of hotels on the market And that's all happening now. But it's likely to have certainly positive effects. Transaction market for the balance of this year, second half, ought to be certainly better than the first six months of this year.

Okay, that's all for me. Appreciate that detail. Very helpful. Thank you. Sorry for the long answer.

Thank you. Again, if you would like to ask a question, please press star followed by the number one on your touchtone phone. And there are no further questions at this time. I would now like to turn the call back over to the speakers for closing comments.

Well, again, thank you all for being with us today. We certainly look forward to continuing to put the kind of results on. And frankly, I'd like to, for those that are listening anyway, compliment our team and the Island Hospitality team insofar as, forget these Chatham guys, insofar as they've been doing a great job. As far as the results that have been posted, I think everyone honestly has worked real hard. The expense management, as was asked on the first question, I think has been excellent. And we expect to continue to maintain our focus on all fronts, driving REVPAR, driving market share, and driving that incremental revenue to the bottom line. Thank you.

Ladies and gentlemen, this concludes today's conference. We thank you for participating and ask that you please disconnect your lines.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good morning, ladies and gentlemen, and welcome to the Chatham Lodging Trust First Quarter 2026 Financial Results Conference Call.

[Operator Instructions]

This call is being recorded on May 7, 2026. I would now like to turn the conference over to Chris Daly. Please go ahead.

Thank you, Annis. Good morning, everyone, and welcome to the Chatham Lodging Trust First Quarter 2026 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 filings.

All information in this call is as of May 7, 2026, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements to conform these statements to actual results or changes in the company's expectations.

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

Now, to provide you some insight on Chatham's 2026 first 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?

All right. Chris, thank you very much, and I certainly appreciate everyone joining us here today on our call. It was really a great quarter, obviously, for us on every front, delivering for our shareholders.

Given our strong operating results, great acquisition, and continued share repurchases, as well as improved outlook for the remainder of the year, we have increased our guidance by approximately 15% since February.

On the corporate side, we increased our common dividend by 11% in the first quarter following a 28% increase in 2025. With a common dividend to FFO payout ratio of only 32%.

Based on our updated guidance, our dividend is well covered with ample room to continue growing in the future. We will reevaluate the quarterly dividend later this year.

Also, we continue to aggressively repurchase shares using free cash flow. Through the end of the first quarter, the company has repurchased 2.2 million shares or approximately 4% of our common equity at an average price of $7.04, which equates to a 10% cap rate based on the updated 2026 guidance.

At current share price levels, we're trading over a turn lower than our select service peers' current EBITDA multiple, which is not reflective of our financial strength or our upward trajectory of our portfolio, especially given the continued strength and increasing strength of our Silicon Valley recovery.

We will continue to repurchase shares given the market disconnect.

Externally, we've been executing a massively successful recycling campaign over the last couple of years, highlighted by the recently acquired portfolio of 6 high-quality Hilton-branded hotels comprising 589 rooms for $92 million that are immediately accretive to Chatham's operating margins, FFO, and FFO per share.

The portfolio diversifies our geographic footprint into areas of the country that are benefiting from expanded investments in manufacturing and distribution.

The hotels are generally the highest quality properties in their respective markets, with an average age of only 10 years, and 66% of the portfolio's rooms are extended stay.

The hotels benefit from very favorable labor dynamics and will enhance Chatham's already industry-leading hotel EBITDA margins. Performance since closing has been great with the portfolio producing RevPAR growth of 6% in the first quarter and an even stronger 7% in April.

Obviously, we're very excited about this acquisition.

Operationally, it was a great quarter for us with RevPAR hotel EBITDA margins and hotel EBITDA easily beating our expectations for the quarter. On a comparable basis, our hotel EBITDA grew 5%, and our hotel EBITDA margins gained 135 basis points.

Facing difficult comps due to the significant amount of wildfire demand last year in our L.A. hotels, our RevPAR went from a decline of 5% in January to growth of 1% in February and up 5% in March, finishing the quarter up 1%, which was well above our expectations for the quarter.

Silicon Valley led the way with RevPAR growth of 23% in the quarter, when you exclude the Mountain View hotel, which was under significant renovation.

We experienced broad demand growth across our portfolio, with over 2/3 of our hotels generating RevPAR growth and approximately 25% of our hotels earning double-digit RevPAR gains.

I do want to spend a few minutes talking about our largest market, Silicon Valley, since these hotels had an incredible start to the year.

Occupancy at our 4 Silicon Valley hotels was 72%, flat to last year despite our Mountain View hotel being under renovation for the entirety of the quarter, and ADR was up 10% to a post-pandemic quarterly high of $210.

Not a first-quarter high, a high mark for all post-pandemic quarters, and our RevPAR of $152 would be the second-best quarter over the last 6 years. These are great results and very encouraging again, especially considering the renovation at Mountain View during the quarter.

For the other 3 hotels, RevPAR was up double digits in each month of the quarter, finishing the quarter with a strong growth of 23%, as I said, and advancing another 12% in April.

As Dennis quoted in the release, demand was up 9% in the first quarter and in April across the entire San Jose Santa Cruz market.

Our hotels did way better than that growth, as our extended-stay Residence Inn hotels, as we've said before, are best suited for the corporate traveler coming to the valley.

RevPAR was up 15% at our San Mateo hotel, and our 2 Sunnyvale hotels shone with RevPAR up 26% in the quarter. Of course, massive capital investment announcements continue in technology from all types of companies.

And seemingly unending these days, major technology companies are engaged in a historic multi-hundred billion dollar investment arms race, as it's been called in 2026, with big tech projected to spend over $650 billion on AI infrastructure alone.

Capital is flowing aggressively into data centers, specialized semiconductors, and energy, with aggregate global AI investment projected to approach trillions. Of course, Silicon Valley is the heart of the tech world.

We don't see that changing anytime soon. And having just been out there last month, I can tell you the energy and overall activity are the most positive I've felt since before the pandemic.

In Sunnyvale, construction of the multibillion-dollar Applied Materials chip facility, our #1 account, by the way, that is near both of our hotels in Sunnyvale, is in full swing.

Actually, they got a permit to build 24 hours a day. We tried to fly a drone over it to share on one of our investor reports, but we kind of got knocked down on that idea by the people in charge there.

Anyway, our 2 Sunnyvale hotels are seeing surging room night production for our largest clients, many of whom are involved in these investments, as I said, such as Applied Materials, Palo Alto Networks, NVIDIA, of course, Google, particularly in Mountain View, Apple, Pure Storage, plug-and-play, and the list goes on and on.

We certainly are encouraged about what finally seems to be happening for sure in the valley.

In the short term, of course, adverse repercussions stemming from the turmoil in the Middle East, especially with respect to gas prices and their impact on travel, so far have yet to make any meaningful impact.

We have easier comps over the last 3 quarters of the year in our 3 D.C. hotels as a result of all the Doge and shutdown events that occurred last year.

And of course, we do have U.S. 250 celebrations. So as to that market, I think we've got some visible upside there. Additionally, we do, as others have mentioned, but we do have some of the highest exposure to the World Cup among lodging REITs.

And in Dallas, our Courtyard downtown is right next to the convention center, which will host up to 5,000 media professionals as it is serving as the international broadcast center for the World Cup.

In addition to Dallas, our hotels are quite close to stadiums in San Francisco and Los Angeles, and our Bellevue Residence Inn is positioned for easy commuter rail access to the stadium in Seattle. And our Residence Inn in Fort Lauderdale should also benefit.

And of course, importantly, business travel demand, especially in our tech markets, recovery in our tech hotels, which accounts for over 20% of our EBITDA, represents a unique opportunity for us to outperform our peers.

Longer term, of course, just looking forward, the supply-demand equation that we've talked about before should still continue to benefit existing hotel owners.

Construction costs, of course, remain quite high, and development is only justified in a few markets. Demand growth is quite encouraging so far, as we've said, in 2026.

Business demand should continue to rise even if a portion of the trillions of dollars of announced investments in technology and reshoring of manufacturing come to fruition in the United States.

Of course, that's where I think our Midwest portfolio that we acquired should also benefit, I think, on an outsized basis, being in the hub of the manufacturing belt in the U.S.

Leisure travel, which is approximately 18% of our hotel EBITDA, will continue to benefit as well from changing consumer demand behavior, as travelers want more experiences and nights away from home.

Finally, on my end, we'll continue to opportunistically sell some older nonperforming assets and with the goal, of course, capital recycling, reinvesting those proceeds into share repurchases or hotel investments.

Also, we expect to commence our Portland, Maine hotel development during the quarter. So, although we've been talking about it for quite some time, they're actually beginning to erect a fence around that portion of the property.

So, it is happening with the opening before the fall season of 2028.

Dennis may say otherwise, but we'll hedge that bet a little bit. We will provide a detailed breakdown of total spend and timing in connection with our second quarter earnings call in August, but I will tell you the unlevered returns are projected to be quite strong, as we've mentioned.

With that, I'd like to turn it over to Dennis.

Thanks, Jeff. Good morning, everyone.

To supplement Jeff's comment regarding using free cash flow to buy back shares, we implemented our $25 million repurchase plan in 2025, and our free cash flow was $15 million in 2025 and is projected to be approximately $20 million in 2026.

Therefore, we intend to finish the entire $25 million program this year, and we'll be reevaluating a new plan in the coming months. After the end of the quarter, in April, we did buy approximately 200,000 shares at approximately $8.34 a share.

