My previous experience in dividend cuts that several Equity Reits have taken that strenghten their balance sheet have resulted in upward share price movement within a short period of time. I continue to hold my FCH. It's already recovered 68 cents from its low point yesterday. I expect this share price to climb throughout the next 30 days until we gain the amount lost ($ 80 cents) in the annual dividend cut. The drop started at $8.06 closing price the day before the announcement and reached a low of $6.56. I expect to see share price reach at least $8.86. Time will tell.
FCH has a portfolio of hotels that are for the most part either in highly competitive hotel markets like Dallas or in secondary markets where there is an expectation that air flights will be cut back by 20% by this time next year.
Hotel reits that have their hotels in major markets where air flights are not expected to be cut back as much will fare better long term. Reason is companies sending employees to conferences will choose major markets to sponsor those events. Foreign and other travelers will choose major markets for their vacations as the secondary markets with major cutbacks in flights will become too expensive to travel to by air.
There is an underlying reason why FCH is so low as its Dallas hotels are always under revpar pressure in one of the most overbuilt hotel markets in the US and many of their suburban and secondary hotels are expected to see lower occupancy as time goes on.
I took the FCH money from the 10,000 shares I sold Monday (8/18) at $8.18/share to work today in FR at $23.93/share instead. I've been in and out of FR over the years. Right now, FR's got good FAD coverage, different sector entirely (and higher dividend than FCH). FR actually closed higher since I bought it. Still have good amount of FCH but less than before. We'll see...