Chatham Lodging Trust: Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Chatham Lodging Trust (CLDT) is a self-advised real estate investment trust (REIT) focused on upscale extended-stay and premium-branded select-service hotels. As of June 30, 2026, the Company owned 39 hotels with 5,610 rooms across 18 states and the District of Columbia. The portfolio is managed by Island Hospitality Management, LLC (IHM), a related party owned by the Company's CEO.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | YTD 2026 (6 Months) |
|---|---|---|
| Total Revenue | $87.8 million | $155.3 million |
| Net Income (GAAP) | $8.5 million | $3.9 million |
| Net Income Attributable to Common Shareholders | $6.2 million | $(0.1) million (Loss) |
| Adjusted Hotel EBITDA | $35.7 million | $57.1 million |
| Funds From Operations (FFO) | $21.7 million | $29.3 million |
| Adjusted FFO | $23.6 million | $33.7 million |
| Total Debt Outstanding | $414.3 million | $414.3 million |
| Cash and Cash Equivalents | $11.3 million | $11.3 million |
| Leverage Ratio (Net Debt/Investments) | 24.1% | 24.1% |
Material Changes vs. Prior Period
- Portfolio Activity: The Company acquired a portfolio of six hotels for $92.0 million on March 3, 2026. In the prior year (2025), the Company sold four hotels, including properties in Houston, TX, and Billerica, MA.
- Revenue Growth: Total revenue increased 9.4% in Q2 2026 compared to Q2 2025, driven by a 3.3% increase in same-property RevPAR and the contribution of the newly acquired hotels.
- Operating Expenses: Hotel operating expenses rose 8.2% in Q2 2026, primarily due to the new acquisitions and inflationary pressures, partially offset by the absence of sold properties.
- Net Income Volatility: While Q2 2026 net income was strong ($8.5M), the YTD 2026 net income attributable to common shareholders was a loss of $0.1 million, compared to a profit of $2.9 million in YTD 2025. This was largely due to the absence of significant gains on hotel sales in 2026 (which totaled $7.5 million in YTD 2025).
- Debt Utilization: The Company increased borrowings under its revolving credit facility to $75.0 million in Q2 2026 to fund acquisitions and operations, compared to zero outstanding in Q4 2025.
Outlook, Guidance, and Risks
- Industry Outlook: Management expects U.S. lodging industry RevPAR to continue increasing modestly for the remainder of 2026, citing a 5.7% industry increase in Q2 2026.
- Capital Allocation: The Company continues its share repurchase program, having repurchased approximately $9.5 million of shares YTD 2026. Approximately $6.6 million remains available under the $25.0 million program authorized in May 2025.
- Dividends: The Company declared dividends of $0.10 per common share for Q2 2026 (totaling $0.20 YTD) and $0.41406 per preferred share for Q2 2026 (totaling $0.82812 YTD).
- Risks: Key risks include interest rate fluctuations on variable-rate debt (SOFR-based), inflationary cost increases, and the ability to access capital markets for future acquisitions. The Company has no debt principal maturities due in the next 12 months.
Investor Verification Checklist
- Acquisition Integration: Verify the operational performance and RevPAR contribution of the six hotels acquired in March 2026.
- Debt Covenants: Confirm continued compliance with financial covenants, specifically the maximum leverage ratio and minimum fixed charge coverage ratio, given the increased revolver utilization.
- Share Repurchase Impact: Assess the impact of the ongoing $25 million share repurchase program on liquidity and future capital availability.
- Related Party Fees: Review the management fee structure with IHM (related party) and its impact on net operating income.
- Capital Expenditures: Monitor the $13.1 million expected capital expenditure budget for the remainder of 2026 for renovations and brand requirements.