Some additional quarterly information.

Our top 5 RevPAR hotels in the quarter were our Residence Inn Fort Lauderdale with RevPAR of $262, our Home to Phoenix Downtown with RevPAR of $191, followed by our Residence Inn Gaslamp, our HGI Marina Del Rey, and our Residence Inn by Marriott White Plains with RevPAR of $164.

Our 2 Sunnyvale and San Mateo Residence Inns were 3 of our top 10 RevPAR hotels for the quarter. Our 7 predominantly leisure hotels generated RevPAR growth of 2% and a little over 2% in the quarter.

6 of our 7 leisure-driven hotels produced RevPAR growth, with our Hyatt Place Pittsburgh leading the way with RevPAR growth of 23%, benefiting from a solid convention calendar, as the convention center is right across the river from our hotel.

And demand related to sporting events, especially the Pittsburgh Penguins' hockey. And of course, in April, the NFL draft was literally located right outside the doors of our hotel between our hotel and the Steelers' Stadium. And we did, of course, really well there with RevPAR up over about 250% during the week.

Our 3 predominantly government-oriented hotels, all in the Greater D.C. area, produced RevPAR growth of 9% despite tough comps in January, comping over the inauguration last year.

As a group, those hotels represent approximately 9% of our EBITDA. Our Springfield and Tysons Corner hotels are recovering from all of the Doge and liberation Day and shutdown activity last year.

San Diego RevPAR grew 5% in the quarter, outperforming our expectation, which was a decline of 5%. We're obviously quite pleased with the quarter.

As a reminder, though, the 2026 convention count is a bit softer than 2025, and we are forecasting a RevPAR decline of about 2% for the rest of the year.

Hopefully, we have some upside there. In other large markets, our coastal Northeast hotels saw RevPAR decline 8% in the quarter. Our Portland and Exeter hotels benefited last year from renovations at hotels in the comp set.

In Texas, our Dallas and Austin hotels have felt the impact of convention demand falloff with convention centers under renovation and ongoing expansions.

RevPAR at our Courtyard Dallas was down 26% in the quarter, though the good news is that our comps get better in the second quarter as we start to lap over prior weaknesses from the closure.

In Austin, our Residence Inn was under renovation for the bulk of the quarter, and that renovation is finished. Having said that, the entire Austin market has really been weak, with overall RevPAR down 6% over the last 12 months.

Like Dallas, comps start to get easier there towards the second half of the year.

As an update, and this is really a great development, it was officially announced that the planned $3 billion MD Anderson Hospital and Research Center that was previously expected to be built downtown is now expected to be built at the J.J. Pickle Research Campus, and groundbreaking is expected to start this year.

That campus is approximately 1 mile from both of our hotels at the Domain. And because our 2 hotels are both extended stay, we should benefit greatly from this new facility. That will be under construction shortly.

Of course, we only owned the new 6-pack of hotels for most of March. But as Jeff said, we're quite pleased with the performance of that group. RevPAR growth, again, for the quarter was up 6%, and then April was up 7%, slightly above our underwriting guidance.

First quarter occupancy of 74% was 200 basis points higher than our portfolio average for the quarter. And given that this is the first time we've spoken publicly since closing the acquisition, I do want to spend some time just sharing some color on the portfolio that we acquired.

The markets further diversify our geographic footprint into areas of the country that are benefiting from expanded investments in manufacturing and distribution.

Joplin, Missouri is adjacent to the intersection of both Interstates 44 and 49 in Southwest Missouri and benefits from its location between Kansas City, St. Louis, Oklahoma City and the ever-growing Northwest Arkansas area, which is home to, of course, Walmart, J.B. Hunt and Tyson Foods.

Key industries in the Joplin area include manufacturing, with major players there, including General Mills, Frito-Lay, Coca-Cola, Cargill, and the headquarters of Legggan & Platt. And obviously, distribution, given its proximity, is a major driver there.

Additionally, the hotels will benefit from an almost $400 million development called Prospect Village, which will be home to a sports complex that will include a 135,000 square foot indoor athletic center as well as outdoor turf fields.

The sports complex is expected to host 28 indoor tournaments and 22 outdoor tournaments over weekends each year that will generate an extra $12 million of annual spending, visitor spending, and 27,000 annual hotel room nights.

And these will be mostly weekend nights, thus enhancing our full week performance at the hotels. Paduca sits on Interstate 24 and is proximate to the many high-traffic commerce routes between St. Louis, Louisville, Nashville, and Memphis.

Key industries include manufacturing with large-scale facilities in the area operated by Darling Ingredients, Frito-Lay, H.B. Fuller, among many others, as well as the marine industry in Paducah, as it is a major hub for the inland marine industry due to its location at the confluence of the Ohio and Tennessee Rivers with proximity to the Mississippi and Cumberland Rivers.

Like Joplin, Paducah is set to open in the next month, an almost $100 million multisport outdoor sports complex, and that's expected to open here in the next month and is expected to host 35 to 40 tournaments a year.

In 2026, it's projected to host at least 2 full weekend tournaments per month for the next 6 months. Additionally, on the longer-term horizon for Paducah, in March, it was announced that Global Laser Enrichment is planning to build a new nuclear enrichment facility on a 665-acre site in Paducah.

Plans are currently under review by the Nuclear Regulatory Commission. And once approved, construction will take approximately 3 years to open. The project is expected to generate approximately 1,000 jobs over the course of construction and hundreds of jobs upon completion.

And just given the nature of the facility, it's going to be a constant source of demand from, obviously, ongoing visitations from authorities, interested parties, and everything of the like.

So, really good long-term project there. Fham sits at the crossroads of Interstates 57 and 70, midway between Indianapolis and St. Louis, and brings into its area about 200,000 of workers from 8 neighboring counties each week.

Key industries include food and agriculture, with major players such as Archer-Daniels-Midland, Crestige, Pepsi, and Simmer Milling. Manufacturing is also a major player with Flexing Gate, Hitachi Metals, Effingham Machine and Assembly, and Peerless of America.

And then, of course, again, similar to the other 2 markets, distribution, given its relation to many different modes of transportation, is a big player. Shifting my comments back to our operating results.

We grew hotel EBITDA 5% at our 33 comparable hotels as we were able to increase our GOP hotel margins on the back of a decline in labor and benefits per occupied room of over 1%.

Additionally, we drove our other operating profit 6% higher in the first quarter. Looking at guidance for the remainder of the year, our hotel EBITDA margins are up about 100 basis points from our previous guidance.

Continuing the trend since last year, we've stayed laser-focused on our staffing levels and maximizing productivity and efficiencies. As a reminder, in 2025, our labor and benefits costs declined slightly year-over-year, and we were the only lodging REIT to accomplish that.

And like I said, in the first quarter, we were able to reduce our labor and benefits by over 1% or $0.50 per occupied room.

We also benefited from lower property insurance renewal rates and property taxes due to some refunds, and those items we were able to absorb an approximate 12% increase in utility costs in our comparable hotels.

We were particularly impacted by the massive snowstorm across the middle of the country and the Northeast in the early part of the first quarter.

For the quarter, our top 5 producers of GOP were led by our Residence Inn San Diego, our 2 Sunnyvale Residence Inns, our Home2 Phoenix, and lastly, our Residence Fort Lauderdale.

Outside of our top 5, but in our top 10, was also our Residence Inn San Mateo. So again, all 3 of the Silicon Valley hotels that were not under renovation were in our top 10.

Looking at these comparable Silicon Valley hotels, hotel EBITDA grew a remarkable 35% year-over-year on what was a 23% RevPAR increase for a 1.5x flow-through, again, going to show you the upside financial leverage we can get from these hotels starts to grow.

That 35% growth is pro forma for a property tax refund that we received on one of those 3 hotels during the quarter. If you include that, the actual growth was about 50% in hotel EBITDA.

On the CapEx front, we spent approximately $6 million in the quarter. We completed the full renovation of our Residence Inn in Austin and the rooms portion of the Mountain View renovation.

We are completing major interior upgrades to the Mountain View Gatehouse that will be completed here in the next month.

Later this year, we will be completing a significant enhancement to our Gatehouse outdoor amenities that will be fantastic for our guests to enjoy the great weather, as well as to collaborate with other guests in a very nice setting.

Our CapEx budget for 2026 is approximately $27 million. We have 3 hotels scheduled for renovation later this year. That's our Gaslamp Residence Inn, our Hyatt Place Pittsburgh, and our Farmington Homewood Suites, and those are all expected to start in the fourth quarter.

Lastly, I'll add that the 6 recently acquired hotels have very little CapEx required this year. And in fact, only 1 hotel is scheduled for renovation over the next 2 years, the Hampton Inn and Suites Paducah.

With that, I'll turn it over to Jeremy.

Thanks, Dennis. Good morning, everyone. Our Q1 2026 hotel EBITDA was $21.4 million, adjusted EBITDA was $18.4 million, and adjusted FFO was $0.20 per share.

We were able to generate a GOP margin of 40.2% and a hotel EBITDA margin of 31.8% in Q1. GOP margins for the quarter were up 60 basis points from Q1 2025 due to outstanding expense control.

As Dennis mentioned, Q1 labor and benefits costs actually decreased 1% on a per occupied room basis. Q1 hotel EBITDA margins increased by 140 basis points due to both the strong expense control and $500,000 of property tax refunds in the quarter.

