Rising interest rates have drastically pushed down markets among other things but one asset class that tends to survive rate increases and inflationary times is real estate investment trusts, or REITs. One major Wall Street brokerage house has some picks in this asset class that it is betting big on.
Barclays has issued a few calls with a focus on lodging REITs. Each call is incredibly positive, forecasting massive upside in both the near and long term.
Anthony Powell was the lead analyst on the call and he noted that lodging REITs have already priced in a typical lodging downturn, and this ultimately presents a buying opportunity. He noted in the report that while a downturn is possible given the macro environment, industry specific items like pent up convention and leisure demand suggest this may not happen.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Apple Hospitality REIT, Inc. (NYSE: APLE): Barclays reiterated an Overweight rating but cut the price target to $19 from $21, implying upside of 30% from the most recent closing price of $14.66. The stock traded around $15 on Wednesday, in a 52-week range of $13.83 to $18.69. Shares are down over 6% year to date. It has a dividend yield of 4.0%.
Chatham Lodging Trust (NYSE: CLDT): Powell reiterated an Overweight rating and slightly lowered the price target to $15 from $16, implying upside of 46% from the most recent closing price of $10.30. The stock has a 52-week trading range of $9.59 to $15.12, and it traded near $11 a share on Wednesday. The stock is down 20% year to date.
DiamondRock Hospitality Co. (NYSE: DRH): Powell reiterated an Overweight rating and lowered the price target to $10 from $11, implying upside of 24% from the most recent closing price of $8.07. The stock traded around $8 on Wednesday, in a 52-week range of $7.68 to $11.15. Shares are down over 13% year to date.
Host Hotels & Resorts, Inc. (NASDAQ: HST): Barclays reiterated an Overweight rating and cut the price target to $22 from $23, implying upside of 42% from the most recent closing price of $15.47. The stock traded around $16 on Wednesday, in a 52-week range of $14.67 to $21.63. Shares are down over 8% year to date. It has a dividend yield of 1.5%.
Park Hotels & Resorts Inc. (NYSE: PK): Barclays reiterated an Equal Weight rating and cut the price target to $18 from $22, implying upside of 38% from the most recent closing price of $13.09. The stock traded around $14 on Wednesday, in a 52-week range of $12.90 to $21.62. Shares are down over 26% year to date. It has a dividend yield of 0.2%.
Pebblebrook Hotel Trust (NYSE: PEB): Powell reiterated an Equal Weight rating and cut the price target to $22 from $26, implying upside of 32% from the most recent closing price of $16.67. The stock has a 52-week trading range of $16.04 to $26.45, and it traded near $17 a share on Wednesday. The stock is down 22% year to date. It has a dividend yield of 0.2%.
RLJ Lodging Trust (NYSE: RLJ): Barclays reiterated an Equal Weight rating and cut the price target to $15 from $18, implying upside of 38% from the most recent closing price of $10.87. The stock traded around $11 on Wednesday, in a 52-week range of $10.20 to $16.22. Shares are down about 20% year to date. It has a dividend yield of 0.4%.
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