Hersha Hospitality Trust (HT) – a real estate investment trust (:REIT) – recently announced that its board of directors has authorized a buyback of up to $75 million of common shares. This share repurchase program is announced with immediate effect and will continue through the end of 2013.
We appreciate Hersha Hospitality’s efforts to bolster long-term shareholders’ value and expect the share buyback activity to reinforce investors’ confidence. We believe that the share repurchase authorization affirms the company’s positive outlook and reflects its confidence in its fundamentals.
Particularly, the buyback move demonstrates the company’s solid balance sheet and decent cash flow generation capabilities. As of September 30, 2012, Hersha Hospitality had $83.1 million in cash and escrows, and $28.0 million of borrowings on its $250.0 million secured credit facility.
One of Hersha Hospitality’s peers, Host Hotels & Resorts Inc. (HST) recently boosted the shareholders’ value with a hike in its quarterly dividend. The dividend payout was increased by 12.5% to 9 cents from 8 cents paid earlier.
Hersha Hospitality primarily owns upscale hotels in core U.S. markets including New York, Washington, Boston, Philadelphia, Los Angeles and Miami. It currently owns 64 hotels totaling 9,221 rooms.
The company is expected to release its fourth-quarter 2012 results on February 18, 2013. The Zacks Consensus Estimate for fourth quarter FFO (fund from operations) is currently pegged at 9 cents per share.
Hersha Hospitality currently carries a Zacks #3 Rank signifying a short-term Hold rating. Also, based on its fundamentals, we are maintaining our long-term ‘Neutral’ recommendation on the stock.
Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.
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