In early March, Chatham closed on the acquisition of a portfolio of 6 Hilton-branded hotels for $92 million. The acquisition was funded with borrowings on our revolving credit facility, which currently has a rate of approximately 5.1%.

We are very excited about this acquisition, given the hotel's average age of only approximately 10 years, outstanding margins, strong RevPAR growth, and limited near-term capital needs. We expect this acquisition to be significantly accretive to Chatham's FFO and free cash flow.

After this acquisition, Chatham's leverage ratio, as defined in our credit agreement, was only 32.5%.

Chatham's strong balance sheet puts the company in an excellent position to continue actively repurchasing shares, pursue the planned development of a hotel in Portland, Maine, and to continue to grow opportunistically through accretive acquisitions.

Turning to our 2026 guidance. We expect RevPAR growth of 0% to 2%, adjusted EBITDA of $95.3 million to $99.6 million, and adjusted FFO per share of $1.21 to $1.29 for the full year.

Our guidance reflects the contribution from the $92 million acquisition from March 3 forward. Reflecting the pro forma impact of this acquisition, our 2025 RevPAR would have been $127 in Q1, $153 in Q2, $151 in Q3, $129 in Q4, and $140 for the full year.

We generally expect Chatham's Q2 '26 RevPAR to increase approximately 1% to 2%. While our guidance does not reflect any share repurchases or acquisitions, our plan is to continue repurchasing shares and, over time, to continue to pursue accretive acquisitions.

This concludes my portion of the call. Operator opens the lines for questions.

[Operator Instructions]

Your first question comes from Gaurav Mehta with Alliance Global Partners.

I wanted to ask you about the portfolio acquisition, hoping to maybe get some more color. Was this like an off-market deal or a fully marketed deal? What were the CapEx rates like? And what do you attribute?

It seems like the performance for the portfolio is coming in better than what you underwrote during the acquisition. What do you attribute that outperformance to?

Gaurav, yes, I mean, I think the transaction itself was a brokered transaction sent out to, I guess, a group of parties.

I think one of the things that we liked about the deal and I think there aren't a lot of buyers that are out there that have the ability to take down a $100 million acquisition.

It's too big for a bunch of buyers that we might see on an individual deal. And we were certainly involved in the transaction, and just a lot of the deals that we've looked at over the last couple of years, really excited about some of these other markets that might initially be off the radar of certain other people, but just doing a lot of work and seeing a lot of information like the transaction.

The performance of the portfolio is, I wouldn't say meaningfully above our underwriting, but both in terms of the first quarter performance and the April performance, RevPAR growth, I'd say, is $1 or $2 above where we thought it was going to be.

So, it's not just like significantly outperforming our underwriting, but it is outperforming. So, just very pleased with the 6 hotels, how they've gotten out of the gate so far, and really like what it does for us in terms of diversifying into some other industries and a little bit into the Midwest of the country.

Maybe on the acquisition market in general, are you guys seeing more activity now in the transaction market compared to maybe even last quarter?

I think it's similar to last quarter, Gaurav. I think it's still a challenging market, especially when you look at individual-type transactions.

I think thankfully, the public, at least the public companies, their multiples, thankfully, we're starting to adjust a little bit here. So it's going to make it, I think, allows people to have a little bit of a lower cost of capital, which might generate some additional interest.

But at the moment, I think it's pretty consistent in terms of deal flow from last quarter to this quarter. But then that's certainly more than what we saw a year ago.

And then maybe on the asset recycling disposition side, are there any more assets that you guys may sell, or have you sold asset that you guys sold in the last few quarters? Is that about it for now?

We are still looking at that, Gaurav. I think we'll probably end up trying to sell 1 or 2, the balance of the year.

I think with the whole purpose of, again, I think, as we noted, reinvesting those dollars into either share repurchases or new acquisitions.

But certainly, that last program was really a pretty high volume for us, but I think it will just be 1 or twosies for the foreseeable future.

Your next question comes from Aryeh Klein with BMO Capital Markets.

Maybe just a follow-up on the acquisitions. These are somewhat different markets from the rest of your portfolio. Just curious, any supply growth to speak of in these markets that we should be aware of?

Supply growth? Yes, very little. There's one hotel that just recently, I believe, opened in Paducah. But outside of that, really, no new supply that's coming to the 3 markets.

And maybe shifting gears a little bit. You mentioned that some of your markets will benefit from the World Cup. What are your World Cup expectations? And how is that factored into the guidance?

And then just on the guide in general, it seems like you're assuming somewhat slower growth in the second half of the year. You do have some easier comps. Is that just factoring some level of conservatism on your part?

Yes, listen, we do have some conservatives in there in general. The World Cup, we're being pretty conservative in regards to that as well.

There's a lot of publicity and media attention around international travelers coming in, and the fact that tickets are really expensive on top of just trying to get to the country. So, we're taking a pretty measured approach when it comes to our forecast for most of those markets.

Obviously, we're projecting growth. But hopefully, we see some upside, not only with the World Cup, but I think just in general, as you said, we have some easier comps with a lot of the shutdown activity.

But I think if you look at our guidance of 1% to 1.5% to 2% for the rest of the year, hopefully, we outperform.

And maybe just one last one. In Silicon Valley, previously, you used to get a decent amount of interim business. It has faded, maybe a little bit, in the last couple of years. How are you seeing that play out, I guess, over the course of the summer?

Yes. In general, the interim business has come down significantly from pre-pandemic, and especially, it was the summer of 2022, I believe, when we had a tremendous amount of business.

There is some still out there. We do have one block of interns on the books at one of our hotels, not taking it to the bank yet, but we do have some interim business coming back this summer. So hopefully, that does end up happening. That will be from late May to mid-August.

Your next question comes from Tyler Batory with Oppenheimer.

A lot of good detail here, and congrats on the really strong results. Really nice to see the execution here. A couple of cleanup questions for me, and share repurchases, capital allocation first.

It's been a while since your stock price was in the double digits. I guess we're starting to approach that. Share repurchases still make sense up here? I mean, you mentioned the stock still being undervalued in your mind.

Any help in terms of what the portfolio might be worth, what you think might be a fair multiple for your assets?

Well, that's a very interesting question. To talk about the share repurchases, I think if you look at where we're trading at as of literally right the second, we're around the 9% cap on our corporate NOI, around the 10% cap on our hotel NOI.

So listen, it's still on a historical basis, even at $9.45 is an attractive investment for, again, what we determine a use of proceeds from our obviously, free cash flow and our capital recycling, so I think we'll continue to buy shares within our $25 million repurchase plan.

And that probably takes us through the end of the third quarter, which is most likely at the rate that we've been buying shares at. I think as far as what we're worth, that's a different loaded question.

But I think certainly, we feel our portfolio, and most, our peers would say the same, our underlying value is much better from a cap rate perspective and EBITDA multiple than where we're trading.

We're still all trading at multiples that are in the history of lodging REITs fairly low. So I think there's a lot of upside.

Yes. I think even outside of the question of valuation multiple or cap rate, we just see a ton of upside in the EBITDA and NOI, in particular, of our Silicon Valley assets.

So, even if the multiples weren't to rerate at all, I think we still see a bunch of upside in the portfolio and the stock.

My follow-up on operations, and just to hit on Silicon Valley a little bit more.

The RevPAR growth there is tremendous. And I'm trying to get a sense of, in terms of your guide talking about the rest of the year, just what's included in that outlook for Silicon Valley.

And just if you could also just frame too, I think you got one of the assets there under renovation, too. I'm not sure if that's a catalyst in terms of driving further upside to that portfolio in the years ahead.

I mean, listen, I think the Mountain View renovation, and like I said, the Gate House has been completely closed, and check-in has been using our lobby, which is, in essence, 2 guest rooms. So it's been pretty disruptive there.

But I think if you look at the balance of the year for the 4 hotels, and I'm just pulling up some information for you, Tyler. Obviously, we talked about the 3 hotels being up 12%.

But when you look at coming out of the renovation, the 4 hotels, we're projecting mid- to upper single digits RevPAR growth for the balance of the year from essentially May to December.

So that's a little bit, I think, obviously conservative compared to what the first 4 months of the year have done. Hopefully, we continue to see that demand growth, but there potentially could be some upside there as well.

There are no further questions on the phone line. I will turn the call back to Mr. Fisher for some closing remarks.

Well, again, I just want to thank everybody for being on the call. We are pretty pleased here with not only the top-line results, but frankly, I'm very pleased with how the operator has been able to flow those top-line results to the bottom line.

And as Denis mentioned, actually experiencing some reduction in some labor costs and otherwise due to some really strict controls that have been enforced very well.

So, we look forward to continuing to put up some good results for the rest of the year. I think conservatism, obviously, is reflected in our peers as well. It is probably the best bet for the time being, given that there is a war going on in the Middle East.

And I don't think we mentioned that yet, but it's certainly worth keeping in mind. But again, we think the hotels themselves and the overall trends bode very well. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.

Good morning, ladies and gentlemen, and welcome to the Chatham Lodging Trust Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference call over to Chris Daly, owner of Daly Gray, Inc. Please go ahead.

