Chatham Lodging Trust

NYSE:CLDT

Greetings, and welcome to the Chatham Lodging Trust Fourth Quarter 2024 Financial Results Call. [Operator Instructions]

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Chris Daly, President of DG Public Relations. Please go ahead.

Thank you, Melissa. Good afternoon, everyone, and welcome to the Chatham Lodging Trust Fourth Quarter 2024 Results Conference Call.

Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of February 26, 2025, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements to conform the statement to actual results or changes in the company's expectations.

You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced in this call on our website at www.chathamlodgingtrust.com.

Now to provide you with some insight in Chatham's 2024 fourth quarter results, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer; Dennis Craven, Executive Vice President and Chief Operating Officer; and Jeremy Wegner, Senior Vice President and Chief Financial Officer.

Let me turn the session over to Jeff Fisher. Jeff?

All right. Thanks, Chris, and I certainly appreciate everyone joining us here for our call today. Before talking about the fourth quarter, specifically in our outlook for 2025, I'd like to spend just a few minutes highlighting some noteworthy accomplishments as we look back at the last year.

We had RevPAR growth of 3%, exceeding industry RevPAR performance by 56%. We continue to be aggressive generating profits outside the room division and we were able to drive other departmental profits 8% higher this year after growth of 25% last year.

We generated GOP margins of 43%, minimizing the year-over-year margin decline to 70 basis points. And as RevPAR growth expanded, we closed out the year with 150 basis points of margin expansion in the fourth quarter. Sold or under contract to sell 6 hotels averaging 24 years of age and with a RevPAR of $98, way below our average, for net proceeds of $101 million at a pro forma capitalization rate of approximately 6% when you include the foregone capital improvements. And in 2024, we repaid $297 million of debt, maturing debt and reduced our net debt by $29 million in 2024 after reducing net debt by $26 million in 2023.

We finally completed our multiyear balance sheet repositioning through the issuance of equity, debt and asset sales and reduced our overall leverage ratio to 23% from 25% a year ago, and importantly, down from almost 35% in 2019. I'd say that's quite an accomplishment, particularly during this period of time.

And finally, we did participate in the Global Real Estate Sustainability Benchmark, GRESB, for the third time, achieving a great score of 83, earning 4 out of 5 GRESB Stars and awarded the Green Star.

We did return $22 million of dividends to our preferred and common shareholders out of excess cash flow and we look forward to this year in an environment where if we can achieve similar kinds of RevPAR growth, we look at our margins really back at what have always been the industry-leading EBITDA margins of all the select service hotel REITs.

Our RevPAR growth has beaten industry performance for 3 consecutive years. And by far, we've got the highest RevPAR of all select service lodging REITs, demonstrating the high quality of our portfolio and the markets we're in.

As most of you know, our success is more reliant on the health of the business traveler and business travel demand continues to grow. In 2024, we saw the health of the business traveler really show up in the nonseasonal month RevPAR growth numbers. Other than March that was impacted by religious holidays, RevPAR growth was over 5% in April and May, 4% in September and almost 7% in October. The November to February months are slower BT and leisure months. But on the average, our RevPAR growth was about 3% in those months. During the heavy leisure months, interestingly enough, of June through August, our RevPAR growth was about 1%, which reflects the softening leisure travel offset by the higher and healthier business travel during those other months and even during those months.

Turning our attention to the fourth quarter, which was a great quarter by all metrics. Our RevPAR growth of 4%, again beat industry performance and most peers' performance. Also we increased our operating margins by a strong 150 basis points as labor and benefit costs continue to moderate at low single-digit levels. Again, this moderation is different than a lot of our full-service peers who are facing much more pressure, given their presence in larger markets and reliance on union labor. As a result of great operating performance, we were able to comfortably exceed the upper end of our guidance range and consensus estimates.

Additionally, if you look at our largest markets, RevPAR grew in 6 of our top 8 markets, with our New York area hotels flat to last year and only Dallas declining. But Dallas' decline is really due to the fact that our hotel is next door to the convention center, which is mostly closed and undergoing major expansion over the next 24 months. When you exclude Dallas, average RevPAR growth was approximately 7% across our top markets.

Leading the way were our technology-dependent markets and the underlying strength in these markets is encouraging as we move forward into this year. RevPAR growth at our 4 Silicon Valley hotels was up 14% in the quarter after posting 14% growth in the 2023 fourth quarter, and the Bellevue market RevPAR was up 9% in the quarter, and I utilize the market here because our Bellevue Residence Inn was under renovation during the quarter.

