Chatham Lodging Trust announced it has acquired six Hilton-branded hotels totaling 589 rooms for $92 million, representing approximately $156,000 per room. The company also increased its quarterly common dividend by 11 percent to $0.10 per share, marking the second consecutive year of double-digit dividend increases.
The acquired portfolio includes six premium-branded hotels located across three markets in the Midwest and South. Two properties are located in Joplin, Missouri, two in Effingham, Illinois, and two in Paducah, Kentucky. The portfolio consists of two Homewood Suites hotels, two Hampton Inn & Suites hotels, and two Home2 Suites by Hilton properties.
Chatham funded the acquisition using available cash and borrowings from its revolving credit facility. The portfolio aligns with the company’s focus on upscale extended-stay and premium-branded select-service hotels, with approximately 66 percent of the rooms classified as extended-stay.
According to the company, the properties have an average age of approximately 10 years and represent some of the highest-quality hotels in their respective markets. The acquisition is expected to strengthen Chatham’s operating margins and expand its geographic footprint into markets benefiting from growing investments in manufacturing and distribution.
The company highlighted that the locations provide strong connectivity to major commerce routes and regional employment centers. Paducah is positioned along Interstate 24 near major logistics corridors linking St. Louis, Louisville, Nashville, and Memphis. Effingham sits at the intersection of Interstates 57 and 70 between Indianapolis and St. Louis and draws nearly 200,000 workers from surrounding counties each week. Joplin is located near the intersection of Interstates 44 and 49 in southwest Missouri and benefits from proximity to major regional hubs, including Kansas City, St. Louis, Oklahoma City, and northwest Arkansas.
Chatham said the transaction is part of its broader portfolio recycling strategy. Over the past 18 months, the company sold six older hotels for approximately $100 million. Those properties had an average age of 25 years, revenue per available room of $101, and hotel EBITDA margins of 27 percent.
By comparison, the newly acquired portfolio generated revenue per available room of $116 and hotel EBITDA margins of 42 percent in 2025. The acquisition is expected to increase Chatham’s 2025 hotel EBITDA by approximately $10 million, representing a 12 percent increase on a full-year basis.
Using 2025 hotel EBITDA and a pro forma blended interest rate of 6 percent, the portfolio is expected to contribute approximately $0.10 per year in adjusted funds from operations. The company also noted that its net debt-to-EBITDA ratio will increase by approximately 50 basis points as a result of the transaction.
Chatham said the deal represents its first hotel acquisition in nearly two years and supports its strategy of reinvesting capital from lower-margin properties into newer assets with higher revenue potential and stronger profitability.
KEY QUOTES:
“We are proud of the job we’ve done over the past few years repositioning the company for growth. The combination of historically low new supply growth, record amounts of new investments in technology, especially with respect to artificial intelligence, and reshoring manufacturing back into the United States should result in strong, multi-year growth for the lodging industry. Operationally, management expense pressures, particularly with respect to labor costs, are moderating. Furthermore, this accretive acquisition, which equates to an approximate 10 percent capitalization rate using 2025 hotel net operating income, will provide further growth in free cash flow, giving us the confidence to boost our dividend by a healthy 11 percent for 2026.”
“This very strategic acquisition truly complements our existing portfolio for multiple reasons. First, the hotels are generally the highest quality properties in their respective markets with the average age of the portfolio only 10 years. Second, 66 percent of the portfolio’s rooms are extended-stay, an exact match to our existing portfolio, more than double our nearest peer, and as everyone knows, is our preferred segment. Third, the hotels benefit from very favorable labor dynamics and generate Hotel EBITDA margins that will further increase our already industry leading margins. Fourth, the portfolio diversifies our geographic footprint into areas of the country that are benefitting from expanded investments in manufacturing and distribution.”
“Lastly, this transaction highlights our extremely successful recycling initiative over the past 18 months, selling older, lower RevPAR, lower margin hotels at a low capitalization rate and reinvesting those proceeds into newer, higher RevPAR, higher margin hotels at a higher capitalization rate that will be accretive to earnings and cash flow in 2026.”
“We have multiple levers to enhance shareholder returns and are executing on those. We have been aggressively repurchasing shares and will continue to do so using free cash flow. We are increasing our common dividend by double digits for the second consecutive year. We have been patiently analyzing many acquisition opportunities, waiting for the right deal that ticked a lot of boxes, and this deal certainly does that. It represents our first acquisition in almost two years. We are enthusiastic about our future.”
Jeffrey H. Fisher, President And Chief Executive Officer Of Chatham Lodging Trust
