The DJIA rose 210 points, Nasdaq was up 25, the S&P 500 was up 11 points while the 10-year treasury yield retreated .04 to close to 4.01%. Lodging stocks were higher but most were up 2% to 3%. VCSA was the biggest mover, up 5% today.
RW Baird issued a report on the Ashford Hospitality Trust announcement they were going to return 19 hotels (3,583 rooms) with $570 million of debt to their lenders. Baird called this not totally surprising and the right move. The three KEYS pools had been performing well below a 1.0x DSCR and AHT’s near-term cash flow profile should improve. Baird said AHT’s actions highlight the challenges that borrowers are facing today, particularly as debt maturities approach. The hand back the keys vs. pay down decision is more difficult for higher-levered, floating-rate loans, according to the report.
Truist formally and informally visited several Pebblebrook Hotel Trust hotels/markets. They said Naples looks better than feared even if LaPlaya has a ways before a full reopening. Truist is mixed on the new San Francisco tourist ad campaign and they support PEB’s reduced concentration in SF and possibly Los Angeles. For 3Q23, Truist is maintaining conservatism on near-term EBITDA projections partly driven by their lack of conviction on PEB-specific factors: performance of recently repositioned hotels, LaPlaya and convention-driven EBITDA. Truist maintained their $16 price target. They assume PEB modeling should become less complicated as many of the capital investment projects and LaPlaya’s full reopening are completed in the next six months.