Greetings and welcome to the Chatham Lodging Trust First Quarter 2025 Financial Results Conference Call. At this time all participants are in a listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Chris Daly, President of DG Public Relations. Thank you, Chris. You may begin.

Thank you, Alicia. Good afternoon, everyone and welcome to the Chatham Lodging Trust first quarter 2025 results conference call. Please note that many of our comments today are considered forward-looking statements 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 6, 2025 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 in this call on our website at chathamlodgingtrust.com Now to provide you with some insight into Chatham’s 2025 first quarter, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer; Dennis Craven, Executive Vice President, 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 afternoon, everyone. I certainly appreciate you all being on our call today. Before I turn it over to Dennis for a recap of the first quarter, I'm going to talk about a few key corporate developments as well as our current outlook on lodging and our operating environment. I'd like to start the call by talking about a first for us and that is the announcement that our board of trustees have approved a $25 million share buyback plan. We've been discussing a repurchase program for quite some time with our board and felt the time was right to initiate the plan. For the last few years we positioned ourselves to be able to address the $500 million of maturing debt we had in 2023 and 2024, and we successfully completed that phase of recapitalization last fall. Since then we've sold five older hotels and generated an additional over $80 million of proceeds. We're in great shape to use our low leverage I believe it's the lowest since our IPO to enhance shareholder value and we view the share repurchase plan as another tool in our toolbox of ways to add value for our shareholders. At current trading levels we are trading at approximately $150,000 per key and at an approximate 9.5% cap rate on forecasted 2025 NOI, a historically low multiple for us as well as most of our peers. Additionally, it seems like a long time ago but another exciting development in the first quarter was that we increased our quarterly common dividend by 29% or $0.02 per common share to $0.09 per share. On an annualized basis, our dividend equates to a yield of over 5%. This was the first increase since we reinstated the dividend and is another way we are adding value for our shareholders through this increased dividend payment. Next, we certainly were very pleased with our execution of the sale of all five hotels we listed in the fourth quarter. With the last closing in April, we sold five hotels with an average age of 25 years and an approximate 6% capitalization rate on 2024 NOI levels for proceeds of $83 million. Each of these five hotels were among the six lowest RevPAR hotels in our portfolio. Of course, we are going to use a portion of these proceeds to buy back shares of our stock or acquire hotels, both options that will be accretive in the short-term and value enhancing over the long-term. Given the yields, we can opportunistically recycle assets at, we can grow accretively and enhance shareholder value, whether that is by buying hotels for the right return or repurchasing shares. We're actively looking at external growth acquisitions and opportunities since you never know when potential opportunistic acquisitions will present the kind of returns we need to add shareholder value. We have been focusing our attention on high quality premium branded targets that further diversifies our portfolio across demand generators and geographic areas where we believe future economic growth will be concentrated. Successfully selling hotels at an approximate 6 cap rate and repurchasing shares or acquiring hotels that yield over 9% are both great options. Operationally, we've delivered a great first quarter with RevPAR growth among the highest of all lodging rates and we substantially exceeded industry growth yet again. We were able to grow our GOP profit margins in the first quarter and we delivered adjusted FFO per share near the top of our guidance range. Last year, our only acquisition was the Home2 Suites Phoenix downtown and we beat our budgeted first quarter top line by 12% and EBITDA by approximately 25%. Now I'm switching gears to spend a few minutes discussing the latest demand trends that we've seen within our portfolio and our outlook for the future. After a great start to the year for us, RevPAR growth in March was flat and in April we saw RevPAR decline 4%. As highlighted in the release, April was meaningfully impacted by the success of Passover and Easter holiday weekends. So through the first 12 days of April leading in the Passover RevPAR was up over 1%. And then for the 10 days from April 13 to 23 surrounding the holidays RevPAR was down approximately 15%. And we finished the month with RevPAR up slightly over the last eight days of the month. Though we're early in the month, May RevPAR is projected to be flat to up over 1%. Of course, everyone wants to know about the status of government-related travel. The good news is that government-driven room revenue is a fairly small piece of our overall portfolio at approximately 5% or less this year and last year. A lot of our government-related business is centered in our three hotels in Washington DC in and around DC. After seeing the demand drop, we quickly shifted our sales efforts to gain more leisure travelers and also retarget certain special corporate business. That is the advantage of having Island Hospitality as our manager. As we look forward to the rest of the year, demand remains strong. However, the ability to grow RevPAR over last year's numbers is somewhat limited at this point. We're currently projecting flat RevPAR given the uncertainty in the economy as of now. It is worth noting that the same uncertainty I'm referring to should result in even less new supply than the already low supply numbers that exist today. The past several down cycles have been characterized by weak demand and historically high supply at the same time. Today's situation is exactly the opposite, which should provide a strong runway for future growth in RevPAR and earnings. With that, I'd like to turn it over to Dennis to give some more color on the quarter.