Thank you, Jenny. Good morning, everyone, and welcome to the Chatham Lodging Trust Fourth Quarter 2025 Results Conference Call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities law. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of February 25, 2026, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website at chathamlodgingtrust.com. Now to provide you with some insights into Chatham's 2025 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?

Okay, Chris, thank you very much, and I certainly appreciate everyone joining us here for our call today. Before talking about the fourth quarter specifically and our outlook for this year, I'd like to spend just a few minutes highlighting some noteworthy accomplishments as we look back at the last year. Operationally, it was a really good year for us despite the extreme volatility that adversely impacted the industry and our top line.

On the top line, for the fourth consecutive year, though, our RevPAR performance beat the industry, and we continued pushing our other operating profits, other department operating profits higher as well. Despite essentially flat RevPAR and for this, we are really proud, we were able to limit our GOP margin decline to only 20 basis points by staying laser-focused on our staffing levels and improving productivity.

Our labor and benefits costs actually declined slightly in 2026, offsetting wage increases of almost 4% in the year. And most importantly, for the first time since the pandemic, we generated the highest operating margins in the industry, reclaiming our top spot among the rankings that we held for an entire decade from 2010 to 2019. Looking ahead to this year, our hotel wages are reassessed in July each year, and our wage increase for the second half of 2025 is up only 2% versus the first half of the year, which means wage pressures are moderating throughout 2026.

Strategically, we sold 4 of our older lower RevPAR hotels at an approximate cap rate of 6% and used those proceeds to reduce debt and to acquire shares under the repurchase plan we initiated in 2025. Since announcing the plan, we've repurchased approximately 1.8 million shares or approximately 4% of our outstanding shares at an average price of $6.87 per share for a total repurchase of almost $13 million or just over half of our $25 million plan.

At our average acquisition price, those shares were acquired at an approximate 9.5% cap rate based on our 2026 corporate NOI guidance and might be the only lodging REIT with an average repurchase price below current trading levels since peers initiated their repurchase plans. Using average multiples for the last 25 years, these repurchases certainly are going to be accretive.

On the corporate side, we added 10 rooms to our portfolio by converting excess meeting space and other available spaces, which will deliver the best returns for those spaces in the hotels. We continue to participate in the GRESB sustainability benchmark and ranked 29th out of 95 listed companies. We completed the largest and most attractive financing in Chatham's history with total capacity of $0.5 billion while reducing our overall borrowing costs, and we used proceeds from the sale of assets and free cash flow to reduce our net debt by $70 million and further reduce our leverage ratio to a mere 20%.

By the way, that leverage compares to almost 35% in 2019. All of these accomplishments allowed us to increase returns to our shareholders, and we're able to increase our common dividend by 2020 -- excuse me, by 28% in 2025, including our repurchase plan and both common and preferred dividends, we returned approximately $35 million to our shareholders. It was truly a great job by our teams at Island Hospitality and Chatham, staying in constant communication and on the same page, delivering solid results throughout a very volatile year.

As we move forward, we're confident in the industry long term. The supply-demand equation should benefit existing owners as construction costs remain quite high and development is only justified in certain markets. GDP growth is healthy and should accelerate if even a portion of the trillions of dollars of announced investments in technology and reshoring of manufacturing come to fruition in the United States.

Existing hotel owners should benefit via stronger RevPAR growth in the years ahead. We obviously need to be able to push those incremental revenue dollars down to GOP. And really for the first time in almost a decade, wage pressures are mitigating to the lower single-digit range, which is vital given that labor costs are our largest expense.

As we sit here today, we're in a great position to deliver earnings growth and shareholder returns in multiple ways. First, we will continue to repurchase shares and intend to utilize most, if not all, of our $25 million plan this year. Second, operationally, we are positioned to outperform the industry on both top and bottom line. There was a lot of noise in 2025 that impacted RevPAR in some of our key markets. So hopefully, things calm down this year. And if they do, our operating model is best at driving profits higher as we've demonstrated over and over again.

Third, we'll continue to opportunistically sell older nonperforming assets with the goal of reinvesting those proceeds into share repurchases or hotel investments. And on that front, we were disappointed not to make any external acquisitions in 2025, but sometimes the best deals are the ones that you don't do, and we never had enough conviction on any deals and chose to remain patient with significant financial flexibility. We are confident that we can make some acquisitions in 2026 as financing costs have lessened and seller pricing expectations have adjusted somewhat from where we were a year ago.

The markets, though, of course, will have to make sense for us, and we are looking for some continued diversification, both in markets and demand generators. And of course, yields have to approximate the implied yield on buying our own stock. We want to invest in markets that are going to benefit from increased business investments, which is generally the Central and Southeastern U.S.

Lastly, we do expect to commence our Portland, Maine hotel development in the coming months with opening before the 2028 summer. As I stated earlier in my comments, hotel development really only makes sense in certain markets and Downtown Portland happens to be one of them, especially considering we have no cost basis in the land. Our focus is on increasing shareholder returns. And in addition to the share repurchase program, we believe our initiatives should enable us to return even more money to our shareholders via further increased dividends this year.

Before Dennis gets into the fourth quarter details, I do want to spend a few minutes talking about our largest market, Silicon Valley, its performance in 2025 and our outlook beyond. Silicon Valley is our largest market and RevPAR grew only 1% in 2026, but it was a tale of 2 halves as RevPAR was up 5% in the first half of the year, and then we were off 4% in the third quarter and less than 1% in the fourth. Our Mountain View Residence Inn was under renovation for the last 2 months of 2025 and will remain under reno through March of this year.

Also, if you recall from our third quarter call, we lost some business related to pricing strategies around a single corporate client at our 2 Sunnyvale hotels. Third quarter RevPAR was down 9% in the third quarter, and we did a great job replacing that business or some of it in the fourth with RevPAR only down 1%. We'll continue to feel some impacts in the first quarter of this year as to that account. But as the year progresses, our comps will get better, and we'll benefit from the World Cup schedule, and that sets up very well for our 2 Sunnyvale hotels.

And of course, we remain very constructive on the Valley and Mountain View, particularly, of course, is anchored by Google, Waymo, LinkedIn, Intuit and several other firms that certainly provide a good steady source of demand for that hotel. Sunnyvale is quickly rebounding from the post-pandemic slumber. Sunnyvale's office market is rebounding faster than any other Silicon Valley market and had 1.4 million square feet of positive absorption last year.

In 2025, Apple increased its square footage by over 1 million feet and LinkedIn added to its campuses and Applied Intuition, which is a $15 billion software company for self-driving cars moved into Sunnyvale. And of course, our largest client, Applied Materials, is building a $4 billion chip facility that's only a block or 2 away from our 2 Sunnyvale hotels. So we certainly look forward to continued better times over the next few years in the Valley.

With that, I'd like to turn it over to Dennis.

Thanks, Jeff. Good morning, everyone. Some additional RevPAR information. Occupancy at our 4 Silicon Valley hotels was 72% and ADR was up 2.5% in the quarter despite that shift in business that Jeff talked about in Sunnyvale from the third and fourth quarters.

Our 6 predominantly leisure hotels, which account for approximately 20% of our EBITDA, produced RevPAR growth of 50 basis points in the quarter. And the shutdowns impact on our 3 D.C. area hotels accounted for about 60% of our quarterly RevPAR decline. Some more color on our larger markets, California, which is home to 2 of our -- 2 more of our top 8 markets in addition to Silicon Valley, Los Angeles and San Diego.

San Diego RevPAR declined 8% in 2025 as the market retracted from an all-time best convention calendar in 2024. Additionally, demand slipped due to the opening of the nearby Gaylord as well as the shutdown of the border, which reduced our government business at our hotel. The 2026 convention calendar sets up similarly to 2025 with 43 conventions in '26 versus 46 in '25.

In L.A., RevPAR at our 3 hotels was up 4% in 2025 due in part to the significant fire-related business we received, especially at our Woodland Hills Home2, which benefited basically from January through the early parts of May. And then obviously, in the L.A. area for the balance of the year, it was generally softer of 2025 due to the general unrest in the L.A. area. Hopefully, that also settles down in 2026. And similar to Sunnyvale, we should benefit from World Cup demand given the proximity of our Marina del Rey and Anaheim hotels to the stadium in L.A.

In other large markets, our Coastal Northeast hotels have better 2026 comps due to renovation impacts in '25 and our D.C. area hotels have much easier comps after January due to all the shutdown-related businesses or pauses in 2025. Our Bellevue Residence Inn also should continue to benefit from increasing corporate demand.

In Texas, all 3 markets have felt the impact of convention demand falloff, with Dallas and Austin convention centers under renovation and expansion, while San Antonio just didn't have a great convention calendar in 2025. Dallas will have tough convention comps through the first quarter, but we will see demand from the World Cup in the second and third quarters as Dallas not only hosts 9 games, which is the most of any city, but the nearby Kay Bailey Convention Center will host up to 5,000 media professionals as it's serving as the international broadcast center for the World Cup.

And then in a very encouraging development for our 2 Austin hotels at The Domain, a planned $3 billion MD Anderson Hospital and Research Center that was previously expected to be built downtown is now expected to be built at The Domain with groundbreaking starting in 2026. Outside of our top markets at our Home2 in Phoenix, as a reminder, it opened in 2024, and we acquired the hotel in May of 2024, RevPAR was up approximately 17% in the quarter as we continue to gain market share as we've been able to partner with the nearby baseball stadium, the Arena and the convention center to participate in business blocks that were generally reserved far in advance of the stay dates.

