Group 1 - The preferred shares in the hospitality sector present an interesting risk/reward ratio, although not all hotel REIT preferreds are considered attractive investments [1] - The focus is on high-quality small-cap investment opportunities in Europe, emphasizing both capital gains and dividend income for continuous cash flow [1] - The investment group European Small Cap Ideas provides exclusive access to actionable research, model portfolios, and educational content related to European investing [1] Group 2 - The analyst has disclosed a beneficial long position in the shares of INN.PR.F and INN.PR.E, indicating a personal investment interest in these preferred shares [2] - There is no position held in INN's common stock, which may suggest a strategic focus on preferred shares rather than common equity [2]

As you are probably aware by now, I think the preferred shares in the hospitality sector offer an interesting risk/reward ratio. While that doesn't mean I am a buyer of all hotel REIT preferreds, I have aThe Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks. He is the leader of the investment group European Small Cap Ideas which offers exclusive access to act ...

Core Thesis - Sunstone Hotel Investors, Inc. (SHO) presents a bullish investment opportunity, particularly in its preferred stock, which offers attractive upside potential with lower risk compared to common equity [1][2]. Company Overview - Sunstone Hotel Investors owns nearly $4 billion in real estate across 14 hotels, comprising 7,000 rooms that are predominantly upper-upscale and luxury, geographically diversified, and mostly branded [2]. - Notable properties include Hilton San Diego Bayfront, Wailea Beach Resort, Ocean's Edge in Key West, and high-ADR Napa Valley resorts [2]. Investment Appeal - The portfolio's simplicity, quality, and scale make SHO a highly desirable M&A target in the hotel REIT space, with market consensus recognizing it as undervalued relative to NAV due to under-earning assets and a higher proportion of trophy hotels [3]. - Preferred shareholders are expected to benefit substantially in a potential privatization, with Series H and I anticipated to be cashed out at par plus 20–25% upside [4]. - The preferred securities provide a 7%+ cash yield, benefit from low leverage (~25% net, 3x EBITDA), and enjoy a large equity cushion compared to peers [4]. Risk/Reward Profile - Even if no sale occurs, the preferred stock offers an attractive yield with limited downside, creating an appealing risk/reward profile for investors [5]. - The combination of a high likelihood of privatization, substantial potential upside, strong cash yield, and relative insulation from operational and interest rate risks positions SHO preferred stock as a unique and opportunistic play in the hotel REIT market [5]. Market Context - The investment thesis for SHO shares similarities with a previous bullish perspective on Park Hotels & Resorts Inc. (PK), emphasizing undervalued premium hotel real estate and strong operational performance [6].

Group 1 - The FIFA World Cup in 2026 will provide a significant boost to hotel REITs, particularly RLJ Lodging Trust [1] - RLJ Lodging Trust's presentation in December 2025 emphasizes the positive impact of the World Cup on its business [1] Group 2 - The author has a long position in RLJ shares, indicating confidence in the company's future performance [2] - The article reflects the author's personal opinions and is not influenced by external compensation [2]

Group 1 - The article emphasizes the importance of timing in trading closed-end funds, highlighting the potential for directional and arbitrage opportunities due to market price deviations [1] - The focus is on Sunstone Hotel Investors, Inc. (SHO), identified as a reliable hotel REIT, suggesting it as a better investment alternative [2] - The investment service provided includes frequent picks for mispriced preferred stocks and baby bonds, along with weekly reviews of over 1200 equities and IPO previews [2] Group 2 - The article mentions that the analyst has a beneficial long position in SHO.PR.H, indicating a vested interest in the stock [2] - It clarifies that the views expressed may not reflect those of Seeking Alpha as a whole, emphasizing the independence of the analysts [3]

Group 1 - The article emphasizes the importance of timing in trading closed-end funds, highlighting the potential for directional and arbitrage opportunities due to market price deviations [1] - The focus is on Sunstone Hotel Investors, Inc. (SHO), identified as a reliable hotel REIT, suggesting it as a better investment alternative [2] - The investment service Trade With Beta offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, and hedging strategies [2]

Group 1 - Hotel REITs are facing rapidly changing circumstances but still present investment opportunities, particularly in preferred equity [1] - The investment group European Small Cap Ideas focuses on high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1] Group 2 - The article expresses the author's personal opinions and indicates a beneficial long position in RLJ.PR.A shares [1]

