Chatham makes first buys in almost 2 years

WEST PALM BEACH, Florida – Chatham Lodging Trust has acquired six Hilton-branded hotels comprising 589 rooms for $92 million, or approximately $156,000 per room. Additionally, the company increased its quarterly common dividend by 11% to $0.10 per share, the second consecutive year of double digit increases to its common share dividend.

Chatham acquired two hotels in Joplin, Missouri, two hotels in Effingham, Illinois, and two hotels in Paducah, Kentucky. Of the six hotels, there are two Homewood Suites, two Hampton Inn and Suites and two Home2 Suites by Hilton hotels. Chatham funded the acquisition with available cash and borrowings on its revolving credit facility.

Over the past 18 months, Chatham sold six hotels for approximately $100 million. The hotels had an average age of 25 years, RevPAR of $101 and hotel EBITDA margins of 27%. In comparison, the $92 million acquired portfolio has an average age of 10 years, generated RevPAR of $116 and hotel EBITDA margins of 42% in 2025.

Although the acquired portfolio will only be included in Chatham’s results for 10 months in 2026, the below summarizes the financial contributions of the acquired portfolio to Chatham’s on a full-year basis:

• Hotel EBITDA of approximately $10 million would represent a 12% increase
• Using 2025 Hotel EBITDA and a pro forma blended interest rate of 6%, the acquired portfolio would add approximately $0.10 of adjusted FFO per year
• Chatham’s net debt to EBITDA ratio increases approximately 50 basis points

“This accretive acquisition, which equates to an approximate 10% capitalization rate using 2025 hotel net operating income, will provide further growth in free cash flow, giving us the confidence to boost our dividend by a healthy 11% for 2026,” said Chatham President and CEO Jeffrey Fischer.

Fischer added that this acquisition complements Chatham’s existing portfolio for multiple reasons. “First, the hotels are generally the highest quality properties in their respective markets with the average age of the portfolio only 10 years,” he said. “Second, 66% of the portfolio’s rooms are extended-stay, an exact match to our existing portfolio, more than double our nearest peer, and as everyone knows, is our preferred segment. Third, the hotels benefit from very favorable labor dynamics and generate Hotel EBITDA margins that will further increase our already industry leading margins. Fourth, the portfolio diversifies our geographic footprint into areas of the country that are benefitting from expanded investments in manufacturing and distribution.”

Fisher concluded, “We have multiple levers to enhance shareholder returns and are executing on those. We have been aggressively repurchasing shares and will continue to do so using free cash flow. We are increasing our common dividend by double digits for the second consecutive year. We have been patiently analyzing many acquisition opportunities, waiting for the right deal that ticked a lot of boxes, and this deal certainly does that. It represents our first acquisition in almost two years. We are enthusiastic about our future.”