Charleston and Savannah continued to grow due to rising corporate demand in South Carolina. And in Savannah, coming out of a really great renovation, it's really done well with getting additional corporate demand and leisure demand to the hotel. Our top 5 RevPAR hotels in the quarter were our Residence Inn White Plains with RevPAR of $200, our Residence Inn Fort Lauderdale at $186 and Residence Inn New Rochelle, New York at $185, followed by our Residence Inn Anaheim and our Hampton Inn Portland with RevPAR of $166.

For 2025, our top RevPAR hotels were the Hampton Inn, Portland with RevPAR over $200. And of course, that's great news for our pending development, followed by our Hilton Garden Inn Marina del Rey, Residence Inn and White Plains, Fort Lauderdale and San Diego Gaslamp, all 5 with RevPAR over $185. As Jeff remarked in his opening comments, we were pleased with our ability to mitigate our margin loss throughout 2025. During the fourth quarter, our GOP margins only declined 30 basis points despite RevPAR declining almost 2%.

We were able to hold the year-over-year increase in labor and benefit costs to just under 2% in the quarter and which was the primary driver behind limiting the decline in that department's profit to only 1%. Most other operating line items were relatively stable year-over-year with nondepartmental expenses flat at approximately $21 million. And the only other major item to note was that guest acquisition-related commission costs were down a couple of hundred thousand dollars and aided our margins by approximately 20 bps.

Our hotel EBITDA margins benefited from some onetime property tax refunds, and they actually grew 70 basis points in the quarter. Property insurance was down 3% in the quarter and great news on our renewal is that those premiums are projected to decline a further 15% on a same-store basis in 2026. For the year, our GOP margin decline was limited to a mere 40 basis points. Labor and benefits only increased 1.2% on a per occupied room basis in the quarter and actually declined slightly from last year to 2025.

For the 33 comparable hotels, our headcount decreased 13% from a year ago. For the quarter, our top 5 producers of GOP were all Residence Inns. In fact, the top 7 were all Residence Inns, but leading the way was Residence Inn Gaslamp with $1.6 million, followed by our Residence Inns in Anaheim, both Sunnyvales and White Plains. For the year, our Gaslamp Residence Inn led the way, followed by our Residence Inn Sunnyvale #2 and Bellevue hotels and then rounding out the top 5 were our Embassy Suites Springfield despite all of the government shutdown impacts and threats. And lastly, our other Sunnyvale hotel.

So just to point out, despite a volatile last 2 quarters in Sunnyvale, the fact that both of those hotels as well as our Bellevue Residence Inn were in our top 5 of GOP producers in the year is pretty encouraging from a corporate demand standpoint.

On the CapEx front, we spent approximately $4 million in the quarter. And during the quarter, we had commenced renovations at our Residence Inn in Austin and Mountain View, California, and those will be wrapping up, as Jeff talked about shortly. Our CapEx budget for 2026 is approximately $26 million, basically the same as 2025 and includes 3 renovations at a cost of approximately $17 million. The 3 hotels scheduled for renovation in 2026 are our Gaslamp Residence Inn, our Hyatt Place Pittsburgh and our Homewood Suites Farmington, all 3 scheduled to commence in the fourth quarter.

Lastly, when you look at our guidance, I wanted to note the projected performance of our top markets. Silicon Valley RevPAR is projected up 3% to 5% in 2026 with increasing business travel demand as well as a favorable World Cup schedule as nearby Levi's Stadium is hosting 6 games. Los Angeles is down 1% to 3%, again, primarily due to the tough comps caused by the L.A. wildfire demand in our hotels in 2025.

Our Coastal Northeast portfolio is projected to be up -- or between flat to up 2%, with our Greater New York hotels essentially projected to finish flat for 2026. And in D.C., we're projected up 2% to 4% as we lap over all the shutdown effects. San Diego is projected to be down slightly, again due to the decline in conventions from 46 to 43. And Dallas is projected to be down mid-single digits due to the lost business related to the convention center expansion and renovation that's ongoing.

And lastly, of our top markets, Bellevue is expected to grow mid- to upper single digits as it laps over renovation comps, but also increased business travel demand and a little bit of World Cup as well. Jeremy?

Thanks, Dennis. Good morning, everyone. Our Q4 2025 hotel EBITDA was $22.4 million. Adjusted EBITDA was $20.2 million and adjusted FFO was $0.21 per share. We were able to generate a GOP margin of 40.2% and hotel EBITDA margin of 33.2% in Q4. GOP margins for the quarter were only down 30 basis points from Q4 2024 despite the 1.8% RevPAR decline in the quarter due to outstanding expense control and stabilizing inflationary increases and hotel EBITDA margins increased by 70 basis points due to $550,000 of property tax refunds in the quarter.

In late December, Chatham closed the sale of the Homewood Billerica for $17.4 million. And over the course of 2025, Chatham completed 4 asset sales for a total of $71.4 million. These asset sales, together with the successful refinancing and upsizing of Chatham's revolving credit facility and term loan in late September, have helped Chatham achieve its lowest ever leverage level and highest ever level of liquidity.

Chatham's strong balance sheet puts the company in an excellent position to continue actively repurchasing shares and to grow opportunistically through accretive acquisitions.

Turning to our 2026 guidance. We expect RevPAR of minus 0.5% to plus 1.5%, adjusted EBITDA of $84 million to $89 million and adjusted FFO per share of $1.04 to $1.14 for the full year. This guidance reflects our decision to exclude noncash stock-based compensation expense from our adjusted FFO effective January 1, 2026, so that our presentation is comparable to how the majority of lodging REIT peers report this measure.

Our guidance reflects the sales of the Homewood Brentwood, Courtyard Houston -- Hampton Houston and Homewood Billerica, which closed in 2025 and collectively contributed $2.1 million to Chatham's 2025 EBITDA. You should also note that Chatham's 2025 EBITDA and FFO included approximately $2.6 million or $0.05 per share of onetime benefits from property tax refunds, workers' compensation refunds and payroll tax refunds, which are not expected to repeat in 2026.

Reflecting the asset sales completed in 2025, our 2025 RevPAR would have been $130 in Q1, $156 in Q2, $154 in Q3, $131 in Q4 and $142 for the full year. In 2025, our RevPAR increased 4.4% in Q1 before declining 0.4% in Q2, 0.9% in Q3 and 1.8% in Q4. So year-over-year comparisons will generally be challenging in Q1 2026 before getting easier over the rest of the year. We generally expect that Chatham's Q1 2026 RevPAR will decline low single digits and then be positive for the rest of the year.

Also note that our capital structure includes $200 million of floating rate debt, and our guidance assumes that SOFR will decline based on the current forward curve, which reflects the assumption of rate cuts in 2026. So our guidance assumes quarterly interest expense will decline over the course of 2026. While our guidance does not reflect any share repurchases or acquisitions, our plan is to continue repurchasing shares and over time to reinvest asset sale proceeds into accretive acquisitions.

This concludes my portion of the call. Operator, please open the line for questions.

[Operator Instructions] Your first question is from Gaurav Mehta from Alliance Global Partners.

I wanted to ask you on some of the dispositions that you have made in '25. As you look into your portfolio, do you think there's room to sell any more assets in '26.

Gaurav, this is Dennis. Nice to talk to you. Listen, I think we probably have 1 or 2 more that we'll opportunistically look at selling. But I think certainly, the half a dozen hotels we've sold over the last 18 months or so kind of did a good bit of trimming. So we'll always look to do a couple here and there, but with the purpose of certainly reinvesting those dollars.

Okay. And maybe on the, I guess, acquisition side, I think in the prepared remarks, you said maybe there's some improvement in the pricing. I'm just wondering if you could maybe provide some more color on, I guess, deploying some of the disposition proceeds from last year and maybe taking leverage up back to historical levels?

Yes. This is Jeff. Gaurav. Certainly, we're comfortable since we've been at this for a long time with leverage levels that we've had from 2010, for example, to 2020. So yes, we are -- we have been digging in here and doubling down on our efforts. I think generally, what we're seeing in the market, since RevPAR has flattened out, and this always seems to be the case, sellers seem to get a little bit more realistic about what their hotel may or may not really be worth and have a little more incentive, I think, to transact if they've got flat RevPAR and EBITDA going down a little bit, such as occurred during 2025 and the prospect by most companies in the category that we like -- as you know, is kind of a flattish RevPAR outlook. Again, we think for us and maybe for others, that's a very conservative outlook, but we're going to take advantage of that outlook by owners as well and try to make a few deals.

All right. Great. Maybe on, I guess, the expense and margin side, where do you expect to see some pressures in '26. I think on the wage side, it seems like it's coming down to mid-single digits, maybe outside of wages, other expense line items?

Yes. I mean, listen, I think especially early in 2026, utilities have a little bit of pressure on them just because of the cold storms that have hit, whether it was the Central and Southeast last month and now -- or earlier this month, but also now you have the Northeast.

So I think you probably -- all of us will have a little bit of utility pressures here in the first quarter. But really outside of that, Gaurav, I mean, I think it's really how much you can control the labor on a wage increase basis. So really, everything else is fairly stable from an operating expense standpoint.

Your next question is from Aryeh Klein from BMO Capital Markets.

