Chatham Lodging Trust (CLDT) 2013 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Chatham Lodging Trust third-quarter earnings conference call. During today's presentation the lines will be listen-only mode.

Following the presentation the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Tuesday, November 5, 2013. I would now like to turn the call over to Jerry Daly at Daly Gray. Please, go ahead.

Thank you, [Maritza], and good morning everyone. And welcome to the Chatham Lodging Trust third-quarter 2013 results conference call.

Yesterday, after the close of the market, Chatham released results for the third quarter ended September 30, 2013, 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 a copy, please call my office at 703-435-6293 and we will be happy to email or fax you one or you may or review the release online at Chatham's website, www.chathamlodgingtrust.com. Today's conference call is being transmitted live via telephone and via webcast over Chatham's website and at streetevents.com.

A recording of the call will be available by telephone until midnight on Tuesday, November 12, 2013, by dialing 1-800-406-7325 with a reference number of 4646993. 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 the call in any form without the express 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 conference call may contain certain forward-looking statements about Chatham Lodging Trust, including statements regarding future operating results and the timing and composition of revenues among 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, and the hotel and real estate market 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 Commission. All information on this call is, as of November 5, 2013, unless otherwise noted and the Company undertakes no obligations to update any forward-looking statements to conform the statements 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. In 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 insights into Chatham's 2013 third-quarter results, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer and Dennis Craven, Executive Vice President and Chief Financial Officer. You may have heard some coughing in the background. Jeff has a bad cold and is hoarse, and will give brief remarks and then turn the lion's share of those remarks over to Dennis. So, Jeff, let's see how well you can croak this morning.

I appreciate it, Jerry. Thank you. Good morning everybody from Palm Beach. We appreciate you spending a few minutes with us this morning.

I'm going to be brief, as Jerry said, but I do want to say a couple of things. Of course, we're excited to tell our story. We feel it's a great story and remains a great investment opportunity for lots of reasons that we'll talk about in detail on this call.

We have acquired 24 high-quality hotels comprising over 3,200 rooms for approximately $625 million since the IPO. At Chatham, we focus on acquiring hotels that are well located within the top 25 MSAs or gateway coastal markets where the customer base is concentrated around high-growth energy, technology, or medical industries, industries we expect to see upsize performance.

When you look at our portfolio, I'm pleased to say approximately 83% of our hotel EBITDA is derived from top 25 markets up substantially from the IPO when it was 54%. We have increased our portfolio RevPAR from $71 since our IPO to now around $110 projected for 2013.

At these levels our RevPAR is well above the brand averages for extended-stay and select-service hotels, a testament to the type of portfolio we have accumulated. Our markets are showing strong growth characteristics with comparable RevPAR up 6.7% for the quarter and 6.5% year-to-date through September.

This portfolio is delivering consistently strong RevPAR growth, and we've been able to make some great acquisitions this year in markets that not only command high, absolute RevPAR but exhibit strong growth characteristics. Through September 30, the six hotels we have acquired since last December have seen RevPAR grow almost 12%, far exceeding industry performances.

I think I'm going to quit here and turn it over to Dennis to finish my prepared remarks. Dennis?

Thanks, Jeff. The only soft market for us, like many hotel owners, has been the DC area. The recently converted DC Residence Inn was without a brand for all but a few days of the third quarter.

So it's not necessarily a good performance barometer, but if you look at our Tysons Corner Residence Inn, RevPAR was down approximately 17% for the quarter, of which most of it was due entirely by declines in rate. As we've provided in our guidance we expect the trend will continue in the fourth quarter in the DC market due to a combination of, obviously, the shutdown and the residual impacts from sequestration.

We do have a unique understanding here Chatham of owning extended-stay, select-service hotels through our relationship with Island Hospitality, which we feel is one of, if not the, best operators in the extended-stay in select-service states. The relationship allows us to respond quickly to market opportunities or operational challenges; for operational opportunities as well.

A perfect example is our acquisition of the Houston Courtyard Hotel in early February of this year. Since acquiring the hotel and transitioning management to Island, on the date of acquisition, we've refocused the revenue management strategy and restructured the operating SOPs with incredible success.

