Chatham Lodging Trust (CLDT) Business
This page reproduces the company's own Item 1 Business text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Informational only - not investment advice. See Disclaimer.
Item 1. Business
Dollar amounts presented in this Item 1 are in thousands, except per share data.
Overview
Chatham Lodging Trust (“we,” “us” or the “Company”) was formed as a Maryland real estate investment trust on October 26, 2009. We elected to be taxed as a REIT for federal income tax purposes commencing with our 2010 taxable year. The Company is internally-managed and invests primarily in upscale extended-stay and premium-branded select-service hotels.
We had no operations prior to the consummation of our initial public offering ("IPO") in April 2010. The net proceeds from our share offerings are contributed to Chatham Lodging, L.P., our operating partnership (the “Operating Partnership”), in exchange for partnership interests. Substantially all of the Company’s assets are held by, and all of its operations are conducted through, the Operating Partnership. Chatham Lodging Trust is the sole general partner of the Operating Partnership and owns 100% of the common units of limited partnership interest in the Operating Partnership ("common units"). Certain of the Company's executive officers hold vested and unvested long-term incentive plan units in the Operating Partnership ("LTIP Units"), which are presented as non-controlling interests on our consolidated balance sheets.
As of December 31, 2025, the Company owned 33 hotels with an aggregate of 5,021 rooms located in 15 states and the District of Columbia.
To maintain our qualification as a REIT, the Company cannot operate its hotels. Therefore, the Operating Partnership and its subsidiaries lease our wholly owned hotels to taxable REIT subsidiary lessees (“TRS Lessees”), which are wholly owned by the Company’s taxable REIT subsidiary (“TRS”) holding company. Each hotel is leased to a TRS Lessee under a percentage lease that provides for rental payments equal to the greater of (i) a fixed base rent amount or (ii) a percentage rent based on hotel room revenue. Lease revenue from each TRS Lessee is eliminated in consolidation. The TRS Lessees have entered into management agreements with third-party management companies that provide day-to-day management for the hotels.
As of December 31, 2025, Island Hospitality Management, LLC (“IHM”), which is 100% owned by Jeffrey H. Fisher, the Company's Chairman, President and Chief Executive Officer, managed all of the Company’s hotels.
As of December 31, 2025, our hotels include upscale extended-stay hotels that operate under the Residence Inn by Marriott® brand (sixteen hotels), the Homewood Suites by Hilton® brand (two hotels), the Home2 Suites by Hilton® brand (two hotels) and the TownePlace Suites by Marriott® brand (one hotel), as well as premium-branded select-service hotels that operate under the Courtyard by Marriott® brand (three hotels), the Hampton Inn or Hampton Inn and Suites by Hilton® brand (two hotels), the Hilton Garden Inn by Hilton® brand (three hotels), the SpringHill Suites by Marriott® brand (one hotel), the Hyatt Place® brand (two hotels), and all-suite hotels that operate under the upper upscale Embassy Suites® brand (one hotel).
We primarily invest in upscale extended-stay hotels such as Homewood Suites by Hilton®, Residence Inn by Marriott®, Home2 Suites by Hilton®, and TownePlace Suites by Marriott®. We also invest in upscale or upper upscale all-suite hotels such as SpringHill Suites by Marriott® and Embassy Suites®. Extended-stay and all-suite hotels typically have the following characteristics:
| • | principal customer base includes business travelers, whether short-term transient travelers or those on extended assignments and corporate relocations; | |
|---|---|---|
| • | services and amenities include complimentary breakfast, high-speed internet access, in-room movie channels, limited meeting space, linen and room cleaning service, 24-hour front desk, guest grocery services, and an on-site maintenance staff; and | |
| • | physical facilities include large suites, quality construction, full separate kitchens in each guest suite or suites that include a wet bar, refrigerator and microwave, quality room furnishings, pool, and exercise facilities. |
Additionally, we invest in premium-branded select-service hotels such as Courtyard by Marriott®, Hampton Inn®, Hampton Inn and Suites by Hilton®, Hyatt Place® and Hilton Garden Inn by Hilton®. The service and amenity offerings of these hotels typically include complimentary breakfast or a smaller for pay breakfast or evening dining option, high-speed internet access, local calls, in-room movie channels, and linen and room cleaning service.
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Financial Information About Industry Segments
We evaluate all of our hotels as a single industry segment because all of our hotels have similar economic characteristics and provide similar services to similar types of customers. Accordingly, we do not report segment information.
