It is interesting to note that hotel REIT stocks have moved in tandem. Last week, hotel REITs increased by an aggregate of 5.2 percent, which is a much higher figure than the aggregate of 1.3 percent for equity REITs as a whole. As a result, it should come as no surprise to learn that hotel REITs claimed 11 out of the 16 top performing REITs last week.
In hindsight, this might not be as surprising as it seems. After all, hotel REITs have had some of the highest dividend yields since the mass sell-off in 2015, meaning that they were attractive choices for investors who were interested in a stable income rather than speculation. However, it should also be noted that they have been held back by beliefs in an oversupply in the market, which has been supported by statistics such as two-thirds of rooms under construction being aimed at upscale and upper upscale markets, which are already believed to be highly competitive.
Still, some hotel REITs have managed to differentiate themselves from their competitors by focusing on either a particular location or a particular segment. That might not be the case of Chatham Lodging Trust, which presented the best stock performance out of its peers last week. Chatham has been focused on upscale extended-stay as well as mid-price segments. In turn, they reported an increase in occupancy of 2 percent as well as an increase in AFFO per share of 14 percent.
Ashford Prime, which saw a 3 percent increase to its shares, continues to suffer because of fighting between its management and activist hedge fund Sessa Capital. Originally, the hedge fund came in with the intention of making a profit on its sale, but ever since its efforts were blocked by Ashford Prime’s management, it has been locked in a bitter struggle, which is made all the worse by the fact that neither party seems willing to relent at the moment, suggesting that they will continue fighting long into the future.
In fact, it is possible that fears of a similar struggle have prompted a farmland REIT called American Farmland Company to address the gap between its share price and its estimated net asset value in order to prevent a similar intervention. So far, the announcement alone has earned results, seeing as how its share price went up by 12 percent, which was enough to make it the best performer last week.
Source: Chatham Lodging Trust(NYSE:CLDT), Ashford Hospitality Prime, Inc(NYSE:AHP),American Farmland Company(AMEX:AFCO)
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