Good day, everyone. Welcome to the Chatham Lodging Announces First Quarter Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Chris Daly. Please go ahead.

Thank you, Mark. Good morning, everyone. Welcome to the Chatham Lodging Trust first quarter 2015 results conference call. This morning, before the opening of the market, Chatham released results for the first quarter of 2015 and I hope you’ve had a chance to review the press release. If you did not receive a copy of the release or you would like one, please call my office at (703) 435-6293 and we’ll be happy to email you a copy, or you can review the release online at Chatham’s website, www.chathamlodgingtrust.com. Today’s conference call is being transmitted live via telephone by webcast over Chatham’s website and at streetevents.com. A recording of the call will be available by telephone until 1 p.m. Eastern on Tuesday, May 12, 2015, by dialing 1 (888) 203-1112, reference number 3216575. A replay of the conference call will be posted on Chatham’s website. As a reminder, this conference call is the property of Chatham Lodging Trust and any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Chatham is prohibited. Before we begin, Management has asked me to remind you that in keeping with the SEC’s Safe Harbor guidelines, today’s call may contain forward-looking statements about Chatham Lodging Trust, including statements regarding future operating results and the timing and composition of revenues amongst others. Except for historical information, these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, including the volatility of the national economy, economic conditions generally in the hotel and real estate markets specifically, international and geopolitical difficulties or health concerns, governmental actions, legislative and regulatory changes, availability of debt and equity capital, interest rates, competition, weather conditions or natural disasters, supply and demand for lodging facilities in our current and proposed market areas, and the company’s ability to manage integration and growth. Additional risks are discussed in the company’s filings with the Securities and Exchange Commissions. All information in this call is as of May 5, 2015 unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements to conform the statement to actual results or changes in the company’s expectations. During this call, we may refer to certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA, which we believe to be common in the industry, and helpful indicators of our performance. Keeping with SEC regulations, we have provided and encourage you to refer to the reconciliations of these measures to GAAP results in our earnings release. Now, to provide you with some insight into Chatham’s 2015 first quarter results, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer and Dennis Craven, Executive Vice President and Chief Financial Officer. Let me turn over the session to Jeff.

Yes sir. Thanks Chris. Good morning, everyone. Great to be here again as we report yet another strong quarter for Chatham. Our operating results were solid as you saw. We acquired yet another very high quality hotel in a great infill location in one of the strongest long-term lodging markets in the U.S. Downtown San Diego right in the heart of the Gaslamp District and our super high quality portfolio is generating excellent cash flow allowing us to raise our dividend a handsome 25% earlier this year. I would like to take a second and I’m sure you all see the exciting news last night announcing the promotion of Dennis to Chief Operating Officer and the addition of Jeremy Wegner someone we've known dating back to the Innkeepers Day as our new CFO. This is a great I think tribute to Dennis for the fantastic work that he has been doing here and we know Jeremy as I said for some period of time. They will be very, very fast transition for Jeremy to take over as CFO of this company. With our substantial growth over the past few years and of course it's easy to forget that all together we have almost including the JVs with NorthStar almost $3.5 billion worth of hotels that we're responsible for here at Chatham. Our Board felt and we certainly think that there is great opportunity to further bolster our Management Team as we continue to build Chatham in the premier lodging REIT focused on upscale extended stay and premium branded select service hotel. So Dennis congratulations to you.

Thank you.

We remain bullish on the lodging sector and frankly just a little editorial here, I am a little bit surprised by some analysts and folks they're saying we're farther out in the cycle than perhaps we feel that we are. It certainly takes three or four years of some very substantial above average industry supply growth in order for a cycle to be more mature such that demand and therefore occupancy rates and subsequent ADR are adversely impacted. And really here we're still under that historical average. Maybe we’ll get to 1.5% supply additions in 2015. Challenged portfolio, on top of that is particularly well insulated because that’s one of our prime -- if not our prime acquisition criteria is to be in markets that land is very expensive and its top the building. So we feel good about, real good about the ability to grow RevPAR and to grow earnings on a go-forward basis here and therefore we're continuing to be net buyers as we look at 2015 and into 2016. We got a substantial pipeline by the way. We've talked about that. Although we don’t give any specific guidance and don’t encourage that for acquisitions, I think we've said that we certainly, given our pipeline particularly of some fantastic targeted off market one half deals, I think we can get to a couple $100 million least of acquisitions this year. Over and above the Gaslamp deal and that does add some pretty substantial FFO between $0.15 and $0.20 on an annualized basis. So I think given our strong internal growth and the potential external growth here that we've already shown over and over, year after year that we've been able to accomplish, we're looking forward to having some more good years going forward. Speaking of good year, our…