Business Strategy
Our primary objective is to generate attractive returns for our shareholders through investing in hotel properties (whether wholly owned or through a joint venture) at prices that provide strong returns on invested capital, paying dividends and generating long-term value appreciation. We believe we can create long-term value by pursuing the following strategies:
| • | Disciplined acquisition of hotel properties: We invest primarily in premium-branded upscale extended-stay and select-service hotels with a focus on the 25 largest metropolitan markets in the United States. We focus on acquiring hotel properties at prices below replacement cost in markets that have strong demand generators and where we expect demand growth will outpace new supply. We also seek to acquire properties that we believe are undermanaged or undercapitalized. |
|---|---|
| • | Opportunistic hotel repositioning: We employ value-added strategies, such as re-branding, renovating, expanding or changing management, when we believe such strategies will increase the operating results and values of the hotels we acquire. |
| • | Aggressive asset management: Although as a REIT we cannot operate our hotels, we proactively manage our third-party hotel manager in seeking to maximize hotel operating performance. Our asset management activities seek to ensure that our third-party hotel manager effectively utilizes franchise brands' marketing programs, develops effective sales management policies and plans, operates properties efficiently, controls costs, and develops operational initiatives for our hotels that increase guest satisfaction. As part of our asset management activities, we regularly review opportunities to reinvest in our hotels to maintain quality, increase long-term value and generate attractive returns on invested capital. |
| • | Selective hotel development: We may consider developing a limited number of hotels in cases where we believe newly developed hotels will generate attractive returns and enhance the quality of our hotel portfolio. |
| • | Flexible selection of hotel management companies: We are flexible in our selection of hotel management companies and select managers that we believe will maximize the performance of our hotels. We utilize independent management companies, including IHM, a hotel management company 100% owned by Mr. Fisher that as of December 31, 2025, managed all of our hotels. We believe this strategy increases the universe of potential acquisition opportunities we can consider because many hotel properties are encumbered by long-term management contracts. |
| • | Selective investment in hotel debt: We may consider selectively investing in debt collateralized by hotel property if we believe we can foreclose on or acquire ownership of the underlying hotel property in the relative near term. We do not intend to invest in any debt where we do not expect to gain ownership of the underlying property or to originate any debt financing. |
We plan to maintain a prudent capital structure and intend to maintain our leverage over the long term at a ratio of net debt to investment in hotels at cost (defined as our initial acquisition price plus the gross amount of any subsequent capital investment) at a level that will be similar to the levels at which we have operated in the past. We have maintained a leverage ratio between the low 20s and the low 50s. A subsequent decrease in hotel property values will not necessarily cause us to repay debt to comply with this target. At December 31, 2025, our leverage ratio was approximately 20.1 percent, which decreased from 23.1 percent at December 31, 2024. Over time, we intend to finance our growth with free cash flow, debt and issuances of common shares and/or preferred shares. Our debt may include mortgage debt collateralized by our hotel properties and unsecured debt.
When purchasing hotel properties, we may issue common units in our Operating Partnership as full or partial consideration to sellers who may desire to take advantage of tax deferral on the sale of a hotel or participate in the potential appreciation in value of our common shares.
Competition
We face competition for investments in hotel properties from institutional pension funds, private equity investors, REITs, hotel companies and others who are engaged in hotel investments. Some of these entities have substantially greater financial and operational resources than we have or may be willing to use higher leverage. This competition may increase the bargaining power of property owners seeking to sell, reduce the number of suitable investment opportunities available to us and increase the cost of acquiring our targeted hotel properties.
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The lodging industry is highly competitive. Our hotels compete with other hotels, and alternative lodging marketplaces, for guests in each market in which they operate. Competitive advantage is based on a number of factors, including location, convenience, brand affiliation, room rates, range of services and guest amenities or accommodations offered and quality of customer service. Competition is often specific to the individual markets in which our hotels are located and includes competition from existing and new hotels and alternative lodging market places. Competition could adversely affect our occupancy rates, our average daily rates ("ADR") and revenue per available room (“RevPAR”), and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make, which may reduce our profitability.
Seasonality
Demand for our hotels is affected by recurring seasonal patterns. Generally, we expect that we will have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters. These general trends are, however, influenced by overall economic cycles and the geographic locations of our hotels. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, we expect to utilize cash on hand or borrowings under our credit facility to pay expenses, debt service or to make distributions to our equity holders.