Chatham has the highest exposure to big tech hotel demand, whether that's in Silicon Valley, Bellevue or Austin, and tech investment, particularly around AI, chip processing and next-gen technology is rapidly expanding as we've all seen even just this past week. And for example, Apple has announced a massive $500 billion further investment in the U.S. over the next 5 years with many of the markets that we have hotels in certainly bound to benefit as that manufacturing and other business expansion continues.

On the operations front, we're really pleased and encouraged by our ability to drive this revenue growth to the bottom line as we pushed our operating margins 150 basis points higher to 41%, the highest fourth quarter operating margins in 3 years. Our expense controls were really locked in, especially regarding staffing levels and wage growth.

As we've stated the last few quarters for us, and this is an important distinction, we've been the beneficiary of moderating wage pressures. On a per occupied room basis, growth in labor and benefits was less than 1% year-over-year in the quarter. And if you just consider only wages, on a per occupied room, they were down year-over-year.

As we close out 2024, we're in great financial position, having delevered over the past few years through the opportunistic sale of hotels, and now sit at our lowest leverage levels in over a decade. We've got the ability, therefore, to grow in several ways. Of course, most importantly, through the outperformance of our existing portfolio, especially given that our largest assets have exhibited the strongest top line growth in the portfolio.

Second, we do expect to commence our Portland, Maine hotel development later in the year. This looks like a very profitable investment and return for sure.

And lastly, we are, of course, still seeking hotel acquisitions. We've got the financial ability to grow. As I've said, we have successfully or will successfully complete the sale of the 5 hotels. Our leverage levels are very low.

I'm confident in our future to continue to grow this company and our FFO particularly this year. And we can grow accretively. It doesn't take meaningful investment dollars to move the needle here at Chatham. And long-term fundamentals are favorable as new supply is less than 1% across our portfolio and further increases in new supply are going to be muted given that most new construction is too expensive and the returns, particularly in the markets that we operate in, certainly don't appear to warrant the risk.

We've emerged from a slew of maturing debt in a financially strong position. And operationally, I think we should continue to outperform the industry and many of our peers. So our ability to increase incremental free cash flow should enable us to return more money to our shareholders moving forward.

And with that, I'd like to turn it over to Dennis.

Thanks, Jeff. Good morning, everyone. Just a quick update on the hotels to be sold. As Jeff talked about, we have 2 remaining of the 5 that are expected to close by the end of the first quarter. The 5 hotels are among the 6 lowest RevPAR hotels in our portfolio that we have sold and are under contract to sell. We believe the best value creation is to sell these hotels instead of investing incremental dollars without what we believe is much incremental return, and reinvest that money into higher yielding, higher margin and higher growth assets.

With respect to our fourth quarter results, a few extra tidbits. RevPAR at our 7 predominant leisure hotels, and our leisure hotels comprise approximately 20% of our fourth quarter EBITDA, increased 1.4% in the quarter. But when you take out our SpringHill Suites in Savannah, which was under renovation for most of the quarter, RevPAR was up approximately 6% for our leisure hotels, with our Fort Lauderdale Residence Inn, our Hampton, Portland and our Hyatt Place Pittsburgh all producing double-digit RevPAR growth in the fourth quarter.

Our top 5 RevPAR hotels for the quarter were the Residence Inn Fort Lauderdale with RevPAR of $208. Second was our Residence Inn White Plains with RevPAR of $196. And then our Hampton Inn Portland and Residence Inn San Diego Gaslamp, both with RevPAR of $180. And lastly, our Residence Inn New Rochelle, New York at $176.

Over 1/3 of our hotels experienced double-digit RevPAR growth in the quarter. Excluding the 5 tech-driven hotels, fourth quarter RevPAR was up 3% over last year, further supporting the breadth of our RevPAR performance and trajectory.

Breaking down our Silicon Valley hotels, underlying demand growth remains strong. Our Silicon Valley fourth quarter occupancy of 74% marks the highest occupancy level since 2015. Our 2 Sunnyvale hotels experienced RevPAR growth of 16% in the quarter, and with -- and that includes a 14% increase in occupancy, again, proving out the surge in business demand in Sunnyvale.

Our San Mateo Residence Inn had a great quarter with RevPAR growth of 19%, with occupancy finishing the quarter at 81%.

And lastly, RevPAR grew 5% at our Mountain View Residence Inn.

