Hersha Hospitality Preferreds and Common Tank

Lodging REIT Hersha Hospitality (NYSE:HT) turned into quite a disaster this past week and the tumbling commons shares took the preferreds with them.

The company released earnings on 10/23 and while a quick review didn’t find too much to worry about, obviously the marketplace didn’t like them as the common shares opened the week at $19.57 and closed the week at $17.43.  The company pays a common distribution of $1.16/share so has a nice yield of 6.7%.

Here is a chart of the common shares, which are very unloved–and of course caught in the market tumble.

Additionally there are 3 perpetual preferred outstanding and they are as unloved as the common shares. Here are charts of the C, D and E series preferreds. The have coupons of 6.875, 6.5 and 6.5% respectively. Current yield are all in the 7.5% area. For a well run lodging REIT these are pretty decent current yields.

At this time we are not interested as we are trying to stay away from perptuals until at least January because of what we believe is some interest rate risk–but for folks looking for a decent yield maybe these are of interest.

3 thoughts on “Hersha Hospitality Preferreds and Common Tank”

  1. Tim curious if the company holds variable debt? Lodging reit AHT has taken a beating too. Many on SI love it and buy and buy on way down. Might be a good buy who knows, but they never mention (or maybe unaware) that 91% of the companies debt is variable/adjustable debt. I dont like those types, especially levered ones no matter what cash they have laying around for a rainy day.

    1. HI Grid–I haven’t dug into the detail as I have no interest and just wanted to point out the drop in case someone missed it.

      Ashford is another story altogether as you have seen—the debt is tremendous and the leverage they carry is quite dramatic, which is why we wouldn’t own AHT common except for a quick flip–like we have done recently. I know I have watched people pile into the AHT common–I think that is a very big mistake for any conservative investor.

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