Thanks, Jeff. Good morning everyone. We saw broad and diverse RevPAR growth across our portfolio with RevPAR growing in six of our top seven markets, leading the way where our technology-dependent markets and the underlying strength in those markets is encouraging as we move forward through the year. RevPAR growth at our four Silicon Valley hotels was up 8% in the quarter after posting 14% growth in the last two quarters of 2024. By the way, our Silicon Valley Hotel EBITDA jumped approximately 10% in the first quarter on that 8% RevPAR growth so good flow through there. Our Residence Inn Bellevue was under renovation for the quarter, but the Bellevue market was up 3% within the first quarter with a 5% increase in ADR - pretty solid numbers in a very seasonally slower period in the Seattle area the first quarter. Chatham has the highest exposure to big tech hotel demand whether that's in Silicon Valley, Bellevue or Austin and tech investment continues to be rapidly expanding and certainly there's a lot of initiatives coming out of some large companies that are looking to invest billions of dollars in tech investments in the US. In our other top markets, LA RevPAR was up 14% with our Home2 Woodland Hills benefiting from fire-related demand, when RevPAR was up 40% at that hotel. Coming off a pretty weak 2024, RevPAR was also up about 15% at our other two LA hotels, and they really didn't see as much fire-related business. New York, Dallas and D.C. were up at least 6% in the quarter, again showing the broad depth across our markets. Jeff spent a little bit of time just talking about kind of the sales pivot within D.C. and just to give you some trends within our three hotels in that market. March RevPAR at our three hotels as a group was down 8% in D.C. And within that, our D.C. and Tysons residences were actually up 4%, while our Springfield, Virginia Embassy Suites was down 20%. As they pivoted sales efforts to drive more demand really on the leisure side, April RevPAR for the collection of three hotels was down 4%, so essentially cut that decline in half. Our projection for May is that RevPAR at those three D.C. hotels looks to be down about 2%. So again, having the shortfall. The only other thing from a government side is our Portsmouth Hilton Garden Inn, which hasn't really been a heavy government hotel due to ample leisure demand. We've seen some attractive demand from the shipyard there this year, and we have a room block of well over 1,600 room nights over the next few months at our hotel. Shipbuilding, as a lot of people know, has been a major focus of the current administration and that demand ultimately is pretty sticky over a multiple year period of time. So from a long-term perspective, that's encouraging for that market. Some additional RevPAR color. Our top five RevPAR hotels in the quarter were our Residence Inn Fort Lauderdale with RevPAR of $259. Second was our Marina Del Rey Hilton Garden Inn with RevPAR of $199. Coming in third and making its first-ever appearance in our top five was our Home2 Phoenix Downtown with RevPAR of almost $190. Rounding out our top five were our Residence Inn San Diego Gaslamp and Home2 Woodland Hills with RevPAR both of over $170. Excluding our tech hotels, RevPAR was still up 4% across the remainder of the portfolio. RevPAR at our six predominantly leisure hotels declined only 1% in the quarter. Leisure hotels generally comprise about 20% of our EBITDA on an annualized basis. On the operations front, for the second consecutive quarter, we drove operating margins higher, this time, 30 basis points above last year's levels. Our other department profit increased another 5% this year with parking profit driving the majority of the increase. Our GOP margins would have been even higher, save a couple of increases that hit us by approximately 50 basis points and should improve in the near future. Complementary F&B costs were up 20% in the quarter due to a combination of brand-mandated items and cost inflation, though we certainly hear that some of those prices are coming down. Utility costs were up approximately 10% in the quarter and impacted our margins by approximately 30 basis points. Again, given the focus on energy expansion, these should moderate in the future. On the labor and benefits front, our total costs on a per occupied room basis was up 4% in the quarter to $44. Our average hourly wages were up 3% in the quarter. Admittedly, kind of as March swung, our headcounts had to adjust them relatively quickly based on the demand trend. As we sit here in early May, our headcount for hourly employees is down about 6% from what it was just a couple of months ago. In the quarter, property-related insurance was down 6% for the quarter with our actual property program down over 10%. We had 11 hotels produce over $1 million of GOP in the quarter, and for the 13th consecutive quarter, our Gaslamp Residence Inn led the way with GOP of $2.1 million. Making its first appearance in our top five was our Home2 Phoenix downtown with the second highest GOP in the quarter at approximately $1.6 million. Rounding out the top five were our Sunnyvale 2 Residence Inn, our Courtyard Downtown Dallas, and our Home2 Woodland Hills. On the CapEx front, we spent approximately $7 million in the quarter. We substantially completed renovations at our Residence Inn Bellevue, Washington and the Hilton Garden Inn in Portsmouth, New Hampshire. The comprehensive renovation of the Residence Inn included a complete refresh of all guest rooms, public space, and meeting spaces. The improvements at our Portsmouth Hilton Garden Inn included a complete redesign and reallocation of our public space adding a new much improved bar, market, meeting room space, and importantly, we converted the old meeting room space into five additional guest rooms bringing our total room count there to 136 rooms. Additionally, in the quarter, at our Exeter Hampton Inn and Suites, we converted a seldom-used meeting room into an expansive guest room suite. Our CapEx budget for 2025 is approximately $26 million, which includes three renovations. The last two renovations we will commence this year will start in the fourth quarter at the Residence Inn Austin and the Residence Inn Mountain View, California during the fourth quarter. I'll turn it over to Jeremy.

