Lodging REIT sector should rally after Bloomberg report on Sunstone, says Stifel

Stifel notes that Bloomberg reported that Trinity Investments has conveyed interest in Sunstone Hotel Investors (SHO), alleging that the group was potentially willing to pay about $13 per share, or a roughly 21% premium from last night’s close. The last public-to-private lodging REIT transaction was November 2023, when KSL Capital Partners purchased Hersha Hospitality Trust, noted the analyst, who argues that lodging REITs overall, and more particularly those with smaller market caps, could rally on this news. Though the firm says it has “no knowledge of any pending M&A activity or discussion,” it is encouraged to see private equity potentially returning to the lodging REIT space and among its coverage, Stifel believes Chatham Lodging Trust (CLDT) could be “a possible takeout candidate, given the company’s select-service and non-brand managed portfolio,” the analyst tells investors. Other lodging REITs include Ashford Hospitality (AHT), Apple Hospitality REIT (APLE), Braemar Hotels & Resorts (BHR), DiamondRock (DRH), Host Hotels (HST), Summit Hotel Properties (INN), Park Hotels & Resorts (PK), Pebblebrook Hotel (PEB), RLJ Lodging Trust (RLJ), Ryman Hospitality (RHP), Service Properties (SVC) and Xenia Hotels (XHR).