Chris Daly - IR, Daly Gray, Inc. Jeff Fisher - Chairman, President and CEO Dennis Craven - EVP and CFO.

Nikhil Bhalla - FBR & Company Anthony Powell - Barclays Capital Rob LaFleur - JMP Securities.

Good day, everyone. Welcome to the Chatham Lodging Announces First Quarter Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Chris Daly. Please go ahead..

Thank you, Mark. Good morning, everyone. Welcome to the Chatham Lodging Trust first quarter 2015 results conference call. This morning, before the opening of the market, Chatham released results for the first quarter of 2015 and I hope you’ve had a chance to review the press release.

If you did not receive a copy of the release or you would like one, please call my office at (703) 435-6293 and we’ll be happy to email you a copy, or you can review the release online at Chatham’s website, www.chathamlodgingtrust.com.

Today’s conference call is being transmitted live via telephone by webcast over Chatham’s website and at streetevents.com. A recording of the call will be available by telephone until 1 p.m. Eastern on Tuesday, May 12, 2015, by dialing 1 (888) 203-1112, reference number 3216575. A replay of the conference call will be posted on Chatham’s website.

As a reminder, this conference call is the property of Chatham Lodging Trust and any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Chatham is prohibited.

Before we begin, Management has asked me to remind you that in keeping with the SEC’s Safe Harbor guidelines, today’s call may contain forward-looking statements about Chatham Lodging Trust, including statements regarding future operating results and the timing and composition of revenues amongst others.

Except for historical information, these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, including the volatility of the national economy, economic conditions generally in the hotel and real estate markets specifically, international and geopolitical difficulties or health concerns, governmental actions, legislative and regulatory changes, availability of debt and equity capital, interest rates, competition, weather conditions or natural disasters, supply and demand for lodging facilities in our current and proposed market areas, and the company’s ability to manage integration and growth.

Additional risks are discussed in the company’s filings with the Securities and Exchange Commissions. All information in this call is as of May 5, 2015 unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements to conform the statement to actual results or changes in the company’s expectations.

During this call, we may refer to certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA, which we believe to be common in the industry, and helpful indicators of our performance. Keeping with SEC regulations, we have provided and encourage you to refer to the reconciliations of these measures to GAAP results in our earnings release.

Now, to provide you with some insight into Chatham’s 2015 first quarter results, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer and Dennis Craven, Executive Vice President and Chief Financial Officer. Let me turn over the session to Jeff..

Yes sir. Thanks Chris. Good morning, everyone. Great to be here again as we report yet another strong quarter for Chatham. Our operating results were solid as you saw. We acquired yet another very high quality hotel in a great infill location in one of the strongest long-term lodging markets in the U.S.

Downtown San Diego right in the heart of the Gaslamp District and our super high quality portfolio is generating excellent cash flow allowing us to raise our dividend a handsome 25% earlier this year.

I would like to take a second and I’m sure you all see the exciting news last night announcing the promotion of Dennis to Chief Operating Officer and the addition of Jeremy Wegner someone we've known dating back to the Innkeepers Day as our new CFO.

This is a great I think tribute to Dennis for the fantastic work that he has been doing here and we know Jeremy as I said for some period of time. They will be very, very fast transition for Jeremy to take over as CFO of this company.

With our substantial growth over the past few years and of course it's easy to forget that all together we have almost including the JVs with NorthStar almost $3.5 billion worth of hotels that we're responsible for here at Chatham.

Our Board felt and we certainly think that there is great opportunity to further bolster our Management Team as we continue to build Chatham in the premier lodging REIT focused on upscale extended stay and premium branded select service hotel. So Dennis congratulations to you..

Thank you..

We remain bullish on the lodging sector and frankly just a little editorial here, I am a little bit surprised by some analysts and folks they're saying we're farther out in the cycle than perhaps we feel that we are.