In 2013, we've raised the RevPAR index over 400 basis points and increased our operating margins at the hotel by almost 500 basis points. When we started an acquisition with the support of Island, we expect that we would be able to get some additional juice out of both the operations, whether it's revenue related, operations related, or some combination of both. It's a unique benefit that accrues to the shareholders of Chatham.

Seizing on opportunities like this allows us to continue to increase our already leading industry margins. We've grown our hotel EBITDA margins from 31% in 2010 to approximately 39% in 2013.

In the third quarter of 2013 we were able to drive margins 130 basis points higher to 40.1%. We expect most of the RevPAR growth in 2014 will be driven by (inaudible), and as we've spoken to many times improving our operating model is very efficient at driving incremental revenue to the bottom line.

Excluding the hotels acquired in 2013, which Jeff alluded to, which are strong performers from a growth perspective this year, we've been able to generate a flow-through of approximately 1.6 times since 2010. Very strong results for those hotels that we've owned for more than a year.

Improving margins, acquisitions and through an almost 25% reduction in interest costs as fuel and almost 71% rise in adjusted FFO for the quarter to $10.8 million with adjusted FFO per share coming in a $0.01 over estimates at $0.48 per share. We've made tremendous advances driving FFO per share in 2012 and 2013, and when you take current consistence estimates for FFO per share in 2014 at $1.72 per share, it would imply an approximately 24% cumulative annual growth rate in FFO per share since 2010, which is very attractive and ranks Chatham as the third best performing lodging REIT over that time behind a couple of highly leveraged turnaround full-service REITs.

Importantly, we've been able to drive this growth while deleveraging our balance sheet to the lowest leverage ratio since 2010, positioning ourselves with a significant amount of capacity to make additional acquisitions. We have a very active pipeline for acquisitions, which allows us to make the right deals for our shareholders.

And we've been able to find targets that have strong RevPAR growth and internal growth prospect at least as good, if not better, than the internal growth rate of our current portfolio. We have one of the highest quality select-service investment portfolios in the REIT space, and we will continue to find assets that meet our very strict acquisition criteria, accrete our current earnings stream, increase cash flow, and ultimately dividends.

During the third quarter, we've completed a couple of acquisitions and then right after the end of third quarter we completed a third. We acquired the 111 room Hampton Inn and Suites in Exeter, New Hampshire in August for $15 million; we acquired in September at great cost per [key] a 180 room Hilton Garden Inn at the Denver Tech Center for $28 million; and then we acquired the beautiful 231 room Residence Inn in the thriving market of downtown Bellevue, Washington, for $72 million on October 31.

We continue to source great deals through our network of relationships and these deals, again, continue to meet our strict underwriting criteria. They have strong growth characteristics, lots of corporate demands, perfect examples of the assets we want to build into our portfolio.

We've got a great partner in Island Hospitality that helps us make deals where we extract or create significant value for our shareholders. It's a great advantage to be able to underwrite [due] diligence acquisitions across the country through this relationship.

When you look at the last two transactions we've done in both Denver and in Seattle in the Bellevue market, we have a lot of market knowledge in those markets, given the fact that we own two hotels in the Denver market and four hotels in the Seattle market through our Innkeepers joint venture and Island Hospitality operates all six of those assets.

With respect to the Innkeeper's joint venture, RevPAR EBITDA continued to show healthy gains with RevPAR up 6.6% for the quarter and 6.4% year-to-date. Hotel EBITDA has grown approximately 8% year-over-year and the key market for us in the joint venture is Silicon Valley, and Silicon Valley continues to produce above industry results with RevPAR up 10% for the quarter and 11% year-to-date. Very consistent, strong results.

As most of you know during the quarter the Innkeeper's joint venture completed a significant refinancing of its debt. Net proceeds were distributed to the partners. To date, we have received approximately 90% of our regional investment.

In 2011 we used our balance sheet to opportunistically acquire Innkeeper's portfolio at a great price and value, and as evidenced by the great returns we've seen to date. With industry experts predicting healthy RevPAR and earnings growth in the coming years, we are absolutely thrilled with the potential value of our promoted interests which we believe can increase our share of cash flow from the current 10.3% to more than 20% if certain returns are achieved.