On a portfolio basis, including all hotels owned during the quarter, operating margins were up 150 basis points, and hotel EBITDA margins were up 90 basis points. At our 36 comparable hotels, operating margins were up 110 basis points with EBITDA margins essentially flat.

Our biggest expenses by far are labor wages and related benefits. These expenses account for approximately 40% of all operating expenses. We've been able to maintain our head count essentially flat the entire year despite occupancy rising 300 basis points in the quarter and 200 basis points for the full year. Additionally, our fourth quarter average wage was up just about 3% over last year. This increased efficiency has enabled us to actually reduce wages on a per occupied room basis by 2%.

Offsetting a bit of this were increased payroll-related costs such as medical insurance, workers' compensation and vacation and stuff like that, which were up 19% in the fourth quarter and almost 25% for the entire year. The good news is that 2025 premiums for not only our medical insurance, but also our workers' compensation are essentially flat compared to last year.

In the quarter, property insurance was up, and for the year, it was up approximately 15%. But again, good news is that our 2025 renewal for property insurance is down approximately 13% over '24 levels.

Our top 5 producers of GOP in the quarter were led by our Residence Inn Gaslamp with $2.3 million, the 12th straight quarter it's led our portfolio; and second was our Sunnyvale II Residence Inn with GOP of almost $2 million. And rounding out our top 5 producers were our Embassy Suites Springfield, and 2 of our New York Residence Inns in White Plains and New Rochelle. And again, I would just add, if you look at the geographic production of those top 5, you essentially have one in Silicon Valley, one in San Diego, one outside of D.C. and 2 in the greater New York area. So again, kind of broad demand showing up across the country in our portfolio.

On the CapEx front, we spent approximately $6 million in the quarter. We commenced renovations on 3 hotels that were completed either in the fourth quarter or will be completed early in the '25 first quarter. And that includes renovations in Savannah, Bellevue, Washington and the Hilton Garden Inn in Portsmouth, New Hampshire.

Our CapEx budget for '25 is approximately $26 million, which includes 3 renovations with a cost of approximately $16 million. The 3 hotels scheduled for renovation in '25 are the Hilton Garden Inn Portsmouth; during the first quarter, the Residence Inn Austin, Texas; and the Residence Inn Mountain View during the fourth quarter.

So with that, I'll turn it over to Jeremy.

Thanks, Dennis. Good afternoon, everyone. Our Q4 2024 hotel EBITDA was $24.3 million, adjusted EBITDA was $21.4 million and adjusted FFO was $0.20 per share. We were able to generate a GOP margin of 40.5% and hotel EBITDA margin of 32.5% in Q4. GOP margins for the quarter were up 150 basis points from Q4 2023, which was due to the strong 3.9% RevPAR growth for the quarter and outstanding expense control. This improvement in year-over-year margin trends relative to prior quarters reflects the continuing stabilization of key expenses, especially labor costs.

Over the past couple of years, we have taken significant steps to reduce leverage and address debt maturities. With the repayment of the $16 million mortgage loan on the Hampton Houston in January 2025, we have now addressed all of our CMBS maturities.

In Q4, we closed on the sales of the Homewood Bloomington and Homewood Maitland for $29.3 million. And in January 2025, we closed on the sale of the Homewood Brentwood for $15 million. The aggregate sale price for these 3 hotels, including approximately $15 million of required renovation costs, represents a cap rate of approximately 6.3% on 2024 NOI. As of December 31, Chatham's net debt to LTM EBITDA was 3.9x, which is significantly below our historical leverage, which was generally in the 5.5x to 6x area.

Turning to our Q1 and full year 2025 guidance. We expect RevPAR growth of 3% to 4%, adjusted EBITDA of $16.7 million to $18.3 million, and adjusted FFO per share of $0.12 to $0.15 in Q1, and RevPAR growth of 1% to 3.5%, adjusted EBITDA of $92 million to $97 million, and adjusted FFO per share of $1.01 to $1.11 for the full year.

This guidance reflects the sales of the Homewood Bloomington, Homewood Maitland and Homewood Brentwood in December 2024 and January 2025, and assumes 2 additional asset sales with a combined sale price of $39 million closed at the end of the first quarter.

In aggregate, the net impact of these 5 asset sales on our expected 2025 EBITDA versus actual reported 2024 EBITDA is approximately $6.8 million. And assuming the proceeds from these asset sales are used to repay bank debt with a cost of 5.9%, the impact on expected 2025 FFO per share versus our actual 2024 FFO per share is approximately $0.05 per share.

