American Hotel Income Properties REIT 6 00 Convertible Unsecured Subordinated Debentures T.HOT.DB.V

RE:RE:RE:RE:RE:Don't get too excited

[ArbProfit]

borne2run wrote: Arb, all analysts were not created equal.  Company wants to re-deploy the cash into the acquisition of premium branded hotels.  Even then, the $90 million is insufficient.  Add in a payout ratio above 100% and the situation is even worse.  Let's see if there are any other surprises, pleasant or otherwise, with the Q2 earnings release next week.

This swap is all about providing cover for a distribution cut, which I expect to be announced in Q4 once the details of the new hotel purchases are known.  Best guess is US 4 cents per share in 2020.

Thanks Borne, 

A potential distribution cut is the main reason I sold into the Q1 bounce.  I know they continue to say that they intend to maintain it (management always does), but they will have to execute flawlessly to avoid the inevitable.  I think they'll delay it as long as possible, but the risk is very real. A cut would likely take us to the $5.50 - $6.00 range and things would become interesting with more cash available and it would still be yielding 6-10% (depending on new div rate) for new buyers.