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Chatham Lodging Trust Message Board

  • neddy4 neddy4 Jul 12, 2013 12:30 PM Flag

    Buyout better not be cheap for those of us with holdings if it gets taken private....


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    • I would recommend researching the previous Innkeepers deal for some insight into what Jeff Fisher believes is a good deal.

      The big different is that Innkeepers was leveraged up to the hilt with a 99% equity to debt ratio.

      Chatham is close to 50%, which is extremely better when it comes to valuation.

      The price Innkeepers went for was $17.75 and the book value was close to $10 per share.

      Based on FFO multiple it was at 14X.

      If CLDT gets a 14X multiple with an estimate at 1.6 it would be at 22.4.

      Chatham will earn more next year, so a 20% increase in FFO would mean a roughly 1.9 multiple.

      1.9X14 = $26.6.

      I estimate the fair value based on future earnings and expectations to be around $27 to $28 a share in a leveraged buyout. The new company can take on more debt and increase FFO by purchasing new assets that are on sale right now.

28.38May 21 4:03 PMEDT