Regulation
Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe each of our hotels has the necessary permits and approvals to operate its business, and each is adequately covered by insurance.
Americans with Disabilities Act
Our properties must comply with Title III of the Americans with Disabilities Act of 1990 ("ADA") to the extent that such properties are "public accommodations" as defined by the ADA. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. Although we believe that our hotel properties substantially comply with present requirements of the ADA, we have not conducted a comprehensive audit or investigation of all of these properties to determine compliance, and one or more properties may not be fully compliant with the ADA.
If we are required to make substantial modifications to our hotel properties, whether to comply with the ADA or other changes in governmental rules and regulations, our financial condition, results of operations, the market price of our common shares and our ability to make distributions to our shareholders could be adversely affected. The obligation to make readily achievable accommodations is ongoing, and we will continue to assess our properties and to make alterations as appropriate.
Environmental Regulations
Under various federal, state and local laws, ordinances and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances on or in such property. Such laws often impose such liability without regard to whether the owner knew of or was responsible for, the presence of such hazardous or toxic substances. The cost of any required remediation and the owner's liability therefore as to any property are generally not limited under such laws and could exceed the value of the property and/or the aggregate assets of the owner. The presence of such substances, or the failure to properly remediate contamination from such substances, may adversely affect the owner's ability to sell the real estate or to borrow funds using such property as collateral, which could have an adverse effect on our return from such investment.
Furthermore, various court decisions have established that third parties may recover damages for injury caused by release of hazardous substances and for property contamination. For instance, a person exposed to asbestos while working at or staying in a hotel may seek to recover damages if he or she suffers injury from the asbestos. Lastly, some of these environmental issues restrict the use of a property or place conditions on various activities. One example is laws that require a business using chemicals to manage them carefully and to notify local officials if regulated spills occur.
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Although it is our policy to require an acceptable Phase I environmental site assessment for all real property in which we invest prior to our investment, such surveys are limited in scope. As a result, there can be no assurance that a Phase I environmental site assessment will uncover any or all hazardous or toxic substances on a property prior to our investment in that property. We cannot assure you that:
| • | there are not existing environmental liabilities related to our properties of which we are not aware; | |
|---|---|---|
| • | future laws, ordinances or regulations will not impose material environmental liability; or | |
| • | the current environmental condition of a hotel will not be affected by the condition of properties in the vicinity of the hotel (such as the presence of leaking underground storage tanks) or by third parties unrelated to us. |
Tax Status
We elected to be taxed as a REIT for federal income tax purposes commencing with our short taxable year ended December 31, 2010 under the Internal Revenue Code of 1986, as amended (the “Code”). Our qualification as a REIT depends upon our ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our shares of beneficial interest. We believe that we are organized in conformity with the requirements for qualification as a REIT under the Code and that our current and intended manner of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT for federal income tax purposes.
As a REIT, we generally will not be subject to federal income tax on our REIT taxable income that we distribute to our shareholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we will be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. Even if we qualify as a REIT for federal income tax purposes, we may still be subject to state and local taxes on our income and assets and to federal income and excise taxes on our undistributed income. Additionally, any income earned by our TRS Lessees will be fully subject to federal, state and local corporate income tax.
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Hotel Management Agreements
The management agreements with IHM have an initial term of five years and will automatically renew for two successive five-year periods unless IHM provides written notice no later than 90 days prior to the then-current term's expiration date of their intent not to renew. The IHM management agreements provide for early termination at the Company’s option upon sale of any IHM-managed hotel for no termination fee, with six months' advance notice. The IHM management agreements may be terminated for cause, including the failure of the managed hotel to meet specified performance levels. Base management fees are calculated as a percentage of the hotel's gross room revenue. If certain financial thresholds are met or exceeded, an incentive management fee is calculated as 10% of the hotel's net operating income less fixed costs, base management fees and a specified return threshold. The incentive management fee is capped at 1% of gross hotel revenues for the applicable calculation.
