Tags: Hospitality | Properties | REIT | HPT

Hospitality Properties REIT A Hold for Now

By    |   Tuesday, 07 February 2012 09:30 AM

Hospitality Properties Trust (HPT), a real estate investment trust (REIT), is worth holding for now but not buying, analysts contend. The reason: The REIT primarily invests in U.S. hotel properties buffeted by the economy. After recovering in 2011, Hospitality Properties Trust’s hotel room prices will rise more slowly than its peers in 2012, they believe.

The Massachusetts REIT owns more than 300 hotels and 150 travel centers, including well-known names such as Courtyard by Marriott, Staybridge Suites and InterContinental.

Lately, though, Hospitality Properties is rejuggling its portfolio. Some hotels are being sold, others rebranded. For example, it’s putting 21 Marriott hotels up for sale. But Hospitality Properties also is acquiring Sonesta International Hotels for $174 million, adding hotels in Boston, New Orleans and other locales.

For third-quarter 2011, Hospitality Properties reported funds from operations (FFO) of $98 million, down from $101.1 million in 2010. FFO per share was 79 cents, down from 82 cents.

Full-year FFO per share is expected to uptick to $3.30, compared to $3.24 in 2010. The 2012 consensus estimate is $3.27.

Like all REITs, hotel REITs do offer good dividends. Hospitality Properties is no exception, yielding 7.2 percent. S&P analysts add that the dividend is adequately covered by cash flow.


Given slowing income, however, lots of analysts have hold ratings on Hospitality Properties. Of the seven analysts followed by Thomson/First Call, only one has a strong buy recommendation, with five holds and one sell.

S&P analysts also rate the hotel REIT a hold, citing its focus on competitive niches such as suburban and extended-stay properties, which pressures pricing.

The company reports next on Feb. 21.

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