PALM BEACH, FL-When Chatham Lodging Trust reported its quarterly earnings less than two weeks ago, the publicly-traded hotel REIT pointed to the growth potential of its joint venture deal with Cerberus Capital Management. The companies won 64 hotels for $1.125 billion in a bankruptcy auction in May and were supposed to close in August. Now, the deal is suddenly off.

As GlobeSt.com reported on Monday, Chatham and Cerberus on Friday terminated their commitment and obligation to acquire interests in 64 Innkeepers USA hotels. The termination clause was worked in to the terms and conditions of the May 16 agreement. The deal failure will impact Innkeeper’s exit from Chapter 11, since paying off its credits was contingent on the bankruptcy sale of the assets. Innkeepers USA could not immediately be reached for comment.

In a press statement, Chatham said the deal was nixed “as a result of the occurrence of a condition, change or development that could reasonably be expected to have a material adverse effect on Innkeepers' business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects.”