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Greetings and welcome to the Chatham Lodging Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Chris Daly. Thank you. Chris, you may begin.

Thank you, Julian. Good morning, everyone, and welcome to the Chatham Lodging Trust third quarter 2024 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 subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of November 7, 2024, 2024, 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 other earnings release, which contains reconciliations to non-GAAP financial measures referenced on this call on our website atchathamlodgingtrust.com. Now to provide you with some insight into Chatham’s 2024 third 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 Wagner, Senior Vice President, and Chief Financial Officer. Let me turn the session over to Jeff Fisher. Jeff? Alright.

Thanks, Chris, and I certainly appreciate everyone joining us this morning for our call. We’ve got some good news here throughout. Before I get into our quarterly results, I’d like to provide an update on some key corporate initiatives that we’ve been undertaking. First, we’ve entered into separate contracts to sell 5 hotels and are hopeful that those transactions close in this fourth quarter. When closed, we’ll generate proceeds of approximately $80 million. The 5 hotels slated for closing are on average 23 years old, among the 6 lowest RevPAR hotels in our portfolio. They have forecasted 2024 RevPAR of $101 and importantly, are in need of renovations within the next 24 months. We will use these proceeds to initially pay down debt, but ultimately make additional investments to accretively grow EBITDA and FFO. This recycling initiative will enable us to continue to add hotels in new markets or expand our presence in existing markets we will continue to look at opportunities to sell assets and reinvest in hotels that enhance our portfolio quality and growth profile. Secondly, our liquidity is strong. We are at the lowest leverage levels in over a decade. We paid off another maturing mortgage in the quarter and have a mere $30 million of debt maturing over the next year. Additionally, we’ve added exposure to floating rate debt, and with rates expected to decline, we will be able to grow FFO. In fact, based on current borrowings outstanding, our FFO increases $2.6 million or approximately $0.05 per share for every 100 basis points decline in SOFR. I’d like to spend a few minutes on our solid third-quarter results, and you’ll hear more detail from Dennis. We’re quite pleased to report the EBITDA and FFO near the top of our guidance range. Importantly, our RevPAR growth continues to exceed industry and most peer performance. Our RevPAR growth of 2.1% when you take out the impact of renovations handily beat industry growth of 0.9%. We were able to deliver EBITDA and FFO at the upper end of our guidance range because our operating expenses were at the lower end of our expectations. We were able to limit our same-store GOP margin decline to only 40 basis points as we’ve said the last few quarters, employment and wage pressures are moderating with year-over-year wages up only 3%, well below what has been experienced over the last 5 years, and our absolute GOP margins of 45% are strong. I think if you step back, what you really see here is the complete cycle change from the post-COVID environment. And I believe as you look forward for the industry and specifically for us, you will see those margins pop back up to some pretty strong levels. Third quarter RevPAR of $150 exceeded 2019 levels, marking the second consecutive quarter beating 2019 levels. And based on our current guidance, full year 2024 RevPAR should exceed 2019 levels for the first time since the pandemic. As most understand, the sluggish recovery in our 5 tech-driven hotels in Silicon Valley and Bellevue have caused us to lag 2019 levels up until now, but we are moving ahead. If you pull out the 5 tech-driven hotels, RevPAR of $148 is up 7% compared to 2019, with ADR up a strong 14% and occupancy up 6%, of course, mostly attributable to Silicon Valley. Let’s talk about our 5 tech-driven hotels in Silicon Valley and Bellevue, which achieved third-quarter RevPAR growth of 8% in the quarter and a whopping 14% in October. In the quarter, ADR rose 5% to almost $200 and occupancy rose 3% to almost 79%. We’re really encouraged by the demand dynamics we’re seeing in the markets. And as we’ve spoken quite a bit over the last few quarters, a lot of good things are happening in the market related to AI, computer chip initiatives, and reoffice efforts by most of the big tech companies announcing the return to office that we’ve been waiting for. To give you some additional color on what’s happening, just a week ago in Sunnyvale, our largest individual market with just about 500 rooms there, it was announced that Sunnyvale was selected as the site for the new CHIPS for America design and collaboration facility. The facility will be one of the flagship R&D facilities for the CHIPS for America initiative. Last month, Applied Materials acquired another site less than half a mile from our Sunnyvale II Residence Inn for about $100 million. Plans for that site have not been announced, but certainly will be beneficial to our hotel and Applied Materials forever has been one of our top 5 accounts. Applied Materials previously announced $4 billion, 180,000 square foot R&D facility is expected to break ground shortly, and I know we’re already doing business with folks involved in that facility’s construction, whether they’re consultants, architects, or otherwise. As a reminder, this facility sits about a mile from our two hotels. Within the last quarter, General Motors opened in Mountain View, a technical center to be a focal point for software development and innovation. It’s located right in Silicon Valley. And of course, we do have a residence Inn right in Mountain View. And it’s certainly going to be beneficial overall to our hotel and the market. As previously mentioned, Intuitive Surgical, another one of our largest corporate clients in Sunnyvale, is also expanding its footprint, building another 1 million square feet of office in R&D. Industrial construction obviously has resumed, and we are pleased with what we see going forward. Looking across the remainder of the portfolio, business travel continues its steady growth across the country, and that certainly was proven out again this quarter for us with seven of our largest 9 markets delivering RevPAR growth in the quarter. Our occupancy for the key weekday business travel days was 79% on Monday, 84% on Tuesday and Wednesday, and 79% on Thursday, all but Thursday up over last year. Weekday ADR was up 2% in the quarter to $186 and weekend ADR was down 1%. Just to finish up here in conclusion, we remain encouraged by the fact that our RevPAR growth continues to outperform the industry and most peers, and we still have the most internal growth upside as we look forward of other lodging REITs given the recovery still available in those 5 tech hotels. Additionally, expense pressures, as I’ve said, have certainly lessened. Labor and benefit wages costs seem to be under control. And by that, I mean reverting back to more historical normal increases that we’ve experienced over the last 5 years, and we’re hopeful that enables us to drive margins higher. Finally, on the balance sheet side, we are in excellent financial condition, and we’re positioned to meaningfully benefit from declining interest rates, and we’ve got the capacity and flexibility to continue to recycle capital, acquire hotels where they can really be accretive to FFO, our earnings and NAV. With that, I’d like to turn it over to Dennis.