Importantly, we wouldn't have been able to take advantage of the Innkeeper's transaction had we not raised equity in early 2011 and maintained capacity to take down those deals. To date in 2013, we've raised over $190 million in three follow-on offerings using money raised to acquire six hotels for approximately $220 million, reduced our leverage ratio, and importantly created capacity to fund additional acquisitions. Just nine months ago, our leverage ratio stood at approximately 51% and we have reduced that to 26% at the end of the quarter.

We take seriously our corporate responsibility to our shareholders, Which is why our long-term goal is to maintain a conservative debt structure and provide meaningful reliable dividends. Having said that, as we did in 2011, we are very comfortable increasing our leverage at the proper time to make deals that we believe will pay off handsomely for our shareholders. We are disciplined capital allocators.

If you look back at our time at Innkeepers and now at Chatham, we know when to say when. We'll be patient and grow as equity and debt markets allow and where proceeds can be used to purchase value enhancing deals. We have executed very well on our strategic initiatives to date and the result is an investment portfolio that produces high FFO per share, high operating margins, attractive growth prospects, and allows us to pay one of the best dividends in the lodging REIT space.

When you look at the quarter, we reported net income of $2.5 million or $0.11 per diluted share compared to net income of $1.5 million or $0.10 per share in the 2012 third quarter. Third-quarter RevPAR was up 3.9% to $119 for the 21 hotels we own for the entire quarter compared to our prior earnings guidance of plus 4% to 5%.

The conversion of the DC Residence Inn was expected to occur by September 1 but, ultimately, didn't officially convert until the last couple of days of September due to, primarily, additional requirements for Marriott that we had to complete prior to opening. September RevPAR at the DC hotel was down about 45% and for the quarter at the hotel RevPAR was down approximately 57%. This obviously provides a nice, inherent implied (inaudible) for us moving into 2014.

Excluding the DC hotel, RevPAR was up a strong 6.7% on a 6.1% increase in rate to $144 and a 0.5% increase in occupancy to a little over 85%. RevPAR performance far outpaced industry performance at 5.5% for the quarter at our comparable hotels.

Our hotels have the highest occupancy rate of all lodging REITs, attributable to a couple of factors. First, we've acquired hotels in great locations in markets that command high rates and occupancy due to its customer base; and secondly, the upscale extended-stay segment is becoming the segment of choice for many travelers and, as evidenced by the fact that the spread between occupancy at extended-stay hotels in the US on average has widened over the past several years.

Adjusted EBITDA for the Company rose 30.2% to $15.6 million for the quarter, with the jump attributable to the acquisitions that we made in late 2012 and 2013, improving margins of 130 basis points for the quarter, as well as the outstanding performance within our joint venture. In the quarter, the joint venture contributed approximately $3 million of adjusted EBITDA to Chatham.

Adjusted FFO jumped 71% to $10.8 million up $4.5 million from the 2012 third quarter. On a per share basis, FFO per share rose 4% to $0.48 compared to $0.46 in 2012.

In the quarter, adjusted FFO per share was adversely impacted approximately $0.01 due to the month-long delay in the conversion of the DC Residence Inn but was aided by the acquisitions of the Exeter and Denver hotels to the tune of about $0.01 as well. In addition to our strong operating performance, the jump in FFO was aided by approximately $0.8 million or 25% decrease in interest expense resulting from the many financing efforts we have accomplished as well as the deleveraging we've accomplished in 2013.

At September 30, the average interest rate on our debt is a very low 4.5%, and we've locked in these rates for a substantial amount of time given the fact that the weighted average and maturity of our debt is over seven years out from now. Net debt was approximately $163 million at the end of the quarter comprised of debt of $224 million, offset by approximately $60 million of cash.

We close our September common share follow-on offering on September 30, and we used the proceeds of the offering to pay down the line of credit on October 1. Typically, we normally like to operate with about $5 million to $6 million of cash on hand at any point in time given the size of our portfolio.

At September 30, our leverage ratio calculated as net debt divided by our hotel investments at cost was down to a multiyear low of 26%. Subsequent to the quarter end we acquired the Bellevue Residence Inn and our leverage ratio currently stands at 33%.

As Jeff mentioned, we're still comfortable operating at leverage levels higher than our long-term goals of 35%, so we do expect that we can make another $150 million to $250 million of acquisitions and still be comfortable with our balance sheet. Our current ratios are very healthy with the debt service coverage ratio of approximately 4 times now, net debt-to-hotel EBITDA of approximately 4 times for Chatham on a standalone basis, and 4.9 times including our share of the joint venture. So we've certainly moved across the table in the right direction when you compare us to other lodging companies.

