Wow–Those Lodging REITs have Been Hammered

I haven’t seen much discussion on the site about the Lodging REITs (and their preferreds), but as I was looking at the ‘big loser’ spreadsheet it was totally littered with lodging preferreds getting hammered lower by 2-9%!!

Of course the hated Ashford Hospitality (AHT) preferreds took the biggest hits–you can see them here. This is a REIT with an extremely heavy debt load–there is not much room for poor business conditions–and between the corona virus and some softness in the industry this company could be facing a make or break situation.

Hersha Hospitality (HT) preferreds also came under heavy selling–see the issues here–as did the Summit Hospitality issues, Sotherly Park Hotels and others–the entire list of lodging REIT preferreds is here.

The point is that there may be bargains being created—and again maybe not. Not only will the corona virus play havoc with lodging REITs, but fundamentals appear to already be deteriorating in particular in New York City.

10 thoughts on “Wow–Those Lodging REITs have Been Hammered”

  1. CEQP preferred stock is a gift. I’m going to add some. Same with GMLPP even if the latter needs to get rid of the refi shackles.

  2. RLJ-A also was hitted sharply, it’s my biggest yesterday’s loss. Not buy nor sell but slightly worried about the future of the sector if the corona will spread…
    I thinking about to add some INN and PEB issues since these are only profitable companies in the lodging sector i know. So I believe they have more probabilities to survive in the bad times, isn’t it?
    Would be appreciated for yours thoughts about these two companies, gents.

  3. Yeah about them lodging prefds. I shoulda axed em yesterday, but they weren’t affected too much so I held. Been holding those AHTs for a good while now. Prob bout a $15 avg with dividends. Might let em go and get something less leveraged. Idk seems like a lot of work having to redploy even more capital after selling all of my gs.prd and prc last week.

  4. While the lodging REITs were hammered today, I was able to pick up some shares of PK at a very reasonable price this afternoon. They have a very strong balance sheet and shares were selling well over $30 back in early 2019. While the virus may have some short-term impact on operations, their properties are not worth 50% less than a year ago. Plus for us income investors, they pay a very nice dividend compared to the new non-cumulative bank preferreds being issued at rates under 5%. I was a little early on my purchase of HT common stock, but those shares are selling at a bargain price right now. Also, was a buyer of HT-C today with the coupon rate of 6.875% ( callable anytime). However, it is now trading below par with about 55 days of accrued dividends.

    While I may be taking some risks in the sector now, for long-term investors who plan to hold shares – this is where some money can be made, especially when there is little to no value in some of the preferreds trading in the $27 range now.

    1. Kaptain,
      Wow was just on TD looking at the screen when I saw a order filled at 23.53
      on the HT-C

      Wasn’t you was it ?

  5. Same thing happened with BDCs today, with even MAIN which is considered the creme de la creme down 9.6% on the day and the lesser known SAR down 7.1%. BDCS = – 4%

    1. I picked up 600 shares each of GBDC and ARCC yesterday near the close. I’ve been waiting for those two for a while. Since they both go ex- very soon, the stripped prices hit my first purchase target. If they fall again today, I’ll be doubling up as they approach NAV.

    2. MAIN is incredibly expensive so profit taking when stocks get hit is quite normal. SAR more reasonably priced but it had just outperformed peers by a mile.

  6. Tim; I couldn’t resist dipping my toe in a couple of these today. Just hope the little appendage isn’t cut off tomorrow!

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