Chatham Lodging (CLDT) Earnings Call Transcript

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DATE

Wednesday, November 5, 2025 at 10 a.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Jeff Fisher

President & Chief Operating Officer — Dennis M. Craven

Chief Financial Officer — Jeremy Wegner

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RISKS

With guidance for the fourth quarter assuming a continued decline of approximately 3%.

The three Washington, D.C, hotels experienced RevPAR declines of about 9% in August and September 2025, and RevPAR at those hotels was down 19% in October, attributed to the government shutdown and its threat reducing travel demand.

Management noted, "Hotel room demand and thus revenue has certainly seen its share of ups and downs this year. Since then, encouraging business demand growth across the portfolio in the first quarter has been adversely impacted by Dodge travel spending halts, tariff threats, Liberation Day impacts, and, of course, inbound international travel, and especially from Canada being down substantially."

TAKEAWAYS

Asset Sales and Capital Allocation -- Five hotels were sold earlier in the year at an approximate 6% capitalization rate, and another hotel is under contract for $17 million, with all assets among the lowest RevPAR performers in the portfolio.

Share Repurchases -- Approximately 500,000 shares, about 1% of outstanding stock, were repurchased at an average price of $6.85, including 230,000 shares subsequent to quarter-end.

Refinancing and Credit Facility -- The credit facility was upsized and recast, resulting in a $300 million undrawn revolving facility and a term loan increased to $200 million; net debt to EBITDA ratio stands at 3.5 times.

Quarterly Financial Metrics -- Hotel EBITDA reached $28.8 million; adjusted EBITDA was $26.2 million; adjusted FFO totaled $0.32 per share; and GOP margin declined by 90 basis points to 43.6%.

Expense Control -- Labor and benefits cost per occupied room rose by only 1.7%; operating profit margin compression was limited to less than 100 basis points.

RevPAR Performance by Market -- RevPAR at Silicon Valley's Mountain View and San Mateo hotels grew 2.5%, while Sunnyvale hotels saw a 9% decline in RevPAR; RevPAR was up 28% in Coastal Northeast and Greater New York, with year-to-date RevPAR in Hawkesville, Long Island up 17% through August.

DC and Sunbelt Markets -- D.C. hotels faced flat RevPAR in July, then negative 9% in August and September; Sunbelt properties, including Savannah and Charleston, achieved RevPAR increases, with Savannah up over 30% and Charleston up 4%.

Acquisition and Development Outlook -- Management reported "somewhat more bullish" sentiment on hotel acquisitions due to increasing cap rates and more reasonable seller expectations, and stated that initial site work on the Portland, Maine, development will begin in 2026, targeting an opening in early 2028.

Q4 and Full-Year Guidance -- Q4 2025 RevPAR is forecasted at minus 3.5% to minus 2.5%; adjusted EBITDA is projected between $16.7 million and $18.3 million; adjusted FFO per share is guided at $0.14 to $0.17; full-year RevPAR growth expected between minus 0.7% and minus 0.3%.

Dividend Policy -- The common dividend was raised nearly 30% earlier this year to $0.09 per share per quarter, with further evaluation planned for early 2026.

SUMMARY

Chatham Lodging Trust (NYSE:CLDT) disclosed ongoing portfolio reshaping through opportunistic hotel sales and indicated continued repurchasing of its shares due to perceived undervaluation. Management emphasized maintaining low leverage and a robust liquidity position by increasing its revolving credit facility and term loan, which collectively underpin its capital flexibility. Operationally, cost control efforts limited margin declines despite challenging RevPAR trends, with select markets—particularly Coastal Northeast and Greater New York—delivering substantial RevPAR growth of 28%, driven by unique events and improving corporate demand. The company is actively evaluating hotel acquisitions as cap rates rise and sellers moderate expectations, aiming to deploy capital to higher-return opportunities, including a new development set for Portland, Maine, beginning in 2026.

CEO Fisher said, "We intend to remain active repurchase shares moving forward since we believe we are trading at a meaningful discount."

Three D.C. hotels significantly impacted October results, reducing overall portfolio RevPAR by about 170 basis points.