It certainly takes three or four years of some very substantial above average industry supply growth in order for a cycle to be more mature such that demand and therefore occupancy rates and subsequent ADR are adversely impacted. And really here we're still under that historical average. Maybe we’ll get to 1.5% supply additions in 2015.

Challenged portfolio, on top of that is particularly well insulated because that’s one of our prime -- if not our prime acquisition criteria is to be in markets that land is very expensive and its top the building.

So we feel good about, real good about the ability to grow RevPAR and to grow earnings on a go-forward basis here and therefore we're continuing to be net buyers as we look at 2015 and into 2016. We got a substantial pipeline by the way. We've talked about that.

Although we don’t give any specific guidance and don’t encourage that for acquisitions, I think we've said that we certainly, given our pipeline particularly of some fantastic targeted off market one half deals, I think we can get to a couple $100 million least of acquisitions this year.

Over and above the Gaslamp deal and that does add some pretty substantial FFO between $0.15 and $0.20 on an annualized basis.

So I think given our strong internal growth and the potential external growth here that we've already shown over and over, year after year that we've been able to accomplish, we're looking forward to having some more good years going forward.

Speaking of good year, our operating results were outstanding with EBITDA and FFO growing 85% and a 102% respectively and FFO per share jumping 43%. We are currently projected to grow FFO per share another 25% in 2015 and that 25% growth is on top of approximately 30% growth we've experienced since 2010.

I should emphasize again that, that 25% growth number does not include any acquisitions for the year and it does not include any of the rolling in of the Silicon Valley expansion which Dennis will talk in more detail about, but orders really start coming early, early 2016.

Approximately 90% of our portfolio is located in the top 25 MSA and with the addition of San Diego Gaslamp residence in February, 51% of our portfolio is located in key West Coast markets from San Diego and Los Angles up to Silicon Valley and Seattle.

I believe that gives us the second highest investment level on the West Coast among all logic REITs which is not merely coincidence. We target our markets.

We target markets where there are strong, strong employment and demand growth, which for us for the most part means corporate growth and the West Coast certainly exemplifies that more than most of the United States right now. That’s where we’re going to continue to focus our acquisition efforts and you’ll see that as we forward.

By focusing our acquisition effort over the past two years into those higher growth markets, we’ve been able to drive RevPAR higher and in the first quarter RevPAR rose just about 8% if not for the Homewood Suites in Orlando, Maitland, which had significant displacement due to the unexpected replacement of the water supply lines throughout the entire hotel.

We've had a lot of rooms down and will continue until the end of this second quarter unfortunately in that hotel. As a matter of fact, I think it was around 100 basis points right Dennis of just that one asset in those rooms down.

So really at the top end of our RevPAR range here at 8% with RevPAR being $118 all driven by average daily rate increase to a very strong $156.

I do think its worthy to just step back again for a minute, look at the RevPAR of Chatham compared to other limited service hotel REITs and really what’s interesting is I think we will make a new slide for the website.

Let's compare it to our full service peer group as well because we’ve got very strong RevPAR average daily rate of $156 across the portfolio that really allows us to drive our margins and with ADR being most of the growth again going forward we’re looking at a very health part of the cycle and I think a healthy year or two or more going forward here at Chatham.

As I said, 12 of the 35 hotels have had very strong RevPAR growth posting double-digit growth for the quarter.

RevPAR in our recently acquired Silicon Valley portfolio continues to outperform this time up 19% in the first quarter escalating corporate demand as the driver with these lot -- with our large high tech company that are primary customers in these hotel spurring significant job growth and building new headquarters, new office space, which is also generating substantial residential development also in Silicon Valley.

With the demand high for office and residential real estate and the prices that are being paid for land by high tech companies to expand their headquarters or build new ones, it's very difficult for the developer to buy land and build a new hotel. They are just being priced out of the game.

So we don’t see very much supply coming to Silicon Valley and demand does look strong. So that modes very well our continued strong growth in our assets out there.