Maybe just following up on the expense side. You've had a lot of success there, and you've generated some real productivity improvements. Just curious how much room you think is left on that front and the ability to kind of keep a lid on costs just from those productivity improvements.

Aryeh, I mean, listen, I think we'd certainly love to say there's always more. But I think as I talked about in my prepared remarks, our headcount is down about 13% year-over-year. Both Chatham and Island are spending a lot of time literally adjusting models every day based on trends, and it was very volatile in 2025. So I think given the fact that we're hopeful that, as Jeff talked about, with wage increases kind of averaging right at 2% from the first half of the year to the last half of 2025, that we haven't seen anything that has changed that over the first almost 2 months of 2026.

So for us, it's all about controlling wages and headcount. And we're going to continue to do that throughout the year. And hopefully, that helps us do a little bit better down the road.

Yes. I mean the focus there is not trying to continue to find cuts that probably don't exist, but it is to flow -- if it's a nominal RevPAR increase, it's to flow that money to the GOP and to the bottom line. And I think we have proven that Island has been pretty successful in doing that. So really, that's for this year. If we get some upside, we want to see that flowing right to the bottom line to enhance those returns for everybody.

I appreciate that color. And then maybe just a couple of quicker ones. You gave a lot of detail on your market level expectations for 2026. Curious just overall, the impact from the World Cup and your expectations around that, given that you do have a number of markets that seem well positioned there. And then -- just on the Portland, Maine development, just the costs associated with that. I don't believe that's included with CapEx. Just wanted to confirm that.

Yes. So I'll start with Portland. The cost is not included in our CapEx number. We'll come out with official guidance on that probably at our next earnings call, Aryeh, with respect to dollars and especially the timing of the flow of those dollars over the project to make sure everybody at least has it modeled correctly.

And then with respect to the World Cup, I mean, listen, I think we've -- certainly when you look at it by market, we're going to be fairly conservative at the outset. And just to give you a specific example, the International Broadcast Center at the Kay Bailey Convention Center in Dallas, just within the last few months, we had a smaller group that basically canceled for the hotel. I think you probably -- you hear that in some locations, there's concerns about demand and tickets and who's coming in and everything like that.

So yes, it's going to be very good for the markets in general. But at least where we sit here today, we're going to be -- we're still going to be a little bit conservative about how that ultimately translates because there is still some uncertainty over demand related to events in certain cities, whether that's L.A., Seattle and even at the -- even in Dallas.

[Operator Instructions] And your next question is from Tyler Batory from Oppenheimer.

Just wanted to expand on the RevPAR guide a little bit, and you gave some details on markets and whatnot. But just really trying to get a good sense on the cadence that we should expect for the year. I think you said down low single digits in Q1 and then up the rest of the year. I mean how much of that is just the comps? Maybe remind us some company-specific building blocks this year that are contributing to the growth in the last 3 quarters of the year compared with the first quarter?

Yes. I mean I think basically, if you look at first quarter this year, tough comps due to, one, inauguration last year and the wildfires. And then for the last 3 quarters of the year, you're kind of looking at a 0 to 2-ish, 1.5-ish RevPAR growth for the balance of the last 3 quarters. A lot of that is due to the effects of whether that was in D.C. with the 3 hotels with all the shutdowns. You had a lot of uncertainty and unrest in L.A. that really pulled back some demand that I think should aid us this year.

We have a couple of like onetime events. Obviously, Pittsburgh is hosting the NFL draft in the second quarter right outside the doors of our hotel. So that's going to be a plus in the second quarter. And I think from a summer perspective, if you look at it, we're trading off a Ryder Cup out on Long Island with a U.S. -- I believe it's U.S. open at Shinnecock. So that really shouldn't affect much. But I think in general, across some of our larger markets where there was some -- should be some easier comps the last 3 quarters of the year.

Okay. Great. From a revenue management perspective, how are you thinking about the mix of occupancy, ADR in 2026? And how is that influencing your margin expectations for the year.

Yes. I mean I think, generally speaking, it's mostly ADR growth for 2026. I think it might be just a -- yes, it's basically kind of flattish occupancy. So strictly ADR.

Okay. So switching gears to capital allocation. You've been pretty active repurchasing shares. I assume you still view the stock as undervalued, given where shares are today, how aggressively do you expect to deploy the rest of that authorization? And just help us think about balancing potential buybacks with what you might do in terms of acquisitions?

Yes. I think, Tyler, I'll start. I mean, I think with respect to the repurchase plan, we intend to utilize most, if not all of it in 2025. If you look at kind of the portfolio and the free cash flow from '25 and 2026 after CapEx and after dividends, it's -- essentially, we're using all of that over the last -- between those 2 years to utilize the entire repurchase, which we think is just -- it's how it should be done, right? You're generating excess cash flow after dividends, and we believe we're undervalued there, and we're going to buy it back.

So -- and I think, listen, from an external perspective, buying hotels, as we've talked, we haven't really done -- the last hotel we bought was Phoenix in May of 2024. So it's been almost 2 years. We've been very just patient in understanding not only from the financing and what Jeremy did with the balance sheet over the last couple of years, that was a lot of work. But we're in a great position from a debt perspective to hopefully do some deals. And of course, it's got to be at a cap rate that makes money, especially and makes sense in light of where we're trading. But that's why we've been pretty patient. So we're hopeful to be able to execute on that a bit more here in 2026.

There are no further questions at this time. Please proceed.

Well, I think we can wrap it up by saying thank you all for being on the call and being attentive, good questions. As I said, hopefully, this guidance is conservative, and we do have the benefit of some, as Dennis explained, some positive attributes for this year on the top line that should come to fruition and flow that to the bottom line is the focus. So we will look forward to talking to you for the next quarter. Thanks.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Chatham Lodging Trust Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, November 5, 2025.

I would now like to turn the call over to Mr. Chris Daly. Please go ahead.

Thank you, Kelsey. Happy Wednesday, everybody, and welcome to the Chatham Lodging Trust Third Quarter 2025 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 filings. All information in this call is as of November 5, 2025, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements conform the statement to actual results or changes in the company's expectations.

You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website at chathamlodgingtrust.com. Now to provide you with some insight into Chatham's 2025 3rd 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?

Thanks, Chris. Good morning, everyone. I certainly appreciate everybody being on our call today. Before I comment on our third quarter operating results, I'd like to update some of our key corporate initiatives. Earlier this year, we completed the sale of 5 hotels with an average age of 25 years at an approximate 6% capitalization rate and each of these 5 hotels were among the sixth lowest RevPAR hotels in our portfolio.

In the fourth quarter, we are under contract to close on the sale of another hotel for $17 million with similar characteristics and had similar returns to the previously sold 5 hotels. These opportunistic sales add liquidity to execute on other value-enhancing opportunities for the company. On that note, we've now repurchased approximately [ 500,000 ] or 1% of our outstanding shares of our stock at an average price of $6.85 and Included in that amount is approximately 230,000 shares that we have repurchased since the end of the third quarter.

We intend to remain active repurchasers of shares moving forward. since we believe we are trading at a meaningful discount. Lastly, we committed an upsized and recast syndication of our credit facility and term loan further enhancing our financial condition and lowering overall borrowing costs. We are one of the lowest leveraged lodging REITs and have great flexibility to create value by using that capacity to repurchase shares acquire hotels and fund our upcoming home to Portland main development. With respect to acquiring hotels, we are somewhat more bullish on our ability to grow externally than we've been in the last 18 months.

Deal flow underwriting has been steady here and it seems like seller pricing expectations in some cases are becoming more reasonable. We have been and will continue to exercise great patience and discipline as operating fundamentals are quite volatile. But of course, it is that volatility that I think is partially the catalyst for some movement in cap rates upward.

The market will have to make sense for us. And of course, yields have to approximate the implied yield on buying our own stock. We want to invest in markets that are going to benefit from continued population migration and business investment. The U.S. is poised to benefit from this potential capital expenditure as they're calling it super cycle based on the announced investments from companies based here and abroad. And more specifically, it's expected that the Central and Southeastern U.S. will be the biggest beneficiaries and some of these investments and additions of employment.

Operationally, despite RevPAR growing -- excuse me, we'd like it to be growing 2.5% and declining 2.5%. We were able to minimize our margin decline to less than 100 basis points and we're able to deliver hotel EBITDA and FFO per share towards the upper end of our guidance range and beating consensus estimates. Looking at RevPAR performance in our largest markets, I want to address our Silicon Valley performance because on the surface, the decline appears weak. RevPAR at our hotels in Mountain View and San Mateo produced RevPAR growth of 2.5% in the quarter, while RevPAR growth at the 2 Sunnyvale hotels fell 9%.

The underlying fundamentals in Sunnyvale are healthy with the third quarter submarket and competitive set RevPAR up as opposed to our 2 hotels, RevPAR was up 3% and 6%, respectively, in the market. Given the underlying health of the market when one of our larger corporate accounts asked us to substantially discount our room rates we declined to participate. We believe the better long-term option for us is to maintain our rate integrity, and that will benefit us in the future as the market outlook, as we've discussed, continues to remain strong and the market is growing and recovering.

Our coastal Northeast and Greater New York markets experienced RevPAR growth of 2% and 8% in the quarter, and the coastal Northeastern portfolio remains fantastic, benefiting from long-term supply growth restrictions in those markets, combined with the balance of leisure business and government demand. In fact, third quarter RevPAR at our Hampton in Portland, Maine, showed an all-time record high for quarterly RevPAR and any of our hotels. Just fantastic and another reason why we are excited about our upcoming development in downtown Portland on the waterfront.

