Chatham Lodging Trust and Cerberus Capital Management have cancelled their $1.1bn deal to acquire interests in 64 hotels owned by Innkeepers USA Trust and its affiliates.

Chatham and Cerberus jointly terminated the deal in accordance with the terms of the agreement as a result of the occurrence of a condition, change or development that is expected to have a material adverse effect on Innkeepers’ business.

According to Chatham, its separate purchase of five Innkeepers hotels, which closed on 14 July 2011, is not affected by the decision.

Cerberus and Chatham agreed a bankruptcy auction to buy 64 Innkeepers hotels for $1.125bn in May 2011.