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Chatham Lodging Trust said its hotel REIT delivered stronger-than-expected first-quarter results, supported by improving demand in Silicon Valley, expense controls, a recently closed acquisition and ongoing share repurchases. Chairman, President and Chief Executive Officer Jeff Fisher also said the company has increased its 2026 guidance by approximately 15% since February.
Fisher said the guidance increase reflects “strong operating results,” an accretive acquisition and a better outlook for the rest of the year. Chatham raised its common dividend by 11% in the first quarter, after a 28% increase in 2025. Fisher said the dividend remains well covered, with a common dividend-to-FFO payout ratio of 32% based on updated guidance.
Fisher added: “We will reevaluate the quarterly dividend later this year.”
Senior Vice President and Chief Financial Officer Jeremy Wegner reported first-quarter hotel EBITDA of $21.4 million, adjusted EBITDA of $18.4 million and adjusted FFO of $0.20 per share. Chatham generated a GOP margin of 42.2% and a hotel EBITDA margin of 31.8% in the quarter.
Wegner said GOP margins rose 60 basis points year over year, helped by expense controls. Hotel EBITDA margins increased by 140 basis points, reflecting expense management and $500,000 of property tax refunds.
On a comparable basis, Fisher said hotel EBITDA rose 5% and hotel EBITDA margins improved 135 basis points. RevPAR finished the quarter up 1%, exceeding the company’s expectations, after moving from a 5% decline in January to 1% growth in February and 5% growth in March. Fisher noted difficult comparisons due to wildfire-related demand at Chatham’s Los Angeles hotels in the prior year.
Executive Vice President and Chief Operating Officer Dennis Craven said labor and benefits costs declined more than 1%, or $0.50 per occupied room, in the quarter. He also cited lower property insurance renewal rates and property tax refunds, which helped offset an approximately 12% increase in utility costs at comparable hotels.
Executives highlighted Silicon Valley as Chatham’s strongest market. Fisher said RevPAR at the company’s Silicon Valley hotels increased 23% when excluding the Mountain View hotel, which was under significant renovation. Occupancy at the four Silicon Valley hotels was 72%, flat versus the prior year despite the renovation disruption, while average daily rate rose 10% to $210, which Fisher described as a post-pandemic quarterly high.
For the three Silicon Valley hotels not under renovation, RevPAR increased by double digits in each month of the quarter and rose another 12% in April, Fisher said. He attributed demand to technology customers and large-scale investment in artificial intelligence infrastructure, semiconductors and other technology-related areas.
Craven said comparable Silicon Valley hotel EBITDA grew 35% year over year on a 23% RevPAR increase, excluding the effect of a property tax refund. Including the refund, hotel EBITDA growth was approximately 50%.
Craven said Chatham is projecting mid- to upper-single-digit RevPAR growth for the four Silicon Valley hotels for the balance of the year, from May through December, adding that the outlook may be conservative relative to performance over the first four months.
Chatham closed in early March on the acquisition of six Hilton-branded hotels totaling 589 rooms for $92 million. Wegner said the deal was funded with borrowings on the company’s revolving credit facility, which carries a rate of approximately 5.1%.
Fisher said the portfolio is immediately accretive to Chatham’s operating margins, FFO and FFO per share. He said the hotels have an average age of approximately 10 years, with 66% of rooms in extended-stay formats. The properties are located in markets benefiting from manufacturing and distribution investment, including Joplin, Missouri; Paducah, Kentucky; and Effingham, Illinois.
Craven said the acquired portfolio generated RevPAR growth of 6% in the first quarter and 7% in April, slightly above underwriting expectations. Occupancy in the first quarter was 74%, about 200 basis points higher than Chatham’s portfolio average. He said the hotels have limited near-term capital needs, with only one hotel, the Hampton Inn & Suites Paducah, scheduled for renovation over the next two years.
During the question-and-answer session, Craven said the transaction was brokered and sent to a group of potential buyers. He said performance was not “meaningfully above” underwriting, but RevPAR was about $1 to $2 better than expected.
Chatham continued repurchasing shares during and after the quarter. Fisher said the company repurchased 2.2 million shares through the end of the first quarter, representing approximately 4% of common equity, at an average price of $7.04. Craven said Chatham bought approximately 200,000 additional shares in April at about $8.34 per share.
Craven said Chatham implemented a $25 million repurchase plan in 2025 and intends to complete the program this year, supported by projected free cash flow of approximately $20 million in 2026. He said the company expects to reevaluate a new plan in the coming months.
Craven said Chatham is also considering asset recycling and may try to sell one or two assets over the balance of the year, with proceeds potentially used for additional share repurchases or new acquisitions.
Wegner said Chatham’s leverage ratio, as defined in its credit agreement, was 32.5% after the acquisition. He said the balance sheet leaves the company positioned to repurchase shares, pursue the planned development of a hotel in Portland, Maine, and consider additional accretive acquisitions.
For full-year 2026, Chatham expects RevPAR growth of 0% to 2%, adjusted EBITDA of $95.3 million to $99.6 million and adjusted FFO per share of $1.21 to $1.29. Wegner said the guidance includes the contribution from the six-hotel acquisition beginning March 3, but does not include future share repurchases or acquisitions.
The company expects second-quarter RevPAR to increase approximately 1% to 2%. Craven said Chatham is taking a measured approach to forecasting the impact of the World Cup, despite exposure in markets including Dallas, San Francisco, Los Angeles, Seattle and Fort Lauderdale.
Fisher said Chatham expects to begin its Portland, Maine hotel development during the current quarter, with an opening before the fall season of 2028. The company plans to provide a detailed breakdown of total spending and timing on its second-quarter earnings call.
Craven said 2026 capital expenditures are expected to total approximately $27 million. Chatham completed the full renovation of its Residence Inn in Austin and the rooms portion of the Mountain View renovation during the first quarter. Later this year, renovations are expected to begin at the Gaslamp Residence Inn, Hyatt Place Pittsburgh and Homewood Suites Farmington.
Chatham Lodging Trust is a self-advised, publicly traded REIT focused primarily on investing in upscale, extended-stay hotels and premium-branded, select-service hotels. The company owns 39 hotels totaling 5,915 rooms/suites in 16 states and the District of Columbia.
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