Ryman Hospitality Properties (NYSE:RHP) enjoyed a good run last week — its 7.2 percent return was the best among the 175 U.S. equity REITs we track. Following the Q3 results release on November 3, Ryman has released a stronger per-share Adjusted FFO than in Q2. This time, in fact, we are not surprised to see a hospitality REIT lead the stock performance — the sector has demonstrated strong fundamentals and is among our favorites.
Year-over-year per-share AFFO has spiked by a whopping 37 percent, potentially demonstrating the best mark in growing FFO in the sector during Q3. However, since other metrics associated with the dividend generation have remained equal or below, that was apparently the only reason for the good stock rally. Revenue growth went from 6 percent in Q2 to 3 percent in Q3; same-story hospitality EBITDA dropped from 10 to 8 percent; and occupancy decreased from 76 to 72 percent. Check out the above comparison for details.
Believe it or not, despite strong Q2 results, Ryman was not among our top choices in the hospitality sector. Even projecting a 40 percent per-share AFFO increase in 2015, it has demonstrated weaker-than-sector-average figures — revenue growth, dividend payout, occupancy and total debt to capitalization. The 5 percent dividend yield is in line with the sector’s 4.8, and price-to-FFO (12×) is equal thereto.
Ryman is a unique company, with four large hotels that source income mainly from group events, in locations where guests can stay in hotels and enjoy amenities; the last fact makes food-and-beverage exceed room revenues. Because of their size, their hotels rank among the top largest in America, competing with those in Las Vegas and Orlando. They are located in Dallas, Nashville, Orlando and Washington.
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Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.