All 3 hotels in Greater New York grew RevPAR in the quarter, led by our residents in Holtsville Long Island, which had growth of 28%, due in part to having the Ryder Cup on Long Island in September; however, that hotel was still having a great year through August with year-to-date RevPAR up 17% as corporate demand has greatly improved really for the first time in that market post COVID. And 3 of our top markets, San Diego, Austin and Dallas were adversely impacted by convention-related demand losses. The Austin and Dallas convention centers are basically closed for renovation, as we've discussed and expansions while San Diego is coming off a record year in convention business in 2024 and our 24th third quarter RevPAR was the second highest quarter ever at that hotel. So the comp is difficult and the softening relative to 2024 in San Diego is really no surprise to us.

Our 6 predominantly leisure hotels, which account for approximately 20% of our EBITDA produced RevPAR growth of 3% in the quarter. Within that group, our SpringHill Suites Savannah had a great quarter with RevPAR up over 30% and as it has really surged after completing a fantastic renovation that was very well received by our guests and customers. Our fourth quarter RevPAR guidance assumes that our current RevPAR trend of a decline of approximately 3% continues for the rest of the year, unfortunately. It's really been a crazy year, a volatile year, hotel room demand and thus revenue has certainly seen its share of ups and downs this year. encouraging business demand growth across the portfolio in the first quarter has been adversely impacted. Since then, by Dodge travel spending, halt tariff threats, liberation day impacts and, of course, inbound international travel and especially from Canada being down substantially. And now with the government shutdown certainly doesn't help matters.

Many of these challenges should be short term; however, and the impact primarily on 2025 performance. But looking forward, lodging dynamics are very favorable. Forecast for super cycle capital investments, limited supply growth and moderating wage increases all tilt in favor of RevPAR and margin expansion as we look forward to next year. Add to this, what is projected to be a favorable interest rate curve and thus lower borrowing costs should enable us to accretively grow as we move forward. good years are ahead.

With that, I'd like to turn it over to Dennis.

Thanks, Jeff. Good morning, everyone. Continuing on with some color related to Silicon Valley. Excluding our 2 Sunnyvale hotels, portfolio RevPAR would have been down 1.7% in the quarter. Occupancy at the 4 Silicon Valley hotels was still a solid 75%, and with a range of 73% to 83% occupancy in the quarter between the 4 hotels. Importantly, October RevPAR at our 4 Silicon Valley hotels was flat to last year compared to the down 4% trend for the quarter. RevPAR was down approximately 5% at the 2 Sunnyvale hotels and up 7% at the other 2 hotels. So just adding on to what Jeff talked about earlier in the call, our Silicon Valley hotels were essentially able to, over the last few months, replace approximately half of the business that we chose to pass on related to one of our larger corporate clients. So good trend developing as we move into the fourth quarter. with respect to Silicon Valley and those 2 hotels.

Obviously, our 3 Washington D.C. hotels have been for quite a ride this year as evidenced by the following trends, which was First quarter RevPAR was up 6%. Second quarter RevPAR was down 2%, feeling the effects of [indiscernible] when April RevPAR was down 9%. Our third quarter RevPAR really shows the impact of just the threat of a shutdown as we typically see just the threat of shutdown start to impact government travel into those markets. Our RevPAR for those 3 hotels was flat in July, then down approximately 9% in August and September.

The government shutdown impacted the third quarter portfolio RevPAR by approximately 40 basis points. In October, the effect of those 3 hotels which were down 19% actually impacted RevPAR by 170 basis points. And when you just take out those 3 hotels, our RevPAR was down only about 1% for October. Outside of our top markets, our other tech heavy hotel, our Bellevue Residence Inn produced RevPAR growth of 1% in the quarter. As we've talked about for the last really 2 quarters, vehicle border crossings and inbound travel from Canada has been an impact, specifically in that region. If you look at vehicle border crossings from British Columbia into Washington State, they were down approximately 35% in the third quarter compared to last year. Having said that, that's better than the 47% and that vehicle crossings were down in the second quarter. So at least from a trend perspective, that crossing decline is moderating.

And our Home 2 in Phoenix, As a reminder, it opened in early 2024, and we acquired the hotel in late May of 2024. RevPAR was up approximately 6% in the quarter. The fourth quarter looks quite strong in Phoenix and our October RevPAR at that hotel was up another 8% year-over-year. Hotels in the Sunbelt continue to perform well for us. In addition to the previously mentioned Savannah Hotel, our 2 Charleston hotels had another solid quarter with RevPAR up 4%. Our 2 Florida hotels in Destin and Florida -- excuse me, Destin in Fort Lauderdale, had flat RevPAR growth in the quarter.

Our top 5 RevPAR hotels in the quarter where our Hampton in Portland, Maine, as Jeff mentioned, with an all-time high of $354 followed by our residents in Washington, D.C. with RevPAR $247 and our Hilton Garden Inn Portsmouth with RevPAR of $239, followed by our Hilton Garden Inns, Marina Del Rey, residents in White Plains and Holtsville, New York with [indiscernible] of approximately $204. Just to clarify, the second hotel was our Hilton Garden Portsmouth, not our residents in Washington, D.C.

On the operations front, our gross operating profit margins declined 70 points in the quarter to a still strong 44%. As we all know, labor and benefits are by far our largest expense and on a per occupied room basis, those costs were up only 2% in the quarter. Head count is down approximately 3% from year-end at our comparable 34 hotels. With so much top line volatility, it is imperative that we closely monitor our staffing levels and productivity. Outside of labor and benefits, our other operating profit was up slightly year-over-year and improved margins by 30 basis points.

Most other operating line items were basically stable year-over-year, though guest acquisition-related commission costs were up approximately 15% or $0.5 million. Our expenses there have increased really just due to the different booking channels year-over-year in the quarter. We had 16 hotels produced over $1 million of GOP in the third quarter compared to 17% in the second quarter, with the only difference related to a DC area hotel. What is quite incredible is that for the first time ever, following an all-time RevPAR high, the Hampton and Portland led all hotels with GOP of $2.5 million in the quarter unseating our Gaslamp Residence in that has led the way for the past 14 quarters.

What's even more incredible is that the Hampton and Portland only has 125 rooms, while the Gaslamp Residence Inn has 240 rooms. Gas Line President in did finish second in the quarter. And rounding out the top 5 were 2 of our Tectum hotels are Bellevue and Sunnyvale 2 residents and our Hilton Garden Inn in Portsmouth, New Hampshire. On the CapEx front, we spent approximately $4 million in the quarter. Our last 2 renovations planned for 2025 are commencing in the fourth quarter and that being the residence in Austin, Texas, which starts this week, and our resident in Moulton View, California, which starts next month.

Our common dividend, which was increased almost 30% earlier in the year, is currently $0.09 per share per quarter, and we will continue and we'll reevaluate our common dividend in early 2026.

With that, I'll turn it over to Jeremy.

Thanks, Dennis. Good morning, everyone. Our Q3 2025 hotel EBITDA was $28.8 million, adjusted EBITDA was $26.2 million and adjusted FFO was $0.32 per share. Our GOP margin for the quarter of 43.6% was only down 90 basis points from Q3 2024 and despite the challenging RevPAR environment due to continued strong expense control and moderating inflationary cost pressures. In Q3, we were able to hold year-over-year increase in labor and benefits cost per occupied room to 1.7%.

In Q3, we continue to strengthen our balance sheet by refinancing our revolving credit facility and term loan, which were our only near-term debt maturities. With this transaction, we upsized our revolving credit facility from $260 million to $300 million and upsized our term loan from $140 million to $200 million.

Our low leverage of 3.5x net debt to EBITDA and the liquidity provided by our $300 million undrawn revolving credit facility provide us with significant capacity to pursue investment opportunities. In Q3, we ramped up utilization of our share repurchase program and repurchased 255,000 shares for $1.8 million and subsequent to the end of Q3 and early October, we repurchased an additional 230,000 of shares for $1.5 million. At current price levels, we believe acquiring [indiscernible] stock is a very attractive investment, and we continue to expect to actively repurchase our shares in the future.

Turning to our Q4 and full year 2025 guidance, we expect RevPAR of minus 3.5% to minus 2.5% and adjusted EBITDA of $16.7 million to $18.3 million and adjusted FFO per share of $0.14 to $0.17 in Q4 and RevPAR growth of minus 0.7% to minus 0.3%, adjusted EBITDA of $89.2 million to $90.8 million and adjusted FFO per share of $0.96 to $0.99 for the full year. This guidance assumes no further asset sales, capital market activity or changes in floating interest rates. This concludes my portion of the call.

Operator, please open the line for questions.

[Operator Instructions] And your first question comes from Gaurav Mehta from Alliance Global Partners.

I wanted to I wanted to ask you on investment opportunities. Can you maybe provide some more color on what you guys are seeing in the acquisition market as you're selling hotels? Are there any opportunities to redeploy that capital into acquisition in the future?

Yes. I think I'll take that, guar. It feels certainly, and we've been consistently like a lot of companies looking at deals, talking to owners, -- but with RevPAR turning in a negative direction, I think that there's -- does present and usually has in the past some opportunities. I feel like the overall ask is certainly now north even on the asking side, north of 8% on a cap rate basis, whereas everybody was hanging on to a lower number, notwithstanding what the hotel REITs trade at as an implied cap rate or otherwise.

