Wall Street’s Newest Darling Looks Like…Hotel Real Estate?

NATIONAL REPORT— Can it be Wall Street is ready to once again smile on real estate in general— and hotel companies in particular? Such a scenario is beginning to look increasingly likely, judging by the positive— though not necessarily overpowering— stock prices being posted by several of the lodging industry’s leaders. Market analysts have long been singing the praises of such solid performers as Four Seasons, Hilton Hotels, Host Marriott and Starwood Hotels & Resorts. And considering where the stock prices of these four hotel companies closed yesterday, it just may be that the exhortations of Wall Street’s pundits have not been falling on deaf ears within the investment community. Indeed, per-share stock prices for three of the aforementioned firms are currently hovering comparatively close to their respective 52-week highs, what with Hilton checking in at $12.72 (with a trailing-year high of $13.56), Host Marriott trading at $13.05 (off just a bit from its high of $13.95), and Starwood holding steady at $36.44 (vis-à-vis its high-water mark of $40.89). In fact, the only blip on the radar screen in terms of the four industry leaders is Four Seasons, with its closing price yesterday of $52.61 per share settling in far closer to its 52-week low of $46.53 than its high of $81.25… this despite the company’s earnings-per-share rolling along at a robust $3.05! Stock pricing aside, further testimony to an anticipated influx of public investment into the hotel sector comes from Dr. Jack Corgel, managing director of applied research for the Hospitality Research Group affiliate of PKF Consulting in Atlanta. As Corgel indicated, after two years of what many have labeled virtual indifference to lodging industry investment opportunities, 2001 may actually show the hotel arena “filling as much as 10%” of its financing needs through Wall Street and related venues. Finally, there is also optimism being voiced throughout much of the (lodging) REIT ranks that— after several years of being shunted off into the background in terms of attracting investors— their respective coffers will be refilled, thereby allowing them to once again be a force in the property-acquisition fray. In short, the feeling is that given the turmoil gripping much of the rest of the stock market, the steady performance and regular dividends of real-estate-based companies can’t help but look better— and infinitely safer— to those looking for places to put their money to work.