We will continue to use property specific debt to fund a portion of our growth and we do expect to close on an approximate $48 million loan on the Bellevue Residence Inn sometime in November at a rate of approximately 4.97%. REITs do rein in at historically low levels and we will continue to take advantage of those markets to lock in solid long-term returns for our shareholders and provide increasing cash flows to reinvest into additional assets or our existing assets to pay down debt, or return to shareholders by incremental dividends.

We have no further renovations for the remainder of 2013 and in 2014 we only have two hotels scheduled -- the Residence Inn in White Plains, New York, and the Hilton Garden Inn in Denver, Colorado. Our portfolio is in excellent physical condition with approximately 90% of our hotels having completed significant upgrades or having been built in 2010 or later. Again, with minimal renovation obligations on the horizon we'll be able to generate significant cash flow.

The Innkeepers joint venture recently refinanced its existing debt with a new $950 million non-recourse loan. It's collateralized by the remaining 51 hotels in the Innkeepers' portfolio. It's a five-year interest-only loan comprised of a two-year loan with three one-year extensions.

It carries an interest rate of one month LIBOR plus 480 basis points. It refinanced two previous loans that carried an average interest rate of approximately 6.74%.

In connection with the closing, the joint venture pre-funded approximately $52 million of capital expenditures related to future renovations at the hotels and $5 million of other customary lender-required reserves. Similar to Chatham's current position, the Innkeepers joint venture should see FFO and distributable cash flow increase in 2014 and beyond. And with a solidified capital structure in place with significant pre-funded CapEx reserves and strong growth prospects on the horizon, our returns should continue to increase.

We've increased our projected full-year FFO guidance $0.04 to a range of $1.48 to $1.49 and our fourth-quarter guidance $0.03 to a range of $0.28 to $0.29. Our fourth-quarter comparable hotel RevPAR is projected to grow 5% for 21 of our 24 hotels.

The 21 hotels exclude the DC hotels, which is comprised of the Tysons Residence Inn and the DC Residence Inn due to the impacts from the government shutdown and sequestration as well as the Holtsville Residence Inn, which was up 56% in the 2012 fourth-quarter due to significant business related to Hurricane Sandy. The Holtsville Hotel alone is pulling down our fourth-quarter RevPAR growth by approximately 150 basis points.

We're projecting margin growth of approximately 50 to 100 basis points from approximately 34.5% to a range of 35% to 35.5% for the quarter. And, again, after the Bellevue acquisition that we completed on Halloween, we have approximately $59 million outstanding on our line of credit and approximately $5 million to $6 million of cash. Our projections do not include any other changes to our capital structure offerings, and from a dispositions perspective, we don't expect any in 2013 for either Chatham or the joint venture.

Before we turn it over to questions, we do, obviously, we've provided a lot of information today regarding our third-quarter results and our progress against our strategic plan, and that's what we intend to focus on during the upcoming Q&A session. That said, we want to briefly knowledge that as many of you know, on November 4 we received an unsolicited conditional proposal from Blue Mountain Capital Management to acquire the Company for $21.50 per share, with proposal subject to due diligence, financing, negotiation, a satisfactory agreement, and other conditions. Our Board of Trustees will review the proposal in due course in consultation with their financial and legal advisors, and we want to assure you that Chatham's Board is committed to acting in the best interest of the Company and its shareholders.

With that, I'd like to ask that you please limit your questions to our financial and operational results for the third quarter as we do not intend to comment any further about Blue Mountain's unsolicited conditional proposal until the appropriate time. I thank you all in advance for your cooperation and with that, operator, we've concluded our remarks on the quarter and we'll turn it over to you for questions.

Thank you. (Operator Instructions) Patrick Scholes, SunTrust.

Just one quick question for you about sort of your plans for the Innkeepers portfolio. And would you ever consider monetizing that in the near term given the significant promote value as opposed to issuing equity, raising funds from equity for a new acquisition?

Do you want to take that, Dennis?

Certainly we believe the value, there's tremendous value to the promote. I think we expect that the value in that promote will increase in 2014 and beyond. And being a highly leveraged vehicle, that promote further accrues to us in that situation.