Thanks Dennis. Good afternoon, everyone. Our Q1 2025 Hotel EBITDA was $20.8 million. Adjusted EBITDA was $17.9 million. Adjusted FFO was $0.14 per share. We were able to generate a GOP margin of 38.9% and Hotel EBITDA margin of 30.5% in Q1. GOP margins for the quarter were up 30 basis points from Q1 2024, which was due to the strong 3.8% RevPAR growth and outstanding expense control. This improvement in year-over-year margin trends relative to prior quarters reflects the continuing stabilization of key expenses. Over the past couple of years, we have successfully reduced leverage through the sales of a number of older hotels with lower growth prospects and significant capital needs and addressed a significant amount of debt maturities. With the repayment of the mortgage loan on the Hampton Houston in January 2025, we have now addressed all of our near-term CMBS maturities. In Q4 we closed on the sales of the Homewood Bloomington and Homewood Maitland for $29.3 million. In Q1 we closed the sales of the Homewood Brentwood for $15 million in January and the Hampton Houston for $15.5 million in March. Subsequent to the end of Q1, we closed the sale of the Courtyard Houston for $23.5 million in April. The aggregate sale price for these five hotels including approximately $22 million of required renovation costs represents a cap rate of approximately 6.5% on LTM NOI. As of March 31, Chatham's net debt to LTM EBITDA was 3.6 times, which is significantly below our historical leverage, which is generally in the 5.5 times to six times area. Turning to our Q2 and full year 2025 guidance, we expect RevPAR of 2% to 0.5%, adjusted EBITDA of $26.8 million to $28.8 million and adjusted FFO per share of $0.32 to $0.36 in Q2, and RevPAR growth of flat to 1%, adjusted EBITDA of $89 million to $93 million, and adjusted FFO per share of $0.95 to $1.03 for the full year. This guidance reflects the sales of the five assets we closed from December to April. The Q2 RevPAR guidance reflects the shift in the timing of Easter from March 2024 to April 2025, which negatively impacted our April 2025 RevPAR results. Our room count reflecting the completed asset sales along with the addition of a few rooms at our existing hotels is expected to be 5,168 for the remainder of the year. Reflecting our recently completed asset sales, our 2024 RevPAR would have been $123 in Q1, $156 in Q2, $155 in Q3, $133 in Q4, and $142 for the full year. This concludes my portion of the call. Operator, please open the line for questions.

Thank you. We will now be conducting the question-and-answer session. Thank you. Our first question comes from the line of Gaurav Mehta with Alliance Global Partners. Please proceed.

Yes. Thank you. Good afternoon. I wanted to go back to your comments around some of the capital allocation initiatives you highlight share buyback and acquisitions. Want to get some more color on how you think about both of those alternatives and then what do you guys think in the acquisition market?

Yeah, hi, Gaurav, it's Jeff. Obviously, we're looking at both of those from a very opportunistic perspective particularly with the new tool in the toolbox as I mentioned with the ability to buy back some shares here we're going to work real hard to and as we always do to try to grow this company in an accretive way to enhance shareholder value, but the acquisition market is such that a, there's no large pipeline out there for the most part; and b, the kind of yields we need which I indicated in my prepared remarks better be over at or over 9% real numbers just obviously it's a difficult metric to hit. But that doesn't mean we stop looking and that doesn't mean that we don't attempt to try to make some kind of deals work, but in the absence of that, I think you know we look at where our share price is and we look at some of the 52-week low numbers and a real what we consider to be dislocation in the share price relative to the value of the company and the assets that we own and we buy some stock back in. I will tell you that from the acquisition side I think the ability to have Island Hospitality underwrite deals continuously and look for value-add opportunities, not stabilized assets that are on the market at an eight cap, those deals won't work. But we do have the unique ability with the affiliated management company to have a lot of insight into what a hotel ought to achieve insofar as margins and otherwise. So you know that's probably an area that we'll continue to try to work on as well.