While our guidance does not reflect any acquisitions, our plan is certainly to reinvest the sale proceeds and foregone capital requirements from our asset sales into accretive acquisitions, which should fully offset the lost FFO from the asset sales.

Our room count reflecting these completed asset sales is expected to be 5,475 in Q1, and is expected to be 5,168 for the remainder of the year, which assumes the close of the 2 pending asset sales at the end of Q1. Reflecting our recently completed and pending asset sales, our 2024 RevPAR would have been $122 in Q1, $156 in Q2, $155 in Q3, $133 in Q4 and $142 for the full year.

This concludes my portion of the call. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on your -- some of your comments around asset recycling. And wanted to get some more color on your expectations around redeploying that capital into the acquisition market. I know you mentioned there's no acquisition included in the guidance, but I was just hoping to get some more color on what you were seeing in the market. Maybe on the volume pricing?

Yes. Gaurav, it's Jeff. How are you today? I guess the way to characterize the acquisition market, at least for what we're seeing and for what we want to buy, is it's still pretty thin out there for the really, really good assets in the kind of markets we want to be in. There's still 100 basis points, let's say, bid-ask kind of gap.

But I will tell you that we've kind of redoubled our efforts in terms of really wanting to get replacement assets for these 5 hotels that we've successfully sold or will have sold shortly. And I feel pretty confident that we'll get that done this year. I don't think we'll get it done in the first quarter of this year, but it's really just sort of ferrying through and talking to prior folks that we've done business with and otherwise to try to find onesie, twosie deals, which is probably the way it will occur as we move forward.

Okay. My second question on your comments around starting a development in Portland, Maine. I was hoping to get some more color on that asset, where you're looking to construct, maybe on your yield expectations for development?

Yes. I mean, we're certainly looking for 150 to 200 basis points premium over, let's say, the 8 cap number that you might be able to acquire existing hotels for. And Portland, Maine Hampton Inn is and has been our highest RevPAR hotel for several quarters. We're pretty excited about the continued growth in the market. City of Portland has recently enacted a hotel moratorium. We are grandfathered in because of the application that we have pending for entitlement. So we still have -- and we've talked about this for probably what I say is too long for 2 years, but it is that kind of market in the Downtown Waterfront District to build on our parking lot next to our existing Hampton Inn, I think, will certainly be very accretive if and when we get there, but we're still working with the city and with our engineers on getting this thing entitled.

Yes. Gaurav, I think the only thing I would add is that, just to add on from Jeff's comments, is that Hampton Inn Portland for us has really been the highest yielding asset for us over the last essentially ownership period since 2012 when we bought it. Great market, moratorium helps, and we feel pretty good about it.

Our next question comes from the line of Aryeh Klein with BMO Capital Markets.

There was a pretty sizable disparity in occupancy performance versus ADR in the quarter. Curious just what drove that dynamic? And then how are you thinking about the ability to push rates with occupancy improving?

Aryeh, this is Dennis. Yes, listen, I think the one thing that -- and we highlighted in our comments is that overall, just demand from business travel is really the driver of that continued occupancy growth. And in certain markets, whether that's Silicon Valley or other markets, you really need to get into the 70s and into the 80s to be able to have pricing power.

So for us, we're really encouraged by the overall trend and just the overall demand growth in some of our major markets. And generally speaking, ADR is a laggard to that. So it really -- I think just positive about where that's heading.

Got it. That's helpful. And then maybe on the RevPAR guide. A fairly widespread for the full year. Curious if you can provide some color just on some of the underlying assumptions at the high and low end of the range? And then is there any reason to think the tech intern business this year will play out differently from last year?

The last bit of that question was tech?

Tech interns.

The intern business versus last year.

Yes. I mean, I think, listen, we're pretty -- we're taking a pretty cautious look as far as our overall guidance range of 1% to 3.5%. We're encouraged by what January did with RevPAR up 5%. February is doing well as well. I think what Jeff highlighted in his comments, and if you look at kind of our monthly RevPAR production, is that the summer months, especially in '24, as we talked about kind of showed an offset of leisure losing, BT gaining. I think whether leisure has bottomed out or is bottoming out kind of as an industry, I think it's too early to tell. But I think we're going to be cautious about those outer months. It feels good at the moment.

And then I think with respect to interims, listen, we -- I think as we talked about last year, we lost a lot in a majority of that business in '24 because most of the tech companies went to a program where they were just giving stipends out for any type of intern, and they could put as many people as they wanted to in a room, in an apartment or whatever it might be.