Thanks, Jeff. Good morning, everyone. RevPAR in our 7 predominantly leisure hotels, which comprises approximately 20% of our third quarter room revenue saw RevPAR rise 0.7%, and that does exclude the impact of the Savannah hotel that was under renovation for August and September. And within our leisure hotels, our best performer was the Hampton Inn Portland, Maine with RevPAR growth of 8% in the quarter. Our top 5 RevPAR hotels in the quarter were dominated by our 3 Northeastern assets led by our Hampton Inn Portland, Maine with RevPAR of $347, our Hilton Garden Inn Portsmouth of $273. That RevPAR was down 1% year-over-year, followed by our Residence Inn San Diego Gaslamp at $216, then our Hilton Garden Inn Marina del Rey with RevPAR of $215. And lastly, our Hampton Inn & Suites Exeter New Hampshire with RevPAR of $201. Post quarter end, October RevPAR grew 6% with occupancy up 5% to 83% and ADR up 1% to 191. Interestingly, 30 of our 38 comparable hotels produced positive RevPAR in the month of October. So again, just really broad overall strong trends in the portfolio in October. RevPAR in the first week of November, not surprisingly, is down about 4% due to the impact, obviously, of the midweek election. Breaking down our Silicon Valley hotels. Within Silicon Valley, RevPAR at our two Sunnyvale hotels gained 13% in the quarter, driven by a 5% gain in occupancy to 80% and a 7% gain in ADR to $195. As Jeff discussed, a lot of good things happening in the Sunnyvale market with our key corporate clients like Applied Materials, Intuit, Apple, TikTok. Versus 2019, these two hotels are recovered slower than the other two, but the good news, obviously, is that they are growing faster than the rest of the portfolio. At our Mountain View Residence Inn, RevPAR was up 3% in the quarter to $174. That’s driven by a 7% increase in ADR to $230 and a decline in occupancy of 4% to 76%. We made the decision earlier this quarter and this summer to not take certain intern business at that hotel because they were looking at lower-rated business in the market – lower-rated hotel business in the market to stay at. In San Mateo, RevPAR rose 2% to $149 with gains evenly attributable to ADR and occupancy. For the second consecutive quarter, RevPAR exceeded 2019 levels. At our other tech-driven hotel, the Residence Inn Bellevue, it produced strong RevPAR growth of 8% in the quarter to $184, again, with an even split in ADR and occupancy. Occupancy at that hotel was 85%. Versus 2019, third quarter RevPAR is approximately 2% shy of 2019 levels. At our 38 comparable hotels, hotel EBITDA margins were only down 40 basis points, a pretty good result given low single-digit RevPAR growth. Moderating labor costs were the primary driver. Wages per occupied room were only up 0.9% within our rooms department and those were actually down 1.8% in the quarter. That decline is partly driven by increased productivity given the fact that occupancy rose while labor headcount declined by 1% Benefit costs were up 18% in the quarter, and that’s been a message obviously all year long, and that adversely impacted margins by approximately 60 basis points. As I mentioned in our release, at least based on preliminary estimates for the first time in what seems like a really long time, we are hopeful that our benefit costs are going to be essentially flat year-over-year in 2025. Other key items that impacted our third quarter ‘24 margins, complementary breakfast costs were up 14%, and that impacted margins by approximately 20 basis points. Insurance has been up, again, kind of a consistent theme, obviously, with renewals on a calendar year basis, 20% year-over-year and that also impacted margins by 20 basis points. And the good news, again, kind of on the renewal front is based on preliminary expectations is that, that increase is going to be kind of in the mid single-digit range across both, both forms of our insurance policies for our properties. Utility costs were up, and that adversely impacted 20 basis points. And offsetting some of those increases were lower guest acquisition costs, primarily related to loyal program reimbursements that improved margins by approximately 80 bps in the quarter. During the third quarter, our other operating departments profits were flat year-over-year. Our top five producers of GOP in the quarter were led by our Gaslamp Residence Inn with $2.9 million, the 11th straight quarter it’s led our portfolio, followed by our incredible Hampton Inn Portland with GOP of $2.5 million, which was up approximately 10% year-over-year and followed by another great quarter at our Residence Inn Bellevue with GOP increasing 15% to $2.4 million. And then rounding out the top five were our Sunnyvale 2 Residence Inn and our seasonally strong Hilton Garden Inn Portsmouth with approximately $1.6 million of GOP each. At our five tech-driven hotels, we generated really strong hotel GOP margins of 50% in the quarter and with GOP up approximately 6% over last year. With respect to capital expenditures, we spent $6 million in the quarter, $25 million year-to-date. Our budget for 2024 is $37 million. We do expect we’re going to come in under that at about $34 million for the year. A renovation of the Courtyard Dallas Addison commenced in July and was completed in the third quarter. A renovation of the SpringHill Suites Savannah commenced in August and will be completed in the fourth quarter. A renovation of the Residence in Bellevue, Washington will commence in the fourth quarter and be completed in the 2025 first quarter. And additionally, the renovation at Hilton Garden in Portsmouth, New Hampshire, scheduled for early 2025. We are commencing that this month to get into some slow periods, and that will commence here shortly. So with that, I’ll turn it over to Jeremy.