Management is prioritizing share repurchases, acquisitions, and the Portland development in its capital allocation hierarchy, supported by a $25 million repurchase plan representing nearly 10% of current market cap.

Labor and wage pressures have stabilized, with wage increases averaging about 2% year-over-year for hospitality staff post-July 1.

Management anticipates favorable long-term industry fundamentals, with limited supply growth expected to remain under 1% in core markets for the next year.

INDUSTRY GLOSSARY

RevPAR: Revenue per available room, calculated as total room revenue divided by the number of available rooms, a key metric in hotel industry performance analysis.

Cap Rate: Capitalization rate; the ratio of net operating income to property value, commonly used for valuing real estate assets.

FFO: Funds from Operations; a performance metric for REITs, approximating cash generated by a property’s operations and often used for dividend assessment.

GOP Margin: Gross Operating Profit Margin; measures profitability from core hotel operations before indirect expenses.

Full Conference Call Transcript

Jeff Fisher: Thanks, Chris. Good morning, everyone. I certainly appreciate everybody being on our call today. Before I comment on our third quarter operating results, I'd like to update some of our key corporate initiatives. Earlier this year, we completed the sale of five hotels with an average age of 25 years, at an approximate 6% capitalization rate. Each of these five hotels were among the six lowest RevPAR hotels in our portfolio. In the fourth quarter, we are under contract to close on the sale of another hotel for $17 million with similar characteristics and at similar returns to the previously sold five hotels. These opportunistic sales add liquidity to execute on other value-enhancing opportunities for the company.

On that note, we've now repurchased approximately 500,000 or 1% of our outstanding shares of our stock at an average price of $6.85. Included in that amount is approximately 230,000 shares that we have repurchased since the end of the third quarter. We intend to remain active repurchase shares moving forward since we believe we are trading at a meaningful discount. Lastly, we completed an upsized and recast syndication of our credit facility and term loan further enhancing our financial condition and lowering overall borrowing costs. We are one of the lowest leveraged lodging REITs and have great flexibility to create value by using that capacity to repurchase shares, acquire hotels, and fund our upcoming Home 2 Portland Maine development.

With respect to acquiring hotels, we are somewhat more bullish on our ability to grow externally than we've been in the last eighteen months. Deal flow underwriting has been steady here, and it seems like seller pricing expectations in some cases are becoming more reasonable. We have been and will continue to exercise great patience and discipline as operating fundamentals are quite volatile. But, of course, it is that volatility that I think is partially the catalyst for some movement in cap rates upward. The market will have to make sense for us and, of course, yields have to approximate the implied yield on buying our own stock.

We want to invest in markets that are gonna from continued population migration and business investment. The US is poised to benefit from this potential capital expenditure as they're calling it super cycle, based on the announced investments from companies based here and abroad and more specifically, it's expected that the Central And Southeastern US will be the biggest beneficiaries in some of these investments and additions of employment Operationally, despite RevPAR growing excuse me, We'd like it to be growing two and a half percent.

Declining two and a half percent, We were able to minimize our margin decline to less than a 100 basis points and we're able to deliver hotel EBITDA and FFO per share towards the upper end of our guidance range and beating consensus estimates. Looking at RevPAR performance in our largest markets, I want to address our Silicon Valley performance because on the surface, the decline appears weak, RevPAR at our hotels in Mountain View and San Mateo produced RevPAR growth of two and a half percent in the quarter while RevPAR growth at the two Sunnyvale hotels fell 9%. The underlying fundamentals in Sunnyvale are healthy, with the third quarter submarket and competitive set RevPAR up.

As opposed to our two hotels RevPAR was up 36% respectively in the market. Given the underlying health of the market, when one of our larger corporate accounts asked us to substantially discount our room rates we declined to participate. We believe the better long term option for us is to maintain our rate integrity and that will benefit us in the future as the market outlook, as we've discussed, continues to remain strong and the market is growing and recovering. Our Coastal Northeast and Greater New York markets experienced RevPAR growth of 28% in the quarter.