So we really didn't get much intern business in '24. We don't have -- we kind of have similar levels baked in for '25. And obviously that -- if something -- somehow that changed, that would be great. But I think that stipend program is probably going to stick.

Got it. And then maybe just one last one, just in terms of the transactions that you seem likely to pursue in '25. How much dry powder do you think you have? Or I guess, maybe how active do you think you'll be?

Yes. Jeremy, do you want to talk about the balance sheet?

Yes. I mean from a dry powder perspective, I think we could easily buy a couple of hundred million dollars of hotels or hotels and development, other investments and still be within the leverage parameters that we feel comfortable with. I don't know if it will be possible to, in one-off transactions, be able to buy $200 million of hotels this year and given how selective we are and the strict underwriting criteria that we have. But we definitely have balance sheet capacity to do quite a bit relative to our existing size.

Got it. And is the Portland development in the $26 million of CapEx? Or is that separate?

No. No, it's not. I mean, I think, listen, we're still working through city approvals. I think if we ultimately get those in the next several months, you're probably talking about starting site work later this year. So any actual cash dollars out the door will be pretty minimal in 2025.

[Operator Instructions] Our next question comes from the line of Jonathan Jenkins with Oppenheimer & Company.

First one for me is a follow-up or a clarification question on the guidance. Given that previous commentary, it sounds like we should expect the majority of RevPAR growth this year to be driven by occupancy and then that rate compression component becomes a greater possibility in out years. Is that a fair read through on that?

I think in our forecast, we have our RevPAR growth kind of built about half between occupancy and half between ADR. So we're still expecting some ADR growth even though Q4 was really -- all the growth was driven by occupancy.

And that's because of the nature of the seasonality of the portfolio and the hotels that we're talking about, but we'll get ADR growth in those summer months. And in those heavy October, for example, business travel months for us.

Okay. That's very helpful. And then switching gears to the capital recycling front. You guys have obviously done a tremendous job. Are there any additional assets that could be potential targets for dispositions? And conversely, are there any markets that you'd like to enter? Or is your preference to grow in the markets you're already in? And should we expect a continued BT demand driver focus for potential acquisitions?

I think for us, BT and business-focused hotels and extended stay hotels is where we live and we feel very comfortable and bullish about that part of the business. So I think we want to be opportunistic, given the amount of dry powder that we have, as Jeremy indicated. So I think we've kind of got open view in terms of markets beyond markets that we're already in. So I would expect that we will just take a real hard look at many different opportunities as we try to move forward and redeploy some of the money that we've got here.

Yes, I think the only thing I would add is with respect to dispositions, yes, we will continue to look at our portfolio and analyze it for any type of opportunities of selling assets. But I think what you will see from Chatham is continued recycling of older assets with higher CapEx spend requirements into newer, higher growth investments over time. So certainly, we'll look for that.

That's the goal.

Our next question comes from the line of [ Manish Modi with Millennium. ]

I just have a couple of quick questions. One is just to get a sense of any impact on the Los Angeles area with the properties with all the wildfires. That's the first one.

And the second one is as an investment portfolio, I have been looking at the performance of your stock, and I'm sure you all do, too, which is that there's been literally no upward movement at all, at least over the last 12 to 18 months. How do you look at the valuation that the market -- of course, you don't control it, but how do you visualize the market valuation for your stock?

[ Manish, ] this is Dennis. I'll answer the first part of it. We had -- thankfully, we had no physical damage to any of our assets related to the fires in Southern -- in the L.A. area. We have 3 hotels in the area. Our Home2 Suites in Woodland Hills has been the beneficiary of a lot of -- whether it's displaced residents or people affiliated with insurance companies there, that is benefiting the hotel. The other 2 hotels are Hilton Garden Inn Marina Del Rey and our Residence Inn at Anaheim saw kind of an initial pop right after the wildfires. But really have kind of settled back into normal, what I would call, normal businesses, if you will. So really, we had 1 of the 3 hotels that benefited.

And then on the stock price here, I'm going to let Jeremy, our expert on that, opine.