In fact when you look at the type of customer travelling in those markets, the engineers, the long stay, the corporate relocation business, all of our hotels out there upscale extended stay hotels with all but one being a Homewood Suite, the rest residents inn, a perfect brand at least in our opinion, for that kind of market.

When we last spoke, we talked about the transition issues shifting gears here and related to the portfolio of Inland hotels that we acquired in November, that’s our four wholly owned assets.

I’m glad to say that those are performing much better with the four hotels acquired for minimum experience seeing 6.6% growth in RevPAR with the Boston Burlington Hilton Garden Inn and the Dallas Addison Courtyard posting solid double digit RevPAR gains. Of course a couple of those hotels are in Huston.

We all know that the Huston market began to soften in the fourth quarter from fallout related to the drop in oil and gas pricing.

Our four Huston hotels are driven primarily by medical center business given that two of them are located directly at the medical center and the other two are only 2.5 miles away in the West University section of the town, but of course they won’t be immune to the overall softness in the market and so RevPAR at those four -- at the four Huston hotels rose only 1% in the quarter and we’re continuing to look carefully at those hotels going forward.

With our high quality portfolio and our best-in-class operator in island hospitality, we're able to command as I said high absolute rates without sacrificing occupancy resulting in a premium absolute RevPAR with our margins jumping significantly year-over-year.

GLP margins altogether raising 550 basis points to 47.7 that’s with the addition of some very high margin in high ADR hotels on the acquisition front and our EBITDA margins flow through was a strong 72%.

I commend Island for again doing a great job driving that incremental revenue to the bottom line in these hotel's operating leverage in the hotels, a solid 1.5 times in the quarter and we think we ought to be able to maintain flow through in the 60% to 70% range as ADR will continue to make up most of the RevPAR growth.

So with that, I’d like to turn it over to Dennis for a little more detail.

Dennis?.

Thanks, Jeff. Good morning, everyone. For the quarter we reported net income of $1.4 million or $0.04 per diluted share compared to a net loss of $1.7 million or $0.07 per diluted share in the 2014 first quarter.

The primary differences between net income and FFO relates to non-cash cost such as depreciation which was $11.5 million in the quarter, acquisition cost is approximately $0.3 million, related to the acquisition of the San Diego Gaslamp and our share of similar items within the joint ventures which amounted approximately $1.9 million in the quarter.

Adjusted FFO for the quarter was $15 million or $0.40 per share compared to $7.4 million or $0.28 per share in the 2014 first quarter a 43% increase year-over-year FFO per share of $0.40 exceed our range of $0.37 to $0.39 per share due to the RevPAR growth coming at almost 7% for the 35 hotels compared to our original guidance range of 4% to 6%.

Adjusted EBITDA for the company rose 85% to $24.4 million slightly above our guidance range of $23 million to $23.9 million.

The FFO and EBITDA beats were driven by the RevPAR outperformance, which added over $1 million of revenue and about $0.01 of FFO considering our 40% hotel EBITDA margins in the quarter and also adding little over of $0.01 in the quarter was our outstanding margin performance of hotel EBITDA margins coming in at almost 41% above the guidance range of 38.6% to 39.1%.

Offsetting this performance was slightly higher G&A for the quarter due to the timing of cost related to our annual report and proxy preparation as well as professional fees for auditors and consultants.

Our quarterly results were quite strong when you also factor in the displacement at our Maitland hotel, which impacted RevPAR 100 basis points and also impacted EBITDA in the first quarter by about $250,000 a little over a $0.005 of FFO.

Combined with the lost EBITDA from the fourth quarter of approximately $350,000 we will certainly get some natural year-over-year growth later this year and then early 2016 in the first and second quarters to the tune of about $0.01 per quarter on a run rate basis, once all of those rooms are back online.

Our margins remain at the top of the industry. Hotel EBITDA margins were up 580 basis points for the quarter to 40.7%, very encouraging for the first quarter, which is typically slower on a relatively basis compared to the second, third and fourth quarters. Prior peak hotel EBITDA margins for this portfolio were in the mid 40s.

