Chatham Lodging Trust (CLDT) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Failure to hedge effectively against interest rate changes may adversely affect usNew
2. 02Joint 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 partners99% rewritten
3. 06The COVID-19 pandemic had, and a future pandemic could have, adverse effects on our financial condition, results of operations, cash flows and performance33% rewritten
4. 07Our investment policies are subject to revision from time to time at our Board of Trustees' discretion, which could diminish shareholder returns below expectations
5. 08We depend on the efforts and expertise of our key executive officers whose continued service is not guaranteed
6. 09Our future growth depends on obtaining new financing and if we cannot secure financing in the future, our growth will be limited
7. 10We 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
8. 11The management of the hotels in our portfolio is currently concentrated in one hotel management company
9. 12Our franchisors could cause us to expend additional funds on upgraded operating standards, which may reduce cash available for distribution to shareholders
10. 13Our 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
11. 14Fluctuations in our financial performance, capital expenditure requirements and excess cash flow could adversely affect our ability to make distributions to our shareholders
12. 15Future 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 price22% rewritten
13. 16the terms of our debt may limit our ability to make distributions to our shareholdersNew
14. 17If 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
15. 18Interest expense on our debt may limit our cash available to fund our growth strategies and shareholder distributions
16. 19Failure to hedge effectively against interest rate changes may adversely affect our results of operations and our ability to make shareholder distributions75% rewritten
17. 20We 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
18. 21Our 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
19. 22There may be conflicts of interest between us and affiliates owned by our Chief Executive Officer
20. 23Hotel development is subject to timing, cost, and other risks45% rewritten
21. 24governmental restrictions on the nature or size of a projectNew
22. 25Inflation and price volatility in the global economy could negatively impact our business and results of operations

Risks related to artificial intelligence

1. 03Uninsured and underinsured losses could adversely affect our operating resultsNew
2. 04The outbreak of widespread contagious disease, such as COVID-19, could reduce travelNew

Risks Related to Our Organization and Structure

1. 05The ability of our Board of Trustees to change our major policies may not be in our shareholders’ interest98% rewritten
2. 48Our 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 interests60% rewritten
3. 49active and deliberate dishonesty by the trustee or officer that was established by a final judgment as being material to the cause of action adjudicatedNew
4. 50Provisions 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
5. 51Provisions 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
6. 52Failure to make required distributions would subject us to tax
7. 53Failure to maintain our qualification as a REIT would subject us to federal income tax and potentially to state and local taxes
8. 54Our 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
9. 55Our TRS structure increases our overall tax liability
10. 56Our 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
11. 57If 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
12. 58Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
13. 59If our hotel managers do not qualify as "eligible independent contractors," we would fail to qualify as a REIT
14. 60Our ownership limitations may restrict or prevent you from engaging in certain transfers of our common shares
15. 61The ability of our Board of Trustees to revoke our REIT qualification without shareholder approval may cause adverse consequences to our shareholders57% rewritten
16. 62If 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
17. 63Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments
18. 64We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares
19. 65We may be unable to generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future
20. 66the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimatesNew
21. 67Our revolving credit facility and term loan may limit our ability to pay dividends on common shares36% rewritten
22. 68The market price of our equity securities may vary substantially, which may limit your ability to liquidate your investment32% rewritten
23. 69announcements by us or our competitors of acquisitions, investments or strategic alliances or changes theretoNew
24. 70The number of shares available for future sale could adversely affect the market price of our common shares
25. 71Future offerings of debt or equity securities or incurrence of debt may adversely affect the market price of our common shares

Risks Related to the Lodging Industry

1. 26The 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
2. 27Our ability to make distributions to our shareholders may be affected by various operating risks common in the lodging industry
3. 28risk generally associated with the ownership of hotel properties and real estate, as we discuss in detail belowNew
4. 29Competition for acquisitions may reduce the number of properties we can acquire59% rewritten
5. 30Competition for guests may lower our hotels' revenues and profitability100% rewritten
6. 31The cyclical nature of the lodging industry may cause the return on our investments to be substantially less than we expect
7. 32The 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. 33The increasing use by consumers of Internet travel intermediaries and alternative lodging market places may adversely affect our profitability
9. 34The 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. 35We 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. 36We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive positionNew
12. 37Future terrorist attacks, rumors or threats of war, or changes in terror alert levels could adversely affect travel and hotel demand
13. 38We may assume liabilities in connection with the acquisition of hotel properties, including unknown liabilities, which, if significant, could adversely affect our business
14. 39Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our shareholders80% rewritten
15. 40Noncompliance with environmental laws and governmental regulations could adversely affect our operating results and our ability to make distributions to shareholders
16. 41that future laws, ordinances or regulations will not impose material environmental liability; orNew
17. 42Compliance with the ADA and other changes in governmental rules and regulations could substantially increase our cost of doing business
18. 43The outbreak of widespread contagious disease, such as COVID-19, could reduce travel and adversely affect hotel demand77% rewritten
19. 44Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our hotel properties
20. 45If 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
21. 46Increases in our property taxes would adversely affect our ability to make distributions to our shareholders
22. 47Our hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem