What the changes say
- Chatham Lodging Trust added risks concerning artificial intelligence adoption, federal government shutdowns affecting travel, and debt covenants constraining distributions.
What changed since the prior 10-K
New
- NewRisks Related to Our Business
Failure to hedge effectively against interest rate changes may adversely affect us
Failure to hedge effectively against interest rate changes may adversely affect our results.
- NewRisks related to artificial intelligence
Uninsured and underinsured losses could adversely affect our operating results
Natural disasters, climate change physical effects, and noncompliance with environmental and ADA regulations could harm our hotel properties.
- NewRisks related to artificial intelligence
The outbreak of widespread contagious disease, such as COVID-19, could reduce travel
Federal government shutdowns, debt limit failures, and property tax increases could reduce travel and hurt our distributions.
- NewRisks Related to Our Business
the terms of our debt may limit our ability to make distributions to our shareholders
Violating debt covenants could force us to repay debt before maturity when financing is unavailable.
- NewRisks Related to Our Business
governmental restrictions on the nature or size of a project
Governmental restrictions and development delays could increase project costs and hurt our financial position.
- NewRisks Related to the Lodging Industry
risk generally associated with the ownership of hotel properties and real estate, as we discuss in detail below
Reductions in TRS net operating profits and rental income could impair our ability to pay shareholder distributions.
- NewRisks Related to the Lodging Industry
We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive position
Managing rapidly advancing artificial intelligence and associated cybersecurity challenges could put us at a competitive disadvantage.
- NewRisks Related to the Lodging Industry
that future laws, ordinances or regulations will not impose material environmental liability; or
Future environmental laws or neighboring property conditions, such as leaking underground storage tanks, could impose material environmental liability.
- NewRisks Related to Our Organization and Structure
active and deliberate dishonesty by the trustee or officer that was established by a final judgment as being material to the cause of action adjudicated
Our bylaws obligate us to indemnify trustees and officers, which may limit shareholder recourse.
- NewRisks Related to Our Organization and Structure
the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates
Inaccurate operating expense estimates could prevent us from maintaining or increasing shareholder distributions.
- NewRisks Related to Our Organization and Structure
announcements by us or our competitors of acquisitions, investments or strategic alliances or changes thereto
Our smaller equity market capitalization and low trading volumes can cause greater stock price fluctuations.
Dropped
- DroppedRisks Related to the Lodging Industry
General Risks Related to the Real Estate Industry
- DroppedRisks Related to the Lodging Industry
In the event of a substantial loss, insurance coverage may not be sufficient to cover the full current market value or
Real estate illiquidity, property tax increases, and mold liabilities.
- DroppedRisks Related to Our Organization and Structure
As a result, no assurance can be given that we will be able to make distributions to our shareholders or that the level of
Reworded
- 100% rewrittenRisks Related to the Lodging Industry
Competition for guests may lower our hotels' revenues and profitability
Completely replaced the prior multi-topic risk with a focused discussion on competition in the upscale extended-stay and mid-price hotel segments.
- 99% rewrittenRisks Related to Our Business
Joint 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
Swapped out joint venture risks for a new combination of share distributions, conflicts of interest with the CEO, development risks, and inflation.
- 98% rewrittenRisks Related to Our Organization and Structure
The ability of our Board of Trustees to change our major policies may not be in our shareholders’ interest
Replaced board policy control risks with new topics covering internal controls, REIT requirements, tax changes, cash flows, and credit facility limits.
- 80% rewrittenRisks Related to the Lodging Industry
Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our shareholders
Added explicit mention of operating results and shareholder distributions to the insurance risk header.
- 77% rewrittenRisks Related to the Lodging Industry
The outbreak of widespread contagious disease, such as COVID-19, could reduce travel and adversely affect hotel demand
Added federal government budget delays and borrowing limit failures as threats to travel demand and revenues.
- 75% rewrittenRisks Related to Our Business
Failure to hedge effectively against interest rate changes may adversely affect our results of operations and our ability to make shareholder distributions
Added explicit references to results of operations and shareholder distributions in the interest rate hedging risk.
- 60% rewrittenRisks Related to Our Organization and Structure
Our 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
Removed the liability exception for deliberate dishonesty established by final judgment from our indemnification risk.
- 59% rewrittenRisks Related to the Lodging Industry
Competition for acquisitions may reduce the number of properties we can acquire
Removed guest competition details from the acquisition competition risk, shifting them to risk 29.
- 57% rewrittenRisks Related to Our Organization and Structure
The ability of our Board of Trustees to revoke our REIT qualification without shareholder approval may cause adverse consequences to our shareholders
- 45% rewrittenRisks Related to Our Business
Hotel development is subject to timing, cost, and other risks
- 36% rewrittenRisks Related to Our Organization and Structure
Our revolving credit facility and term loan may limit our ability to pay dividends on common shares
- 33% rewrittenRisks Related to Our Business
The COVID-19 pandemic had, and a future pandemic could have, adverse effects on our financial condition, results of operations, cash flows and performance
Was: The 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
- 32% rewrittenRisks Related to Our Organization and Structure
The market price of our equity securities may vary substantially, which may limit your ability to liquidate your investment
- 22% rewrittenRisks Related to Our Business
Future 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
All 71 risk factors
Headings as the filing states them, in filing order.
