Chatham Lodging Trust

Previous wording

The following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include information about possible or assumed future results of the lodging industry and our business, financial condition, liquidity, results of operations, cash flow and plans and objectives. These statements generally are characterized by the use of the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, such forward-looking statements relate to future events, our plans, strategies, prospects and future financial performance, and involve known and unknown risks that are difficult to predict, uncertainties and other factors that are, in some cases, beyond our control and which could differ materially from those set forth in the forward-looking statements. Important factors that we think could cause our actual results to differ materially from expected results are summarized below. Some factors that might cause such a difference include the following: local, national and global economic conditions, uncertainty surrounding the financial stability of the United States, Europe and China, increased direct competition, changes in government regulations or accounting rules, changes in local, national and global real estate conditions, declines in lodging industry fundamentals, increased operating costs, a potential recessionary environment, seasonality of the lodging industry, our ability to obtain debt and equity financing on satisfactory terms, changes in interest rates, our ability to identify suitable investments, our ability to close on identified investments, inaccuracies of our accounting estimates, the uncertainty and economic impact of pandemics like COVID-19, epidemics or other public health emergencies or fear of such events, the impact of and changes to various government programs, and our ability to dispose of selected hotel properties on the terms and timing we expect, if at all. Given these uncertainties, undue reliance should not be placed on such statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. The forward-looking statements should also be read in light of the risk factors identified in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as updated by the Company's subsequent filings with the SEC under the Exchange Act.

Current wording

The following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include information about possible or assumed future results of the lodging industry and our business, financial condition, liquidity, results of operations, cash flow and plans and objectives. These statements generally are characterized by the use of the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may,” “will,” “could” or similar expressions. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, such forward-looking statements relate to future events, our plans, strategies, prospects and future financial performance, and involve known and unknown risks that are difficult to predict, uncertainties and other factors that are, in some cases, beyond our control and which could differ materially from those set forth in the forward-looking statements. Important factors that we think could cause our actual results to differ materially from expected results are summarized below. Some factors that might cause such a difference include the following: local, national and global economic conditions, uncertainty surrounding the financial stability of the United States, Europe and China, increased direct competition, changes in government regulations or accounting rules, changes in local, national and global real estate conditions, declines in lodging industry fundamentals, increased operating costs, a potential recessionary environment, seasonality of the lodging industry, our ability to obtain debt and equity financing on satisfactory terms, changes in interest rates, our ability to identify suitable investments, our ability to close on identified investments, inaccuracies of our accounting estimates, the uncertainty and economic impact of pandemics like COVID-19, epidemics or other public health emergencies or fear of such events, the impact of and changes to various government programs, and our ability to dispose of selected hotel properties on the terms and timing we expect, if at all. Given these uncertainties, undue reliance should not be placed on such statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. The forward-looking statements should also be read in light of the risk factors identified in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as updated by the Company's subsequent filings with the SEC under the Exchange Act.

Previous wording

At June 30, 2024, our leverage ratio was 25.8% measured as the ratio of our net debt (total debt outstanding before deferred financing costs less unrestricted cash and cash equivalents) to hotel investments at cost. Over the past several years, we have maintained a leverage ratio between the mid 20s and the low 50s. As of June 30, 2024, we have total debt of $452.4 million at a weighted average interest rate of approximately 6.8%.

Current wording

At September 30, 2024, our leverage ratio was 24.3% measured as the ratio of our net debt (total debt outstanding before deferred financing costs less unrestricted cash and cash equivalents) to hotel investments at cost. Over the past several years, we have maintained a leverage ratio between the mid 20s and the low 50s. As of September 30, 2024, we have total debt of $438.5 million at a weighted-average interest rate of approximately 6.8%.

Previous wording

Smith Travel Research reported that U.S. lodging industry RevPAR increased 2.5% for the three months ended June 30, 2024, with RevPAR up 2.0% in April 2024, up 4.0% in May 2024 and up 1.5% in June 2024. We expect that over the remainder of 2024, lodging industry RevPAR will increase modestly.

Current wording

Smith Travel Research reported that U.S. lodging industry RevPAR increased 0.9% for the three months ended September 30, 2024, with RevPAR flat in July 2024, up 3.9% in August 2024 and down 1.3% in September 2024. We expect that over the remainder of 2024, lodging industry RevPAR will increase modestly.

