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On 5-15 Citigroup upgraded Camden Property Trust (CPT) to hold from sell, saying that while the company is trading roughly in line with its peers, a premium now seems warranted given above-average same-store results are likely for the remainder of the year. On 5-16 Morgan Stanley Initiated coverage of AHT at Equal-weight. On 5-09 Wachovia Upgraded EHP from Underperform to Market Perform. On 5-05 JMP Securities Upgraded ENN from Market Perform to Market Outperform. On 5-19 Morgan Stanley Downgraded SHO from Overweight to Equal-weight. Equity Inns Q1 Update Nathan Parmelee, the Motley Fool, 5-05 The hotel and lodging market has been doing well for quite a while now, and until the economy begins to cool off, it's reasonable to expect Equity Inns to continue enjoying the good times. Equity Inns' first-quarter numbers were solid across the board. Revenue was up 30% versus last year to $94.1 million. The company's RevPAR (revenue per available room) also improved, up 10.2%, with the majority of the gain coming from increases in the daily rate charged to customers and a slight improvement in occupancy rates. The average daily rate and occupancy data that the company provided shows that the average daily rate gains were across Equity Inns' entire portfolio, but that with the occupancy numbers, there was some weakness in the Mid-Atlantic region and among a couple of the company's brands. That's all good news, but the real story for investors who purchased Equity Inns shares in the last couple of years has been the company's increased dividend payments. The first-quarter dividend of $0.19 is a 27% improvement over last year's first quarter. Assuming no further increases this year -- though I must admit an increase appears likely -- the company's yield is 4.2%, and the expected $1.28 to $1.35 in adjusted funds from operations that the company is forecasting more than covers the $0.76 annual payout. On the balance sheet, Equity Inns remains healthy, with 34% of its enterprise value in debt. Of that debt, 98% is fixed or hedged, so if interest rates continue to lurch higher, Equity Inns' interest expense should remain relatively stable. Given Equity Inns' focus on suite and extended-stay hotels, the company's performance is likely to be more stable than that of the average hotel real estate investment trust. However, when the economy eventually slows, investors can expect Equity Inns' performance to cool off. Fortunately, the company doesn't see a slowdown in the near future and is using the good times to reposition its portfolio of hotels into newer buildings with strong brand names. LaSalle Hotel Properties Delivers Again Sean Smith, The Motely Fool 4-20 Another quarter, another stellar earnings report by LaSalle Hotel Properties, and another 52-week high for the stock. Yawn. Shares of the upscale and luxury hotel REIT have been on a steady climb since early 2003. Given the strength of the company's first-quarter results, the shares seem poised to continue their rise. LaSalle's earnings announcement contained a wealth of positive information, including increases in occupancy and room rates. Earnings soundly beat analyst estimates, and the company increased its 2006 guidance for the second time. Since the stock has risen almost continuously for three years now, investors are likely wondering how long the growth can last. For much of that time, LaSalle has traded at a premium multiple to its peers, such as Hospitality Properties Trust and Innkeepers USA Trust. That premium comes with a price: One earnings misstep, and the shares can drop faster than Barry Bonds' home-run record this season. For years, many analysts have pointed to LaSalle's strong balance sheet and access to capital as justification for its premium valuation and as indicators of likely future growth. The question has always been when, and how, the company would put that money to work. Since the end of November, La Salle has begun to answer that question by announcing the acquisition of six hotels for a total of $539 million, including Chicago's House of Blues Hotel and Westin Michigan Avenue. In LaSalle's 10-Q filing, we see that at the close of Q1, the company had only $51 million drawn on its $300 million credit facility; that debt made up only 27% of the company's total capitalization. On average, most hotel REITs carry debt-to-total capitalization percentages in 40% to 50% range. This gives LaSalle ample capacity to add leverage in order to finance additional property acquisitions. With its existing property portfolio delivering exceptional operating results, and with the capacity to add additional properties throughout 2006, shares of LaSalle Hotel Properties appears poised to continue its ascent. Sometimes, premium multiples really are deserved. Host's Earnings Not So Inviting Sean Smith, The Motely Fool 4-27 In the Wall Street world of "bigger is better," Host Hotels & Resorts is a brokerage-house favorite. With a nearly $8 billion market cap, the company formerly known as Host Marriott is by far the largest hotel real estate investment trust (REIT), and seventeen out of its 18 stock analysts recommend its shares. But after reviewing the company's