Thanks, Jeff. Good morning, everyone. For the quarter we reported net income of $1.4 million or $0.04 per diluted share compared to a net loss of $1.7 million or $0.07 per diluted share in the 2014 first quarter. The primary differences between net income and FFO relates to non-cash cost such as depreciation which was $11.5 million in the quarter, acquisition cost is approximately $0.3 million, related to the acquisition of the San Diego Gaslamp and our share of similar items within the joint ventures which amounted approximately $1.9 million in the quarter. Adjusted FFO for the quarter was $15 million or $0.40 per share compared to $7.4 million or $0.28 per share in the 2014 first quarter a 43% increase year-over-year FFO per share of $0.40 exceed our range of $0.37 to $0.39 per share due to the RevPAR growth coming at almost 7% for the 35 hotels compared to our original guidance range of 4% to 6%. Adjusted EBITDA for the company rose 85% to $24.4 million slightly above our guidance range of $23 million to $23.9 million. The FFO and EBITDA beats were driven by the RevPAR outperformance, which added over $1 million of revenue and about $0.01 of FFO considering our 40% hotel EBITDA margins in the quarter and also adding little over of $0.01 in the quarter was our outstanding margin performance of hotel EBITDA margins coming in at almost 41% above the guidance range of 38.6% to 39.1%. Offsetting this performance was slightly higher G&A for the quarter due to the timing of cost related to our annual report and proxy preparation as well as professional fees for auditors and consultants. Our quarterly results were quite strong when you also factor in the displacement at our Maitland hotel, which impacted RevPAR 100 basis points…

Thank you very much. [Operator Instructions] Our first question today will come from Nikhil Bhalla, FBR Investment Bank.

Yes, hi. Good morning, Jeff and congratulations Dennis.

Hey Nikhil, how are you?

Good, yes, thank you very good. All good. First question, Dennis, could you just break down the expected CapEx on the redevelopment project at Silicon Valley in 2015 and 2016? Can you give us some sense of the timing of that?

Sure, the $8 million for the Mountain View tower is going to be basically all spend here in 2015. The remainder of the spending which I think at this point, we still haven't got bids on the other three, but as we're working through the plants, I think we originally provide an estimate of around $60 million for the four developments that’s going to go higher. It’s going to be -- we don’t have a number, but just to give you an instance on -- or to comparison on Mountain View that the capital was about 30% higher than what we originally thought it was going to be, the construction cost, which I think is in line with what we hear from a lot of the developers out there and contractors. So I think the good news is that we do expect the spending to be higher but the performance within those hotels has continued to outperform even our original projections and where we thought occupancies and rates would be. So we still believe that on a total return basis, that we’re still going to get that 20% return that we originally expected.

Got it. So basically I think your initial outlook for EBITDA from these hotels would have been something like $12 million $13 million. So you think that will go up as well?

Yes that’s absolutely going to go up and as soon as we get a little bit further down the road with the other three locations we’ll certainly provide revised construction costs and returns. But certainly just assuming those additional CapEx costs and where we believe operations are now, we’re pretty comfortable saying that the returns are going to be in that similar range.

Okay. And just from a Innkeepers and Inland portfolio perspective, it looks like the outlook for AFFO kind of dropped a little bit from your previous guidance. Can you just explain that a little bit what’s causing that? Clearly it seems to be some issues with the Management transition and few additional things maybe due to weather, but just some additional color?

