Hotels Could Benefit From Cut in Interest Rates
Skift Take
Analysts expect the Fed's interest rate cuts to boost hotel REIT earnings, with Ashford Hospitality Trust and Braemar Hotel Trust being the biggest beneficiaries.
Thee DJIA rose 84 points, Nasdaq was up 100, the S&P 500 was up 14 points and the 10-year treasury yield was pretty much unchanged at 3.74%. Lodging stocks were mostly higher but modestly so. SOND was the big winner, up 6% while VCSA was the big loser, down 5% on the day.
Analysts are positive on the impact of the Fed cutting interest rates as it pertains to the hotel sector. Baird predicted that lower short-term interest rates would boost hotel REIT earnings. Most have floating rate debt exposure via credit facility borrowings and bank term loans. They believe the biggest beneficiary of lower rates will be Ashford Hospitality Trust and Braemar Hotel Trust. They also mentioned Chatham Lodging Trust and DiamondRock having 60% floating rate exposures while Sunstone is approximately 50%. On the refinancing front, they believe the lower interest rate environment will help DiamondRock, Xenia Hotels,