As Jeff alluded to, we believe we’ve got plenty of running room left in this cycle, which is going to be mostly driven by increases in rate. So we do believe that our overall margins will pass the prior peak mid 40s range.

In the fourth quarter, our three joint ventures contributed approximately $3.4 million of adjusted EBITDA and $1.6 million of adjusted FFO, below our initial expectations of approximately $3.6 million and $2.0 million of FFO with the underperformance due primarily to the non-cash accounting change related to the term on the amortization of debt issuance cost within the joint venture to only account for the initial two years of floating rate loans.

That will be something that does impact our guidance in 2015 and I’ll speak to that here is just a few minutes. In January, we raised almost $120 million and 4.025 million share offering to fund the acquisition of $90 million residents in San Diego Gaslamp, which closed in late February. We used the remaining proceeds to pay down our line of credit.

We did have $5 million of outstanding on our line, which we repaid in early April.

Our balance sheet is in excellent condition as we move forward for the second, third and fourth quarters with nothing outstanding on our line ability to add as Jeff alluded to $200 million of acquisitions through the issuance of debt whether it would be long-term debt or our line of credit and still maintain healthy leverage ratio.

Our net debt was approximately $510 million at the end of the quarter, comprised of debt of $527 million offset by approximately $17 million of available cash and at the end of the quarter, our leverage ratio was approximately 39% compared to 44% at the end of the year.

During the first quarter, as we talked about, we did have a loan that was maturing in March, the Washington, Pennsylvania Springhill suites about $5 million.

We repaid that with cash available on our balance sheet, with that asset unencumbered one thing that I think we’ve seen out with other companies we will continue to asses our hotels, especially hotels that might be outside of where our standard, where you’ve seeing us buying hotels for potentially recycling some capital down the road, but certainly not a huge emphasis on that at this point in time.

As we again saw many times we're comfortable operating at higher leverage level given our confidence in where we are in the cycle. We remain bullish and we believe that with borrowings rates at still historically very attractive rates at somewhere in the low 4%, we can continued to user our balance sheet to fund our growth as opportunity arise.

From a leverage perspective, if you do assume that we make another $200 million of acquisitions, our leverage ratio would increase to approximately 46% to 47%, again a very manageable percentage given our healthy coverage ratios on both the interest coverage and debt service coverage side.

Transitioning to our guidance for 2015, we will have renovation at our residents in Huston, Texas to West University during the second quarter and the Savannah SpringHill Suites during the fourth quarter.

Our guidance assumes that we, we've upped our guidance really across the Board for the first quarter outperformance with RevPAR now coming in at 5.5% to 7% for the year to a range of $129 to $131.

On a comparable same-store basis, 2014 hotel quarter-by-quarter RevPAR was slightly over $109 in the first quarter, $130 in the second quarter, a $138 in the third quarter and $112 in the fourth quarter and basically coming in at $122 for the 2014 full year and that's where the 35 hotels that we now own.

In 2015, by quarter, our RevPAR is projected to be $138 to $140 in the second quarter, $145 to $148 in the third quarter and $118 to $120 in the fourth quarter and for the full year again, RevPAR is projected to be $129 to $131. Room revenue is expected to be in the range of $251 million to $255 million, up approximately 40% over 2014.

Other revenue which comprises miscellaneous revenue and F&B we expect that to be -- remain pretty consistent at around 5.3% to 5.5% of total revenue from our portfolio. Our operating platform and quality of assets have continued to allow us to drive margins higher.

We’re projecting hotel EBITDA margins to rise 240 to 320 basis points for the full year to a range of 44.2% to 45%, again upping that from our original guidance and also up from 41.8% in 2014. When you look below the up hotel operating line, we anticipate core cash -- corporate cash and administrative expenses to be $8.6 million.