It's obviously, and we've always talked about the fact that we, obviously, have owned that portfolio before, we've operated that portfolio through Island and through Innkeepers Hospitality, since most of its inception, those hotels inceptions, so we like the portfolio and we've always said that, ideally, in the right situation we would be the appropriate buyers for that portfolio down the road. But at this point, listen, we think the industry is set up for strong growth and that leverage vehicle will provide outsize returns even moving forward.

Okay. Appreciate the color.

And then just remind me, again, in your press release here you talked about your pipeline for targeted markets. Remind me, again, what you're thinking about as far as targeted markets for any hotels.

We spoke to it briefly, but it's really going to be similar to what we've done currently this year. It's going to be primarily gateway, coastal-type markets; East Coast and West Coast. It's going to be market, such as Houston, that are tied to a pretty thriving energy sector.

So it's going to be hotels in those areas. Again we have a lot of focus on energy, medical, technology. I think as we continue to grow those are the characteristics we like to see.

Great. That's it for me, thank you.

Nikhil Bhalla, FBR.

Just a question on the repositioning of the other renovations at the Residence Inn in Washington, DC. Dennis, you may have already talked about this, and sorry if I missed this.

Could you give us some sense of what the full-year impact of the Residence Inn renovation was both in terms of RevPAR and EBITDA, just so we kind of know what to expect. How much of that you can recover next year? Thank you.

Yes, for a full-year basis the impact on the portfolio is going to be close to 150. Obviously, if we grow and buy some more hotels it's a little bit different. It's going to be anywhere from 150 to 200 basis points to the full Company is what we've seen so far.

On RevPAR?

On RevPAR. And if you actually look at it from an EBITDA perspective, you're looking at well over $1 million of incremental EBITDA from the hotel.

Okay. So despite DC being at least expectations for the DC market being still sort of weak next year, if nothing else you should be able to make this back just the fact that you don't have any renovations, correct?

That's exactly right, Nikhil, and even in the fourth quarter, October, it just flipped into the Residence Inn program. October wasn't a great month.

You obviously have the shutdown, as well, but we are starting to see some traction from the Marriott system which we expected starting in November, and it's gotten better and better in the last few weeks. So we do expect that at minimum we'll be able to recoup what we lost this year next year, so it should be a nice addition to our overall performance for next year.

Got it. And just one follow-up question on acquisitions, so this year year-to-date you've done about $220 million of acquisitions. You talked about having a strong pipeline, should we think that's about the same you have in your pipeline in terms of value of acquisitions, maybe a little bit more little bit less? How should we think about that?

Well, I think our pipeline is typically anywhere from $200 million to $300 million-plus at any point in time. We move stuff in and out of that fairly quickly, but that's by design because we turn down a lot that we ultimately don't like.

But I think, listen, our goal is to continue to grow this Company. We have our sights set on a few nice assets. I think we'd like to be able to, by the time we talk in February, have a few more hotels in the portfolio by that time.

Got it. Thanks, Dennis.

Bob LaFleur, Cantor Fitzgerald.

You guys made no bones about the fact that you think TheStreet doesn't get it right when it comes to valuing your stock. I was wondering if you might go through sort of conceptually or intellectually how you think is the proper way to approach valuation for your Company, not specific targets or anything like that, but just what you think the proper approach is and what you think TheStreet isn't getting.

Obviously, our Company and our profile is certainly getting a little more attention in the last 24 hours. I think we've, obviously, been a small [cash] company in the past and, therefore, haven't gotten a lot of attention.

We've maintained our focus on proving out our model and there's a few things to do that. That's, obviously, you look at what our FFO per share is, you look at what our EBITDA is, and especially when you look at where we expect it to be, based on the acquisitions we've made, based on the acquisitions we intend to make, I think, obviously, there's only a couple of inputs into the story and that's what type of multiples should you be valued at on your EBITDA or NOI.

And then you, obviously, have the benefits that accrue to Chatham as a result of the joint venture. It's not rocket science, but I think it's merely the fact that we have been, from 2011 our story was a little bit cloudy. And a lot of people weren't sure what the JV meant to Chatham.

