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PALM BEACH, FLA. — On Friday, August 19, Chatham Lodging Trust (NYSE: CLDT) and Cerberus Capital Management, L.P. terminated their commitment and obligation to acquire interests in 64 hotels owned by Innkeepers USA Trust and its affiliates.

At that time, Chatham released a statement noting that the company and Cerberus jointly determined to terminate in accordance with terms and conditions of their May 16th agreement as a result of “the occurrence of a condition, change or development that could reasonably be expected to have a material adverse effect on Innkeepers' business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects.”

On August 22, Innkeepers’ Chief Restructuring Officer Marc A. Beilinson contested the termination: “The company has no doubt that Cerberus/Chatham terminated the Commitment Letter inappropriately,” he said. “Accordingly, we are evaluating all legal and equitable remedies against Cerberus/Chatham.”

According to the statement released by Innkeepers USA Trust and its affiliates, the notice of termination to purchase the equity in entities that own and operate 64 of the its hotels had no basis, and Beilinson contested the reasoning outlined in the statement from Chatham and Cerberus quoted above.

“Throughout our restructuring process, Innkeepers has maintained normal business operations at all of its properties, including the completion of all property improvement work on time and under budget as well as having successfully maintained its supportive relationships with its franchisors,” he said. “Cerberus/Chatham cannot dispute this fact and cannot support any argument that recent volatility in the global markets has negatively impacted the 64 hotels subject to the Fixed/Floating Transaction.”

Innkeepers has also begun evaluating all of its options with respect to the hotels subject to the agreement, including a process to re-market the 64 hotels over the course of the next few months.

Chatham's separate purchase of five Innkeepers hotels, which closed on July 14, 2011, is not affected by this decision.

Dan Marcec

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