Cerberus Capital Management and Chatham Lodging Trust (CLDT.N) said on Tuesday that analyst downgrades for the lodging sector, weakening hotel asset sales and a 30 to 40 percent decline in the stocks of competing hotel operators were among the nine reasons it backed out of buying Innkeepers USA Trust (INKPQ.PK). Innkeepers, a hotel operator, filed for bankruptcy last year and later agreed to sell 64 hotels to hedge fund Cerberus and real estate investment firm Chatham. The deal was due to wrap up in August, but Cerberus and Chatham claimed that a "material adverse event" had occurred with the deterioration of the global economy and walked away. Innkeepers then sued the firms, and a trial begins in bankruptcy court next week. Most deals -- both in and out of bankruptcy court -- have material adverse event clauses built into them. In a court filing on Tuesday, Cerberus and Chatham laid out the facts they will present at the trial, including more details about exactly what economic conditions had changed, such as reduced U.S. gross domestic product projections and the U.S. credit downgrade by Standard & Poor's ratings agency.
Chatham Lodging Trust is a hotel investment company. Shares of CLDT fell by 0.77% or $-0.0707/share to $9.13. In the past year, the shares have traded as low as $9.11 and as high as $19.46. On average, 82980 shares of CLDT exchange hands on a given day and today's volume is recorded at 16431.
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