Opinions Paul Gardner, CFA
American Hotel IncomeHOT.UN.TODON'T BUYMay 29, 2018
$8.44
Stock price when the opinion was issued
$0.47
As of Jun 04, 2026. Market Open.
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DON'T BUY
They own U.S. hotels, a high-risk, high-reward stock. He's bearish on hotels, which is struggling with labour costs and keeping labour. HOT.UN has done a good job restoring vacancies, in the low-70s, though their peak was in the 80s. However, they've made up the balance on their hotel rates. Their balance sheet is slightly higher, so he would avoid. There are better hotel names.
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DON'T BUY
He once owned this, selling it before Covid fortunately. The reason was that the 9% dividend could not be sustainable. Indeed, the dividend was cut during Covid. He wouldn't buy it back. Their hotels remain largely empty. He isn't a flipper or trader. Perhaps you can make a trade her if the US economy rapidly reopens and travel revives. There are better ways to play the reopening. Doesn't know when their dividend will return.
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DON'T BUY
This REIT has had so many problems. They owned a lot of railway depot hotels, where engineers would take rest. These contracts have been lost and they own in secondary markets. They have over distributed and missed earnings on several occasions. They are now having to invest to keep these assets maintained. This is still a work in progress stock. He does not think the 12% yield will be sustainable. Stay away.
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DON'T BUY
A huge dividend is not a good thing. The market is telling us something – the dividend is too high. They may be capitalizing too much of their maintenance expenditures. The CAP-X is about 6% of net operating income. It should be 20-25%, which is closer to what they are actually spending. They don’t have to cut their dividend, but at this point in the cycle and with more sensitivity in the cycle, they should be more conservative with their capital.
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BUY
A REIT that owns hotels in secondary US cities. They've upgraded old hotels, many on railway lines. They took a cash-flow hit and the street wasn't ready for that. The stock took a big hit in 2018. Good sustainable yield of 11%. As these investments pay off this and next year, they'll see higher income and share price. But they need to show payback and results in their next earnings report.
Jamie Murray Owned
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BUY
REITs aren't doing bad now. We're getting close to the end of the cycle rate-tightening as bond yields have risen alot. on This REIT comes down to your view on interest rates--he thinks we'll come to the end of this in 6-12 months when the cycle turns. REITs like this have decent valuations. However, the bears say that the bond market will correct for another two years.
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HOLD
He has met with their management a few times. They have transitioned their business from hotels for railworkers and staff, which was a simple and good business. They have transitioned to owning more hotels, generally in B cities in the US. He doesn’t have confidence that this will work out well. Its price has been dropping. He doesn’t recommend selling it this low.
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He's met them a few times and nearly bought their stock. It was the hotel chain for railroad workers, but have since re-positioned themselves into premiere brands operating in secondary markets like Pittsburgh. They've done a good job of repositioning, but had a poor quarter. True, there are good things in thosenumbers, but it'll take maybe three quarters to work through this transition. Also, hotels are vulnerable to an economic downturn.