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Massive REIT Conference Could Have Lasting Effects On Investors

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Massive REIT Conference Could Have Lasting Effects On Investors

  • Canaccord recently met with REIT management at the NAREIT Convention.
  • The firm reports extremely low market sentiment for lodging REITs.
  • Canaccord believes that REIT-related fears surrounding a tech slowdown in Silicon Valley and a political push to eliminate the private prison system are overblown.
  • Canaccord analyst Ryan Meliker recently had a chance to sit down and talk with REIT management teams at the annual NAREIT Convention. Here’s a look at what he learned at the conference and which REITs are Canaccord’s top picks.

    Lodging

    According to Meliker’s report, market sentiment toward lodging REITs is “the lowest we’ve seen in years.” Investors remain concerned about slowing RevPAR growth and disappointing M&A valuations.

    Related Link: Evercore ISI Sees Holiday "Headline Risk" For These 3 Mall REITs

    Meliker believes the Marriott International Inc (NASDAQ: MAR)/Starwood Hotels & Resorts Worldwide Inc (NYSE: HOT) deal was a positive for the space, and Canaccord predicts that RevPAR growth will pick up in 2016.

    Top picks include:

    • Ashford Hospitality Prime Inc (NYSE: AHP)
    • Ashford Hospitality Trust, Inc. (NYSE: AHT)
    • DiamondRock Hospitality Company (NYSE: DRH)
    • Hersha Hospitality Trust (NYSE: HT)
    • Summit Hotel Properties Inc (NYSE: INN)
    • RLJ Lodging Trust (NYSE: RLJ)

    Multifamily

    Meliker acknowledged concerns over a tech slowdown in California, but noted that West Coast fundamentals remain strong. Student housing REITs have witnessed a pickup in interest from universities regarding on-campus developments.

    Top picks include:

    • Preferred Apartment Communities Inc. (NYSE: APTS)
    • Education Realty Trust, Inc. (NYSE: EDR)

    Prisons

    Meliker warned that political rhetoric about reducing or eliminating the private prison system could be a headwind for prison REITs, as the U.S. election season plays out. However, he believes that “ending private prisons is an unrealistic outcome” and “private players aren’t going away.”

    In addition, Canaccord’s top pick in the space, The Geo Group Inc (NYSE: GEO), has identified several potential new contracts in the pipeline for 2016.

    Disclosure: The author holds no position in the stocks mentioned.

    Image Credit: Public Domain

     

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