And the Coastal Northeastern portfolio remains fantastic, benefiting from long term supply growth restrictions in those markets combined with the balance of leisure business, and government demand. at any of our hotels. Just fantastic and another reason why we are excited about our upcoming development in Downtown Portland on the waterfront. All three hotels in Greater New York grew RevPAR in the quarter, led by our residents in Hawkesville, Long Island. Had growth of 28% due in part to having the Ryder Cup on Long Island in September. However, that hotel was still having a great year through August with year to date RevPAR up 17% as corporate demand has greatly improved. Really for the first time in that market.

Post COVID. And three of our top markets, San Diego, Austin, and Dallas, were adversely impacted by convention related demand losses. The Austin and Dallas convention centers are basically closed for renovation as we've discussed and expansions while San Diego is coming off a record year convention business in 2024, and our at that hotel. So the comp is difficult and the softening relative to 2024 in San Diego is really no surprise to us.

Our six predominantly leisure hotels, account for approximately 20% of our EBITDA, produced RevPAR growth of 3% in the quarter, Within that group, our SpringHill Suites Savannah had a great quarter with RevPAR up over 30% as it has really surged after completing a fantastic renovation that was very well received. By our guests and customers. Our fourth quarter RevPAR guidance assumes that our current RevPAR trend of a decline of approximately 3% continues for the rest of the year. Unfortunately.

It's really been a crazy year, a volatile year, Hotel room demand and thus revenue has certainly seen its share of ups and downs this year Since then, encouraging business demand growth across the portfolio in the first quarter has been adversely impacted by Dodge travel spending halts, tariff threats, Liberation Day impacts, and, of course, inbound international travel, and especially from Canada being down substantially And now with the government shutdown, certainly doesn't help matters. Many of these challenges should be short term, however, and the impact primarily on 2025 performance But looking forward, lodging dynamics are very favorable.

Forecast for super cycle capital investments limited supply growth, and moderating wage increases all tilt in favor of RevPAR and margin expansion as we look forward to next year. Add to this what is projected to be a favorable interest rate curve and thus lower borrowing costs should enable us to accretively grow as we move forward Good years, are ahead. With that, I'd like to turn it over to Dennis.

Dennis Craven: Thanks, Jeff. Good morning, everyone. Continuing on with some color related to Silicon Valley, excluding our two Sunnyvale hotels, portfolio RevPAR would have been down 1.7% in the quarter. Occupancy at the four Silicon Valley hotels was still a solid 75%. With a range of 73 to 83% occupancy in the quarter between the four hotels. Importantly, October RevPAR at our four Silicon Valley hotels was flat to last year, compared to the down nine to down 4% trend for the quarter RevPAR was down approximately 5% at the two Sunnyvale hotels and up 7% at the other hoot other two hotels.

So just adding on to what Jeff's Jeff talked about earlier in the call, our Silicon Valley hotels were essentially able to, over the last few months, replace approximately half of the business that we chose to pass on related to one of our larger corporate clients. So good trend developing as we move into fourth quarter. With respect to fill Silicon Valley and those two hotels. Obviously, our three Washington DC hotels have been for quite a ride this year.

As evidenced by the following trends, which was first quarter RevPAR was up 6% Second quarter RevPAR was down 2%, feeling the effects of Doge when April RevPAR was down 9% Our third quarter RevPAR really shows the impact of just the threat of a shutdown as we typically see just the threat of shutdown start to impact government travel into those markets. Our RevPAR for those three hotels was flat in July, then down approximately 9% August and September. Government shutdown impacted the third quarter portfolio RevPAR by approximately 40 basis points In October, the effect of those three hotels was which were down 19% actually impacted RevPAR by a 170 basis points.

And when you just take out those three hotels, our RevPAR was down only about 1% for October. Outside of our top markets, our other tech heavy hotel, our Bellevue Residence Inn, produced RevPAR growth of 1% in the quarter, As we've talked about for the last really two quarters, vehicle boarded crossings and inbound travel from Canada has been an impact specific in that region. If you look at vehicle border crossings from British Columbia, into Washington State, they were down approximately 35% in the third quarter. Compared to last year. Having said that, that's better than the 47% that vehicle crossings were down in the second quarter.

