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Condor Hospitality (CDOR) Banks on Acquisitions for Growth


Condor Hospitality Trust CDOR is making concerted efforts to grow its portfolio with solid acquisitions. In fact, in a recent video interview at REITworld 2017 with Nareit, the company’s CEO — Bill Blackham — noted that the company has a “robust” acquisition pipeline and there are about $300 million of individual assets under different phases of assessment.

Notably, this hotel REIT targets properties in secondary markets, where competition is less fierce than in primary markets, according to Blackham. In fact, the company eyes hotel assets in top 100 metropolitan statistical areas (MSAs) but typically concentrates on MSAs ranked 20 to 60. Markets with population and job growth above the national average also remain a priority for the company while considering hotels for purchase.

Going by numbers, with the acquisition of the two Marriott-branded hotels in third-quarter 2017 — Fairfield Inn & Suites El Paso Airport and the Residence Inn Austin Airport — Condor Hospitality has accomplished around $240 million of buyouts, denoting 12 high-quality premium-branded select-service hotels, comprising 1,593 rooms in aggregate, since fourth-quarter 2015.

On the other hand, the company is fast shedding its legacy-hotel portfolio and now has only six such hotels remaining in the portfolio. This is a notable achievement when compared with 55 such hotels which the company had at the beginning of 2015.

The move to sale non-core assets is a strategic fit, as it offers the company scope to apply the proceeds to existing debt, and in turn, enjoy flexibility in the acquisition of additional superior hotels. Hence, the capital-recycling initiatives are anticipated to help the company achieve a favorable portfolio mix.

Condor Hospitality currently has 19 hotels in nine states under its ownership that are franchised by a number of reputed brand families including Hilton, Marriott/Starwood and InterContinental Hotels Group.

However, shares of Condor Hospitality have underperformed the industry it belongs to, in the past six months. This Zacks Rank #3 (Hold) company’s shares have edged down 1.6%, while the industry recorded growth of 3.0% during this time frame.

Stocks to Consider

Better-ranked stocks in the REIT space include Franklin Street Properties FSP, Columbia Property Trust CXP and Urstadt Biddle Properties UBA. All three carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Franklin Street Properties’ Zacks Consensus Estimates for 2017 FFO per share remained unchanged at $1.05 over the past month. Its share price has declined 4.2% in six months’ time.

Columbia Property Trust’s FFO per share estimates for the current year have moved up 1.8% to $1.15 in a week’s time. Its shares have gained 6.1% over the past six months.

Urstadt Biddle Properties’ FFO per share estimates for fiscal 2017 remained unchanged at $1.25 over the past month. Its shares have rallied 26.9% in the past six months.

Note: All EPS numbers presented in this report represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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