first-quarter earnings report, investors pursuing the hotel REIT space may be better served by looking elsewhere. Host reported 8.8% growth in revenue per available room (the primary hotel-industry operating metric, otherwise known as RevPAR) during the first calendar quarter. That's a solid increase, but it falls short of the first-quarter RevPAR increases already posted by fellow REIT LaSalle Hotel Properties, which delivered 13.7% growth, and non-REIT hotel operator/franchisor Marriott, which posted 11.7% systemwide growth in its North American properties. Host's size can work as a stabilizing influence, with its results spread over a large portfolio of hotels. On the flip side, it can be difficult to generate external growth that is substantial enough to move the needle. Host did recently make a very large acquisition, picking up 28 hotels from Starwood Hotels & Resorts for roughly $3.1 billion. Transactions of that magnitude don't present themselves very often, though; the company needs to excel at generating internal growth through improving operations at its hotel properties. And while Host's first-quarter operating results were certainly impressive, they weren't spectacular. That may seem like a high bar to set, but the shares already trade at a premium to the peer group, and Host's dividend yield of 2.7% is the lowest among dividend-paying REITs in the hotel sector. Host's strong earnings report should reassure current long-term stockholders that the company is operating well and steadily. For investors looking to open a position in the hotel REIT sector, however, other options appear to offer more attractive valuations and greater growth prospects. Getting to Know RevPAR Sean Smith, The Motely Fool 5-11 In real estate, some of the terminology used can be confusing. And because Foolish investors always strive to be in the know, we will take a closer look at the primary operating metric for hotel companies: revenue per available room, or RevPAR. RevPAR is an easily calculated number that provides a wealth of information about the operations of a hotel. It's calculated by simply multiplying the average daily room rate by the hotel's occupancy percentage, and is expressed in dollar terms. Now as far as mathematical calculations go, they don't come much more straightforward than that. For example, during the first quarter, hotel real estate investment trust LaSalle Hotel Properties reported an average daily room rate (ADR) of $170.76 and an average portfolio occupancy of 68.1%, equaling a first-quarter RevPAR of $116.33. In other words, the company generated revenue of $116.33 per night for every room in its portfolio during that time, which was a 13.7% increase over Q1-05. RevPAR is an important metric because it provides a quick, simple overview of the company's top-line operations in a form that incorporates both room rates and occupancy. By checking trends in a company's RevPAR, you can see where a company's operations are headed. The metric allows comparisons within a company's portfolio, on either a brand-specific or a geographic basis. RevPAR stats also enable investors to make comparisons among different companies, to see which ones are generating the best growth from their property. You can grow RevPAR by boosting either occupancy or room rates. However, while increases in either of these measures will boost a company's RevPAR, they do not affect the bottom line equally. Growth in average daily room rates will always have a more significant impact on profits because there are few additional expenses that are related to increases in ADR. While manager bonuses and tax expenses may be increased, the vast majority of increases in room rates fall directly to the bottom line. Increases in occupancy, on the other hand, come with additional costs, such as housekeeping, laundry, and utility expenses. For a real-life comparison, we turn to Equity Inns and Winston Hotels. During Q1, Equity Inns and Winston Hotels reported RevPAR gains of 10.2% and 10.4%, respectively. Upon examining those gains, we see that Winston's occupancy increased 2.3 percentage points and its ADR rose 6.7%, while Equity Inns' occupancy increased 1.3 percentage points and its ADR rose 8.1%. So while Winston posted a slightly higher RevPAR percentage gain, the increase for Equity Inns was likely a more profitable one because of the larger increase in ADR. So, when evaluating a hotel company, be it an operator or a REIT, make sure to keep an eye on RevPAR, and in particular the trends in its recent results. Compare the company's RevPAR growth with that of its competitors, both on an absolute basis and in how the RevPAR numbers were generated. And rest easy knowing that you've got a handle on the company's top-line operations. NOTE: Although the tables above are checked and double-checked for accuracy, and may at times be 100% accurate - do NOT count on that. Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. Most sites giving this kind of data would say that it's information is for entertainment purposes only. I will not presume that you are that masochistic. And even accurately replicated and freshly retrieved FFO numbers are often stale. Home Page Previous REIT Update Top Sites |