Greetings and welcome to the Chatham Lodging Trust announces Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Mr. Chris Daly. Thank you, sir. You may begin.

Thank you, LaTonya. Good morning, everyone and welcome to the Chatham Lodging Trust third quarter 2016 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 and described in our 2015 Form 10-K and other SEC filings. All information in this call is as of November 3, 2016 unless otherwise noted and the company undertakes no obligation to update any forward-looking statement 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 on this call on our website at www.chathamlodgingtrust.com. Now, to provide you some insight into Chatham's 2016 third 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. Jeff.

Thanks, Chris. Good morning, everyone and welcome to our third quarter earnings call. Like many others, we've experienced a continuing sequential slowdown with RevPAR declining 2% for us to $143 driven by an approximate 3% drop in occupancy to a still very strong 84% for this portfolio. We were able to increase ADR 2% to $170, which I think is very encouraging. In hindsight, and we need to focus on our last-year third quarter number because occupancy was very strong at 87% and of course, that's a pretty difficult number to maintain year-over-year. A key driver behind the RevPAR decline for us was the weakening oil industry-influenced Houston and Western Pennsylvania markets that we've all talked about and I guess we’re going to have to continue to talk about it for some time here. We have six hotels in those markets. That equates to about 9% of our EBITDA and those properties experienced a 21% drop in RevPAR. Those markets negatively impacted our overall RevPAR performance by approximately 200 basis points, so almost the entirety of our RevPAR decline. And I think that's the way we need to look at the company here in the ensuing quarters and really we will talk a little bit more about that, but implicit, of course, in our guidance is the continuation of the substantial 20% to 22% RevPAR decline until we start lapping over those numbers later in 2017, particularly Houston hotels. In fact, if you remove the impact from those six hotels for the quarter, our ADR was up 2.4%, while our occupancy was down 2.5% to 86%. As a comment on the industry, occupancy was flat for the industry, but, in the upscale and upper mid-scale segments where our hotels are, occupancy was down 0.6% in the quarter. Given the fact…

Thanks, Jeff. Hello, everyone. Jeff spent quite a bit of time talking about top line, so really the only thing that I'm going to chime in on the revenue side is related to what we’re seeing in terms of the mix of the travelers out there, at least in the third quarter. And a trend we've seen for most of 2016 is that the business traveler production continues to be down a little bit. Our national corporate and local corporate traveler’s production for the year and that accounts for about 25% of our room revenue is down approximately 5% year-over-year with ADR basically flat to down slightly for that segment of business. Some of these travelers could certainly be rolled up within the brand reporting systems in certain retail channels if they’ve decided to book themselves. We can't necessarily track that, but within our retail segment, which accounts for approximately 50% of our room revenue, we've seen that production increase about 6% year-to-date. And the third business, government business, which accounts for approximately 10% of our revenue, we've seen production increase 20% this year 2016 year-to-date versus 2015. From a margin perspective, our same-store third quarter operating margins were down 180 basis points. Still it's a very impressive overall absolute number at 50.6%, basically in line with our second-quarter margins of 50.7%. As Jeff mentioned, the 2015 third quarter was very strong and has certainly proven to be a very tough comp for not only Chatham, but also the industry. Compounding the weaker RevPAR performance was higher expenses related to wage and benefit costs, as well as guest acquisition costs. The entirety of our operating margin decline was basically due to higher wages and benefits, which brought down margins 120 basis points and guest acquisition costs rose 50 basis points…

Thanks, Dennis. Good morning, everyone. For the quarter, we reported net income of $13.4 million, or $0.34 per diluted share, compared to net income of $14.4 million, or $0.37 per diluted share in Q3 2015. Adjusted FFO for the quarter was $27.4 million, compared to $29.3 million in the 2015 third quarter, a decrease of 6.5%. Adjusted FFO per share was $0.71 per share versus $0.76 per share in Q3 2015, a 6.6% decrease year-over-year. Adjusted EBITDA decreased $2.2 million to $37.2 million, compared to $39.4 million in Q3 2015. In the quarter, our two joint ventures contributed approximately $5 million of adjusted EBITDA and $3.1 million of adjusted FFO, in line with our guidance of $4.8 million to $5 million for EBITDA and $2.8 million to $3.1 million for FFO. During the quarter, we received distributions of $2.5 million from the JVs. Our balance sheet remains in excellent condition. Our net debt was $573 million at the end of the quarter; our weighted average cost of debt was 4.5%; our weighted average maturity was 7.1 years and our leverage ratio was 40%. In Q3, we used free cash flow to reduce our debt by $14.3 million. Transitioning to our guidance for Q4 and full-year 2016, I’d like to note that it takes into account the completion of the 32-room expansion of the Residence Inn Mountain View in the first week of October. We have amended our full-year RevPAR guidance to reflect actual performance in the third quarter and current business trends. We are lowering the bottom end of our full-year 2016 RevPAR growth range by 70 basis points and the upper end of the range by 100 basis points and lowering our hotel EBITDA margin guidance by approximately 85 basis points. We now expect Q4 RevPAR growth to be minus 3.5% to minus 1.5% and full-year RevPAR of minus 0.7% to flat. As a result of our RevPAR and margin adjustments, we are trimming the midpoint of our adjusted EBITDA guidance range by 3% and FFO per share range by 3% as well. Operator, at this point, we’ll open up the call for questions.

Thank you. [Operator Instructions] Our first question comes from Gaurav Mehta with Cantor Fitzgerald. Please proceed with your question.