Look, it would always be nice to have your stock valued higher and to appreciate. Obviously, there's been headwinds over the last few years in terms of expense increases across the sector and cost of capital across the sector. I think if you look just on a relative valuation basis, on a price to FFO basis, I think we're roughly in line with most of our peers. We may be a little bit of a discount on an EV to EBITDA basis. And I think a lot of that's probably due to the fact that we've refinanced a lot of our debt. We've reset the pricing on a lot of our debt. So all of our debt is sort of market priced, which is more expensive than people who have legacy fixed rate debt at 4%. All of our debt kind of in that 6.5% to 7% range right now. So there's higher interest burden.

So that's reflected in our FFO. It doesn't impact the EBITDA, which is probably why we're really right in line with peers on an FFO basis and EBITDA is a little bit of a discount. But again, there's higher interest costs. Hopefully over time, the EBITDA gap will shrink relative to any peer multiples as they kind of refinance their balance sheet as well.

The other part of it, I would say, is I still think, and we've heard from some investors, that Silicon Valley, we keep coming back to it but it is a major portion of our portfolio, obviously, is a question mark for the company. And even in our guidance for the year, it's very difficult for us and our operators who have lived and breathed in that market, in some cases for over 20 years, to put your finger on what kind of RevPAR increase and what kind of return to our 2019 EBITDA levels and RevPAR levels we're going to get there. And I think that keeps sort of a lid on our share price until we really have sort of what I would characterize as double-digit RevPAR growth quarter after quarter for a couple of years in a row here that we feel is pretty consistent as we look forward to be able to get those numbers back to some level as to where they were.

So look, we're certainly encouraged by what we see and what we talked about on our call for the fourth quarter. And our January and February numbers out there, particularly given January and February seasonality of being very little real BT travel, are pretty d*** strong as well.

So we'll continue to have our focus and our operating team and our sales teams out there, doubling down on the efforts to make those hotels fly. And with our ability and our operators' ability to flow the incremental revenue at levels that are, in some cases, well over 50%, I think we can get the FFO and the EBITDA, and therefore the share price moving again.

No, I appreciate it. I mean you certainly delevered the balance sheet substantially over the last couple of years. However, it's interesting that when you look at it, that your RevPAR growth in Silicon Valley has been in double digits compared to last year, but your RevPAR growth in Dallas and the Seattle markets, however small they are as contributors, they seem to be more negative. So it's interesting you made that point across.

Well, Dallas, as I mentioned, it has been a great performing hotel for us in that Downtown market. If that is nothing more frankly than the convention center being -- and most conventions sort of for the next couple of years being nonexistent in that market. I know that in 2024, we substantially exceeded the operator budget for 2024 because starting in I think it was March or April, we took the numbers way down, and we still -- because of what's happening generally in Dallas and the quality of that hotel and its location sort of outperformed the budget numbers, but it's still going to comp on a difficult basis.

Bellevue, Dennis, purely renovation there. That should be finished, what, the next -- we're going to see it next week, right? And about -- so that should be done here and again, tech-heavy and reliant, but you've got those players back to the office, even I think with a declaration of being a little bit sooner than some of the Silicon Valley companies.

And Bellevue as a submarket, really strong and benefiting over Downtown Seattle when you look at -- if you look at the STR, Smith Travel numbers for the market anyway.

Yes. I think the only thing I would add regarding Silicon Valley is, yes, we've had a good run here and we're confident and we're optimistic about where we see '25 out there. But you should still take a look at the table in our release, that compares it to 2019 levels. RevPAR for those 4 hotels is still over 20% short of 2019 levels. So there's still a good way to go. And I think a lot of our investors who know us well and have known us well, we got to get a little bit more out of there to really start pushing that number to the bottom line.

Especially when it comes to ADR as we were talking about on a prior question and the incremental flow that comes from high ADR.

I certainly appreciate it. I mean you all certainly vested into the ownership of Chatham Lodging Trust. It was interesting that -- however, as I thought, I just had made one observation, which is that there were 2 filings from BlackRock that happened literally 2 days of each other. And the most recent filing showed a reduction of about 5% or 6% of the ownership literally within a span of 2 days. I just didn't know if you're aware of something substantially that happened that would reduce their ownership by a few million shares.

We saw those same filings. I think we don't have any active dialogue with them. Whether that was a mistake or something else, I'm not sure.

But they bought a bunch and then sold a bunch, right? Something like that. Yes. We don't know.

Mr. Fisher, there are no further questions at this time. I'll turn the floor back to you for final comments.

Well, we certainly appreciate the questions and everybody's attendance this morning. So let's continue to sit tight here and have this quarter evolve. And we will continue to, I think, put up some pretty strong numbers and work on growing our free cash flow in 2025. Thank you.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.