Hi everyone, its Amirah again from KGI, welcome back!
So while all eyes on the Lendlease IPO that started trading yesterday
We'd like to bring your attention to two other REITs that have IPO-ed earlier this year
And have since gained some stability
You may have heard of them
they are ARA US Hospitality Trust and Eagle Hospitality Trust
You may also identify from their names
Both of them are hospitality REITs whose upscale hotel properties are in the United States
But that is as far as the similarities go between them
ARA operates in the upscale  select service hotels segment
with 38 hotels made up of the Hyatt Place and Hyatt House brands
We like that ARA is able to maintain a higher GOP margin of about 40 percent
due to lower labor requirements and less reliance on ancillary revenues
Its 38 hotels are also strategically diversified across economically stronger regions throughout the US
allowing it to demand slightly higher average daily room rates than other select service accommodation options
Eagle on the other hand operates in the upscale full-service hotel segment with 18 hotels
made up of various brands including IHG, Marriot and Hilton
Eagle may appeal to more conservative investors as it has a 100% master lease structure
which gives greater visibility to its future earnings
This is further supported by a rental floor and its stability is well cushioned by diversification across
revenue stream segments, brand affiliations, and both leisure and corporate demand drivers
So as of now, we feel that the US economy and lodging sector remains
well supported by strong consumer consumption as
consumer and business sentiments continue to be buoyant fueled by ease of credit and growing
disposable income through a record low level of unemployment in modest wage growth
Consumer expenditure on accommodation as well
continues to outpace total expenditure and we are anticipating that this trend will linger
as US consumers continue to allocate a higher percentage of the total spending on accommodation services
driven especially by millennials penchant to spend on experiences rather than physical goods
Our target prices for ARA and Eagle is currently 96 and 84 US cents respectively
representing upsides of 17% and 26%
So I'm gonna stop here for today's update, but if we've intrigued you or if you are interested in either REIT,
do check out our reports that are we published yesterday will link it down below in the description box.
So that's all for today
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Thanks for watching and have a wonderful Thursday!