Previous wording

Total revenue was $86.5 million for the three months ended June 30, 2024, up $2.0 million compared to total revenue of $84.5 million for the corresponding 2023 period. The increase in total revenue primarily was related to the 3.6% increase in same property RevPAR. One hotel acquired during the three months ended June 30, 2024, which was not owned during the three months ended June 30, 2023, contributed $0.5 million of revenue during the three months ended June 30, 2024. This was partially offset by the decrease in revenue from the sale of one hotel that contributed $0 in room revenue for the three months ended June 30, 2024, down $1.9 million from the $1.9 million that hotel contributed for the corresponding 2023 period. Since all of our hotels are select-service or limited-service hotels, room revenue is the primary revenue source as these hotels do not have significant food and beverage revenue or large group conference facilities. Room revenue comprised 91.4% and 91.7% of total revenue for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Total revenue was $87.2 million for the three months ended September 30, 2024, up $0.5 million compared to total revenue of $86.7 million for the corresponding 2023 period. The increase in total revenue primarily was related to the 1.3% increase in same property RevPAR. One hotel owned during the three months ended September 30, 2024, which was not owned during the three months ended September 30, 2023, contributed $1.4 million of revenue during the three months ended September 30, 2024. This was offset by the decrease in revenue from the sale of one hotel that contributed $0 in room revenue for the three months ended September 30, 2024, down $2.1 million from the $2.1 million that hotel contributed for the corresponding 2023 period. Since all of our hotels are select-service or limited-service hotels, room revenue is the primary revenue source as these hotels do not have significant food and beverage revenue or large group conference facilities. Room revenue comprised 92.0% and 92.1% of total revenue for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Food and beverage revenue was $4.0 million for the six months ended June 30, 2024, down $0.2 million compared to food and beverage revenue of $4.2 million for the corresponding 2023 period.

Current wording

Food and beverage revenue was $1.8 million for the three months ended September 30, 2024, down $0.2 million compared to $2.0 million for the corresponding 2023 period. The decline in food and beverage revenue was related to the sale of one hotel.

Previous wording

Other operating revenue is comprised of parking, meeting room, gift shop, in-room movie and other ancillary amenities revenue. Other operating revenue was $5.0 million and $4.5 million for the three months ended June 30, 2024 and 2023, respectively. The increase in other operating revenue primarily was related to increases in revenue from parking.

Current wording

Other operating revenue is comprised of parking, meeting room, gift shop, in-room movie and other ancillary amenities revenue. Other operating revenue was $4.8 million and $4.6 million for the three months ended September 30, 2024 and 2023, respectively. The increase in other operating revenue primarily was related to increases in revenue from parking.

Previous wording

Reimbursable costs from related parties were $0.3 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively. The cost reimbursements were offset by the reimbursed costs from related parties included in operating expenses.

Current wording

Reimbursable costs from related parties were $0.3 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively. The cost reimbursements were offset by the reimbursed costs from related parties included in operating expenses.

Previous wording

For the three months ended June 30, 2024 same property RevPAR increased 3.6% due to a decrease in ADR of 0.2% and an increase in occupancy of 3.9%. Same property RevPAR increased 4.8% in April 2024, increased 5.1% in May 2024, and increased 1.2% in June 2024. Same property RevPAR was $146.31 in April 2024, $148.67 in May 2024, and $157.15 in June 2024.

Current wording

For the three months ended September 30, 2024 same property RevPAR increased 1.3% due to an increase in ADR of 1.3% and no change in occupancy. Same property RevPAR increased 0.2% in July 2024, increased 0.3% in August 2024, and increased 3.4% in September 2024. Same property RevPAR was $154.72 in July 2024, $143.59 in August 2024, and $151.16 in September 2024.

Previous wording

Hotel operating expenses increased $3.3 million, or 7.5%, to $46.6 million for the three months ended June 30, 2024 from $43.3 million for the three months ended June 30, 2023. The primary causes of the increase in hotel operating expenses were increases in staffing levels, wage and benefit costs, and inflation.

Current wording

Hotel operating expenses increased $0.5 million, or 1.2%, to $48.2 million for the three months ended September 30, 2024 from $47.7 million for the three months ended September 30, 2023. The primary causes of the increase in hotel operating expenses were increases in insurance costs, utilities costs, and other hotel operating expenses.