Yeah Nikhil on the EBITDA side and in our guidance you’ll see that on the EBITDA side it really hasn’t changed a whole lot. It’s going down just fractionally. I think that really just accounts for the transition issues that we’re working through in the first quarter. From the AFFO perspective what I alluded to earlier, I spoke to earlier was that there wasn’t a basically change in the accounting treatment and how the debt issuance cost were being amortized over how many years. And adjustment to almost all of the adjustment and about $0.9 million of that adjustment was related to the change in the accounting treatment related to that amortization. So doesn’t really affect any -- doesn’t affect any type of cash flow. Doesn’t affect any type of distributions, merely just an accounting change.

Okay, that helps and then when you look across supply growth across your markets Jeff, what's sort of the average supply growth across your markets? You mentioned that industry would be between 1% and 1.5% or so. So what about your portfolio if you could just help us understand that?

Nikhil I guess I need to do a little work to measure it as a percentage of existing supply. We don’t really -- we think about it more directly street corner like, which is we’ve only got a couple of assets that even have any new supply that’s opening in the markets. So if you want us to do that math we can. It’s obviously below 1% I would guess.

When we bought the Goathland Hotel, we knew that there were certainly going to be a good chunk of new supply coming in the market. We don’t believe it’s kind of in a different part of the -- what we call the Downtown area and not really mere our hotels. But certainly if you looked across the 35 hotels, that would be one where the macro view might be higher than the 1% or something like that. But all in all I agree with Jeff, that across our direct portfolio of competition it’s going to be lower than that number.

Got it and just on Houston sort of what’s your -- clearly your -- in 1Q your hotels outperformed the market. How do you see the rest of the year shaping up in Houston?

I think it’s going to get a little bit better, not much better. I think if you -- we’re at 1% growth in the first quarter. It may go up another 100 basis points or something like that. But we certainly believe it’s still going to remain soft. Obviously there has been a little bit of a rebound in oil and I don’t know, at least in oil prices in the last couple weeks, but that’s not going to have much of an impact on the space. If you look at within the four hotels that we own, within Chatham the two hotels that are directly at the Medical Center had RevPAR increases of 3% to 4% in the first quarter, which far outpaced the market. The two of West University were down slightly, which kind of got us to the 1% overall growth in the market. So I think our assets will still perform better than the overall Houston market unless we’re not going to insulated from just the overall softness.

Got it. Thank you very much. That’s all from me.

Thank you.

[Operator Instructions] Our next question will come from Anthony Powell with Barclays.

Hi good morning everyone and congrats Dennis.

Thank you Anthony. How are you?

Doing great, just on the acquisition pipeline and philosophy, how are you looking at for any potential deals with debt versus equity and the space has been down a bit on the equity side past few month. Are you still as willing to issue stock to fund deals or will you increase your debt portfolio?

No I mean look at this point, we definitely don’t feel like we need to be issuing stock to fund any growth. I think we’re pretty comfortable as Jeff alluded to with kind of adding $200 million to the portfolio that we can put that on our balance sheet whether that be through permanent long-term financing for some of our unencumbered assets as well as borrowings on our line of credit. But certainly we’re going to be very careful in our growth to make sure that we’re buying the right assets given where our equity price is.

Got it. Okay, and just generally on the environment for deals, are you seeing more trajectories out there or are people marketing more deals. Are you seeing more deals in your targeted markets? Can you just kind of give or view how the market is right now?

I think I could comment on that because there’s certainly less deals that are being brokered in 2015 compared to 2014. Obviously last year was a big year for large portfolio deals as you know, which two of those we bought with Northstar. We don’t see those size and that many deals coming down the pipe. But for us particularly on the Chatham side our selective sort of direct conversations that we’ve got and traditionally always have going on I think as I said should pay off Anthony. But we’re been very judicious as we always are, but always considering that stock price and the last time we issued stock it was at $30. As you indicated, we’re not above that stock price. We’re not at that stock price and our history at Chatham has been to try to obviously issue at or above the stock price of the prior offering. So I think we’re going to take a measured pace, but as Dennis indicated if we borrow another $200 million, our leverage level is still at a very comfortable leverage level such that we could get some great growth and some I’d say some fast growing assets that will continue to add to our NAV.

