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Hospitality Properties Trust Message Board

  • the_mo_monitor the_mo_monitor Nov 1, 1999 6:04 PM Flag

    New First Call for HPT

    Go to my club for a First Call Update.

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    • I think the new 90% rule in the RMA will have no
      impact on dividend increase timing or cash flow
      retention or payout ratios -- if a REIT only pays out 90%
      of its income it has to pay tax on the remaining 10%
      (although it can still be a REIT). This new 90% rule will
      have the effect of keeping sick REITs hanging around
      just a little longer than the 95% rule, but is
      otherwise quite meaningless.

    • REIT's are out of favor for the short term. They
      continue to drop in price so a SMALL position using 2cube
      theory (2% of portfolio initial buy, 2% on news, last 2%
      when your in love)might work for you when you have
      done your research. Buying at the lowest price is
      always a investor's call. The computer likes HPT and a
      2% of portfolio would not be out of line. The above
      are my SOLE opinions only.

    • thanks for your quick reply I have a lot
      researched to do one thing I've found the boards to be very
      helpful with is sometimes taking me in a direction I
      might not have followed as quickly with probable you
      have talked about is not a bad problem to have I'm
      going to have to check the S. E. C. files but can you
      tell me do they have any large debt coming due soon
      that they may have trouble paying makes everybody Take

    • lack of growth is main concern apparently-if you can live with 14+% dividend until more news then it looks like great buy

    • The only problem ,according to the analysts at
      Merril Lynch, that HPT has right now is they have not
      been able to make good acquisitions with the money
      they raised from their last stock offering. .this
      means they are willing to take the short term money
      market yields they can get for now. probably 5 to 6% and
      wait till good properties come on the market, on which
      they can expect to make 10 to 12%. At the current
      price this is a buy, imo,Gimbus

    • I'm thinking about buying H. P. T. I'm not trying
      to get around my DD but I would like to ask what are
      the major concerns of the stockholders concerning the
      stock at present as I do my research this helps me to
      sometimes looked in areas that I might have missed by the
      way the reason I address this to you guy was your
      names are familiar I also have NHP ASN MLS EQR KPA may
      be that is where I recognize your names
      Take Care
      and Thank You

    • To add one small tidbit to Rlitke's answer, the extra gain taken when (if) you sell the stock (the gain being based on sale price less the REDUCED cost basis) is taxed at capital gains rates.

    • I don't see an answer to your question. Perhaps I
      missed it. Uncle Sam won't take 75%
      of your dividend,
      but 75% of the dividend will
      be taxed at your tax
      rate for ordinary income.
      The 24% is not
      immediately taxable, but the cost basis of you stock is
      reduced by that amount. Uncle Sam may get you when you
      sell your stock and realize a higher capital


    • this is really informative. My best educated
      guest is that it will benefit the hotel and healthcare
      REITS more substantially than the apartment REITS for
      example; however, I will not add one cent to my HPT

      This last week I bought into Archstone (ASN) which is
      an apartment REIT beaten down badly this year. The
      fundamentals of the apartment and office REITS, e.g., ASN,
      BXP, SPK hold far more promise or capital gains.

      November 19, 1999


      I just learned this morning via fax from NAREIT
      that Congress has passed, as part of the "Work
      Incentives Improvement Act of 1999," the REIT Modernization
      Act (RMA). NAREIT and the REIT industry have been
      working very hard to get this legislation enacted by
      Congress, and they have now done it! Congratulations to
      Steve Wechsler, Michael Grupe, Tony Edwards and all
      those who've been instrumental in getting this
      accomplished. Detailed information on the RMA can be reviewed
      on NAREIT's website under "Government

      The significance of this legislation is potentially
      large and very positive for the REIT industry.
      Commencing in 2001, REITs may own as much as 100% of fully
      taxable subsidiaries (TRS), which may provide services to
      tenants and to others without disqualifying REITs'
      regular rental income. While there are limits on the
      value of the TRS (it cannot not exceed 20% of the
      REIT's assets) and the amount of dividends that the REIT
      can receive from its TRS, this new flexibility could
      be a major benefit to those REITs who elect to take
      advantage of it.

      Not only will the TRS be a good
      source of income for many REITs but, perhaps more
      important, will enable the REIT to compete with other public
      and private property owners in providing new forms of
      services to tenants. This will level the playing field and
      allow REITs to pursue market leadership, innovation and
      status as the low-cost provider of real estate and
      related services. Some of the larger REITs, with huge
      amounts of assets and resultant market power, could
      benefit the most.

      There are special provisions in
      the RMA for hotel and healthcare REITs. While such a
      REIT may not operate or manage any of their
      properties, they may lease them to their own TRS at market
      rents, which in turn can hire an independent contractor
      to operate and manage the facility on a day to day
      basis. This could help to eliminate many of the
      conflicts of interests which have plagued the hotel REITs
      and end "leakage," but it will take some time for
      existing leasing arrangements to be redone. Shareholders
      will need to watch these unwinding transactions to
      make sure that they don't end up with the short end of
      the stick.

      In addition, the requirement for
      REITs to pay out 95% of their net income to
      shareholders in the form of dividend payments will be changed
      to 90%, effective in 2001. This will have the effect
      of delaying major dividend boosts for many REITs.
      The bad news is that for most REITs, dividend growth
      will lag behind FFO growth; the good news is that
      REITs will be able to retain a bit more income, which
      will improve the balance sheet, make the payout ratios
      even more conservative and allow REITs to modestly
      step up their value creation objectives via
      developments, stock buybacks and acquisitions, which could
      increase FFO growth rates slightly.

      The above is
      just a very quick summary done in a hurry early
      Saturday morning. I'd strongly suggest that we all read
      the new legislation, a great summary of which can be
      found on NAREIT's website -- under Government
      Relations, click "REIT Modernization Act '99" and then click
      "NAREIT Analysis April 29, 1999." Again, congratulations
      to all those at NAREIT and to others in the industry
      who worked so hard to get RMA enacted.

      thought: Could that dead-cat bounce for some REIT stocks
      near the end of Friday's session have anything to do
      with the passage of the RMA? We'll know more on


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