And I think what we're seeing in a few cases, is perhaps the opportunity, as I said, and the goal is to try to create long-term shareholder value here with great hotels that will grow at least as good, if not better than the existing portfolio that are newer that are in the brands that we all we specialize in, and I think we might be able to do that with some yields that will approximate what we can do by buying our own stock as Jeremy was talking about.

Yes. And Gaurav, I think I'll just add 1 thing to add on to Jeff, is when you combine all that with some of these newer assets are coming up on their next wave or really, in a lot of cases, first waves of renovations -- and as an owner who might have been relatively new to the industry now has to look at an environment that's a bit choppy and has to come up with $2 million to $3 million to renovate a hotel that decision might spur a little bit more activity as well. So we're in a great financial position to be able to take on some of these opportunities in a market that might make others a little bit nervous, too. .

Great. Second question on the development. Can you remind us on the timing of the Portland main development?

Yes. I mean, Gaurav, I think we're kind of proceeding as we'll start site work on that in 2026, probably be a 21- to 24-month construction time line. So kind of an early 2028 opening.

I think the seasonality and the results that Dennis was talking about in the existing asset really dictate. We have to be very careful about when we start digging up the parking lot because it's the same land parcel as Portland has continued, it seems beyond obviously, summer months, well into the month of October to achieve ADRs, particularly on weekends that are over $300 a night. So we're going to look at that carefully and skirt those time frames as well.

Yes. I mean I think October RevPAR at our Hampton in Portland was, I believe, around $380. So just to add on to Jeff's comment. That hotel does really well in almost every month except for the late December and January and early February when just weather is a little tricky. .

And your next question comes from Tyler Batory from Oppenheimer.

So I wanted to really dive into the RevPAR performance for a little bit, if I could. And you missed the midpoint of the guide. Just isolate for us what really drove the variance? Just trying to understand what surprised you in the quarter? And what caused that shortfall?

Yes. Tyler, it really comes down to 2 things. our decision on the 2 hotels in Sunnyvale and basically the government shutdown impact on August and September. So you had the 2 Sunny May hotels are basically 10% of our room count. And for those 2 hotels to be down 9% in the quarter, following a first and second quarter with growth in the mid-single digits was a very significant impact that I think, as Jeff talked about, is really, for us, we decided yes, it ultimately was a short-term hit to us, but maintaining that rate integrity. And I think as I spoke about, we were able to, in essence, replace half of that business in October already, I think, ultimately is going to prove to be a pretty good decision long term.

And then obviously, in Washington, D.C., it was flat RevPAR growth in July. And then what we historically see. And by the way, we saw this back in -- late in the first and early in the second quarter with the [indiscernible] cuts and the threat of a government shutdown is that as soon as the threat of a government shutdown starts or is kind of out there. Generally speaking, that government travel pulls back. And we saw that leading into the actual shutdown with RevPAR at our 3 D.C. hotels down 9% in August and September. That's it.

Awesome. So thinking about the outlook and the guide for Q4, our RevPAR down in Q3, you're guiding down 2.5% to down 3.5% in Q4. So the decline is getting worse. Last time that we spoke last time you reported, just looking at kind of some of the industry forecast, there was an expectation that Q4 is going to be a little bit better compared with Q3 just from a year-over-year perspective. So just kind of unpack what's implied in that Q4 and kind of why things on a sequential basis getting deteriorating and getting a little bit worse.

Yes, absolutely. That really has all to do with essentially the same answer, but just to really put a nail in it is the 3 DC hotels reduced our October RevPAR by approximately almost 200 basis points, 170 basis points. So just those 3 alone in essence, if you excluded those, our RevPAR was off 1% for the month of October. So we obviously have -- we improved Silicon Valley in fourth quarter to flat RevPAR -- I mean, in October to flat RevPAR. But the moderating and lessening range of RevPAR is strictly due to the shutdown in D.C. .

Okay. And then taking a step back and also trying to think about 2026, the convention calendar and some of the disruption in Austin and Dallas, San Diego coming off of a record year in 2024. How are -- how is the convention business shaping up for next year in some of those markets. And then the supply picture, I think, has been pretty favorable for lodging. So not sure if you can comment on just supply growth in your markets, whether it's next year or the next couple of years?

Yes. I mean with respect to the convention calendars, I mean, listen, I think Austin and Dallas are essentially going to maintain kind of where they are until -- and with respect to San Diego, you had an all-time year last year. It came down this year, it will be something similar next year. So I think what you also have in San Diego is one thing that did happen that had a little bit more of an impact as well this year. is you had the new Ryman property that opened up just outside of San Diego, and that obviously had an impact on smaller conventions that might have chosen to go there instead of the primary San Diego Convention Center.

So I think as you move forward on that respect for '26, you probably have no incremental adverse impact from those 3 hotels. And then I think if you look at the supply outlook for our markets, supply is less than 1%. And and is projected to remain that way for next year as well. So I think I was just adding on to Jeff's concluding comment, which was -- when you look out into '26 and '27 and the overall macro looks really good, not only to the industry, but specifically to us, with respect to some of these key markets. And I think just adding to what Jeff said, 2025 has just been a nut job of a year in terms of just all these things that have impacted the industry and us. And I think when we can get past a lot of these short-term things, which I think are primarily focused here in 2025.

I think the outlook for not only the industry, but for us, and I think just with our upside to some of these markets should be pretty rosy at this point. So -- It's a little choppy.

So switching gears to the margin side of things. I think the performance in the quarter was really quite strong. all things considered. Just talk a little bit more about how you're able to do that, or thing you want to call out that was just kind of driving the performance there?

Yes. I mean, it's -- listen, we're putting a lot of focus and energy on day-to-day and week-to-week management of head count and productivity specifically with respect to anything related to housekeeping. And obviously, that's very that fluctuates based on occupancy levels. So the key is to really keep a laser eye on those items and really just managing incoming and current wage levels. As you look at where we project moving forward, generally speaking, our hospitality staff, their annual wages are generally up for review every July 1.

As you look at the wages we put in place across the portfolio, the average wage increase for us post July 1 year-over-year is about 2% as well. So I think kind of as wages have kind of stabilized, we've been able to maximize efficiencies in our housekeeping department. And I think the availability to hire labor for our hotels has really been fairly stable for the past 12 to 18 months. So we're able to, I think, have a 2% wage increase across the board is, again, pretty favorable when you look forward for us.

So last question for me, just capital allocation and balance sheet is in great shape. -- plenty of liquidity, just given the backdrop, given where the stock trades, just rank order for us your priorities for your capital here?

Yes. I mean, listen, I think the first is I think it's what Jeff had in his comment in order, which was we're active repurchasing shares and we will be and we'll continue to be active purchasing shares. We have a $25 million plan in place, which is about or it's just a little bit less than 10% of our current equity market cap. So we'll continue to be really active there. And then I think the next priority is obviously, acquiring hotels if we can do it. And we obviously have our Home to Portland development. So I'd say #2 and #3 are kind of about the same, but in the meantime, we're going to be active purchasing shares. .

[Operator Instructions], Your next question comes from John Sangani from Britney Holdings.

Good morning, and thank you for the overview here. My question is primarily related to capital deployment as well. From my kind of calculations here, it looks like the stock is trading around $140,000 a key any kind of development right now, what we've been seeing is $300 a key. Can you walk me through the decision-making process on why to pursue the Portland development when the stock is trading probably around half of what that cost per key would be.

Sure. This is Dennis. Nice to talk to you. I mean, listen, where are our equity price is trading at whether it's $140,000 or $150,000 or $160,000 a key, that's made up of -- that's comprised of a valuation based on the entirety of our 34 hotels this specific hotel, you have to look at that deal individually and look and see what the returns project out to be for that specific asset and whether that's going to add value to the overall portfolio. And if you look at we're only going to do the deal if we believe it's going to make long-term sense. And based on a lot of factors, which is the market is very restrictive on new hotel development. The market is very popular. The RevPARs and margins we're able to obtain and able to achieve on our existing Hampton but also what we project for this particular hotel will -- based on where we are at the moment and where we believe we'll be after developing that asset, we'll drive and earn returns well above where the portfolio is returning.

So would certainly add value to not only the company but obviously then ultimately to our shares and be accretive to that value. So you have to look at each opportunity individually, whether it's buying a hotel developing a hotel or selling a hotel. And if those add value ultimately to what you want to do with that with your capital dollars, that's how we assess it.

Got it. And then I think just on the acquisition side, you mentioned potentially looking for acquisitions. How would you allocate that discuss that and review that against the share price because that's more of an immediate hit 1 way or the other with respect to buying shares or acquiring an existing property?

Yes. I mean, I think for us, it's -- what we're trading at on an equity share price. You look at the acquisition, are the yields similar? Does the acquisition provide growth, either consistent with or higher than your portfolio? And does it ultimately drive incremental distributable cash flow that ultimately, you'd bring back and deliver to your shareholders via dividend. So yes. .

And there are no further questions at this time. You can proceed with the conference.

Well, thank you all for the questions. Thank you all for being here today with us, and we will talk to you as time goes by for better times, I think, as we move into next year. .

Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation and ask you please disconnect.

Have a great day.