In the last 2 posts, we talked about 2 categories of REIT: Retail Reits and Healtcare Reits. You can read them by clicking on these links:
Today, lets talk about one of the high property yield type of REIT: Hospitality REITs.
Here are some Hospitality REITs we have access to:
The 2 featured above are CLD Hospitality and Ascott REITs. I have screen captured some of the properties these REITs are holding and we can notice that these REITs own hotels and accommodations all over the world.
For more info, visit their websites at
Lets go into some issues surrounding this type of REITs.
1. Typically, hotels give high yield because it is based on daily rental. So the yield is typically expected to be higher based on property value to yield. (This is not the same as dividend yield because dividend yield depends on the price you pay for that share or unit. So a good indicator may be to buy below book value.)
2. Consumer and Customer Demand for such the rental of such properties depends on:
a. Tourism Figures – Ultimately, the bulk of the demand comes from tourist.
b. Economic Cycle. This affects tourism directly regardless of tourism for leisure or business.
c. Security Issues. This affects the numbers of tourist too.
d. Foreign Exchange. When a country’s currency weakens, it typically encourages higher tourism as things in that country becomes relatively cheaper.
Well, all that being said, we do not have much control over these factors. What is more important to recognize is that when these factors appear to be negative, we may expect the dividends of the REITs to fall and thus correspondingly, the price of the REITs to fall. In my opinion, that would be a good time to enter if we have confidence in the Trust and the underlying properties.
Looking forward to opportunities and your comments.
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Mind Kinesis Research Team