Buy This Lodging REIT For Yield + Gains!

I have owned a number of lodging REITs in past years. Our most recent, however, was Hersha Hospitality (HT) which we sold at a nice profit back in late 2014. (FYI, with its round trip back near what we paid this past year, Hersha is starting to look good again...) But of the three most undervalued lodging REITs I see right now – Pebblebrook Hotel Trust (PEB), Hersha and Sunstone Hotel Investors (SHO) – Sunstone would be my first choice with the others as further diversification later.

I travel a great deal for my business as well as for pleasure and in support of a non-profit on whose board I serve. This puts me in lots of different hotels, where I always inquire which companies actually own and, if different, which manage the property. In most cases Marriott, Hilton, Hyatt et al provide some combination of employee training, marketing and branding, logistics and supply, restaurant management, etc., but they do not own the land and buildings they occupy.

Often, the owners, typically REITs, large real estate development companies, or consortiums of successful individuals, will also hire a property management company to oversee day-to-day operations. No matter the business model, most quality properties then affiliate themselves with a nationally-known hotelier like Hyatt, Hilton or Marriott in order to gain national exposure, provide loyalty programs, and train employees to the standard guests have come to expect from these names.

Hyatt Regency Newport Beach – Far From the Madding Crowd


One of my favorite hotels, to which I return whenever I am in Southern California, is the Newport Beach Hyatt. This is an older hotel in a sylvan setting, spread across 26 acres with buildings no higher than three stories. The sense of being in the country, while really an easy walk to Balboa Island or a slightly longer one to Fashion Island, is enhanced by the views of Back Bay, beautiful landscaping and the contiguous golf course. The service is always superb and the onsite dining excellent. They are a typical Sunstone acquisition. The staff is attentive without being intrusive and leadership is innovative and guest-focused.

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Disclaimer: I do not know your personal financial situation, so this is not "personalized" investment advice. I encourage you to do your own due ...

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