Hospitality Properties Trust (NYSE:HPT)
CAPS Rating:
The Company is a real estate investment trust which invests in real estate used in hospitality industries.
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The Company is a real estate investment trust which invests in real estate used in hospitality industries.
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This is a strong landlord that can weather current troubles. Hotel business isn't going to dry up rolling through the summer. TA could U-turn in 2009. (with fingers tightly crossed) Very-long term I think HPT is going to keep seeing steady growth and a solid dividend (which is currently only 76% of FFO)
FFO is not a cash figure; it is a GAAP earnings metric. To get to Funds Available from Distribution you need to get remove the non-cash items (straight line rent, FF&E reserves) and you'll get to a $3.08 dividend on FAD of $4.00 or about 75% and that's before there's a rent cut from TravelCenters (TA). That 'cushion' over the dividend is about $80MM but the TA rent right now is about $120MM too high (they're chewing through $30MM/qtr in cash). TA can't keep this up or else HPT needs to cut the rent and perhaps their dividend.