The increase from our original guidance of $8 million again due to the timing of certain items that hit us in the first quarter, which we'll see the benefit of in the next two quarters, but also the addition of Jeremy that on an annualized basis will add for 2015 approximately $0.4 million in G&A expenses to the G&A line.

On a full year basis, the three joint ventures are expected to contribute $17.5 million to $18.3 million of EBITDA in 2014 and as I spoke about earlier, due primarily to the accounting treatment related to the amortization of debt issuance cost that has no impact on cash flow, distributions or coverage ratios within the joint ventures.

FFO from those joint ventures will come in, in a range of $10 million to $10.8 million. Of that FFO, approximately $0.26 to $0.28 for the year in 2015. From a cash flow perspective, capital expenditures still expected to be about $17 million in 2015.

We do have the Silicon Valley expansion that are not included in that number and we do expect to begin construction on the 32 room addition and not view here very shortly, we've already demolished the building that was on that partial that we've acquired and we expect to complete that addition of the tower at Mountain View sometime in the early part of 2016.

Our expected spend on that addition of the room tower is expected to approximately $8 million. When you actually look at the additional 32 rooms that were expected to add within the tower, we expect those to generate approximately $1.5 million of FFO, which is almost $0.04 a share on an annualized basis in 2016.

We do expect the construction on the two Sunnyvale locations to start still around the 1st of the year or later this year with really limited capital spending occurring on those projects until we get the construction ramped up and really there hasn’t been any change in the San Mateo expansion.

It's a little bit longer because again we're still trying to get special approvals in an area called Mariners Island that we’re currently working on and hopefully we’ll be able to bring that timing a little bit sooner. I think at this point operator, that concludes our remarks and we'll open it up for questions..

Thank you very much. [Operator Instructions] Our first question today will come from Nikhil Bhalla, FBR Investment Bank..

Yes, hi. Good morning, Jeff and congratulations Dennis..

Hey Nikhil, how are you?.

Good, yes, thank you very good. All good.

First question, Dennis, could you just break down the expected CapEx on the redevelopment project at Silicon Valley in 2015 and 2016? Can you give us some sense of the timing of that?.

Sure, the $8 million for the Mountain View tower is going to be basically all spend here in 2015.

The remainder of the spending which I think at this point, we still haven't got bids on the other three, but as we're working through the plants, I think we originally provide an estimate of around $60 million for the four developments that’s going to go higher.

It’s going to be -- we don’t have a number, but just to give you an instance on -- or to comparison on Mountain View that the capital was about 30% higher than what we originally thought it was going to be, the construction cost, which I think is in line with what we hear from a lot of the developers out there and contractors.

So I think the good news is that we do expect the spending to be higher but the performance within those hotels has continued to outperform even our original projections and where we thought occupancies and rates would be. So we still believe that on a total return basis, that we’re still going to get that 20% return that we originally expected..

Got it. So basically I think your initial outlook for EBITDA from these hotels would have been something like $12 million $13 million.

So you think that will go up as well?.

Yes that’s absolutely going to go up and as soon as we get a little bit further down the road with the other three locations we’ll certainly provide revised construction costs and returns.

But certainly just assuming those additional CapEx costs and where we believe operations are now, we’re pretty comfortable saying that the returns are going to be in that similar range..

Okay. And just from a Innkeepers and Inland portfolio perspective, it looks like the outlook for AFFO kind of dropped a little bit from your previous guidance.

Can you just explain that a little bit what’s causing that? Clearly it seems to be some issues with the Management transition and few additional things maybe due to weather, but just some additional color?.

Yeah Nikhil on the EBITDA side and in our guidance you’ll see that on the EBITDA side it really hasn’t changed a whole lot. It’s going down just fractionally. I think that really just accounts for the transition issues that we’re working through in the first quarter.

From the AFFO perspective what I alluded to earlier, I spoke to earlier was that there wasn’t a basically change in the accounting treatment and how the debt issuance cost were being amortized over how many years.

