FelCor Lodging Trust, Inc. (FCH)
The Company operates as a real estate investment trust. Its business is conducted in one reportable segment, which is hospitality.
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Beaten up (rightfully so). It was thrown away by many.
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This company owns mostly Holiday Inns and Crown Plazas. Aside from the problems currently being experienced in the travel industry, a number of the properties are older and somewhat rag-tag. They will need to spend considerable sums to upgrade their properties before I would consider them in a positive light.
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Betting that economic improvements will lead to huge improvements in depressed RevPAR and modest multiple expansion. More:
http://www.fool.com/investing/small-cap/2009/10/16/the-next-million-dollar-penny-stock.aspx
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Even with the slowdown, analysts expect FCH to have FFO of over $2/share in 2009. That means that it's trading at a P/FFO of just a bit over 4. That's stunningly low for a REIT. The rebound will precede the economic recovery, meaning it's ripe for a turnaround soon.
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http://news.morningstar.com/articlenet/article.aspx?id=251375&pgid=hparticle
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Price is down, unfairly punished by weak sector. Good financials, strong dividend, remodelings completed at most hotels.
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a very positive free cash flow helps to cover its dividends and with a lot of renovation that have been completed look for an increase in more free cash flow within the next two years.
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Hotel REITS will continue to be a solid investment. Out of all the real estate sectors, I think hotels are #1 right now. people are still traveling a lot and are staying in hotels. Occupancys overall are good and the average daily rate (ADR) keeps going up. There is also a lot of new development in the pipeline across the country. I think you can not go wrong with hotel REITS.
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FELCOR PFD C IS A STEAL AT CURRENT PRICE. YIELD IS OVER 10% ON A CUMMULATIVE PFD STOCK THAT HAS NEVER DEFAULTED
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A REIT that shouldn't be treated as a REIT exposed to subprime, but has thus far. Hold for gains. Buy for a great entry point here at the end of Aug07
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