Hersha Trust

Ticker: HT, Buy below $20.

Hersha Trust is a REIT that owns and operates upscale hotesl in United States .

Why I Would Buy

  1. Cheap – Hersha Trustcurrently sells at 8x trailing and forward AFFO (Adjusted Free Flow from Operations).   
  2. Insider Buying – Strong insider buying during last last 12 months. No insiders have sold last 3 months.
  3. Dividend – 7%+ yield.
  4. Insider Holding – More than 10% of the outstanding units are held by insiders
  5. Low Dividend Payout – Less than 70% of AFFO paid out as dividends.

What Could Go Wrong

  1. High Debt – Debt-to-Equity at 1.39, several high yield preferred securities are outstanding.
  2. Risky Market Segment – Luxury hotel occupancies are highly sensitive to the health of economy.
  3. Interest Rates – Interest rates moving up will likely hurt all leveraged REITs including HT.

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

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