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.

Franklin Street Properties

Ticker: FSP, Buy below $12.

Why I Would Buy

  1. Cheap– Franklin Street Properties is trading at just 11 times forward FFO (free flow from operations).
  2. Dividend – FSP yields over 7%, while the FFO payout ratio hovers around a healthy 75%.
  3. Credit Rating – FSP enjoys investment grade ratings.
  4. Insider Buying – Managers and directors at Franklin Street purchased 150,000+ shares during the past 12 months, of which 131,275 were purchased during the past 3 months. No shares were sold by insiders during this period.

What Could Go Wrong

  1. Hurricanes Harvey and Irma – Houston is one of the key markets for Franklin Street, and they own properties in Miami and Atlanta too. Therefore, the impact of Harvey and Irma on FSP’s cash flow is indeterminate at this point.

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

British Land Company

Ticker: BTLCY, Buy below $9.

Why I Would Buy

  1. Cheap– British Pound is hovering near historic lows relative to the US Dollar. This makes now an ideal time to buy British hard assets (such as real-estate) on the cheap using the strong dollar.
  2. High Yield– British Land is a REIT, and yields 5+%.
  3. Discount – Shares trade at about 70% of book value.
  4. Buyback – Management (rightly) perceives shares to be undervalued and has initiated a massive buyback, setting aside 300 million pounds ($393 million) for this.
  5. Sponsored ADR – British Land is listed on the London Stock Exchange, however the company has sponsored an ADR for the benefit of American investors.

What Could Go Wrong

  1. Brexit –The Pound and British real estate are cheap for a reason: the full impact of Brexit on the British economy is unknown. Additionally, financial companies may leave London as a result of Brexit, reducing demand for real estate.

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