So at least from a trend perspective, that crossing decline is moderating. At our home too in Phoenix, as a reminder, it opened in early two thousand and twenty four, and we acquired the hotel in 2024. RevPAR was up approximately 6% in the quarter, The fourth quarter looks quite strong in Phoenix, and our October RevPAR at that hotel was up another 8% year over year. Hotels in the Sunbelt continue to perform well for us. Addition to the previously mentioned Savannah Hotel, our two Charleston hotels had another solid quarter with RevPAR up 4%. Our two Florida hotels in Destinham, Florida and excuse me. Destin and Fort Lauderdale had flat RevPAR growth in the quarter.

Our top five RevPAR hotels in the quarter were our Hampton and Portland, Maine, as Jeff mentioned, with an all time high of $354. Followed by our residence in Washington DC with RevPAR of $202,147 dollars, and our Hilton Garden Inn Portsmouth with Rip Bar of 239, followed by Hilton Garden Inn's Marina Del Rey, residence in White Plains, and Holtville, New York with rep pars of approximately $204. Just to clarify, the second hotel was our Hilton Garden Inn in Portsmouth. Not our residence in Washington DC. On the operations front, our gross operating profit margins declined 70 points in the quarter to a still strong 44%.

As we all know, labor and benefits are by far our largest expense and a per on a per occupied room basis, those costs were up only 2% in the quarter. Headcount is down approximately 3% from year end at our comparable 34 hotels. With so much top line volatility, it is imperative that we closely monitor our staffing levels and productivity. Outside of labor and benefits, our other operating profit was up slightly year over year and improved margins by 30 basis points. Most other operating line items were basically stable year over year, though guest acquisition related commission costs were up approximately 15% or a half million dollars.

Our expenses there have increased really just due to the different booking channels year over year in the quarter. We had 16 hotels produce over a million dollars of GOP, in the in the third quarter. Compared to 17 in the second quarter. With the only difference related to a DC area hotel What is quite incredible is that for the first time ever following an all time RevPAR high, the Hampton Inn Portland let all hotels with GOP of 2,500,000.0 in the quarter unseating our gas lamp residents in that had led the way for the past fourteen quarters.

What's even more incredible is that the Hampton Inn Portland only has a 125 rooms, while the Gaslamp Residence Inn has 240 rooms. Gaslamp Residence Inn did finish second in the quarter, two of our tech driven hotels, our Bellevue and Sunnyvale two Residence Inn. And our Hilton Garden Inn in Portsmouth, New Hampshire. On the CapEx front, we spent approximately $4,000,000 in the quarter. Our last two renovations planned for 2025 are commencing in the fourth quarter, and that being the Residence Inn Austin, Texas. Which starts this week, and our residents in Mountain View, California, which starts next month. Our common dividend, was increased almost 30% earlier this year, is currently 9¢ per share per quarter.

And we will continue and we'll reevaluate our common dividend in early twenty six. With that, I'll turn it over to Jeremy.

Jeremy Wegner: Thanks, Dennis. Good morning, everyone. Our Q3 2025 hotel EBITDA was $28.8 million. Adjusted EBITDA was $26.2 million. And adjusted FFO was $0.32 per share. Our GOP margin for the quarter of 43.6% was only down 90 basis points from Q3 2024, despite the challenging RevPAR environment due to continued strong expense control and moderating inflationary cost pressures. In Q3, we were able to hold year over year increase in labor and benefits cost per occupied room to 1.7%. In Q3, we continue to strengthen our balance sheet by refinancing our revolving credit facility. Facility and term loan, which were our only near term debt maturities.

With this transaction, we upsized our revolving credit facility from $260 million to $300 million, and upsized our term loan from $140 million to $200 million. Our low leverage of 3.5 times net debt to EBITDA and the liquidity provided by our $300 million undrawn revolving credit facility. Provide us with significant capacity to pursue investment opportunities. In Q3, we ramped up utilization of our share repurchase program and repurchased 255,000 shares for $1.8 million. And subsequent to the end of Q3 and early October, we repurchased an additional 230,000 of shares for $1.5 million. At current price levels, we believe acquiring Chatham stock is a very attractive investment.