As of December 31, 2025, certain key terms of our management agreements for our 33 hotels were as follows (dollars are not in thousands):
| Monthly | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Base | Monthly | Revenue | Incentive | |||||||||||||||
| Management | Management | Accounting | Management | Management | ||||||||||||||
| Property | Company | Fee | Fee | Fee | Fee Cap | |||||||||||||
| Homewood Suites by Hilton Hartford-Farmington | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Long Island Holtsville | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn White Plains | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn New Rochelle | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Garden Grove | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Homewood Suites by Hilton San Antonio River Walk | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Washington DC | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Tysons Corner | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Hampton Inn Portland Downtown | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Hyatt Place Pittsburgh North Shore | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Hampton Inn Exeter | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Bellevue | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| SpringHill Suites Savannah | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Silicon Valley I | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Silicon Valley II | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn San Mateo | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Mountain View | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Hyatt Place Cherry Creek | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Courtyard Addison | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn San Diego Gaslamp | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Hilton Garden Inn Marina del Rey | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Dedham | IHM | 3.0 | % | $ | 1,200 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Il Lugano | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Hilton Garden Inn Portsmouth | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Courtyard Summerville | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Embassy Suites Springfield | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Summerville | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Courtyard Dallas | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Residence Inn Austin Northwest/The Domain Area | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| TownePlace Suites Austin Northwest/The Domain Area | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Home2 Suites Woodland Hills | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Hilton Garden Inn Destin Miramar Beach | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % | |||||||||
| Home2 Suites Phoenix Downtown | IHM | 3.0 | % | $ | 1,500 | $ | 1,000 | 1.0 | % |
Management fees totaled approximately $9.9 million, $10.7 million and $10.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.
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Hotel Franchise Agreements
The fees associated with the franchise agreements are calculated as a specified percentage of the hotel's gross room revenue. Certain key terms of our franchise agreements for our hotels as of December 31, 2025 were as follows:
| Franchise | Franchise/ | Marketing/ | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property | Company | Royalty Fee | Program Fee | Expiration | |||||||||
| Homewood Suites by Hilton Hartford-Farmington | Promus Hotels, Inc | 4.0 | % | 4.0 | % | 2039 | |||||||
| Residence Inn Long Island Holtsville | Marriott International, Inc. | 6.0 | % | 2.5 | % | 2026 | |||||||
| Residence Inn White Plains | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2030 | |||||||
| Residence Inn New Rochelle | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2030 | |||||||
| Residence Inn Garden Grove | Marriott International, Inc. | 5.0 | % | 2.5 | % | 2031 | |||||||
| Homewood Suites by Hilton San Antonio River Walk | Hilton Franchise Holding LLC | 4.0 | % | 3.5 | % | 2041 | |||||||
| Residence Inn Washington DC | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2033 | |||||||
| Residence Inn Tysons Corner | Marriott International, Inc. | 5.0 | % | 2.5 | % | 2031 | |||||||
| Hampton Inn Portland Downtown | Hampton Inns Franchise LLC | 6.0 | % | 4.0 | % | 2032 | |||||||
| Hyatt Place Pittsburgh North Shore | Hyatt Hotels, LLC | 5.0 | % | 3.5 | % | 2030 | |||||||
| Hampton Inn Exeter | Hampton Inns Franchise LLC | 6.0 | % | 4.0 | % | 2031 | |||||||
| Residence Inn Bellevue | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2033 | |||||||
| SpringHill Suites Savannah | Marriott International, Inc. | 5.0 | % | 2.5 | % | 2033 | |||||||
| Residence Inn Silicon Valley I | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2029 | |||||||
| Residence Inn Silicon Valley II | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2029 | |||||||
| Residence Inn San Mateo | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2029 | |||||||
| Residence Inn Mountain View | Marriott International, Inc. | 5.5 | % | 2.5 | % | 2029 | |||||||
| Hyatt Place Cherry Creek | Hyatt Hotels, LLC | 5.0 | % | 3.5 | % | 2034 | |||||||
| Courtyard Addison | Marriott International, Inc. | 5.5 | % | 2.0 | % | 2029 | |||||||
