PALM BEACH, FL-The hotel business is recovering, and Chatham Lodging Trust is seeing the fruit of the turnaround. Still, the hotel REIT reported a net loss on the second quarter.
Chatham posted a 3.3% increase in revenue per available room to $96.49 for the second quarter. Occupancy across the portfolio was up 2.6% to 83.2% and average daily rate was up 0.7% to $115.97.
However, Chatham reported a net loss of $1.9 million, or $0.14 per diluted share, in the 2011 second quarter. That compares to a net loss of $0.6 million, or $0.09 per diluted share, in the year-ago period. Gross operating profit margins were strong at 44.4%. The losses stem largely from significant renovations on five of the company’s 13 hotels.
“We already are starting to see these investments pay off with accelerating RevPAR growth after the renovations,” Jeffrey Fisher, Chatham’s CEO and president, said in a statement. “In the locations where we have completed renovations during 2011, market RevPAR is up approximately 10 percent for the year. As a result, extended stay occupancy is returning to more normalized levels in our renovated hotels.”
Chatham is on a growth track, completing the first of two Innkeepers acquisitions in July. Chatham invested $195 million through the acquisition of five hotels spanning 764 rooms, or $255,000 per room, and will close on the investment in a joint venture with Cerberus Capital Management to purchase 64 hotels comprising approximately 8,300 rooms in the next two weeks.
“The five hotels we added to our portfolio perfectly exemplify our acquisition strategy--to buy the highest quality, upscale extended stay and limited-service hotels, concentrated in high-barrier-to-entry markets with strong and diverse demand generators,” Fischer said. “With the joint venture, we are able to participate in an off balance sheet, higher leveraged investment in hotels that we understand better than anyone, hotels we believe will generate strong returns for our shareholders.”
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