Okay. I think on the last call you had also mentioned opportunity for a development in Portland Maine. Just wanted to get some more color on if that's still an option for you guys this year?

Look, it's out there. The process in terms of entitlements continues to be a little bit more extended, but in the meantime, we've got for example, a zoning board of appeal hearing coming up for a certain variance request relative to that asset that didn't need to occur even as short as two months ago. But nonetheless I think with the tariffs and with the uncertainty around what those costs could be we're going to be very careful in pulling the trigger on that deal even though the returns look extremely favorable as we've indicated before with our knowledge and our Hampton Inn and Suites sitting on right next door to where this hotel would be constructed, we certainly know what the turnaway nights are for being full where the demand is. By segment and otherwise the market continues to be strong. So you know we'll just kind of move forward here since we own the land anyway and other than some minor costs soft costs incurred during this period of time I think it would be a wonderful opportunity if we could tie the costs down and have the approvals we need in a manner that it's been underwritten that.

Okay. And then lastly, I think, you mentioned Phoenix Hotel a few times being in top RevPAR hotel for your company for the first time and also on the margin side just wanted to learn what drove the performance for the Phoenix Hotel?

Dennis, you want to pick that one up?

Yeah. I mean it opened up last basically January of 2024, so we obviously have some ramp in there from in terms of RevPAR growth but I think it's certainly outperformed our budget for 2025. Through the first quarter, really January was a little bit slower than we than we estimated but has really come on strong in the last few months. But just pleased with the overall performance there we've got a great GM that we hired not too long ago that's really had a positive impact, an operating team entirely that's had a positive impact on getting some good corporate business in that hotel. So just really kind of as we sit here pleased with kind of where that hotel is going.

Of course, you're in the season, so to speak, with the winter season being as we underwrote it the very high RevPAR period of time, but you come to find that when you're in a brand new product, in a market that has some older product in it, and you have the right brand and the right operating team, as Dennis said, you can really achieve some pretty hefty market share gains and some pretty strong numbers and that's what that hotel is experiencing.

Okay. Thank you. That's all I have.

Thanks.

Thank you. Our next question comes from the line of Ari Klein with BMO Capital Markets. Please proceed.

Thanks and good afternoon. I was curious, just as it relates to the guidance and some of the weaker trends you saw in April. Now, how much of that is I guess government versus some of the other trends that you're seeing in BT and leisure hopefully, you can talk a little bit more about the broader trends that you're seeing from those segments. Thank you.

Hey Ari, this is Dennis. Yeah, I mean listen I think if you look at March, obviously, you had Easter kind of right at the end of March last year. We finished flat for March this year, I think as we highlighted in the release and in the comments around the timing of how April progressed, I think the government impact is in there, but that 15% for that 10 day period certainly was more driven by really not just government travel, but just business travel slowing down around those two successive weekends of religious holidays and I think kind of as you think about corporate business and everything like that, it seems as if around holidays they've extended kind of we're not going to travel around these dates. That's kind of been a post-pandemic trend that we've seen, and I think that that was just exacerbated in the middle of April. So again, I think as I think Jeff talked about and as we said in our release, May is, at least trending at the moment to where it's going to be a positive month. So I think the government impact is a little bit, but for us it's less than 5% of our portfolio. So it will have some impact, but hopefully not too meaningful.

Thanks. And then maybe you just stop on the expense side, It sounds like you reduced headcount a little bit just curious about the opportunities, if we're in a softer kind of backdrop weaker trends, how do you think about the opportunities I guess to further reduce costs and manage margins.

Yeah I mean listen, I think probably you've heard from a lot of others. I don't think anybody is making any deep, what I would call COVID-related cuts or anything like that it was – as it kind of got five or six days into March things were moving pretty well and pretty encouraging and then kind of the rug got taken out from a lot of that whether it was government or tariff-related or whatever it might be, people just kind of pulling back quickly. You've got to be able to adjust your headcounts fast to make up for that lack of demand, I think and with Island they basically said yeah, we're moving and we in essence adjusted. We had ramped up headcount going into March, on expected occupancy levels being in demand being a little bit higher, and then we cut that back basically as we got to April and said hey, we need to revert back to where we were based on what we saw in terms of occupancy. So I wouldn't say there's a whole lot of deep cuts coming. Everybody's I think is reflective in their guidance for the balance of is just kind of taking a wait-and-see approach, and it's not the end of the world, but it's not what it was in January and February. So I think if we can get some good developments that solidifies kind of the economic certainty out there, then we're positioned to do pretty well, like we saw to start the year.

