torsdag 7 november 2019

Hersha Q3 2019

Innehåller reklam och annonslänkar.

Jag lyssnade just på Q3 presentationen som Hersha gav. Jag tycker den var tämligen givande, och nedan följer en kort summering av det jag tar med mig. Det är tydligt att renoveringarna och förvärv/försäljningar ger avsedd effekt och jag tror ledningen gör rätt i att i denna del av cykeln reducera skuldsättningen. De var även fortsatt konfidenta avseende möjligheterna till bibehållen utdelning.

" That said, for 2019, we are forecasting softer fundamentals for the rest of the year based on the September trend and early observations from October in our markets. 

These hotels posted a weighted average RevPAR growth of 8.1%, with 110 basis points of EBITDA margin growth in the third quarter. We anticipate continued outperformance from these hotels to drive meaningful growth for our portfolio for the foreseeable future.

Second, the seven hotels we acquired since June 2016, which reported weighted average RevPAR growth of 4.3% during the third quarter. These hotels provided a strong tailwind in 2018 as well, but their performance was obscured by the disruptive renovations we had ongoing throughout the year.

Over the last several years, we upgraded our portfolio to one of the highest quality platforms in the industry. We did this by recycling close to $1 billion of hotel assets into new investments in the most sought after markets... With all of this disruption behind us, along with a lower CapEx load for the foreseeable future, and strategic leverage reduction plans in place, the stabilization of our portfolio is within sight.

But for a baseline, we are targeting about $3 million of cost savings from these new initiatives. I think the majority of those will be enacted by the end of the year and will realize those savings in 2020.

We target buybacks. It’s clearly opportunistic. It’s not a strategy. But when we are trading at more than a 30% discount to NAV, we are looking at the opportunity for buybacks.

Our preferred C tranche of preferred is – has a coupon of 6.875% and is $75 million in total. Our first step is to use proceeds to pay that down, and that would be clearly accretive to cash flow.

Our leverage targets kind of remain the four to five times debt-to-EBITDA metric. 
So organic EBITDA growth is the primary way of getting there. But we think by 2021, we have – we believe we can get there. "

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