And we continue to expect to actively repurchase our shares in the future. Turning to our Q4 and full year 2025 guidance, we expect RevPAR of minus 3.5% to minus 2.5% adjusted EBITDA of $16.7 million to $18.3 million, and adjusted FFO per share of 14¢ to 17¢ in Q4, and RevPAR growth of minus 0.7% to minus 0.3% adjusted EBITDA of $89.2 million to $90.8 million and adjusted FFO per share of $0.96 to 99¢ for the full year. This guidance assumes no further asset sales, capital markets, activity, or changes in floating interest rates. This concludes my portion of the call. Operator, please open the line for questions.

Operator: Thank you. Ladies and gentlemen, we'll now begin the question and answer session. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing the key. One moment please for your first question. And your first question comes from Gaurav Bhatma from Alliance Global Partners. Please go ahead.

Gaurav Mehta: Thank you. Good morning. I wanted to ask.

Chris Daly: Hey. Wanted to ask you on investment opportunities. Can you maybe provide some more color on what you guys are seeing in the acquisition market? As you're selling hotels Are there any opportunities to redeploy that capital into acquisition in the future?

Jeff Fisher: Yes. I think I'll take that. Hi, Gaurav. You know, it feels certainly, and we've been consistently like a lot of companies, you know, looking at deals, talking to owners, But with RevPart, turning in a negative direction, I think that there's does present and usually has in the past some opportunities. I feel like the overall ask is certainly now north even on the asking side. North of 8% on a cap rate basis, whereas everybody was hanging on to a lower number notwithstanding you know, what the hotel REITs trade at. You know, as an implied cap rate or otherwise.

And I think what we're seeing in a few cases is perhaps the opportunity, as I said, and the goal is to try to create long term shareholder value here you know, with great hotels that will grow at least as good, if not better than the existing port portfolio. That are newer, that are in the brands that we all know we specialize in. And I think we might be able to do that with some heels that will approximate what we can do by buying our own stock as Jeremy was talking about.

Dennis Craven: Yeah. And, Gaurav, I think I'll just add one thing to stat on to Jeff's is when you combine all that with you know, some of these newer assets are coming up on their next wave or probably, in a lot of cases, first waves of renovations. And as an owner who might have been relatively new to the industry now has to look at a, you know, an environment that's a bit choppy and has to come up with you know, 2 to $3 million to renovate a hotel. You know, that decision might spur a little bit more activity as well.

So we're in a great financial position to be able to you know, take on some of these opportunities in a market that might make others a little bit nervous. Too.

Gaurav Mehta: Great. Second question on the on the development. Can you remind us on the timing of the Portland main development?

Dennis Craven: Yeah. I mean, Garth, I think we'll you know, we're kinda proceeding as well We'll start site work on that in 2026. Probably be a twenty one to twenty four month construction timeline. So kind of an early 2028 opening.

Jeff Fisher: I think the seasonality and the results that Dennis was talking about in the existing asset really dictate. We have to be very careful about when we start digging up the parking lot know, because it's the same land parcel. And, you know, as Portland has continued it seems beyond, obviously, summer months, well into the month of October. To achieve ADRs particularly on weekends that are over $300 a night. So you know, we're gonna look at that carefully and skirt you know, those time frames as well. Yeah. I mean, I think October RevPAR at our Hampton Inn Portland was I believe, around 380 to eighty dollars.

So just to add on to Jeff's comment, that hotel does really well in almost every month except for, you know, the late December and January and early February when just weather is a little tricky.

Gaurav Mehta: Okay. Thank you. That's all I had.

Dennis Craven: Thank you.

Operator: Thank you. And your next question comes from Tyler Battery from Oppenheimer. Please go ahead.

Tyler Battery: Hey guys, good morning. Thanks for all the Hey, John. Sales. Here. I So I wanted to really dive into the RevPAR performance for a little bit if I could. And you missed the midpoint of the guide. Just isolate for us what really drove the variance I'm just trying to understand what surprised you in the quarter and what caused that shortfall.

Dennis Craven: Yeah. Tyler, it really comes down to two things. It's our decision on the two hotels in Sunnyvale. And basically the government shutdown impact on August and September. So you had two, you know, the two Sunnyvale hotels are basically 10% of our room count. And, you know, for those two hotels to be down you know, 9% in the quarter, following, you know, a first and second quarter with growth in the mid single digits was know, a very significant impact. That I think, as Jeff talked about, is really you know, for us, we decided you know, yes, if, you know, ultimately, was a short term hit to us.

