Back in January at the Americas Lodging Investment Summit in San Diego, a source I interviewed on the subject of real estate investment trusts made a comment that stuck with me for a large part of the past year.
“A year from now, you’re not going to be talking about blind pools,” he said.
The reason those words stuck with me this year is because it stood in sharp contrast to the high level of activity REITs have shown this year. Pebblebrook Hotel Trust has made several investments this year, most recently acquiring the 254-room Skamania Lodge in Stevenson, Washington, for US$55.8 million. And Chesapeake Lodging Trust in October completed its own offering of shares, raising approximately US$140.5 million in net proceeds.
But given the news coming from Chatham Lodging Trust on Thursday, that statement from ALIS appears prescient. The blind pool REIT said it was calling off its previously announced offering of 7 million Class A common shares. Chatham cited “unfavorable market conditions” as the reason for the postponement.
• Read “Chatham postpones public shares offering.”
Chatham is in a quiet period and not talking, but an outside spokeswoman told me the REIT has not made a decision to cancel the offering and will continue to monitor the economic environment in deciding when to reinstate the offering.
I can’t help but wonder, though, just how much of an appetite investors have for shares of Chatham given the lingering uncertainty in the United States real estate market. The REIT’s shares closed Thursday down 10 cents to US$16.99. Year-to-date, the shares are down US$3.51 per share, or 17.1%.
Its fellow blind pools have seen mixed results. Pebblebrook’s stock is down 9% year-to-date while Chesapeake Lodging Trust’s shares are up 1.4% so far during 2010, but have shown strength during the past three months.
Of course, one statement does not make a trend and, as I mentioned earlier, other REITs have been active and successful in raising capital and acquiring properties. But that said, Chatham’s news can serve as a reminder that all is still not well with the U.S. economy and success can quickly turn to failure.