Tuesday, Hospitality Properties Trust (HPT) raised its dividend payout 4.4% to a quarterly $0.47. Shares of this REIT now yield over 8%. Shares of Hospitality Properties Trust remained unaffected by the increase payout. Shares ended the day trading at $23.40, stuck in the middle of their fifty two week range of $19.77 to $27.00.
Hospitality Properties Trust owns hotels in 44 states in the United States, and also has properties in Puerto Rico, and Canada. The company remains the only hotel REIT with investment grade debt ratings. Hospitality Properties has a total of $7.0 billion in its investment portfolio of hotels and travel centers. The company owns 475 properties, consisting of 290 hotels and 185 travel centers (as of June 30, 2012). Here is a look at the portfolio by value:
· 185 Travel Centers of America (TA): $2.6 billion
· 123 Marriott International (MAR), 17,712 rooms: $1.7 billion
· 93 InterContinental Hotels (IHG), 13,747 rooms: $1.3 billion
· 21 Sonesta Hotels, 4,184 rooms: $0.57 billion
· 22 Hyatt Hotels (H), 2,724 suites: $0.30 billion
· 11 Carlson Hotels, 2,096 rooms: $0.20 billion
· 20 Wyndham Hotels (WYN), 3,052 rooms: $0.20 billion
Hospitality Properties Trust has eleven agreements signed with seven different hotel brands. Seven of the agreements feature manager guarantees and/or security deposits. These guarantees offer protection on minimum annual rent payments in case the hotels feature extremely low occupancy. Here is a look at the eleven agreements:
|Agreement||# Units||# Rooms||Minimum Annual||Percentage|
|Marriott No. 1||53||7610||$67,582||11.3%|
|Marriott No. 234||69||9764||$101,482||17.0%|
|Marriott No. 5||1||356||$9749||1.6%|
|Sonesta No. 1||20||3701||$36,097||6.0%|
|Sonesta No. 2||1||483||$2440||0.4%|
|TA No. 1||145||N/A||$150,463||25.2%|
|TA No. 2||40||N/A||$56,372|
In total the agreements provide an annual minimum rent of $597,112.
Hospitality Properties has $2.6 billion invested in travel centers across the country. These unique offerings are located along highways. The average travel center is 24 acres with parking for 189 trucks and 100 cars. Each travel center features a full service restaurant and at least one quick service restaurant. The 185 total travel centers in the portfolio have 286 quick service restaurants across the country. Each travel center also features a truck repair and parts store, along with the normal gas station, and convenience store.
Hospitality Properties Trust is geographically diversified with no state making up more than 12% of the portfolio. Here is a look at the top states:
· California 11.6%
· Texas 11.4%
· Georgia 5.6%
· Arizona 4.4%
· New Jersey 4.2%
· Others 62.8%
On November 5th, Hospitality Properties Trust will report third quarter earnings. Analysts are expecting the company to post $0.79 in earnings per share. For the fiscal year, analysts see the company reporting earnings per share of $3.11 after posting earnings of $3.30 last year. In 2013, analysts see the company earning $3.26.
Hospitality Properties Trust has been public for sixteen years. The company has a great credit rating and also has manageable debt. Hospitality Properties has a $750 million line of credit that is undrawn. No long term debt is due for the company until 2014.
Investors looking for safety and yield should look no further than Hospitality Properties Trust. The company owns some of the most recognizable hotel brands in the world and acts as a landlord to the larger corporations. The ownership of travel centers is also strong as traffic on highways for cars and trucks stays the same or increases. Shares trade at less than ten times earnings and offer an 8% yield.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.