| Residence Inn San Diego Gaslamp | Marriott International, Inc. | 6.0 | % | 2.5 | % | 2035 | |||||||
| Hilton Garden Inn Marina del Rey | Hilton Franchise Holding LLC | 5.5 | % | 4.3 | % | 2030 | |||||||
| Residence Inn Dedham | Marriott International, Inc. | 6.0 | % | 2.5 | % | 2030 | |||||||
| Residence Inn Il Lugano | Marriott International, Inc. | 6.0 | % | 2.5 | % | 2045 | |||||||
| Hilton Garden Inn Portsmouth | Hilton Garden Inns Franchise LLC | 5.5 | % | 4.0 | % | 2037 | |||||||
| Courtyard Summerville | Marriott International, Inc. | 6.0 | % | 2.5 | % | 2037 | |||||||
| Embassy Suites Springfield | Hilton Franchise Holding LLC | 5.5 | % | 4.0 | % | 2037 | |||||||
| Residence Inn Summerville | Marriott International, Inc. | 6.0 | % | 2.5 | % | 2038 | |||||||
| Courtyard Dallas | Marriott International, Inc. | 6.0 | % | 2.0 | % | 2038 | |||||||
| Residence Inn Austin Northwest/The Domain Area | Marriott International, Inc. | 6.0 | % | 2.5 | % | 2036 | |||||||
| TownePlace Suites Austin Northwest/The Domain Area | Marriott International, Inc. | 5.5 | % | 2.0 | % | 2041 | |||||||
| Home2 Suites Woodland Hills | Hilton Franchise Holding LLC | 5.0 | % | 3.0 | % | 2040 | |||||||
| Hilton Garden Inn Destin Miramar Beach | Hilton Franchise Holding LLC | 5.5 | % | 4.0 | % | 2042 | |||||||
| Home2 Suites Phoenix Downtown | Hilton Franchise Holding LLC | 4.0 | % | 3.5 | % | 2044 |
Franchise and marketing/program fees totaled approximately $23.6 million, $25.4 million and $24.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
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Leases
The Company is the lessee under ground, property, air rights, garage and office lease agreements for certain of its properties. The Company's leases are classified as operating or finance leases. The Company recognizes a right of use ("ROU") asset and lease liability at the estimated present value of the minimum lease payments over the lease term. The leases typically provide multi-year renewal options to extend the term as lessee at the Company's option. Option periods are included in the calculation of the lease obligation liability only when options are reasonably certain to be exercised.
In calculating the Company's lease obligations under the various leases, the Company uses discount rates estimated to be equal to what the Company would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment. Lease obligations are based on contractually required cash payments, while lease expense is recognized on a straight-line basis for its operating leases and as interest expense on the lease liability for its finance lease.
Operating Leases
The Residence Inn San Diego Gaslamp hotel property is subject to a ground lease with an expiration of January 31, 2065 and we have an extension option of up to three additional terms of ten years each. Monthly payments are currently approximately $49 thousand per month and increase 10% every five years. The hotel is subject to supplemental rent payments annually calculated as 5% of gross revenues during the applicable lease year, minus 12 times the monthly base rent scheduled for the lease year.
The Residence Inn New Rochelle hotel property is subject to an air rights lease and a garage lease, each of which expires on December 1, 2104. The lease agreements with the City of New Rochelle cover the space above the parking garage that is occupied by the hotel as well as 128 parking spaces in a parking garage that is attached to the hotel. The annual base rent for the garage lease is the hotel’s proportionate share of the city’s adopted budget for the operations, management and maintenance of the garage and established reserves to fund for the cost of capital repairs. Aggregate rent for 2025 under these leases amounted to approximately $31 thousand per quarter.
The Hilton Garden Inn Marina del Rey hotel property is subject to a ground lease with an expiration of December 31, 2067. Minimum monthly payments are currently approximately $47 thousand per month and a percentage rent payment less the minimum rent is due in arrears equal to 5% to 25% of gross income based on the type of income.
The Company entered into a corporate office lease in September 2015. The lease is for a term of 11 years and includes a 12-month rent abatement period and certain tenant improvement allowances. The Company has a renewal option of up to two successive terms of five years each. On June 1, 2023, the Company executed an amendment to the corporate office lease to vacate and surrender possession of 7,374 rentable square feet in exchange for an early termination payment of $0.1 million. The partial termination of this lease required the Company to apply Accounting Standards Codification ("ASC") 842 and remeasure the ROU asset and lease liability and recognize those adjustments in the consolidated statements of operations. The Company shares the space with related parties and is reimbursed for the pro-rata share of rentable space occupied by the related parties.
The Company entered into a new 10-year corporate office lease in May 2024, which was subsequently amended in September 2024, that will commence when the Company takes possession of the space for leasehold improvements, on or before September 1, 2026. Annual base rent will range from $0.6 million to $0.7 million over the term of the lease. The new office space will be shared with a related party and the Company will be reimbursed for the pro-rata share of rentable space that will be occupied by the related party.