Risks Related to Our Business
- 01Failure to hedge effectively against interest rate changes may adversely affect usNew
- 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
- 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
- 07Our investment policies are subject to revision from time to time at our Board of Trustees' discretion, which could diminish shareholder returns below expectations
- 08We depend on the efforts and expertise of our key executive officers whose continued service is not guaranteed
- 09Our future growth depends on obtaining new financing and if we cannot secure financing in the future, our growth will be limited
- 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
- 11The management of the hotels in our portfolio is currently concentrated in one hotel management company
- 12Our franchisors could cause us to expend additional funds on upgraded operating standards, which may reduce cash available for distribution to shareholders
- 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
- 14Fluctuations in our financial performance, capital expenditure requirements and excess cash flow could adversely affect our ability to make distributions to our shareholders
- 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
- 16the terms of our debt may limit our ability to make distributions to our shareholdersNew
- 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
- 18Interest expense on our debt may limit our cash available to fund our growth strategies and shareholder distributions
- 19Failure to hedge effectively against interest rate changes may adversely affect our results of operations and our ability to make shareholder distributions75% rewritten
- 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
- 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
- 22There may be conflicts of interest between us and affiliates owned by our Chief Executive Officer
- 23Hotel development is subject to timing, cost, and other risks45% rewritten
- 24governmental restrictions on the nature or size of a projectNew
- 25Inflation and price volatility in the global economy could negatively impact our business and results of operations
Risks related to artificial intelligence
- 03Uninsured and underinsured losses could adversely affect our operating resultsNew
- 04The outbreak of widespread contagious disease, such as COVID-19, could reduce travelNew
Risks Related to Our Organization and Structure
- 05The ability of our Board of Trustees to change our major policies may not be in our shareholders’ interest98% rewritten
- 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
- 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
- 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
- 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
- 52Failure to make required distributions would subject us to tax
- 53Failure to maintain our qualification as a REIT would subject us to federal income tax and potentially to state and local taxes
- 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
- 55Our TRS structure increases our overall tax liability
- 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
- 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
- 58Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
- 59If our hotel managers do not qualify as "eligible independent contractors," we would fail to qualify as a REIT
- 60Our ownership limitations may restrict or prevent you from engaging in certain transfers of our common shares
- 61The ability of our Board of Trustees to revoke our REIT qualification without shareholder approval may cause adverse consequences to our shareholders57% rewritten
- 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
- 63Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments
- 64We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares
- 65We may be unable to generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future
- 66the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimatesNew
- 67Our revolving credit facility and term loan may limit our ability to pay dividends on common shares36% rewritten
- 68The market price of our equity securities may vary substantially, which may limit your ability to liquidate your investment32% rewritten
- 69announcements by us or our competitors of acquisitions, investments or strategic alliances or changes theretoNew
- 70The number of shares available for future sale could adversely affect the market price of our common shares
- 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
- 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
- 27Our ability to make distributions to our shareholders may be affected by various operating risks common in the lodging industry
- 28risk generally associated with the ownership of hotel properties and real estate, as we discuss in detail belowNew
- 29Competition for acquisitions may reduce the number of properties we can acquire59% rewritten
- 30Competition for guests may lower our hotels' revenues and profitability100% rewritten
- 31The cyclical nature of the lodging industry may cause the return on our investments to be substantially less than we expect
- 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
- 33The increasing use by consumers of Internet travel intermediaries and alternative lodging market places may adversely affect our profitability
- 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
- 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
- 36We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive positionNew
- 37Future terrorist attacks, rumors or threats of war, or changes in terror alert levels could adversely affect travel and hotel demand
- 38We may assume liabilities in connection with the acquisition of hotel properties, including unknown liabilities, which, if significant, could adversely affect our business
- 39Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our shareholders80% rewritten
- 40Noncompliance with environmental laws and governmental regulations could adversely affect our operating results and our ability to make distributions to shareholders
- 41that future laws, ordinances or regulations will not impose material environmental liability; orNew
- 42Compliance with the ADA and other changes in governmental rules and regulations could substantially increase our cost of doing business
- 43The outbreak of widespread contagious disease, such as COVID-19, could reduce travel and adversely affect hotel demand77% rewritten
- 44Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our hotel properties
- 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
- 46Increases in our property taxes would adversely affect our ability to make distributions to our shareholders
- 47Our hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem
Other Chatham Lodging Trust 10-Ks
- FY2024 10-K risk factors63 risks
Chatham Lodging Trust faces heavy concentration risks tied to its external manager IHM and franchisors. Lodging cyclicality, debt financing costs, and capital expenditure needs dominate risks.
Filed Feb 26, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.