Chatham Lodging Comes Back as Active Buyer, Seller

LOS ANGELES—After taking a quieter approach to transactions in recent years, Chatham Lodging Trust rounded out the end of 2017 with a handful of acquisitions and one sale.

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“We had a pretty active year last year in 2017,” Chairman, President and CEO Jeff Fisher said in an interview during the Americas Lodging Investment Summit.

Prior to its purchase of the 131-room Hilton Garden Inn Portsmouth Downtown in New Hampshire for $43.5 million in September 2017, Chatham Lodging hadn’t been an active buyer since 2015. In the fourth quarter of 2017, Chatham also purchased the 96-room Courtyard by Marriott Charleston Summerville in South Carolina for $20.2 million, as well as the 219-room Embassy Suites by Hilton in Springfield, Virginia, for $68 million.

In 2017, Chatham Lodging launched a capital recycling program. In December, it sold the 145-room Homewood Suites by Hilton Carlsbad, California, for $33 million. The company originally had two identified for sale, Fisher said, but the second one fell through at the 11th hour because there was an assumption of commercial mortgage-backed securities debt that was required but the servicer did not have the buyer’s approval. That hotel will likely be back on the market again at a later date, he said.

“The theme here is to sell an asset that’s a little bit older,” he said. “Most of the hotels, if not older, are in good markets if not very good markets. Some might be challenged more by supply. We’ll look to see if there’s an end in sight on the supply front. We’ll look for more opportunities to sell at a lower cap rate than what we could acquire for.”

Looking at where the U.S. hotel industry is now, Fisher said he expects to see more of the same: record-high occupancy rates, good average daily rates but no ability to grow revenue per available room much.

“That’s where it’ll be over the next year or two until some of the new supply abates,” he said. “As that happens, we’ll absorb hotel by hotel depending on where you are. We’ll get some group, assuming the economy stays healthy where it is.”