Those things are starting to become more clear. We're in position now with over 90% of our original capital returned to us that that promote interest within the joint venture is closer. It's not a dim light at the end of the tunnel. It's a little more brighter.

And that, obviously, brings a little more notoriety to the Chatham story. Without having 90% of the capital returned, if 10% of the capital had been returned, it's a very dim light at the end of the tunnel. So there aren't a whole lot of inputs through our valuation, but I think it's mainly making sure people understand Chatham, understand our earnings and our earnings stream and also, obviously, the value of our off-balance-sheet investments.

Let me just add that we are here to build long-term shareholder value just like we did in the Innkeepers days. The overemphasis, however, on the value of this promote is probably not appropriate either.

I've seen your report, I think you've done a great job in addressing the components of value, overall. But if you fundamentally believe that there is room in this cycle like we do, then the JV is a great off-balance-sheet investment for Chatham and shareholders to continue to accrue further value as we reap the benefits from the cash flow and the dividends that that's going to bring to this Company.

So all of this immediate monetization conversation is clearly short term hedge fund thinking that we are really, generally, forever have not ascribed ourselves to. We think there's lots of upside left and we intend to reap the benefits of that upside.

I think when you look at kind of where our remaining original adjustment is at 10% of $37 million, obviously that's $3.7 million that hasn't been returned to us. When you look at the FFO that gets contributed and the distributable cash flow from the joint venture, it's over $4 million in 2013 alone. So when you move that forward and you project some nice growth, the actual cash-on-cash returns are very handsome. And that benefits, obviously, our shareholder base.

At this point is that where the make whole is going to come from, the distribution of FFO? There's no more transactions anticipated, are there?

Well, as we spoke to we don't expect to have any dispositions of real estate within the joint venture. Every asset is encumbered with new debt so we believe it the balance sheet in place, and we're set to be able to reap the benefits of annual cash flow that gets spit off of that thing.

Okay. Thanks, guys.

Thank you.

Charles Fitzgerald, V3 Capital Management.

I just had a brief comment. To the best of our knowledge, V3 is currently Chatham's largest shareholder. We have been shareholders in the Company since our fund's inception in 2011 and view ourselves as patient long-term shareholders.

We believe that you and your team have assembled an outstanding portfolio and have managed it very well, particularly Innkeepers JV where you created substantial value that continues to be unrecognized in the share price and underestimated by most on the [sale side]. For a variety of reasons, the public markets have not been willing to pay fair value for your assets and, quite frankly, we don't think Blue Mountain's current bid reflects fair value either.

The persistent discount in your stock has caused shareholders to suffer significant dilution in value from the recent equity offerings. We believe that running a full sales process now and maximizing value blockbuster interest is high is the best course for the Company and shareholders.

We just want to make sure our view is known as you discuss the matter with the Board in your advisors. Thank you for the time.

Thank you, Charles, and we intend to do just that. We appreciate your support.

(Operator Instructions) Anthony Powell, Barclays.

I just wanted to ask about the acquisition market. Are you seeing more competition for urban flex service assets within the lodging industry and you expect more competition going forward? Thank you.

Yes. I think for us we haven't seen any incremental change to the competition for assets. Obviously, this cycle has been a little bit different in terms of the outsiders, if you will, in the last cycle that just wanted to jump into the lodging space.

We typically see fairly similar people on these deals, but it's the one things that we've always prided ourselves is on our ability to not participate in marketed-type transactions. It's the ability to go out there and find deals, or find assets, that are great assets for Chatham.

Most of our deals have been off-market-type transactions where we've been able to gain and buy those assets through our relationships with those guys. So, typically, in a marketed-type deal you're going to see the similar players.

I wouldn't say there's a heck of a lot more people jumping into the space. A lot of people got burned at (inaudible) six years ago from making some crazy investments into this space. So I think, for us, we have to stick to what we do well, which is find deals outside of the standard marketing process where you eliminate that bid up that comes from some marketed-type deals.

That's it for me. Thank you.

Thank you. At this time, I'm not showing any further questions. Please continue.

We appreciate everybody's participation today on the call and we will [as we said] continue to move forward, create long-term value here, and we are excited with Chatham's future. So thank you all and we'll talk to you soon.

Thank you, ladies gentlemen that does conclude our conference call for today. Thank for your participation. You may now disconnect.