Thanks, Dennis. Good morning, everyone. Chatham’s Q3 2024 hotel EBITDA was $32.2 million. Adjusted EBITDA was $29.6 million and adjusted FFO was $0.35 per share. We were able to generate a GOP margin of 44.5% and hotel EBITDA margin of 37.1% in Q3. GOP margins for the quarter were only down 40 basis points from Q3 2024 – 2023, which is strong given our Q3 RevPAR growth of 1.3%, this improvement in margin trends relative to prior quarters reflects continuing stabilization of key expenses such as labor and the fact that expense comparisons to Q3 last year were clean unlike Q2, where expense comps were impacted by some one-time benefits in Q2 of 2023. We ended the quarter on a strong note with RevPAR up 3.4% in September and the strong top line performance has continued into the start of Q4 with October RevPAR up 6%. Over the past couple of years, we have taken significant steps to reduce leverage and address debt maturities. We now have only $30 million of debt maturing over the next 12 months and have $135 million of availability under our revolving credit facility. $265 million or 60% of our debt is floating rate, so we stand to benefit significantly as rates come down. As Jeff mentioned, we are pursuing several potential asset sales and if any of these are completed, the proceeds would likely be used to repay credit facility borrowings in the near-term and reinvest it into hotel investments in the medium to longer-term. As of September 30th, Chatham’s net debt to LTM EBITDA was 4.2x, which is significantly below our pre-pandemic leverage, which is generally in the 5.5x to 6x area. Our leverage ratios should continue to improve with the continuing performance recovery of our Silicon Valley hotels. Turning to our Q4 guidance, we expect RevPAR growth of 1% to 3%, adjusted EBITDA of $19 million to $21 million and adjusted FFO per share of $0.15 to $0.18. This guidance reflects the renovations of three hotels during the quarter. So you should note that we also renovated three hotels in Q4 2023, so there is no net impact on year-over-year RevPAR growth. Our guidance also reflects the repayment of a $14 million mortgage loan maturing in December with available cash and credit facility borrowings and does not reflect any acquisitions, dispositions or other capital markets activity. This concludes my portion of the call. Operator, please open the line for questions.

