Chatham Lodging Trust

Ladies and Chairman, good morning and welcome to the Chatham Logging Trust's second quarter 2025 Financial Results Conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Daly, President of DG Public Relations. Please go ahead.

Thank you, Ryan. Good morning, everyone, and welcome to the Chatham Logging Trust's second quarter 2025 Results Conference call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subjects to risks and uncertainties, both known and unknown, as most recent Form 10-K and other SEC filings. All information in this call is as of August 6, 2025, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at chathamloggingtrust.com. Now to provide you with some insight into Chatham's 2025 second quarter results, allow me to introduce Jeff Fisher, Chairman, President, and Chief Executive Officer, Dennis Craven, Executive Vice President and Chief Operating Officer, and Jeremy Wegener, Senior Vice President and Chief Financial Officer. Let me turn the session over to Jeff Fisher. Jeff?

Thanks, Chris. Good morning, everyone. I certainly appreciate everybody being on our call today. Before I comment on our second quarter, I want to update some of our key corporate initiatives. We completed the sale of all five hotels we listed in the fourth quarter and are very happy with the results. We sold five hotels, as a reminder, with an average age of 25 years at an approximate 6% capitalization rate on 2024 NOI levels for proceeds of $83 million. Each of these five hotels were among the six lowest rent-par hotels in our portfolio at cap rates lower than our cost of debt and our value enhancing. We currently have two additional hotels listed for sale, and of course, it's too early in the process to comment on the specifics of each transaction, but these would be further opportunistic sales. We intend to use the proceeds from the five asset sales, as well as those currently listed if we sell them, to fund our Home 2 Portland development, acquire hotels, and repurchase of our stock, and we look forward to being opportunistic on all those accounts to continue to add shareholder value where we can. Our Board of Trustees approved a $25 million share buyback plan in May, and during the quarter we repurchased approximately 20,000 shares at a weighted average price of $7.02. Since we intend to be a bit more active in the third quarter given current share price levels. And our balance sheet continues to get stronger as we've reduced our leverage to now only 21% and are projected to create almost $20 million of free cash flow in 2025 after dividends. We positioned ourselves to add value in multiple ways. During the third quarter, we intend to launch an upsize and recast syndication of our credit facility and term loan, further enhancing our financial condition and lowering overall borrowing costs. We're hopeful that process is complete by the time we speak again in November. Operationally, we're pretty pleased with the results of our second quarter, delivering We rev par and FFO per share at the top of our guidance range. Second quarter occupancy of 82% matched last year's second quarter occupancy in a supposed pandemic high. Additionally, we hit an all time high in ADR and rev par in May. We grew our operating margins this year, and yes, we did benefit from non-recurring refunds, But even excluding those one time impacts, margins would have declined less than 1%. Not bad considering the rev par results for the quarter. I believe our island operating team will do even better in the third and fourth quarters in that regard. After a challenging start to the quarter when April rep, our was down 4%. We grew rep par in May and June to essentially finish with flat rep par for the quarter. Our core business segment business traveler remains healthy and growing as we are seeing our highest occupancies during the week. When comparing us to our pairs, I want to reiterate that we've beaten industry rep par growth for now 14 consecutive quarters or three and a half years. Our largest market, Silicon Valley, continues its recovery to pre-pandemic levels and it was good to see our occupancy at all four hotels reach 80% in the quarter, which is an important hurdle. The amount of investments being committed by tech companies combined with the applied materials expansion and the Nvidia Innovation Center will certainly help facilitate additional demand growth in the valley. And those demand generators are around the corner from our two large hotels in Sunnyvale. Another good sign of the underlying momentum in Silicon Valley is that multifamily rental growth rates are accelerating. For example, in their recent quarterly report, Essex Property Trust pointed out that their highest growth rates are in the Northern California regions. Our press release included details on our largest market performance and Dennis will expand further on those, but I want to highlight some interesting tidbits from other markets. Our Sunbelt markets are performing well with our two Charleston hotels showing strong growth and encouragingly, our two Florida hotels experiencing rep par growth in the quarter after being down last year and in the first quarter this year. Texas, as a reminder, three of our five hotels are being adversely impacted due to the closure of their cities' respective convention centers for expansion and that being specifically downtown, Dallas, and Austin. Rep par in the entire Austin market is down 6% year to date and down 14% in the quarter, with the only good news being the domain market is less bad than that at down 5% in the quarter and 11% year to date. In Seattle, the entire market, including Bellevue, is soft and feeling the effects of reduced Canadian travel with rep par down 2% year to date and 4% in the second quarter. The automobile border crossings in the region were down 47% in the second quarter. And lastly, driven by some great events, our second quarter in Pittsburgh was huge with growth of 23% and its second quarter rep par of $161 was its highest second quarter in history. Second quarter events, special events included its first motocross championship in April, three concerts and the Monster Jam in May and then the US Open in June. Next year during the second quarter, we have the NFL draft right outside our front door, which should be great for the hotel. As we look forward ahead to the balance of the year, we are essentially leaving our guidance unchanged. Growing business travel demand across a good portion of our portfolio is encouraging, yet not saving that is weakness in the convention demand in Austin, Dallas and San Diego, which had an all-time best year in 2024. Leisure demand has held up well for us, yet the decline in travel from Canada and Europe is certainly impacting the industry overall. For us, government travel rebounded post-liberation day after our three DC hotels saw rep par decline 9% in April. Rep par was up approximately 2% for the balance of that quarter. As an industry, I believe we are poised for some better performance in the coming years. Supply demand, that is the key here and of course we all know that new supply should continue to be muted for some time as we look forward. It is expensive to build and it is my belief that development only makes sense in some very special markets in the U.S. Looking past 2025, current GDP growth rates are encouraging and the outlook is even more so given the massive investments being made by companies across the U.S., including the substantial commitments made to the technology advancements and all things AI. Adding to this is all the announced foreign investment coming in the U.S. in the coming years. Historically speaking, we all know there is a strong correlation between GDP growth and rep par growth. Operationally, as a reminder, we have great internal growth potential with the continued recovery of the Silicon Valley hotels. There is quite a bit happening in the market, not only with the largest companies in the world that are based there and the future continues to look bright. Silicon Valley once again took over the number one ranking for startups and is the global epicenter of innovation with abundant capital and continuously creating groundbreaking technologies. In conclusion, I am excited about our prospects going forward. We have executed on most all strategic fronts and sit in a great position to grow and add value with a very strong balance sheet. With that, I would like to turn it over to Dennis.