Core Insights - Hotel REITs are currently facing challenges due to seasonal fluctuations and a decrease in leisure and business travel, particularly from Canada [1] Group 1: Industry Overview - U.S. hospitality REITs are experiencing a lower inflow of travel, impacting their performance [1] Group 2: Investment Opportunities - The European Small Cap Ideas investment group focuses on high-quality small-cap investment opportunities, emphasizing capital gains and dividend income [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Core Insights - Park Hotels & Resorts reported Q2 2025 earnings with adjusted funds from operations (FFO) per share at $0.64, significantly exceeding analyst estimates of $0.19, while revenue reached $672 million, reflecting a 2.0% year-over-year decline [1][2] - The company operates 39 hotel properties with approximately 25,000 rooms, focusing on upper-upscale and luxury segments, and aims to enhance cash flow through renovations and asset sales [3][4] - The current strategy emphasizes capital recycling, cost control, and maintaining a conservative balance sheet to support dividends and growth opportunities [4][10] Financial Performance - Adjusted FFO per share was $0.64, outperforming consensus by $0.45 but down 1.5% from the previous year [2][5] - Revenue for Q2 2025 was $672 million, slightly above estimates but down 2.0% from Q2 2024 [2][5] - Comparable RevPAR decreased by 1.6% year-over-year to $195.68, with urban hotels showing a 3% increase in RevPAR [6][10] Operational Highlights - The company completed the sale of Hyatt Centric Fisherman's Wharf for $80 million and announced the closure of Embassy Suites Kansas City Plaza [7][9] - Major renovations are ongoing, including a $103 million project at Royal Palm South Beach Miami, expected to yield a 15% to 20% return on investment post-reopening in May 2026 [8][9] - Capital expenditures for Q2 totaled nearly $45 million, with plans for up to $330 million for the full year [9] Balance Sheet and Liquidity - As of June 30, liquidity was approximately $1.3 billion, supported by a $950 million undrawn revolving credit facility [11] - Net debt stood at $3.7 billion with an average maturity of 2.7 years, highlighting a focus on managing high leverage [11] - A significant upcoming item is the $1.3 billion mortgage maturing on the Hilton Hawaiian Village in November 2026 [11] Future Outlook - Management revised full-year guidance for comparable RevPAR to $184–$187, reflecting a potential decline compared to 2024 [12] - Adjusted EBITDA is forecasted at $595–$645 million, with adjusted FFO per share projected at $1.82–$2.08 [12] - Ongoing caution is advised regarding macroeconomic factors and the impact of renovations on demand [13]

Core Viewpoint - Summit Hotel Properties (NYSE:INN) is facing a challenging environment with high costs and competition, but the preferred series F offers an attractive investment opportunity with an 8.4% current yield and 42% upside to par [1][30]. Cashflow Amount and Stability - INN's latest earnings report shows an AFFO of $0.22 for Q1 2025, which annualizes to $0.88, but seasonal trends indicate stronger performance in Q2 and Q3 [2][5]. - Adjusting for seasonality, the annualized AFFO appears to exceed $0.90 per share, providing ample coverage for preferred dividends [5]. Preferred Series F Investment Opportunities - Three potential ways for preferred series F investors to benefit include: 1. Continuing to collect dividends 2. A buyout of INN at any price over $3.50 3. A decline in interest rates leading to a price increase toward $25 [6][30]. Financial Performance Metrics - For Q1 2025, INN reported a net loss attributable to common stockholders of $4.684 million, with total revenues of $184.478 million [8]. - The company’s FFO for the same period was $23.196 million, with adjusted FFO at $27.359 million [9]. AFFO Calculation Concerns - There are anomalies in INN's AFFO calculation, as it includes deferred financing costs and other adjustments that may not reflect true earnings [10][12]. - A more conservative AFFO estimate of $0.42 per share still indicates that preferred dividends are well covered [13]. Preferred Safety and Liquidation Preference - INN has over $600 million in common equity, providing a significant buffer for preferred shareholders [14][21]. - The company has a debt-to-gross properties ratio of about 39%, which is typical for real estate, and has been reducing leverage [15][18]. Return Potential of Preferreds - The preferred series F has a current yield of 8.37% and a potential upside to par of 42.53%, making it an attractive option compared to other fixed-income securities [22][23]. - The change of control provisions favor series F, providing better upside and reduced risk compared to series E [24][29]. Market Conditions and Buyout Potential - The hotel industry is currently distressed, with many hotels trading below replacement cost, making INN a potential buyout target [31][34]. - A buyout price above $4.30 would trigger favorable outcomes for series F holders, ensuring they receive the full $25 liquidation preference [34][35]. Interest Rate Impact - A decline in interest rates could lead to significant capital gains for INN-F, as its market price would rise to maintain a yield premium over treasuries [36].