Chatham Lodging Trust is a Real Estate Investment Trust (REIT) specializing in investing in upscale and premium-branded select-service hotels and extended-stay hotels. The company was initially founded in 2009 and is based in Palm Beach, Florida, in the US. It operates as a self-advised, fully-integrated REIT, earning income through investment in hotel properties, hotel performance, and leasing of its properties.
As a REIT, Chatham Lodging Trust has a unique business model. REITs purchase and manage income-producing real estate such as apartments, shopping centers, offices, and hotels. They allow individual investors to earn returns from real estate—without having to buy, manage, or finance any properties themselves. For Chatham, the focus is on upscale, extended-stay hotels and premium-branded, select-service hotels. It typically works with significant brands like Residence Inn, Homewood Suites, Hyatt Place, and Hampton Inn.
As of the end of 2021, Chatham Lodging Trust's portfolio included ownership interests in 86 hotels totaling approximately 11,760 rooms/suites. They own hotels in 15 states and the District of Columbia. Chatham Lodging's specialty in upscale select service and extended stay hotels sets the company apart from other hospitality REITs. These types of hotels typically have better operating margins than larger, full-service hotels.
In addition to owning hotel properties, the company also receives income by leasing its hotel properties to third-party operators, who run the day-to-day operations of the hotels under the umbrella of well-known hotel franchises. By doing so, the company is able to collect the lease income without the hassle of running a hotel.
As with any real estate company, Chatham Lodging Trust is susceptible to the peaks and troughs of the real estate market. Yet, the company has remained resilient despite these market fluctuations demonstrating consistent returns.
It’s important to mention that, in order to maintain its REIT status, Chatham Lodging Trust is required to distribute at least 90% of its taxable income to shareholders annually, via dividends. This is something that makes Chatham Lodging Trust, as with many REITs, appealing as an investment. As such, investors looking for a stake in the real estate sector, particularly in the hospitality and lodging niche, might consider Chatham Lodging Trust REIT (CLDT) as a potential portfolio addition.