Morningstar | Hotel Property Investments offers an attractive yield and earnings growth visibility.
Hotel Property Investments is a small Australian REIT with a portfolio of pub properties primarily in Queensland, currently leased almost exclusively to subsidiaries of supermarket giant Coles. Earnings are highly secure, with strong tenants and no material lease expiries until 2021. Unlike most Australian REITs, the majority of the portfolio realises robust rent growth of about 4% per year. It is assured by contracted rental increases of twice the consumer price index, or at a fixed amount. Solid population growth in Queensland is a long-term tailwind. The key risks are potential changes to Queensland gambling and liquor laws hurting pub profitability and rent as leases roll over. Considering the distribution yield, highly secure medium-term earnings, and solid growth, we consider Hotel Property Investments a good income stock.Hotel Property Investments is an Australian Real Estate Investment Trust. Co. is engaged in real estate investment in the pub freehold sector in Australia. Co. owns a portfolio of 48 investment properties including 41 freehold pubs (and adjacent specialty tenancies) and 7 detached bottleshops leased to members of the Coles Group.
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