Finance Leases
The Home2 Phoenix hotel property is subject to a Government Property Lease Excise Tax ("GPLET") agreement with the City of Phoenix. As part of the agreement, title of the hotel property was conveyed to the City of Phoenix and leased back to the Company for a term of 8 years with fixed annual rent payments ranging from $26 thousand to $81 thousand. Title of the hotel property will be re-conveyed to the Company at no cost at the expiration of the 8-year lease term. The GPLET agreement can be terminated by the Company at any time for a fee of $0.1 million and title of the hotel property would be re-conveyed back to the Company.
The Home2 Phoenix ROU assets are recorded as finance lease assets within Investment in hotel properties, net and the lease liability is recorded within Lease liability in the Company’s consolidated balance sheet. Expenses related to the finance lease are included in depreciation and amortization and interest expense, in the Company’s consolidated statements of operations.
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The following table includes information regarding the Company's total minimum lease payments for which it is the lessee, as of December 31, 2025, for each of the next five calendar years and thereafter (in thousands):
| Total Future Lease Payments | |||
|---|---|---|---|
| Amount | |||
| 2026 | $ | 1,768 | |
| 2027 | 1,313 | ||
| 2028 | 1,338 | ||
| 2029 | 1,338 | ||
| 2030 | 1,407 | ||
| Thereafter | 59,765 | ||
| Total lease payments | $ | 66,929 |
Human Capital
As of February 27, 2026, we had 16 employees. All persons employed in the day-to-day operations of our hotels are employees of the management companies engaged by our TRS Lessees to operate such hotels. None of our employees are represented by a collective bargaining agreement, however, certain hotel level employees of IHM are represented under a collective bargaining agreement.
Our key human capital management objectives are to attract, recruit, hire, develop and promote a deep and diverse set of talent that translates into a strong and successful workforce. To support these objectives, our human resource programs are designed to develop talent to prepare employees for critical roles and leadership positions for the future; reward and support employees through competitive pay and benefit programs; enhance our culture through efforts to foster, promote and preserve a culture of inclusion and belonging; and invest in technology, tools, and resources to enable employees at work.
Corporate Responsibility
We are committed to creating value while being responsible stewards at our hotels, in the community, and in our industry. While the COVID-19 pandemic presented tumultuous challenges, the new reality we experienced reinforced our desire to formalize our historical efforts relating to Environmental, Social, and Governance (ESG) issues into a more structured corporate responsibility strategy. We published our first Corporate Responsibility Report in March 2021.
In February 2022, the Company established a standalone Environmental Social and Governance Committee made up of members of the Board of Trustees of the Company (the "Board of Trustees") and two of our executive officers.
In February 2026, we published our annual Corporate Responsibility Report which includes reporting with standards from the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD). The report is available on our website at www.chathamlodgingtrust.com.
Environmental and Sustainability
Our initiatives are intended to improve energy efficiency at our hotels and enhance the value and profitability of our hotels. Among these energy efficiency programs are the installation of energy efficient lighting, guestroom “smart” thermostats that adjust room conditions based upon occupancy status, low-flow toilet systems, and recycling laundry water. We are committed to seeking new environmental initiatives to implement across our portfolio.
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Corporate Citizenship and Community Impact
The Company prioritizes the need to invest in the communities in which our properties are located. In addition, we have made a significant effort to give back to the local charitable organizations in the West Palm Beach area, where our corporate office is located. In combination with IHM, we have engaged in events for charitable organizations in a number of ways including participating in race events for charity, collecting food and feeding those in need, and reading and providing gifts to underprivileged children during the holidays. Our employees' volunteer efforts have directly added value to our local community.
Available Information
Our Internet website is www.chathamlodgingtrust.com. We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 reports on Forms 3, 4 and 5 and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC. All reports that we have filed with the SEC, including this annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, can also be obtained free of charge from the SEC's website www.sec.gov. In addition, our website includes corporate governance information, including the charters for committees of our Board of Trustees, our Corporate Governance Guidelines, Conflict of Interest Policy and our Code of Business Conduct. This information is available in print to any shareholder who requests it by writing to Investor Relations, Chatham Lodging Trust, 222 Lakeview Avenue, Suite 200, West Palm Beach, FL 33401. The information on our website is not, and shall not be deemed to be, a part of this report or incorporated into any other filings that we make with the SEC.