Chesapeake REIT posts strong RevPAR gains, forecast

ANNAPOLIS, MARYLAND Chesapeake Lodging Trust reported a net loss of US$1.5 million in the fourth quarter of 2010, but its RevPAR increase of 6% and an improved forecast for 2011 has analysts bullish on the REIT.

“We are reiterating our outperform rating and US$23 price target for shares of Chesapeake following its fourth quarter earnings release,” says analyst David Loeb of R.W. Baird & Co., citing the REIT’s strong 2011 RevPAR  guidance of increases of 8% to 10%. “With US$75 million of investment capacity remaining, Chesapeake can acquire one more hotel, but more equity will be needed in order to double the size of the portfolio, which is management’s goal.”

The year-old Chesapeake acquired the 360-key Le Méridien San Francisco for US$143 million, or US$397,000 per key, in December. Chesapeake expects to close on the 195-key Homewood Suites Seattle Convention Center before the end of March at a price of US$53 million, or US$272,000 per key. The REIT owns five hotels comprising 1,629 guestrooms.

“We are very pleased with our accomplishments since going public in January 2010,” says President and CEO James L. Francis. “Over the last 12 months, we’ve raised approximately US$310 million of equity, invested or committed approximately US$456 million in high-quality hotel properties with solid going-in yields and requiring limited owner-funded capital, obtained a US$150 million revolving credit facility with a syndicate of banks that will provide financing flexibility as we continue to grow our hotel portfolio, and began paying a strong quarterly dividend to our shareholders.”