CLDT - Chatham Lodging Trust: A Low Double-Digit Return Opportunity

2024-06-06 12:00:57 ET

Summary

• Chatham Lodging Trust is a lodging REIT focused on extended-stay accommodations and select-service hotels.
• The company's April/May Q2 2024 business update shows it will likely easily beat its initial guidance.
• Net debt accounts for 45% of enterprise value, with preferred shares contributing 12% to the capital structure.
• The company offers a 10.3% market cap rate before capex and general and administrative expenses.
• Key risks are that RevPAR growth is driven exclusively by occupancy gains, as well as a high cost of debt.

Introduction

Chatham Lodging Trust ( CLDT ) is one of the weakest-performing REITs so far in 2024, with a negative return of 18% significantly below the 5% drop in the benchmark Vanguard Real Estate Index Fund ETF ( VNQ ):

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