Hello Paul,
I like your Financial Analysis on SPPR. And to me, the scenario you layout of a 12% return is almost enough right there to consider investment. Here are some other positives:
I think that FFO will improve from the $35k once the economy gets some footing. In the meantime, they're at $296M of property value vs. $192M of mortgage. A difference of $100M vs. $34M of current market capitalization. Given that RevPar has dropped about 1/2 the national average for their hotels, I'm believing that the property value is still relatively reasonable. They're in the process of selling hotels to improve their balance sheet.
So, to me, it's a matter of getting some decent FFO now, even after the drop in RevPar nationally, and waiting for the economy/banking system to recover. But, if the stock bounces in the meantime like AHT did (4-5x from lows), I would take my profits in the short-term and move on to something else.
Thanks,
cw |
