Business Context and Reporting Period
This Form 8-K is a current report filed by Chatham Lodging Trust on May 17, 2013, with the earliest event reported on that date. The filing primarily discloses a new hotel acquisition agreement and provides an update on second-quarter 2013 operational expectations.
Key Financial Metrics and Transactions
- Acquisition: Entered into an agreement to acquire the 178-room Hyatt Place Pittsburgh North Shore for a total cash purchase price of $40.0 million, plus customary pro-rated amounts and closing costs.
- Funding: The purchase is expected to be funded through borrowings on the Company's secured revolving credit facility and the issuance of property-specific debt.
- Revenue per Available Room (RevPAR): The Company expects to report RevPAR of $114-$115 for its 20 wholly-owned hotels for the second quarter of 2013.
- Comparative Growth: The expected Q2 2013 RevPAR represents a 2-3% increase from the same period in 2012. Excluding the Washington Hotel, the Company anticipates a 4.5-5% increase.
Material Changes and Operational Updates
The filing highlights a material operational change at the Company's former DoubleTree Guest Suites in Washington, D.C., which is being rebranded to a Residence Inn by Marriott. Renovations to guest rooms and common areas have resulted in certain rooms being out of service, negatively impacting the second-quarter RevPAR. The renovation is expected to be completed in the third quarter of 2013.
Guidance, Outlook, and Risks
- Acquisition Timeline: The Company anticipates the Pittsburgh Hyatt Place acquisition will close by June 17, 2013. However, the transaction is subject to customary closing requirements, and there is no assurance it will be consummated.
- Forward-Looking Statements: The RevPAR estimates are based on internal reporting to date. The Company explicitly states it can provide no assurance that final reported RevPAR will not differ materially from the current expectations once the quarter concludes and financial statements are finalized.
Investor Verification Checklist
- Verify the final closing date and total cost of the Pittsburgh Hyatt Place acquisition, including any adjustments to the $40.0 million base price.
- Confirm the actual second-quarter 2013 RevPAR against the $114-$115 guidance range once the quarter ends.
- Monitor the completion status of the Washington Hotel rebranding and its impact on third-quarter 2013 performance.
- Review the terms of the secured revolving credit facility and property-specific debt utilized to fund the acquisition.