Boston, MA 05/12/2014 (wallstreetpr) – Real estate investment trusts (REITs) are looking to a positive year in 2014. There are all indications that REITs will benefit from the strong demand for office, retail, lodging and residential spaces thanks to an improving economy. REITs such as Chesapeake Lodging Trust (NYSE:CHSP) are poised for even better things this year given that besides demand, lodging REITs also enjoy pricing flexibility in that they can always raise rates overnight.
If fiscal 2013 and the latest quarter are anything to go by, REITs stand out as some of the stocks with solid potential upside. REITs had encouraging returns in 2013 that exceeded even the S&P 500 Index. While the S&P returned an average of 1.4 percent, REITs boasted 10.6 percent in the past year.
Lodging REITs
Chesapeake Lodging Trust (NYSE:CHSP) reported 1Q2014 results that exceeded Wall Street expectations. The results left no doubt about the company’s positive prospects in 2014. The company reported a net loss of $0.2 million in 1 cent per share. That compared with $4.9 million or 11 cents per share in 1Q2013. Revenue in the quarter was $94.8 million, up from $70.6 million in 1Q2013. On the average analysts, expected revenue of $92.98 million or a net loss of 4 cents per share.
The results were supported by the strong demand for upscale hotel accommodation coupled with stable and high prices during the quarter. Though 1Q results beat the average estimate of analysts, the results suggested the improving economic situation should support even better performance for the balance of 2014. Analysts have observed that demand for rooms this year is not only going to be higher, but the fact that fewer new hotels are opening this year means that prices are also likely to remain stronger than in the previous years.
In conclusion
Chesapeake Lodging Trust (NYSE:CHSP) owns about 20 upscale hotels across the major U.S. cities such as San Francisco, New York and Chicago. The company expects the average revenue per room to go up by 5.5 percent in a move that could significantly boost overall revenue in 2014. The company also expects the strong demand for upscale hotel accommodation to support high revenue growth.