Previous wording

Room expenses, which are the most significant component of hotel operating expenses, increased $2.4 million from $14.6 million for the three months ended June 30, 2023 to $17.0 million for the three months ended June 30, 2024. The increase in room expenses primarily was related to increases in staffing levels, wage and benefit costs.

Current wording

Room expenses, which are the most significant component of hotel operating expenses, decreased $0.2 million from $17.2 million for the three months ended September 30, 2023 to $17.0 million for the three months ended September 30, 2024. The decrease in room expenses primarily was related to a decrease in costs for overtime, outsourced contracted labor, and travel agent commissions.

Previous wording

The remaining hotel operating expenses increased $0.9 million, from $28.7 million for the three months ended June 30, 2023 to $29.6 million for the three months ended June 30, 2024. The increase in other remaining expenses primarily was related to inflation.

Current wording

The remaining hotel operating expenses increased $0.8 million, from $30.4 million for the three months ended September 30, 2023 to $31.2 million for the three months ended September 30, 2024. The increase in other remaining expenses primarily was related to increases in insurance and utilities costs.

Previous wording

Depreciation and amortization expense was $14.9 million and $14.7 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Depreciation and amortization expense was $15.3 million and $14.7 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

General and administrative expenses principally consist of employee-related costs, including base payroll, bonuses and amortization of restricted stock and awards of long-term incentive plan units. These expenses also include corporate operating costs, professional fees and trustees’ fees. Total general and administrative expenses (excluding amortization of stock based compensation of $1.7 million and $1.6 million for the three months ended June 30, 2024 and 2023, respectively) was $3.0 million for the three months ended June 30, 2024 versus $3.1 million for the three months ended June 30, 2023.

Current wording

General and administrative expenses principally consist of employee-related costs, including base payroll, bonuses and amortization of restricted stock and awards of long-term incentive plan units. These expenses also include corporate operating costs, professional fees and trustees’ fees. Total general and administrative expenses (excluding amortization of stock based compensation of $1.7 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively) was $2.7 million for the three months ended September 30, 2024 versus $2.6 million for the three months ended September 30, 2023.

Previous wording

Reimbursable costs from related parties, comprised of corporate payroll and rent costs were $0.3 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively. The cost reimbursements were offset by the cost reimbursements from related parties included in revenues.

Current wording

Reimbursable costs from related parties, comprised of corporate payroll and rent costs were $0.3 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively. The cost reimbursements were offset by the cost reimbursements from related parties included in revenues.

Previous wording

Interest on cash and cash equivalents and other income increased $0.5 million from $0.2 million for the three months ended June 30, 2023 to $0.7 million for the three months ended June 30, 2024. The increase was due to higher cash balances and higher interest rates received on cash balances during the three months ended June 30, 2024.

Current wording

Interest on cash and cash equivalents and other income decreased $0.4 million from $0.5 million for the three months ended September 30, 2023 to $0.1 million for the three months ended September 30, 2024. The decrease was due to lower cash balances during the three months ended September 30, 2024.

Previous wording

Interest expense increased $1.3 million from $6.4 million for the three months ended June 30, 2023 to $7.7 million for the three months ended June 30, 2024 and is comprised of the following (dollars in thousands):

Current wording

Interest expense increased $1.5 million from $6.8 million for the three months ended September 30, 2023 to $8.3 million for the three months ended September 30, 2024 and is comprised of the following (dollars in thousands):

Previous wording

Net income was $7.0 million for the three months ended June 30, 2024, compared to net income of $9.4 million for the three months ended June 30, 2023. The change in net income was primarily due to the increase in RevPAR offset by higher operating costs and higher interest expense combined with the other factors discussed above.

Current wording

Net income was $4.3 million for the three months ended September 30, 2024, compared to net income of $7.5 million for the three months ended September 30, 2023. The change in net income was primarily due to the factors discussed above.

Previous wording

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023

Current wording

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023

Previous wording

Results of operations for the six months ended June 30, 2024 include the operating activities of the hotels we owned for the entire period. We sold one hotel located in Denver, CO on January 9, 2024 and acquired one hotel located in Phoenix, AZ on May 30, 2024. The changes in results described below were driven primarily by the continued recovery of business travel following the COVID-19 pandemic, the sale of one hotel, the acquisition of one hotel, and inflationary cost pressures.

