Hersha Hospitality Trust

Ticker: HT, Buy below $18.

Hersha Hospitality Trust is a small cap REIT focused on hospitality industry.

Why I Would Buy

  1. Cheap– Trailing P/AFFO: < 9x.
  2. Insider Trends – Management has been aggressive buyers for last 12 years, especially so in the last 3 months.
  3. Dividend – Currently yields over 6%. This is well covered by Adjusted Free Flow from Operations (AFFO), the payout is less than 55%!!
  4. Buyback – A recently announced buyback would retire 13% of outstanding shares.
  5. Below Book –Hersha trades below 80% of book value.

What Could Go Wrong

  1. High Beta – The Hotels industry is strongly correlated to the overall economy, and would suffer disproportionately in a downturn.
  2. Industry Trends – Home rental services are potentially disruptive trends for the hospitality industry, the full extent of impact is indeterminate.

Disclosure: I am long HT, please read additional disclosures here before taking any action based on this post.