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CorePoint Lodging

WKN: A2JL0R / Symbol: CPLG / Name: CorePoint Lodging / Aktie / Small Cap /

... CorePoint Lodging (CPLG) is a uniquely-positioned REIT that owns midscale and upper-midscale select-service hotels. The company was formed in 2018 when La Quinta decided to spin its real estate into a REIT with the help of Blackstone Group (BX), one of its owners.

CPLG currently owns 279 hotels located across 41 states – with no single asset contributing more than 3% of earnings before interest, taxes, depreciation, and amortization for real estate (EBITDAre).

It’s the only publicly-traded REIT focused on the upper-midscale and midscale segments of the hotel industry. That’s an important distinction since those two concentrations make up the largest slice of the U.S. lodging sector.

At $552 million, CPLG is another small cap. And it too has high leverage at around $973 million.

However, it has no outstanding borrowings on its $150 million revolving credit facility. Plus, it’s prioritized paying down debt, returning capital to shareholders, and making capital investments into its portfolio.

In 2019 shares returned -63%. And so far in 2020 they’ve returned -9%. For that matter, we expect to see negative growth for the rest of the year as CorePoint continues to recycle assets.

Yet analysts expect it to grow its earnings, or FFO, by 4% or more in 2021. In addition, the annual dividend payout is $0.80 per share, and the payout ratio is 58% using 2020 FFO consensus. As such, the current 8.3% dividend yield appears safe.

We’re forecasting returns in excess of 25% annually, so we consider this pick a Strong Spec Buy.

Price: $9.64

Dividend Yield: 8.3%

Payout Ratio (FFO 2020 Consensus): 58%

P/FFO: 6.9x

P/FFO vs 2-year average: 7x

2019 Total Return: -6.3%

2020 FFO growth forecast: -5%

iREIT Recommendation: Strong Spec Buy ...

https://seekingalpha.com/article/4322920-you-must-speculate-learn-rules