Hotel REITs Are Smashing Estimates Like Crazy

In January, it became apparent that something was different in the hotel real estate investment trust (REIT) sub-sector, as stocks that had been trashed by investors throughout 2022 were suddenly springing back to life. Some of the stocks were up more than 27% during the month. Some were raising dividends for the first time in a while.

Were these just oversold bounces, or was somebody counting the cars in the parking lot and knew the hotel industry was picking up occupancy? Although the stocks tempered their gains somewhat in February, going into earnings season they were still up quite nicely year to date.

Here are four hotel REITs that just smashed earnings estimates as well as fourth-quarter 2021 operating results:

Formed in 2007, Apple Hospitality REIT Inc. APLE is a Richmond, Virginia-based hotel REIT with a portfolio of approximately 29,000 rooms in 220 hotels in 87 markets across 37 states. Its portfolio includes 96 Marriotts, 119 Hiltons, four Hyatts and one independent hotel.  

On Feb. 21, Apple Hospitality REIT reported fourth-quarter operating results. Funds from operations (FFO) of $0.33 per share beat the consensus estimate of $0.12 by 175% and was 26.92% ahead of FFO of $0.26 per share in the fourth quarter of 2021. Revenue of $299.12 million was also ahead of the consensus of $293.18 million and 19.37% above $250.59 million in the fourth quarter of 2021.

Apple Hospitality REIT was up 14.98% in January and is up 8.13% year to date in 2023.

Pebblebrook Hotel Trust PEB is a Bethesda, Maryland-based hotel REIT that invests in upscale hotel and resort properties in or near urban markets in major U.S. gateway cities. Most of its 51 properties are in California, Florida and Washington state.

On Feb. 21, Pebblebrook Hotel reported its fourth-quarter operating results. FFO of $0.20 was $0.03 better than estimates and up from $0.06 in the fourth quarter of 2021. Revenue of $319.61 million was ahead of estimates of $315.68 million and 114.3% better than revenue of $147.28 million in the fourth quarter of 2021.

Pebblebrook Hotel was up 27.53% in January and is up 13.84% year to date.

Park Hotels & Resorts Inc. PK is a Tysons, Virginia-based hotel REIT with 46 premium brand hotels and resorts across 14 of the top 25 markets in the United States. Its affiliates include Hilton, Marriott and Hyatt.

On Feb. 22, Park Hotels & Resorts reported fourth-quarter operating results. FFO of $0.45 per share was well above the consensus estimate of $0.09 and FFO of $0.05 in the fourth quarter of 2021. Revenue of $665 million beat estimates of $649.79 million and far exceeded revenue of $451 million in the fourth quarter of 2021.

Park Hotels was up 27.80% in January and is up 17.29% year-to-date. In December, it raised its quarterly dividend up from $0.01 to $0.25.

Sunstone Hotel Investors Inc SHO is an Aliso Viejo, California-based hotel REIT that owns and operates 15 hotels in upscale areas of Florida, California, Hawaii, three other states and Washington, D.C. Its portfolio includes hotels by Hilton, Hyatt, Marriott and Four Seasons.

On Feb. 22, Sunstone Hotel Investors reported fourth-quarter operating results. FFO of $0.26 beat the estimates of $0.19 and was a huge increase over FFO of $0.09 in the fourth quarter of 2021. Revenue of $244.14 million was ahead of the consensus of $227.51 million and a 40.4% increase over revenue of $173.89 million in the fourth quarter of 2021.

Sunstone Hotel Investors was up 27.87% in January and year to date is up 17.49%.

The chart below summarizes the four Hotel REITs earnings and revenue for the fourth quarter of 2022: 

SUMMARY OF FOURTH-QUARTER EARNINGS 

It’s clear that hotel REITs’ earnings are back, and these REITs could continue doing well for the remainder of 2023.

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