But maintaining that rate integrity and I think as I spoke about, we were able to, in essence, replace you know, half of that business in October already. Think, ultimately, is gonna prove to be you know, a pretty good decision long term. And then obviously in Washington DC, it was flat RevPAR growth in July. And then what we are historically seeing, and by the way, we saw this back you know, in you know, late in the first and early in the second quarter with you know, the dose cuts and the threat of a government shutdown.

Is that as soon as the threat of a government shutdown starts or is kind of out there, generally speaking, that government travel pulls back. And we saw that leading into the actual shutdown know, with RevPAR at our three DC hotels down. 9% in August and September. That's it.

Operator: Okay.

Tyler Battery: Awesome. Thinking about the outlook and the guide for Q4, RevPAR down 2.5% in Q3, you're guiding down 2.5% to down 3.5% in Q4. So the declines getting worse. You know, last time that we spoke and last time you reported, just looking at kind of some of the industry forecast, there was an expectation that Q4 is going to be a little bit better. Compared with Q3 just from a year over year perspective. So just kind of unpack what's implied in that Q4 and kind of why things on a sequential basis are getting deteriorating and getting a little bit worse?

Dennis Craven: Yeah. Absolutely. That really has all to do with essentially the same answer. But just to really, you know, put a you know, put a nail on it is the three DC hotels you know, reduced our October RevPAR by approximately 200 basis points, a 170 basis points. So just those three alone, you know, in essence, if you excluded those, our FPAR was off 1% for the for the month. Of October. So, you know, we obviously have you know, we improved Silicon Valley in fourth quarter to flat RevPAR I mean, in October to flat RevPAR. But it, you know, the moderating and lessening range of RevPAR is strictly due to the gut dip. The shutdown in DC.

Tyler Battery: Okay. And then taking a step back and also trying to think about 2026. You know, the convention calendar and some of the disruption in Austin and Dallas, San Diego coming off of a record year, in 2024. How are or how is the convention business shaping up for next year in some of those markets? And then the supply picture, think, has been pretty favorable for lodging. So not sure if you can comment on just supply growth in your markets, whether it's next year or the next couple of years.

Dennis Craven: Yeah. I mean, with respect to the convention calendars, I mean, I think Austin and Dallas are essentially gonna maintain kind of where they are until '27. And with respect to San Diego, you had an all time year last year, It came down this year. It'll be something similar next year. So you know, I think what you also have in San Diego is one thing that did happen know, that had a little bit more of an impact as well this year.

Is you had the new the new Ryman property that opened up just outside of San Diego in that obviously had an impact on smaller conventions that might have chosen to go there instead of the primary San Diego convention center. So think as you move forward on the that respect for twenty six, you know, you probably have, you know, no incremental adverse impact from those three hotels. And then I think if you look at the supply the supply outlook, for our market, supply is less than 1%. And is projected to remain that way. For next year as well.

So you know, I think as just, you know, adding on to Jeff's concluding comment which was you know, when you look out into '26 and '27 and you know, the overall macro looks really good, not only to the industry, but specifically to us. With respect to some of these key markets and you know, I think just adding to what Jeff said, 2025 has just been a nut. Job of a year in terms of just all these things that have impact the industry and us.

And, you know, I think you know, when we can get past a lot of these short term things, which I think are primarily focused here in 2025, I think the outlook for not only the industry, but for us, and I think just with our upside to some of these markets should be you know, pretty rosy at this point. So a little choppy. Okay.

Tyler Battery: Yep. Switching gears to the margin side of things. You know, think the performance in the quarter was really quite strong. All things considered. Just talk a little bit more about how you're able to do that. Anything you wanna call out that's just kinda driving the performance there?

Dennis Craven: Yeah. I mean, it's it's listen. We're we're putting a lot of focus and energy on day to day and week to week management of headcount and productivity specifically, you know, with respect to you know, anything related to housekeeping. And obviously, that's very that fluctuates based on occupancy levels. So the key is to really keep a laser eye on those items And really just, you know, managing incoming and current wage levels. You know, as you look at, you know, where we project moving forward, generally speaking, our hospitality staff their annual wages are generally up for review. Every July one.