Current wording

Results of operations for the nine months ended September 30, 2024 include the operating activities of the hotels we owned for the entire period. We sold one hotel located in Denver, CO on January 9, 2024 and acquired one hotel located in Phoenix, AZ on May 30, 2024. The changes in results described below were driven primarily by the continued recovery of business travel following the COVID-19 pandemic, the sale of one hotel, the acquisition of one hotel, and inflationary cost pressures.

Previous wording

Total revenue was $154.9 million for the six months ended June 30, 2024, up $2.8 million compared to total revenue of $152.1 million for the corresponding 2023 period. The increase in total revenue primarily was related to the 2.6% increase in same property RevPAR, the acquisition of one hotel on May 30, 2024, partially offset by the decrease in revenue from the sale of one hotel January 9, 2024. The one hotel acquired during the six months ended June 30, 2024, which was not owned during the six months ended June 30, 2023, contributed $0.5 million of revenue during the six months ended June 30, 2024. This was partially offset by the decrease in revenue from the sale of one hotel that contributed $0.1 million in room revenue for the six months ended June 30, 2024, down $2.8 million from the $2.9 million that hotel contributed for the corresponding 2023 period. Since all of our hotels are select-service or limited-service hotels, room revenue is the primary revenue source as these hotels do not have significant food and beverage revenue or large group conference facilities. Room revenue comprised 91.4% and 91.5% of total revenue for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Total revenue was $242.1 million for the nine months ended September 30, 2024, up $3.3 million compared to total revenue of $238.8 million for the corresponding 2023 period. The increase in total revenue primarily was related to the 2.1% increase in same property RevPAR, the acquisition of one hotel on May 30, 2024, partially offset by the decrease in revenue from the sale of one hotel January 9, 2024. The one hotel acquired during the nine months ended September 30, 2024, which was not owned during the nine months ended September 30, 2023, contributed $1.8 million of revenue during the nine months ended September 30, 2024. This was partially offset by the decrease in revenue from the sale of one hotel that contributed $0.1 million in room revenue for the nine months ended September 30, 2024, down $4.9 million from the $5.0 million that hotel contributed for the corresponding 2023 period. Since all of our hotels are select-service or limited-service hotels, room revenue is the primary revenue source as these hotels do not have significant food and beverage revenue or large group conference facilities. Room revenue comprised 91.6% and 91.7% of total revenue for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Other operating revenue, comprised of parking, meeting room, gift shop, in-room movie and other ancillary amenities revenue, increased $0.9 million to $8.9 million for the six months ended June 30, 2024 compared to $8.0 million for the corresponding 2023 period. The increase in other operating revenue primarily was related to increases in revenue from parking.

Current wording

Other operating revenue, comprised of parking, meeting room, gift shop, in-room movie and other ancillary amenities revenue, increased $1.1 million to $13.7 million for the nine months ended September 30, 2024 compared to $12.6 million for the corresponding 2023 period. The increase in other operating revenue primarily was related to increases in revenue from parking.

Previous wording

Reimbursable costs from related parties were $0.6 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively. The cost reimbursements were offset by the reimbursed costs from related parties included in operating expenses.

Current wording

Reimbursable costs from related parties were $0.8 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively. The cost reimbursements were offset by the reimbursed costs from related parties included in operating expenses.

Previous wording

For the six months ended June 30, 2024 same property RevPAR increased 2.6% due to an increase in ADR of 0.1% and an increase in occupancy of 2.6% primarily related to the continued recovery of business travel following the COVID-19 pandemic.

Current wording

For the nine months ended September 30, 2024 same property RevPAR increased 2.1% due to an increase in ADR of 0.5% and an increase in occupancy of 1.6% primarily related to the continued recovery of business travel following the COVID-19 pandemic.

Previous wording

Hotel operating expenses increased $4.6 million to $88.4 million for the six months ended June 30, 2024 from $83.8 million for the six months ended June 30, 2023. The increase in hotel operating expenses was related to the increase in revenues and occupancy caused by the continued recovery of business travel following the COVID-19 pandemic, increases in staffing levels, wage and benefit costs, and inflation. The increase was partially offset by the sale of one hotel during the first quarter of 2024 that contributed $0.2 million of operating expenses during the six months ended June 30, 2024, down $1.9 million from the $2.1 million the sold hotel contributed during the six months ended June 30, 2023.