Thanks. Good morning. A couple of quick questions. So, you talked about using your free cash flow to lower debt in the quarter. I was wondering if you could comment on how you think about using your free cash flow for share repurchases?

Yes, Gaurav I think, at this point, we do have - as we look forward into not only the balance of 2016 but 2017, we have a pretty good use of free cash flow at the moment, which is to fund - when we are not paying down debt is to fund the expansion of the two Silicon Valley assets that are certainly going to require about $70 million over the next couple years. So with double-digit returns on that money, it's our belief that our cash is much better used and served at this point to fund those expansions.

Okay. And then following up on Silicon Valley, are you still expecting an annual run rate of $10 million on EBITDA and $6.5 million on FFO per share from those expansions?

Yes, once all three of them are open, yes, we do.

Okay. Thank you.

Thank you.

Thank you. Our next question comes from Patrick Scholes with SunTrust. Please proceed with your question.

Hi, good morning.

Hi Pat.

Just another question on the Silicon Valley market, any concerns you have about transient corporate business going into next year?

No, we don't at this point. Actually, demand is still pretty strong. We do have obviously some pretty big companies out there, whether it's Google or Apple, LinkedIn, you name it, that we've talked about for next year in terms of demand requirements and room inventory, as well as rate negotiations and quite frankly, those have all been pretty good so far.

Okay. Thank you. My second question, what is the expected RevPAR and EBITDA impact from the SpringHill Suites Savannah closure due to the hurricane?

It was only for a week, so it maybe $100,000, $200,000, so it's not that big of a number.

Okay. That's all for me. Thank you.

Thank you. [Operator Instructions] Our next question comes from Anthony Powell with Barclays. Please proceed with your question.

Good morning, everyone. A few on supply growth. What markets right now have the highest percentage of rooms under construction among your major markets?

Hi Anthony, this is Dennis. We are just not sure we have all of that data right here in front of us. So we may have to …

Yes, I think we will circle back to you.

Just generally what markets concern you, I guess, in terms of upcoming supply additions from a broad basis?

I think that the markets frankly that we have been talking about are the ones that seem to be showing continued new supply in 2017 as well. So it's still Silicon Valley, as I mentioned, where I think there's another 3% roughly on the books to come and I think as you look across San Diego, there's more hotels to come there. Did you find the sheet with the …

Yes, again, it's some that are similar to what we've seen and what we've talked about in the press release. Brentwood is a challenge, a couple that are outside of that where we may have just individual hotels, not necessarily a cluster of hotels, but Savannah continues to see some supply increases, as well as Bellevue, Washington has continued to absorb it and that's been a story by the way for a couple years now is just the fact that the demand has been so strong that we've absorbed that pretty easily. But Bloomington is still going to be an issue as well and in Anaheim as well. So those are the top ones.

You had mentioned Denver, which is showing, I guess, overall supply growth next year, but you've done well there in that market and is that less of a concern?

Yes, absolutely. We look at it from the Denver Tech Center, it's actually pretty de minimis. If you look at our Cherry Creek hotel, it's a little less than 1% in terms of our direct market track, so not bad.

Got it. Thanks. I guess medium term, most of your brands, Hilton and Marriott, are aggressively promoting some of their mid-priced flex service brands, Moxy, Tru and whatnot. Are you concerned that those hotels pop up in your markets over time and potentially undercut you in rate?

Well, as we look, for example, I think at Mall of America, there is a Tru. We just got a notice for a franchise application there. I think we are going to see, particularly with Tru, more of those than anything. Moxy is supposed to be very focused, as you know, to really big city urban. So, I think you'll see some of that, for example, of course, we are not in New York City, you will see a Moxy come in San Diego in the gas plant, the downtown area and I think you'll see it in downtown Bellevue, for example and again, so we are in those kind of markets. But I think we are in a slightly or more than slightly different segment and again hopefully be able to, with good marketing, differentiate ourselves enough to not be as worried. I would be more worried when, for example, a new AC by Marriott opens up next to one of our Courtyards, or something like that, or even a Residence Inn or a Homewood because they are geared at that upscale same segment, similar traveler even if it's not extended stay. So you look at something like a SpringHill Suites and if an AC is opening in that end market, you've got to have an impact.

Got it, thanks. Finally, some of the companies that we cover are reporting some strong leisure trends. Have you seen that in any of your markets and is there a way for you to go after that business?

Look, we've got a few hotels, of course, that we focus like downtown Savannah in the historic district, etc., for that kind of market.

Portland, Maine, Fort Lauderdale.

Yes, absolutely. So that's one of the reasons why we acquired those hotels because we did not want to be 100% corporate-reliant. So that should give us some diversification and some balance here in RevPAR.

Anthony, if you look at, Jeremy mentioned Portland, Maine, RevPAR was up almost 8% in the quarter and our Residence Inn Lugano in Fort Lauderdale, RevPAR was up almost 9% in the quarter. So, leisure markets have done fairly well. Savannah as well was a pretty decent grower in the third quarter with - so, yes, we would echo those trends.

All right, that's it for me. Thank you.

Thank you.

Thank you. At this time, I would like to turn the call back over to management. There are no more comments.

We appreciate everybody being on the call today and as I said, I think we look forward to better times ahead. We have to survive a few more quarters of this. We don't see it getting substantially worse unless something happens in the economy or otherwise, but I can assure you that our efforts, particularly on the asset management side, are intense relative to top line and cost savings for the bottom line. And thank you.

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