Strategic Hotels and Resorts Inc (BEE): This REIT Could Skyrocket

Other options in the space

Ashford Hospitality Trust, Inc. (NYSE:AHT) has seen increased revenue over the past two years, but it also can’t get out of the red. Ashford Hospitality Trust has reported a loss in every quarter over the past year. On the other hand, it currently yields 4.10%, which is better than any other yield you will find in this article. The company’s debt-to-equity ratio of 2.50 is above the industry average of 0.9, which increases the odds of the dividend being in danger in the future. However, if you’re looking for dividends, then this is one option to consider.

Host Hotels and Resorts Inc (NYSE:HST) has seen revenue growth for three consecutive years, and it delivered a profit in 2012 after three years of losses. It has also been profitable in four of the last five quarters. Furthermore, it’s the only REIT mentioned here that sports a debt-to-equity ratio below the industry average — 0.76 versus 0.90. This has allowed Host Hotels & Resorts to offer a decent yield, which currently stands at 2.70%. Thanks to a strong balance sheet, the dividend should remain intact.

Conclusion

If you’re looking for a speculative play that has the potential to pay off in a big way, then consider Strategic Hotels and Resorts Inc (NYSE:BEE). If it’s acquired, then shareholders will rejoice. However, investing in a company based on acquisition speculation comes with risks. In this case, if an acquisition doesn’t take place and the losses continue, then new investors will have wished they had stayed on the sidelines.

Ashford Hospitality Trust offers a nice yield, but the leverage position and the consistent losses lead to high risk. Why take that risk when you can invest in a REIT that’s better positioned for the long haul in Host Hotels & Resorts. Of the three REITs mentioned in this article, it’s the only one with a positive profit margin, and it has shown the best debt management. The 2.70% yield doesn’t hurt, either. Due to the uncertainty of the macroeconomic environment, it could be a bumpy road ahead, but it’s likely to be the best long-term bet of this bunch.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article This REIT Could Skyrocket originally appeared on Fool.com.

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