Thursday, April 15, 2010

“Chatham Lodging Raises $150 Million in Initial Offer (Update1)” plus 1 more

“Chatham Lodging Raises $150 Million in Initial Offer (Update1)” plus 1 more

Chatham Lodging Raises $150 Million in Initial Offer (Update1)

Posted: 15 Apr 2010 04:39 PM PDT

By Michael Tsang and Inyoung Hwang

April 15 (Bloomberg) -- Chatham Lodging Trust, the hotel property trust operated by real-estate investor Jeffrey Fisher, raised $150 million in its initial public offering today.

Chatham Lodging sold 7.5 million shares at $20 each, according to Bloomberg data. The Palm Beach, Florida-based real- estate investment trust has agreements to buy six Homewood Suites by Hilton extended-stay hotels from Billerica, Massachusetts, to Brentwood, Tennessee, and is in negotiations to acquire four more properties, according to its filing with the Securities and Exchange Commission.

Investors earned 316 percent in Innkeepers USA Trust, Fisher's last hotel REIT, from the company's 1994 IPO through its sale to Apollo Investment Corp. in June 2007, just before property prices started to tumble and wiped out 78 percent of the new owner's value. With the U.S. economy improving, the Bloomberg REIT Hotels Index has climbed 30 percent this year.

Chatham is the first initial offering of a U.S. hotel REIT since Fairfield, New Jersey-based Chesapeake Lodging Trust raised 40 percent less than it originally sought on Jan. 21. IPOs stumbled at the start of 2010 as the first 14 deals were reduced by 22 percent on average, Bloomberg data show.

Barclays Plc of London and Arlington, Virginia-based FBR Capital Markets Corp. were hired to arrange the sale.

2010 Rebound

All 10 IPOs except one in the past month have priced within or above their forecast range as the Standard & Poor's 500 Index rebounded 15 percent from its 2010 low in February.

Chatham entered into a agreement to buy the six extended- stay hotels from billionaire entrepreneur Robert L. Johnson, the founder of Black Entertainment Television, for $73.5 million. The company plans to qualify as a REIT, making it exempt from corporate taxes if it distributes 90 percent of income as dividends.

At $20 a share, Chatham will have a market capitalization of $162 million, or 1.1 times shareholder equity of $147.5 million, according to the SEC filing. The median price-to-book ratio for 23 publicly traded hotel REITs is 1.06, data compiled by Bloomberg show.

The previous hotel REIT run by Fisher, 54, rewarded investors with bigger gains than U.S. stocks last decade.

Innkeepers USA returned 215 percent from the start of 2000 until it was sold to Apollo Investment, the fund advised by Leon Black's New York-based private equity firm, four months after prices for hotel REITs peaked in February 2007. The S&P 500 rose 16 percent, including dividends.

Future Obligations

The value of Apollo Investment's common and preferred equity stakes is now worth about 22 cents per dollar originally spent, its quarterly SEC filing as of Dec. 31 showed. Palm Beach-based Innkeepers USA said this week that it had defaulted on some debt and may miss future obligations.

The Bloomberg REIT Hotels Index, which fell 88 percent from February 2007 through March 2009, has erased almost half its loss. The measure rose more than three times as much as the S&P 500's 8.7 percent gain this year, as the economy rebounded from the worst recession in seven decades.

Commercial real-estate prices have recovered 6.3 percent after dropping to a seven-year low in October, according to the Moody's/REAL Commercial Property Price Index. Property values plunged from a 2007 record as the collapse of U.S. subprime mortgages froze credit markets.

To contact the reporter on this story: Michael Tsang in New York at mtsang1@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net.

Last Updated: April 15, 2010 19:16 EDT

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Chatham Lodging Trust Prices $150M IPO

Posted: 15 Apr 2010 06:43 PM PDT

PALM BEACH, Fla., April 15 -- Chatham Lodging Trust today announced it has priced its initial public offering of 7,500,000 common shares of beneficial interest, $0.01 par value per share, at $20.00 per share, for total gross proceeds of $150 million, prior to underwriting discounts and offering expenses.

The offering is expected to close on April 21, 2010. The underwriters have a 30-day option to purchase up to an additional 1,125,000 shares to cover overallotments, if any. All of the shares are being offered by the Company.

The Company will contribute the net proceeds of the offering to its operating partnership, which will use $73.5 million of the net proceeds to purchase six Homewood Suites by Hilton® hotels. The Company's operating partnership will use the remaining net proceeds to invest in hotel properties in accordance with the Company's investment strategy and for general business purposes.

The common shares of the Company are scheduled to begin trading on April 16, 2010 on the New York Stock Exchange under the symbol "CLDT."

A registration statement relating to the offering of the Company's common shares discussed above was declared effective by the Securities and Exchange Commission on April 15, 2010. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Barclays Capital and FBR Capital Markets are acting as the joint book-running managers for the offering. Morgan Keegan & Company, Inc. and Stifel Nicolaus are acting as senior co-managers and Credit Agricole CIB and JMP Securities are acting as co-managers. A copy of the prospectus can be obtained by contacting Barclays Capital, c/o Broadridge, Integrated distribution Services, 1155 Long Island Ave., Edgewood, N.Y. 11717, telephone (888) 603-5847 or by e-mail at barclaysprospectus@broadridge.com, or FBR Capital Markets, Prospectus Department, 1001 18th Street, North, Arlington, Va. 22209 or by e-mail at prospectuses@fbr.com. The prospectus may also be obtained by contacting any of the other underwriters listed above.


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