Entering text into the input field will update the search result below

Chatham Lodging Trust REIT: A Bargain At 10% Yield And Below Tangible Book Value

Mar. 06, 2020 1:12 PM ETChatham Lodging Trust (CLDT)18 Comments
Mark Hake profile picture
Mark Hake


  • Chatham Lodging Trust is a $622 million market cap REIT with a 10% yield and selling for 82% of its tangible book value.
  • The company invests in 135 U.S. upscale extended stay hotels, mostly Residence Inn, Homewood Suites, Courtyard, Hampton Inn, Hyatt Place, and Hilton Garden Inn.
  • This is one of the few REITs that actually covers its dividends with cash flow from operations. So the dividend is well covered.
  • I estimate the stock is worth at least its tangible book value or 22.5% above today's price. CLDT's average historical P/TBVPS is 1.14x or 39% above today's price.
  • This idea was discussed in more depth with members of my private investing community, Total Yield Value Guide. Get started today »

Chatham Lodging Trust Is A Bargain REIT

Chatham Lodging Trust (NYSE:CLDT) is one of the few REITs that can generate enough cash flow from operations to cover its high dividend yield. CLDT's stock yields 9.95% and is now selling for 82% of its tangible book value per share ("TBVPS"). It is worth at least its TBVPS, or 22.5% above its price today.

CLDT, which own 40 upscale hotels and has two joint ventures involving 95 other upscale extended stay residence hotels, was formed by Jeffrey H. Fisher. Mr. Fisher has an extensive background in managing hotel REITs, having taken a REIT company public in the '90s (Innkeepers USA Trust) and sold it in 2007. He also now owns a controlling interest in a managing/operating company to run the wholly owned hotels. Most of these are Residence Inn (16 hotels), Homewood Suites (9 hotels), Courtyard (5), Hilton Garden Inn (3), Hyatt Place (2), SpringHill Suites (1) and Embassy Suites (1). Most of the company's hotels are located in 25 top US metro markets.

Cash Flow Covers this High Yield Dividend Stock

I am primarily interested in CLDT's stock since it covers its dividend with cash flow from operations. The stock's dividend yield is very high, almost 10%. Therefore, the stock seems depressed beyond measure.

For example, here is the recent history of Cash Flow from Operations (CFFO) compared to the dividend cost, in million dollars:

Source: Mark R. Hake, CFA, using Seeking Alpha data

From this, you can see that the dividends, in blue, are lower than CFFO, in red. However, recently the CFFO, as of Q4 2019, just barely covered the dividend. The estimate for Q1 CFFO is 85% of the prior quarter and is below the cost of the dividend. However, I believe that the dividend will be maintained for the time being unless CFFO begins to significantly drop from here.

This article was written by

Mark Hake profile picture
Mark R. Hake, CFA, has been a consultant to various companies, including hedge funds, software, and technology companies. Prior to that, Mr. Hake was President of Hake Investment Research and Hake Capital Management. He has been featured in Barron’s, CNBC, Bloomberg, and other news organizations as a contrarian investor and deep value specialist.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (14)

With all of the unknowns with the coronavirus feel all the travel related and leisure stocks are in for some real bumpy times ahead.
Conventions canceling people are traveling only if they must who needs a hotel room.
This is going to effect all of us in time it will play out but not in Q! or Q2.
jgrever621 profile picture
Hotels are in general offering high returns today, mostly based on fear of the coronavirus effects.
With far to go before we have any clarity on the virus effects on the US economy, am holding off adding to ANY positions, but hotels are high on my watch list.

Also like HT and PK here.

My current buy stock today however is PRU, for both safety and dividend returns.
Mark Hake profile picture
Here is my latest and recent article on PRU: seekingalpha.com/...
craftbrewinfo profile picture
I saw that article @Mark Hake CFA .. we went from everything being over priced, to everything being a screaming buy in a matter of a few weeks... I too a watching PRU, but thank you for this timely article. I used to own CLDT and it wasn't here or there, so I sold it merely to put towards another lucrative position. Will dip in again as this is a good buy right now
CLDT is my longest holding. I trade lots in and out frequently to lower my cost basis and harvest profits on higher levels. I’m satisfied with the .11 monthly dividend as long as it’s stable and at recent price levels the .33 quarterly is a bargain at the 13$ price level. I’m a buyer, a holder and a trader...all at different times.
Rudester profile picture
How about the sudden departure of their chief investment officer?
Hotel REITs are all stinkers. The Capex is too high. I have APLE and it's been a dud. Avoid.
lubo_b profile picture
Cons: capital intensive, strong competition, AirBnB, fundamentals
Pros: the stock will go up after the cure/vaccine is announced
Hold od speculative buy? 🤔
Good article - thanks for the recommendation.
AvgWeirdo profile picture
I figured this for an 8% holding, which equals a $16.50 share price. 10% was beyond my fondest dreams when I bought a lot at $13.20! Anyway, I'm using covered calls to profit on my most expensive shares.
Somewhat concerned, but lucky for all of us, we have free trades. Gone are the days of "do I add 100+ shares, or not?" I'm trickling in to my 2k shares position; added 22 shares yesterday; and will add another 11 or 22 shares today... and then see what it looks like next week... basically money that I could have spent frivolously, but bought distressed shares instead; so if things get worse, it really wasn't a loss; and when things get better; well, chance to spend frivolously again? ha ha, just kidding...
cfrd profile picture
I agree. Very good, experienced management. Also, PK has a very similar story tho has a unique best-in-class portfolio. Trading at 1/3 private ownership values if using a 5-6% cap.
Took small losses on CLDT and PK a week or so ago and took positions in HST, RLJ, and INN instead, though I waited several days to jump back in. Now ahead on HST and down a bit on RLJ and INN. These names all have better balance sheets than CLDT.
Don’t believe all this private ownership nonsense. These hotels are literally empty and will be for months. All hotels will cut their dividends and will take a while for them to climb back up to where they are today.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.