Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: anializer who wrote (34785)	8/8/2009 11:28:42 AM
From: Grantcw	1 Recommendation Read Replies (4) \| Respond to of 78750

Another Hotel REIT Update as most released earnings this week: SPPR - To me, actually had the best report of them all, achieving net income for the quarter. Revpar is down much less than the industry. They are selling hotels here and there to add liquidity, seemingly without too much issue since the hotels are individually pretty cheap. I look at this as probably my safest Hotel REIT Play. FCH - I had bought a large position with an average price of about $2.25 and recently sold about 1/4 of that position at $2.80. I still like this company a lot because most of their hotels were purchased several years ago, giving them equity cushion as hotel prices fall from their hotels. Still producing FFO in this tough climate. BEE - I sold a few shares of TGB (Copper Miner) and FCH to buy some BEE shares. This is the company with the luxury hotels around the world. I like this company, but I find this to be more of a speculation that it's not going to go into bankruptcy as the economy turns around (as it's shares seem to be priced for a strong bankruptcy risk). Negative FFO this quarter, which is not good, but I think there are several factors that will turn this company around. No material debt repayments until 2011 is a big plus. AHT - I'm not in AHT anymore. Still monitoring it, but I don't like that the company is writing off it's mezzanine loans to other hotels. In addition, many of its hotels were purchased in the last few years, making me question the equity left in these hotels. But, I'm still monitoring this one. I think overall, a lot of these Hotel Reits are still being priced for a decent bankruptcy risk, but I feel with the economy seemingly turning around a bit, this risk should decrease. In addition, these Reits in general tie their mortgage debt to the hotel only, and when in trouble can deleverage by giving the hotel to the lender. Yes, this is not the ideal situation, but how many Hotels does BEE need to justify a market cap under $100 Million? Same with FCH under $200 Million. I think it's going to take some strategy, but between the economy turning around, the credit markets healed a bit, and the ability for these REITS to jettison Hotels one at a time, that these Reits will hopefully survive and therefore provide solid returns. We'll see if I'm right. :) cw