Thank you. [Operator Instructions] And it looks like our first question is from Jonathan Jenkins, Oppenheimer & Company.

Good morning. Thank you for taking my questions. Congrats on the quarter. First one for me for Jeff. RevPAR sequentially improved in September and into October relative to earlier in the quarter. And I’m curious if you think that’s kind of a shift in demand and inflection higher in corporate demand post Labor Day? Or is it more a continuation of the steady improvement that you’ve seen over the course of the year?

Yes. I think what you’ve got is just more or less the end of the leisure summer component that’s out there. And I think what you’ve seen over time post-COVID is business travel seems to be a lot more slack in and around holidays in and around the summertime anyway generally. So what I like to say in the office we’re Europe or almost Europe, and they all think I’m a little bit of a right winger. But anyway, that’s what happens when you live in Palm Beach. So I think that’s really what you’ve got going on with September and October really being time to get back to work and business. And so therefore, I think what we’ve seen is just some corporate demand pick up.

Okay. That’s great. I appreciate the color there. And then maybe switching gears. Can you remind us what your target leverage is? Is that historical level kind of a good expectation going forward? And maybe can you provide some additional color on how you’re thinking about the asset sales in light of a seemingly good and improving demand environment above industry trends and then your solid balance sheet position? I mean, is there anything in particular you would need to see to maybe step on the gas on acquisitions in the near-term a little quicker?

Addressing the first part of your question with respect to leverage targets, I’d say we don’t necessarily want to be all the way to where we were historically, but we’re probably a little below where we would feel comfortable being now. So if we’re at 4.25x or so now, probably 4.75% to 5.25% would be a reasonable range for us.

And I think with regard to recycling capital, I will tell you that it is around here anyway. A very much of a renewed focus, you can tell because if you look at our history, we’ve sold assets on a onesie-twosie basis on a limited basis. For us to aggressively market and be successful in listing and signing PSAs on five different hotels, I think, certainly shows our desire to move some things along here a little bit. And I do believe that opportunities are out there. We’re looking at a few now. I think that in 2025, there’ll be more just because the overall environment in capital markets, I think, will be more favorable. In that regard, which might also cause some owners to just look at selling. I’m not going to talk about distress because that never seems to come to fruition. But I think our relationships are solid enough with folks that we bought from before. I just had a call from one we bought two from actually about 3 or 4 years ago with an opportunity just 2 days ago. So yes, I think that we can enhance our internal growth by newer assets, lessen our ongoing capital requirements and CapEx spend. That’s the plan, create more free cash flow to distribute to shareholders and lower the average age of the portfolio. Those are really, I think, doable objectives.

Okay. That’s great. And maybe a follow-on to that commentary. Given you guys have been out in the market lately, can you maybe talk about what you’re seeing real time in terms of volume and pricing? Has there been any closing of the gap between buyer and seller expectations or any other moves as of late given the interest rates movement since September?

Look, there really hasn’t been much dramatic. This stuff seems to have a lag time historically to it anyway. But yes, there’s been I know certainly from some broker friends, etcetera, they’re doing a lot more BOVs and activity in their shop for things that folks are looking to perhaps test the market with.

Okay, great. Very helpful. Thank you for all the color. That’s all for me.

Thanks, Jon.

Thanks. [Operator Instructions] Okay. It looks like there’s no further questions at this time. I would like to turn the floor back to Jeff Fisher for closing remarks.

Well, thank you all for being here once again. I think we’ve clearly enunciated where we intend to go, and we’re looking forward to posting some more good results going forward. Thank you.