When Ashford Hospitality Trust
So far, the strategy sounds more like a philharmonic than a measly trumpet. The company has put $500 million into capital and used 85% of that leveraged bankroll to purchase distressed hotels. These properties' operating income allowed Ashford Hospitality Trust to boost its quarterly dividend from zero to $0.14 per share over the past year, with yet another surge due next quarter. While some hospitality REITs such as Host Marriott
Ashford Hospitality Trust's mellifluous tones are the result of its talented conductor. CEO Montgomery J. Bennett watched the 9/11 terrorist attacks deliver a crushing blow to the industry's already-declining revenue per available room (RevPAR). The result, however, created a gap between the long-term RevPAR growth before the attacks and the current one. It was in this gap that Bennett saw an opportunity for greater returns than a normal recovery would provide, and the Ashford Hospitality REIT was conceived. His foresight proved incisive. For 2004, analysts expect hotel RevPAR to increase by the largest amount in 20 years, and it's happening.
But what makes Ashford Hospitality Trust sing so beautifully is that management's business plan takes advantage of the industry's peaks and troughs. The hotel biz is only one year into what is, on average, a five-year cycle. In the next three years, look for Ashford Hospitality Trust to redeploy capital toward providing mortgages and mezzanine financing, similar to Anthracite Capital
The market has overlooked Ashford Hospitality Trust much as Vienna overlooked Salieri. But Mozart's rival was doomed to mediocrity; Ashford Hospitality Trust is worthy of humming duets with the top REITs. Its stock hovers around its IPO price of $9, while yielding a maestoso 6.3%. With its visionary business model, Ashford Hospitality Trust's dividend should be music to investors' ears for years.
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Fool contributor Lawrence Meyers owns shares of Ashford Hospitality Trust and occasionally zones out to classical music.