Chatham Lodging Buys Six Hilton Hotels, Hikes Quarterly Dividend

Chatham Lodging Trust CLDT recently announced the acquisition of six Hilton-branded hotels with 589 rooms for $92 million. The portfolio includes two Homewood Suites by Hilton properties, two Hampton Inn & Suites hotels and two Home2 Suites by Hilton assets.

The company noted that the properties are relatively young, with an average portfolio age of about 10 years. Approximately 66% of the rooms are in the extended-stay segment, which represents the core focus of CLDT’s existing portfolio and preferred lodging category. Management also expects favorable labor dynamics to support margin expansion. The acquisition broadens CLDT’s geographic footprint in markets benefiting from increased investments in manufacturing and distribution.

The transaction also reflects CLDT’s active portfolio-recycling strategy. The company has been selling older, lower RevPAR and lower-margin hotels and reinvesting the proceeds into newer, higher-performing properties to enhance earnings and cash flow growth. Over the past 18 months, Chatham sold six hotels for roughly $100 million. These assets had an average age of 25 years, RevPAR of $101 and EBITDA margins of 27%. By contrast, the newly acquired hotels have an average age of 10 years and generated RevPAR of $116 with EBITDA margins of 42% in 2025.

The newly acquired portfolio will contribute to CLDT’s financial results for 10 months in 2026. On a full-year basis, the properties produced approximately $10 million in hotel EBITDA in 2025, representing roughly a 12% increase. Based on this EBITDA level and a pro forma blended interest rate of 6%, the portfolio is expected to add about $0.10 per share annually to adjusted FFO. However, CLDT’s net debt-to-EBITDA ratio is projected to rise by around 50 basis points following the transaction.

Management also highlighted a strengthening industry outlook, supported by slower new supply growth, increasing investments in artificial intelligence and the reshoring of manufacturing in the United States. Reflecting this optimism, the company raised its quarterly common dividend by 11% to $0.10 per share, marking its second consecutive year of double-digit growth. The dividend will be paid on April 15, 2026, to shareholders on record as of March 31, 2026.

Wrapping Up on CLDT

The acquisition reinforces the long-term growth strategy of Chatham Lodging Trust by improving portfolio quality and strengthening its presence in the extended-stay segment. By replacing older, lower-performing assets with newer, higher-margin Hilton-branded properties, the company is positioning itself for stronger earnings, better operating efficiency and more resilient demand.

Although the deal will modestly increase leverage, the expected uplift in EBITDA and adjusted FFO, along with favorable lodging industry trends, should support long-term cash flow growth and shareholder returns.

Over the past three months, shares of this Zacks Rank #1 (Strong Buy) REIT have soared 29.3% compared with the industry’s growth of 6.9%.

Analysts also seem bullish on this stock, with the Zacks Consensus Estimate for 2026 FFO per share having been revised northward 6% to $1.06 over the past week.

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Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are Cousins Properties CUZ and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CUZ’s 2026 FFO per share is pinned at $2.93, calling for year-over-year growth of 3.2%.

The Zacks Consensus Estimate for WPC’s 2026 FFO per share is pegged at $5.16. This implies a year-over-year increase of 3.8%.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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