Current wording

Hotel operating expenses increased $5.2 million to $136.7 million for the nine months ended September 30, 2024 from $131.5 million for the nine months ended September 30, 2023. The increase in hotel operating expenses was related to the increase in revenues and occupancy caused by the continued recovery of business travel following the COVID-19 pandemic, increases in staffing levels, wage and benefit costs, insurance costs, and inflation. The one hotel acquired during the nine months ended September 30, 2024, which was not owned during the nine months ended September 30, 2023, contributed $1.2 million of operating expenses during the nine months ended September 30, 2024. The increase was partially offset by the sale of one hotel during the first quarter of 2024 that contributed $0.2 million of operating expenses during the nine months ended September 30, 2024, down $3.2 million from the $3.4 million the sold hotel contributed during the nine months ended September 30, 2023.

Previous wording

Room expenses, which are the most significant component of hotel operating expenses, increased $3.4 million from $28.7 million for the six months ended June 30, 2023 to $32.1 million for the six months ended June 30, 2024. The increase in room expenses was related to an increase in occupancies and revenues at our hotels due to the continued recovery of business travel following the COVID-19 pandemic, increased staffing levels, and inflation.

Current wording

Room expenses, which are the most significant component of hotel operating expenses, increased $3.2 million from $45.9 million for the nine months ended September 30, 2023 to $49.1 million for the nine months ended September 30, 2024. The increase in room expenses was related to an increase in occupancies and revenues at our hotels due to the continued recovery of business travel following the COVID-19 pandemic, increased staffing levels, wage and benefit costs, and inflation.

Previous wording

The remaining hotel operating expenses increased $1.2 million, from $55.1 million for the six months ended June 30, 2023 to $56.3 million for the six months ended June 30, 2024. The increase in other remaining expenses primarily was related to an increase in occupancies and revenues at our hotels due to the continued recovery of business travel following the COVID-19 pandemic and inflation.

Current wording

The remaining hotel operating expenses increased $1.9 million, from $85.6 million for the nine months ended September 30, 2023 to $87.5 million for the nine months ended September 30, 2024. The increase in other remaining expenses primarily was related to an increase in occupancies and revenues at our hotels due to the continued recovery of business travel following the COVID-19 pandemic, increased insurance costs, and inflation.

Previous wording

Total property taxes, ground rent and insurance expenses decreased $0.1 million from $6.1 million for the three months ended June 30, 2023 to $6.0 million for the three months ended June 30, 2024. The decrease was primarily related to successful property tax appeals at multiple hotel properties.

Current wording

Total property taxes, ground rent and insurance expenses decreased $0.5 million from $18.2 million for the nine months ended September 30, 2023 to $17.7 million for the nine months ended September 30, 2024. The decrease was primarily related to successful property tax appeals at multiple hotel properties.

Previous wording

General and administrative expenses principally consist of employee-related costs, including base payroll, bonuses and amortization of restricted stock and awards of LTIP units. These expenses also include corporate operating costs, professional fees and trustees’ fees. Total general and administrative expenses (excluding amortization of stock-based compensation of $3.3 million and $3.0 million for the six months ended June 30, 2024 and 2023, respectively) increased $0.1 million to $6.0 million for the six months ended June 30, 2024 from $5.9 million for the six months ended June 30, 2023.

Current wording

General and administrative expenses principally consist of employee-related costs, including base payroll, bonuses and amortization of restricted stock and awards of LTIP units. These expenses also include corporate operating costs, professional fees and trustees’ fees. Total general and administrative expenses (excluding amortization of stock-based compensation of $4.9 million and $4.6 million for the nine months ended September 30, 2024 and 2023, respectively) increased $0.1 million to $8.7 million for the nine months ended September 30, 2024 from $8.6 million for the nine months ended September 30, 2023.

Previous wording

Reimbursable costs from related parties, comprised of corporate payroll and rent costs were $0.6 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively. The cost reimbursements were offset by the cost reimbursements from related parties included in revenues.

Current wording

Reimbursable costs from related parties, comprised of corporate payroll and rent costs were $0.8 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively. The cost reimbursements were offset by the cost reimbursements from related parties included in revenues.

Previous wording

Loss on sale of hotel property was $0.1 million for the six months ended June 30, 2024 compared to a gain on sale of hotel property of $0.1 million for the six months ended June 30, 2023. The HGI Denver Tech hotel property was sold on January 9, 2024 which resulted in a loss of $0.1 million.