Got it. And then maybe just going back to Portland and that project. Curious how the cost of that project might be impacted by tariffs. Obviously, a lot of unknowns on that front, but just curious how you're thinking about that. Thank you.

Yes. I mean, we had factored in some steel-related tariffs a few months ago into our projections. Obviously, that's kind of moving around a lot, whether it's steel or just anything in general. So we have our underwriting model. We have our projections. We know that market really well, I think as Jeff talked about, the – at least the projected returns are very strong but who knows where that goes here in the next six or nine months in terms of impact, but we're taking it and we're going to continue to try and get approval for the building and see what it looks like.

Yeah, I mean if you extrapolate that thought process even to a multitude of other hotel developers around the country. You've got to imagine that as you read the lodging econometrics pipeline numbers, you've got to imagine that those numbers insofar as pipeline, hey, they may be what they are. Our numbers in the pipeline and have been for four or five years frankly, but how many end up really breaking ground here? I think over the six or nine months I think their numbers frankly are way high.

Appreciate all the color. Thank you.

Thank you. Our last question comes from the line of Jonathan Jenkins with Oppenheimer. Please proceed.

Good afternoon. Thank you for taking my questions. First one for me, helpful commentary on the government demand and the impact there but I'm sure it's a small percentage but could you maybe help us think about how much international inbound travel exposure you have in the portfolio and if that's having any impact at all?

Pretty light for our hotels quite frankly. I mean most of it would be in and around Silicon Valley but frankly we've been experiencing some pretty strong numbers overall, there as Dennis indicated in his remarks but not being specifically in New York City or San Francisco or otherwise kind of really insulates us from that issue. Maybe in the summer there was a little Canadian travel that might be scared off a little bit right now in some of the northeastern a couple of the coastal northeastern hotels but thank goodness there's been such excess demand frankly in those markets anyway over the last few years. I'm not sure that's going to be overly impactful either.

Okay, that's great color. And then switching gears to the guidance. When we think about the full-year RevPAR guidance, how much of that RevPAR expectation for 2025 will be or could be driven by ADR growth? I mean is the assumption that occupancy will continue to grow back to 2019 and maybe be offset by a little bit of rate?

I mean listen, I think we're basically at a flat midpoint for the balance of the year, so yeah I don't think there's much movement one way either way in ADR or occupancy quite honestly. So you might have if it's a percent one way or the other. Nothing would be kind of surprising at this point.

Yes, I mean I think the only place you'll see any ADR slippage because it - because obviously we were growing ADR along with occupancy here is when a hotel does have let's say a disproportionate amount of government business that is really pulled back. So as we were talking about, we have one particular hotel I'm not going to name it of the three in the DC area that has always had lots of government business at very high rates, higher than per diem rates because of what it is and its location. So there, you're essentially trying to shift-share some other business into the hotel. And so maybe you see a little lower ADR in that realm, but otherwise, I think it's flattish to up a little bit.

Okay, that's perfect. Thank you. And then, last one for me, if I could, outside of that potential development opportunity, which you talked about a couple of times now - when you think about potential acquisition opportunities, is there any markets or types of assets you would like to target? I mean, does it make sense to add to existing markets or expand to new markets? What are your thoughts on that?

I think that, as we look at our portfolio, we are definitely ready to diversify the company's asset base just a little bit outside of markets that we're in. We're very tech-heavy, and the fortunes of the company do seem to rely quite heavily on that part of the economy. Now look, it's the right place to be, and the hotels we have are absolutely right locationally in those markets. But I think an overall goal is to get a little less volatility in our cash flow. And if we could make acquisitions that were solid, in a cap-rate that makes sense relative to where we trade at and that's a big caveat, then I think we would look at some newer assets in markets that allow us to diversify a bit more.

Okay, that's very helpful. Thank you for all the color today. That's all for me.

Appreciate your questions. Thanks a lot.

Thank you. There are no further questions at this time. I'd like to pass the call back over to management, if they have any closing remarks.

Thank you all for joining the call today. We remain optimistic about our direction in the economy, especially once certainty is restored. We are also confident about the industry's outlook over the next three to five years. We look forward to our next quarterly discussion.

Thank you. You may disconnect your lines at this time. Thank you for your participation.