Got it, okay and just maybe one more on the RevPAR growth at the JV level, it seems as it kind of trail some of the change to get RevPAR from FTR, is that a function of maybe the markets they’re in or all that just made the transition or genuinely…

First of all in Innkeepers we would have been pretty much right on top of where Smith travel numbers were, but we had on purpose just a large number I think there were 9 or 10 hotels with very substantial renovations going on beyond just soft goods. We’ve been changing out some tubs in every bathroom and all of our Hyatt House hotels to shower stalls and kind of bringing them and fully up to speed based on newer Hyatt specs today. So you got that going on and Inland is purely just the huge amount of turnover and transition that occurred frankly taken all those hotels over at the same time. So you’ll probably have some of that below I’d say below market RevPAR performance trickling into the second quarter. I must say that our folks did a phenomenal job though in flowing or saving money to the bottom line, because the bottom line for the first quarter in Inland was almost completely on top of what our budget was for those assets even though our RevPAR was off. So good tight expense controls in those hotels are making that all together work well.

Okay. Thanks a lot. That's all for me.

Thank you, Anthony.

Currently we have no questions in the queue. I will now turn the conference over to our host for any additional comments. Actually right as we were speaking, we had one that came in Rob LaFleur, JMP Securities

Hi guys. Just quite got in under the wire there. Jeff, I appreciate the comments early in the call about guys trying to be heroes and calling the end of the cycle probably three or four years before it actually shows up, but another thing we're seeing obviously REIT shares have been weak over the past several REIT's weeks in general with hotels participating in that despite the fundamentals. So wondering you've been through a cycle or two in your day. I was wondering if you could talk about the whole phenomenon of what is it that makes hotel REITs different or should make them different than other real estate assets classes and should have tied into that what you think the cap rate sensitivity is for hotel REITs in a rising interest rate environment?

Well, I think you're obviously trying to get to -- yes, you're trying to get to the point that we should not and through prior cycles we don't 100% correlate to the rest of the REIT world as interest rates rise, stock prices fall, but I think that given where we are in the cycle here, we ought to be somewhat divergent, probably based on year-to-date performance, that's not showing up because everybody is reporting beats in the first quarter for the most part and in some cases very, very handsome beats in RevPAR growth and EBITDA growth yet the stock price is down going with the tide. So as we all know that's Wall Street, but I would suspect and experience shows from prior cycles that as this continues to move on, I think that the strong same-store sales growth should prevail in hopefully providing similar upside to these stock prices even if the big, which won't be that big obviously, but finally sometime interest rate rise, does come from the fed sometime this year, but that's more your game than mine. We just buy and run hotels around here and I think we're doing a pretty good job at that. Second part of your question was what?

It was just cap rate sensitivity for hotel assets in changing rate environments and whether it's a one to one correlation or not?

No, listen we go out there and it's funny. You don't see that kind of correlation. If it's a seven cap world today and our stock prices evolved and kind of generally clustered in that implied seven cap range, but all of a sudden we all trade at an eight cap, I am going to tell you that Joe Brown on the street corner isn’t lowering his price, so that we could buy it at an eight cap or better and be accretive. Obviously if stock prices in multiples change over time, then yes, there will be some kind of obviously in the real world and the private world, there will be a cap rate change, but the lag is pretty big between those two events occurring especially because most folks on the private side just say that Wall Street over reacts to everything anyway. So I am not going to over react an price my asset that way.

Okay. Thanks.

Appreciate it.

And at this time, we have no questions in the queue. I will turn the call over to our host for any additional comments.

Well, again I would just like to thank everybody and congratulate Dennis. We will have our new CFO, Jeremy with us during NAV REIT, is that right, Dennis?

Yes, that's correct.

So we will roll him out for everybody to see and hopefully ask a bunch of questions too and continue to move forward here on all fronts. So we look forward to seeing you shortly. Thank you.