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No. of Recommendations: 5
MrJoe, I'm with you on HPT. Your post prodded me into shorting HPT today at 34.58. And since I was in a shorting mood, I also shorted USV at 13.64. With HPT, there is risk that people are missing that is hidden by their current triple net structure. This structure doesn't make their hotels any more valuable than those by other hotel REITs, yet they are valued way above others. Additionally they are valued far above what they paid for their hotels, and I'm sure that the hotel market has not appreciated to anywhere near this extent if at all. Their triple net structure is helping them temporarily by pushing all the pain of the hotel downturn onto the companies leasing their hotels. These companies will either go bust or make it to lease expiration and demand much different terms. I consider buying HPT akin to buying an office reit with properties located in an area where lease prices have dropped 40 percent, but because leases don't come due for some time, they continue to report good earnings. And people simply purchase based on current year earnings and/or a nice dividend. IMO, holding HPT because it pays a nice dividend, for lack of great investment alternatives, or because they don't want to pay capital gains taxes is a big mistake. Why would one want to own a REIT that sells well above the value of it's real estate that doesn't grow earnings. And everytime I've held onto something that I wanted to sell due to tax reasons, I have lived to regret it. Gifts like the current HPT stock price don't come around that often, and it is hard for me to understand why those long HPT don't want to accept the gift. Don't look a gift horse in the mouth. Since HPT management was issuing equity when they sold below NAV, and they love to issue more shares to grow the size of their REITs, I have to believe to believe they will be issuing equity soon. And simply by dump luck, this time the offering will actually raise NAV. Just as an aside, I purchased HPT-A today at 25.26 -- clearly a superior value to the common.
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