And adjustment to almost all of the adjustment and about $0.9 million of that adjustment was related to the change in the accounting treatment related to that amortization. So doesn’t really affect any -- doesn’t affect any type of cash flow. Doesn’t affect any type of distributions, merely just an accounting change..

Okay, that helps and then when you look across supply growth across your markets Jeff, what's sort of the average supply growth across your markets? You mentioned that industry would be between 1% and 1.5% or so.

So what about your portfolio if you could just help us understand that?.

Nikhil I guess I need to do a little work to measure it as a percentage of existing supply. We don’t really -- we think about it more directly street corner like, which is we’ve only got a couple of assets that even have any new supply that’s opening in the markets. So if you want us to do that math we can. It’s obviously below 1% I would guess..

When we bought the Goathland Hotel, we knew that there were certainly going to be a good chunk of new supply coming in the market. We don’t believe it’s kind of in a different part of the -- what we call the Downtown area and not really mere our hotels.

But certainly if you looked across the 35 hotels, that would be one where the macro view might be higher than the 1% or something like that. But all in all I agree with Jeff, that across our direct portfolio of competition it’s going to be lower than that number..

Got it and just on Houston sort of what’s your -- clearly your -- in 1Q your hotels outperformed the market.

How do you see the rest of the year shaping up in Houston?.

I think it’s going to get a little bit better, not much better. I think if you -- we’re at 1% growth in the first quarter. It may go up another 100 basis points or something like that. But we certainly believe it’s still going to remain soft.

Obviously there has been a little bit of a rebound in oil and I don’t know, at least in oil prices in the last couple weeks, but that’s not going to have much of an impact on the space.

If you look at within the four hotels that we own, within Chatham the two hotels that are directly at the Medical Center had RevPAR increases of 3% to 4% in the first quarter, which far outpaced the market. The two of West University were down slightly, which kind of got us to the 1% overall growth in the market.

So I think our assets will still perform better than the overall Houston market unless we’re not going to insulated from just the overall softness..

Got it. Thank you very much. That’s all from me..

Thank you..

[Operator Instructions] Our next question will come from Anthony Powell with Barclays..

Hi good morning everyone and congrats Dennis..

Thank you Anthony.

How are you?.

Doing great, just on the acquisition pipeline and philosophy, how are you looking at for any potential deals with debt versus equity and the space has been down a bit on the equity side past few month.

Are you still as willing to issue stock to fund deals or will you increase your debt portfolio?.

No I mean look at this point, we definitely don’t feel like we need to be issuing stock to fund any growth.

I think we’re pretty comfortable as Jeff alluded to with kind of adding $200 million to the portfolio that we can put that on our balance sheet whether that be through permanent long-term financing for some of our unencumbered assets as well as borrowings on our line of credit.

But certainly we’re going to be very careful in our growth to make sure that we’re buying the right assets given where our equity price is..

Got it. Okay, and just generally on the environment for deals, are you seeing more trajectories out there or are people marketing more deals.

Are you seeing more deals in your targeted markets? Can you just kind of give or view how the market is right now?.

I think I could comment on that because there’s certainly less deals that are being brokered in 2015 compared to 2014. Obviously last year was a big year for large portfolio deals as you know, which two of those we bought with Northstar. We don’t see those size and that many deals coming down the pipe.

But for us particularly on the Chatham side our selective sort of direct conversations that we’ve got and traditionally always have going on I think as I said should pay off Anthony. But we’re been very judicious as we always are, but always considering that stock price and the last time we issued stock it was at $30.

As you indicated, we’re not above that stock price. We’re not at that stock price and our history at Chatham has been to try to obviously issue at or above the stock price of the prior offering.

So I think we’re going to take a measured pace, but as Dennis indicated if we borrow another $200 million, our leverage level is still at a very comfortable leverage level such that we could get some great growth and some I’d say some fast growing assets that will continue to add to our NAV..

