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No. of Recommendations: 47
Here’s a short post of the type I have threatened:

I have never been a big fan of hotel REITs, as this category lacks the protection of long-term leases, and results can be cyclical and affected by new developments that have not been as disciplined as in the case of other property types. The only hotel REIT I own presently is LaSalle (LHO). It owns “upper upscale” hotel properties, most of which are independently branded (giving the REIT more flexibility than other hotel REITs). Its heaviest concentrations are in San Francisco, Boston, San Diego and D.C. Management is solid and experienced, and they are good capital allocators. Debt leverage is very low, at below 30% and debt/ebitda is a very modest 3.2x.

LHO came out with earnings last night, and they were quite good. RevPar grew at +5.4%, and hotel EBITDA growth was +16.8%. Full-year earnings guidance was boosted by 3% at the mid-point. AFFO should rise by almost 13% this year, and perhaps by almost that in ’16. The stock rose 1.4% today, to $38.50, where it trades at a REIT market multiple of 20.9x. It also trades at a very modest NAV discount. The 12-month high and low is $43.56 and $31.36.

LHO has been generous with its dividend increases. Last night it announced a 20% dividend increase to $1.80 per share. The yield at today’s closing price is 4.67%, and the new dividend will be covered by estimated ’16 AFFO (though not by a lot). I bought more LHO today, and believe it’s a good REIT to own for those who like yield and willing to assume a little more risk than your average REIT, given the nature of its property type.

P.S. LHO has two preferreds outstanding. The one I like most (but don't presently own) is LHOpI, which trades at par and yields about 6.38% (slightly more with accrued dividends). But, like most of these, it is pretty illiquid.

Ralph
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