As you look at the wages we put in place across the portfolio, the average wage increase for us post July one year over year is about 2% as well. So think kind of as, you know, as wages have kind of, you know, stabilized, we've been able to maximize efficiencies in housekeeping department. I think the availability to hire labor for our hotels has really been fairly stable for the past you know, twelve to eighteen months. So we're able to, you know, I think, you know, have a 2% wage increase across the board is again, pretty favorable when you look forward for us.

Tyler Battery: So last question for me. Just capital allocation. Balance sheet's in great shape. Plenty of liquidity. Just given the backdrop, given where the stock trades, just rank order, for us. Your priorities for your for your capital here.

Dennis Craven: Yeah. I mean, listen. I think the first is, you know, I think it's what you know, Jeff had in his comment in order, which was we're active repurchasing shares or we will be and will continue to be active purchasing shares. We have a $25 million plan in place which is know, about or, you know, it's just a little bit less than 10% of our current equity market cap. So we'll continue to be really active there. And then, you know, I think the next priority is you know, obviously acquiring hotels if we can do it. And we obviously have our Home to Portland development.

So, you know, I say number two and number three are kind of about the same, but in the in the meantime, we're gonna be active purchasing shares. Okay.

Tyler Battery: I appreciate you taking all my questions here. That's all for me. Thank you.

Dennis Craven: Thank you.

Operator: Thank you. As a reminder, if you wish to ask a question, please press 1. And your next question comes from Johnson Gandhi from Brittany Holdings. Please go ahead. Hi.

Jeff Fisher: Good morning, and thank you for the overview here.

Gaurav Mehta: My question is primarily related to capital deployment as well.

Johnson Gandhi: You know, from my kind of calculations here, it looks like the stock is trading around a 140,000 a key Any kind of development right now what we've been seeing is know, 300 a key. Can you walk me through the decision making process on why to pursue the Portland development when our you know, the stock is trading probably around half of you know, what that cost per key would be.

Dennis Craven: Sure. This is Dennis. Nice to talk to you. Mean, listen, where our equity price is trading at, whether it's a 140 or a 150 or a 160,000 a key, that's made up of that's comprised of a of a valuation based on the entirety of our 34 hotels. This specific hotel you have to look at that deal individually. And look and see what the returns project out to be for that specific asset and whether that's gonna add value to the overall portfolio. And if you look at you know, we're we're only gonna do the deal if we believe it's gonna make long term sense.

And based on a lot of factors, which is market is very restrictive on new hotel development, The market is very popular. The RevPARs and margins we're able to obtain and able to achieve on our existing Hampton, but also what we project for this particular hotel. His drug will and, you know, based on where we are at the moment, and where we believe we'll be after developing that asset. We'll will derive and earn returns well above you know, where know, the portfolio is returning. So would certainly add value not only the company, but, obviously, then ultimately to our shares. And be accretive to that value.

So you have to look at each opportunity individually whether it's buying a hotel developing a hotel, or selling a hotel. And if those add value ultimately to what you wanna do with that, with your capital dollars, that's how we assess it.

Johnson Gandhi: Got it. Then I think just on the acquisition side, you've mentioned potentially looking for acquisitions. How would you know, allocate that? I you know, discuss that and review that against the price because that's more of an immediate hit one way or the other. With respect to buying shares or acquiring an existing property.

Dennis Craven: Yeah. I mean, I think, you know, for us, it's it's you look at what we're trading out on an equity share price, you look at the acquisition, Are the yields similar? Does the acquisition provide growth either consistent with or higher than your portfolio? And does it ultimately you know, drive incremental distributable cash flow that ultimately you'd you'd bring back in and deliver to your shareholders via dividend. So yeah,

Johnson Gandhi: Okay. Thank you.

Operator: Thank you. Thank you. And there are no further questions at this time. You can proceed with the conference.

Jeff Fisher: Well, thank you all. For the questions. Thank you all for being here today with us. And, we will talk to you as time goes by for better times, I think. As we move into next year.

Operator: Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. And ask that you please disconnect. Have a great day.

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