Chatham Lodging Trust (CLDT) risk factors, FY2024 10-K

Risks Related to the Lodging Industry

1. 01Competition for guests may lower our hotels' revenues and profitability
2. 02General Risks Related to the Real Estate Industry
3. 22The lodging industry has experienced significant declines in the past and failure of the lodging industry to exhibit improvement may adversely affect our ability to execute our business strategy
4. 23Our ability to make distributions to our shareholders may be affected by various operating risks common in the lodging industry
5. 24Competition for acquisitions may reduce the number of properties we can acquire
6. 25The cyclical nature of the lodging industry may cause the return on our investments to be substantially less than we expect
7. 26The ongoing need for capital expenditures at our hotel properties may adversely affect our business, financial condition and results of operations and limit our ability to make distributions to our shareholders
8. 27The increasing use by consumers of Internet travel intermediaries and alternative lodging market places may adversely affect our profitability
9. 28The need for business-related travel and, thus, demand for rooms in our hotels may be materially and adversely affected by the increased use of business-related technology
10. 29We and our hotel managers rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business
11. 30Future terrorist attacks or changes in terror alert levels could adversely affect travel and hotel demand
12. 31We may assume liabilities in connection with the acquisition of hotel properties, including unknown liabilities, which, if significant, could adversely affect our business
13. 32Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our shareholders
14. 33In the event of a substantial loss, insurance coverage may not be sufficient to cover the full current market value or
15. 34Noncompliance with environmental laws and governmental regulations could adversely affect our operating results and our ability to make distributions to shareholders
16. 35Compliance with the ADA and other changes in governmental rules and regulations could substantially increase our cost of doing business
17. 36The outbreak of widespread contagious disease, such as COVID-19, could reduce travel and adversely affect hotel demand
18. 37Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our hotel properties
19. 38If financing for hotel properties is not available or is not available on attractive terms, it will adversely impact the ability of third parties to buy our hotels. As a result, we may hold hotel properties for a longer period than we would otherwise desire and may sell hotels at a loss
20. 39Increases in our property taxes would adversely affect our ability to make distributions to our shareholders
21. 40Our hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem

Risks Related to Our Business

1. 03The COVID-19 pandemic has had, and may continue to have, or a future pandemic could have, adverse effects on our financial condition, results of operations, cash flows and performance
2. 04Our investment policies are subject to revision from time to time at our Board of Trustees' discretion, which could diminish shareholder returns below expectations
3. 05We depend on the efforts and expertise of our key executive officers whose continued service is not guaranteed
4. 06Our future growth depends on obtaining new financing and if we cannot secure financing in the future, our growth will be limited
5. 07We must rely on third party management companies to operate our hotels in order to qualify as a REIT under the Code and, as a result, we have less control than if we were operating the hotels directly
6. 08The management of the hotels in our portfolio is currently concentrated in one hotel management company
7. 09Our franchisors could cause us to expend additional funds on upgraded operating standards, which may reduce cash available for distribution to shareholders
8. 10Our franchisors may cancel or fail to renew our existing franchise licenses, which could adversely affect our operating results and our ability to make distributions to shareholders
9. 11Fluctuations in our financial performance, capital expenditure requirements and excess cash flow could adversely affect our ability to make distributions to our shareholders
10. 12Future debt service obligations could adversely affect our overall operating results or cash flow and may require us to liquidate our properties, which could adversely affect our ability to make distributions to our shareholders and our share price
11. 13If we are unable to repay our debt obligations in the future, we may be forced to refinance debt or dispose of or encumber our assets, which could adversely affect distributions to shareholders
12. 14Interest expense on our debt may limit our cash available to fund our growth strategies and shareholder distributions
13. 15Failure to hedge effectively against interest rate changes may adversely affect our results of operations and our ability to make shareholder distributions
14. 16Joint venture investments that we may make could be adversely affected by our lack of decision-making authority, our reliance on joint venture partners' financial condition and disputes between us and our joint-venture partners
15. 17We may from time to time make distributions to our shareholders in the form of our common shares, which could result in shareholders incurring tax liability without receiving sufficient cash to pay such tax
16. 18Our conflict of interest policy may not be successful in eliminating the influence of future conflicts of interest that may arise between us and our trustees, officers and employees
17. 19There may be conflicts of interest between us and affiliates owned by our Chief Executive Officer
18. 20Hotel development is subject to timing, cost, and other risks
19. 21Inflation and price volatility in the global economy could negatively impact our business and results of operations

Risks Related to Our Organization and Structure

1. 41Our rights and the rights of our shareholders to take action against our trustees and officers are limited, which could limit your recourse in the event of actions not in your best interests
2. 42Provisions of Maryland law may limit the ability of a third party to acquire control of our Company and may result in entrenchment of management and diminish the value of our common shares
3. 43Provisions of our declaration of trust may limit the ability of a third party to acquire control of our Company and may result in entrenchment of management and diminish the value of our common shares
4. 44Failure to make required distributions would subject us to tax
5. 45Failure to maintain our qualification as a REIT would subject us to federal income tax and potentially to state and local taxes
6. 46Our TRS Lessee structure subjects us to the risk of increased hotel operating expenses that could adversely affect our operating results and our ability to make distributions to our shareholders
7. 47Our TRS structure increases our overall tax liability
8. 48Our transactions with our TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm's-length terms
9. 49If our leases with our TRS Lessees are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT
10. 50Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
11. 51If our hotel managers do not qualify as "eligible independent contractors," we would fail to qualify as a REIT
12. 52Our ownership limitations may restrict or prevent you from engaging in certain transfers of our common shares
13. 53The ability of our Board of Trustees to revoke our REIT qualification without shareholder approval may cause adverse consequences to our shareholders
14. 54The ability of our Board of Trustees to change our major policies may not be in our shareholders’ interest
15. 55If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our investors could lose confidence in our reported financial information, which could harm our business and the value of our shares
16. 56Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments
17. 57We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares
18. 58We may be unable to generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future
19. 59As a result, no assurance can be given that we will be able to make distributions to our shareholders or that the level of
20. 60Our revolving credit facility and term loan may limit our ability to pay dividends on common shares
21. 61The market price of our equity securities may vary substantially, which may limit your ability to liquidate your investment
22. 62The number of shares available for future sale could adversely affect the market price of our common shares
23. 63Future offerings of debt or equity securities or incurrence of debt may adversely affect the market price of our common shares