Got it, okay and just maybe one more on the RevPAR growth at the JV level, it seems as it kind of trail some of the change to get RevPAR from FTR, is that a function of maybe the markets they’re in or all that just made the transition or genuinely….

First of all in Innkeepers we would have been pretty much right on top of where Smith travel numbers were, but we had on purpose just a large number I think there were 9 or 10 hotels with very substantial renovations going on beyond just soft goods.

We’ve been changing out some tubs in every bathroom and all of our Hyatt House hotels to shower stalls and kind of bringing them and fully up to speed based on newer Hyatt specs today. So you got that going on and Inland is purely just the huge amount of turnover and transition that occurred frankly taken all those hotels over at the same time.

So you’ll probably have some of that below I’d say below market RevPAR performance trickling into the second quarter.

I must say that our folks did a phenomenal job though in flowing or saving money to the bottom line, because the bottom line for the first quarter in Inland was almost completely on top of what our budget was for those assets even though our RevPAR was off. So good tight expense controls in those hotels are making that all together work well..

Okay. Thanks a lot. That's all for me..

Thank you, Anthony..

Currently we have no questions in the queue. I will now turn the conference over to our host for any additional comments. Actually right as we were speaking, we had one that came in Rob LaFleur, JMP Securities.

Hi guys. Just quite got in under the wire there.

Jeff, I appreciate the comments early in the call about guys trying to be heroes and calling the end of the cycle probably three or four years before it actually shows up, but another thing we're seeing obviously REIT shares have been weak over the past several REIT's weeks in general with hotels participating in that despite the fundamentals.

So wondering you've been through a cycle or two in your day.

I was wondering if you could talk about the whole phenomenon of what is it that makes hotel REITs different or should make them different than other real estate assets classes and should have tied into that what you think the cap rate sensitivity is for hotel REITs in a rising interest rate environment?.

Well, I think you're obviously trying to get to -- yes, you're trying to get to the point that we should not and through prior cycles we don't 100% correlate to the rest of the REIT world as interest rates rise, stock prices fall, but I think that given where we are in the cycle here, we ought to be somewhat divergent, probably based on year-to-date performance, that's not showing up because everybody is reporting beats in the first quarter for the most part and in some cases very, very handsome beats in RevPAR growth and EBITDA growth yet the stock price is down going with the tide.

So as we all know that's Wall Street, but I would suspect and experience shows from prior cycles that as this continues to move on, I think that the strong same-store sales growth should prevail in hopefully providing similar upside to these stock prices even if the big, which won't be that big obviously, but finally sometime interest rate rise, does come from the fed sometime this year, but that's more your game than mine.

We just buy and run hotels around here and I think we're doing a pretty good job at that.

Second part of your question was what?.

It was just cap rate sensitivity for hotel assets in changing rate environments and whether it's a one to one correlation or not?.

No, listen we go out there and it's funny. You don't see that kind of correlation.

If it's a seven cap world today and our stock prices evolved and kind of generally clustered in that implied seven cap range, but all of a sudden we all trade at an eight cap, I am going to tell you that Joe Brown on the street corner isn’t lowering his price, so that we could buy it at an eight cap or better and be accretive.

Obviously if stock prices in multiples change over time, then yes, there will be some kind of obviously in the real world and the private world, there will be a cap rate change, but the lag is pretty big between those two events occurring especially because most folks on the private side just say that Wall Street over reacts to everything anyway.

So I am not going to over react an price my asset that way..

Okay. Thanks..

Appreciate it..

And at this time, we have no questions in the queue. I will turn the call over to our host for any additional comments..

Well, again I would just like to thank everybody and congratulate Dennis.

We will have our new CFO, Jeremy with us during NAV REIT, is that right, Dennis?.

Yes, that's correct..

So we will roll him out for everybody to see and hopefully ask a bunch of questions too and continue to move forward here on all fronts. So we look forward to seeing you shortly. Thank you..

And that conclude today’s conference call. Thank you for your participation..