Good Example Of Essay On Summit REIT
REIT (Summit) history and the types of properties held
Summits has a strategic goal to own upscale and premium-branded, as well as select-service hotels in a nationwide scale ha, are clustered within the topmost 50 U.S. metropolitan regions.
It is the first publicly owned company in hotel business with a significant focus on select-service segment, with majority of the REIT peers having a focus on luxury and upper upscale markets. Further, the select-service segment usually provides higher returns ha have a lower volatility resulting in greater earnings and stability in all business cycles. It also distinguishes its model by having a focus on the properties that are attractively priced in interior MSA compared to its peers that focus on acquisitions of the top coastal markets. Summit went public select-service business strategy in the year February 2011. After the IPO that was held two years ago, the company has acquired over 24 upscale as well as select-service hotels from Hilton, InterContinental, Hyatt and Marriott. It has also expanded its equity market cap having had $625.96 million by mid-January. Further, there have been two stock offerings with one in September 2012 while the other was another in January 2013. They generated $232.8 million in the additional capital while $26 million resulted from the company’s sale of five non-strategic hotels in the year 2012.
In the January stock offer, Summit noted that it had plans for acquisition of six hotels owned by Hyatt, Hilton as well as the InterContinental and Marriott brands. In addition, the four largest brands constitute a 93 percent of the company’s portfolio in select-service. Among the six acquisitions, one has already been completed and are expected o develop the business’ portfolio to reach 90 hotels ha total up o about 10,000 rooms across 22 states.
Data and interpretation on institutional ownership, insider ownership and analyst recommendations
In the last six months, there were two transactions for insider purchases of 10,000 shares resulting to a total insider held shares of 6.55Million shares. In addition, there were 6,842,700- shares sold by institutional investors resulting in a -11.35% change in institutional shareholding in the last six months. In the last two years, there have been insider transactions involving direct non-market acquisition mainly by Directors and few officers. That shows the low volume of insider transactions hence he insider trading does no present a significant risk for the stock.
On the other hand, the analyses recommendation for the stock is a strong buy with a mean price target of 15.06 given the current price of 13.62. In addition, the company was upgraded in 2014 after a downgrade in 2011 and an initiation in 2012 and 2013. That is an indication of the analysis positive view of the business prospects as well as improvement that shows the company promises beer returns and has stable operations.
Finally, the shareholding reflects an 8% ownership by all insider and 5% owners while 78% is held by mutual fund owners as well as institutional investors. Further, 84% of the float is held by institutions and fund owners with the number of institutions holding the shares being 151. That is an indication that institutions and mutual funds mainly hold the stock. Thus, it has a less risky ownership structure as institutional investors mainly have long terms investment goals.