Chatham Lodging Trust (NYSE:CLDT) Tops Profit Estimates Despite Revenue Miss in Q3 2025

Chatham Lodging Trust (NYSE:CLDT) reported its financial results for the third quarter of 2025, delivering a performance that notably surpassed analyst expectations for profitability, though it fell short on the top-line revenue figure. The market's initial reaction appeared cautiously positive, with the stock trading slightly higher in pre-market activity following the announcement.

Earnings and Revenue Versus Estimates

The lodging REIT’s quarterly results presented a mixed picture when measured against Wall Street forecasts. The key earnings metric for REITs, Adjusted Funds From Operations (AFFO) per share, came in at $0.32. This significantly exceeded the analyst estimate of $0.0102, indicating stronger-than-anticipated underlying profitability.

However, the company's total revenue told a different story. Chatham reported revenue of $78.41 million for the quarter, which missed the analyst consensus estimate of $80.85 million.

The divergence between the earnings beat and revenue miss can be largely attributed to effective cost management. The company highlighted that despite weaker revenue per available room (RevPAR), it was able to deliver AFFO per share toward the upper end of its guidance range by benefiting from labor efficiencies and lower-than-expected property taxes.

Market Reaction and Price Action

Following the earnings release, CLDT shares experienced a modest uptick in pre-market trading. This positive movement suggests that investors were more influenced by the substantial earnings beat and the company's ability to control costs than by the revenue shortfall. The stock's performance over recent weeks has been relatively stable, with minor declines of less than 2% over the past month, indicating a neutral to slightly negative sentiment leading into the earnings report that was then tempered by the results.

Operational and Financial Highlights

The third quarter was characterized by several strategic and operational developments:

• RevPAR and Occupancy: Portfolio RevPAR declined 2.5% to $151 compared to Q3 2024, driven by a 1.8% decrease in average daily rate (ADR) to $192 and a 60-basis point slip in occupancy to 79%.
• Profitability Metrics: Adjusted EBITDA declined to $26.2 million from $29.6 million in the prior year. The company produced AFFO of $16.4 million, down from $18 million in the 2024 third quarter.
• Balance Sheet Initiatives: A significant highlight was the execution of a new, $500 million unsecured credit facility, upsized from a prior $400 million facility. This strengthens the company’s liquidity and financial flexibility.
• Capital Return: The company is actively repurchasing shares under its $25 million plan, having bought back approximately 1% of outstanding shares at an average price of $6.85 since the plan's announcement.
• Dividend: The board declared a quarterly common dividend of $0.09 per share.

Forward Outlook and Analyst Comparisons

Looking ahead, Chatham provided guidance for the fourth quarter and full-year 2025. The company expects Q4 RevPAR to decline between 2.5% and 3.5% and forecasts AFFO per diluted share in the range of $0.14 to $0.17. For the full year, AFFO per share is projected between $0.96 and $0.99.

This outlook appears to set a challenging path for the next quarter when compared to existing analyst expectations. Prior to the report, analysts had estimated a revenue decline of 12.24% for Q4 2025. Chatham's guidance for a more moderate RevPAR decline of 2.5-3.5% may be viewed as a positive signal relative to those steeper expectations, though it still points to a continuation of the current softer demand environment.

For a detailed look at historical earnings, future estimates, and analyst projections for Chatham Lodging Trust, you can review the data here.

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