Current wording

Loss on sale of hotel property was $0.2 million for the nine months ended September 30, 2024 compared to a gain on sale of hotel property of $0.1 million for the nine months ended September 30, 2023. The HGI Denver Tech hotel property was sold on January 9, 2024 which resulted in a loss of $0.2 million.

Previous wording

Interest on cash and cash equivalents and other income increased $1.3 million from $0.2 million for the six months ended June 30, 2023 to $1.5 million for the six months ended June 30, 2024.

Current wording

Interest on cash and cash equivalents and other income increased $0.9 million from $0.7 million for the nine months ended September 30, 2023 to $1.6 million for the nine months ended September 30, 2024. The increase was due to higher cash

Previous wording

Interest expense increased $2.1 million from $12.9 million for the six months ended June 30, 2023 to $15.0 million for the six months ended June 30, 2024 and is comprised of the following (dollars in thousands):

Current wording

Interest expense increased $3.6 million from $19.7 million for the nine months ended September 30, 2023 to $23.3 million for the nine months ended September 30, 2024 and is comprised of the following (dollars in thousands):

Previous wording

Loss on early extinguishment of debt decreased $0.7 million from $0.7 million for the six months ended June 30, 2023. The loss in 2023 is related to the Company's repayment of the construction loan on the Home2 Woodland Hills hotel property.

Current wording

Loss on early extinguishment of debt decreased $0.7 million from $0.7 million for the nine months ended September 30, 2023. The loss in 2023 is related to the Company's repayment of the construction loan on the Home2 Woodland Hills hotel property.

Previous wording

Gain from partial lease termination decreased $0.2 million from $0.2 million for the six months ended June 30, 2023. The gain in 2023 is related to the Company's termination of a portion of its 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.

Current wording

Gain from partial lease termination decreased $0.2 million from $0.2 million for the nine months ended September 30, 2023. The gain in 2023 is related to the Company's termination of a portion of its 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.

Previous wording

Income tax expense for the six months ended June 30, 2024 and 2023 was $0 and $0, respectively. We are subject to income taxes based on the taxable income of our TRS Lessees at a combined federal and state tax rate of approximately 25%. The Company’s TRS is expecting taxable losses in 2024 and recognizes a full valuation allowance equal to 100% of the gross deferred tax assets due to the uncertainty of the TRS's ability to utilize these deferred tax assets.

Current wording

Income tax expense for the nine months ended September 30, 2024 and 2023 was $0 and $0, respectively. We are subject to income taxes based on the taxable income of our TRS Lessees at a combined federal and state tax rate of approximately 25%. The Company’s TRS is expecting taxable losses in 2024 and recognizes a full valuation allowance equal to 100% of the gross deferred tax assets due to the uncertainty of the TRS's ability to utilize these deferred tax assets.

Previous wording

Net income was $1.5 million for the six months ended June 30, 2024, a decrease of $2.8 million from net income of $4.3 million for the six months ended June 30, 2023. The change in net income was primarily due to the increase in RevPAR offset by higher operating costs and higher interest expense combined with the other factors discussed above.

Current wording

Net income was $5.9 million for the nine months ended September 30, 2024, a decrease of $5.9 million from net income of $11.8 million for the nine months ended September 30, 2023. The change in net income was primarily due to the factors discussed above.

Previous wording

The following is a reconciliation of net income to FFO and Adjusted FFO for the three and six months ended June 30, 2024 and 2023 (in thousands, except share data):

Current wording

The following is a reconciliation of net income to FFO and Adjusted FFO for the three and nine months ended September 30, 2024 and 2023 (in thousands, except share data):

Previous wording

The following is a reconciliation of net income to EBITDA, EBITDAre and Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following is a reconciliation of net income to EBITDA, EBITDAre and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

The following is a presentation of Adjusted Hotel EBITDA for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following is a presentation of, and a reconciliation of net income to, Adjusted Hotel EBITDA for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

Cash, cash equivalents, and restricted cash totaled $25.7 million as of June 30, 2024, a decrease of $60.1 million from December 31, 2023, primarily due to net cash provided by operating activities of $32.1 million, net cash used in investing activities of $46.0 million, and net cash used in financing activities of $46.1 million.

Current wording

Cash, cash equivalents, and restricted cash totaled $28.8 million as of September 30, 2024, a decrease of $56.9 million from December 31, 2023, primarily due to net cash provided by operating activities of $60.9 million, net cash used in investing activities of $52.1 million, and net cash used in financing activities of $65.7 million.