Service Properties Trust SVC is among a handful of real estate investment trusts (REITs) making the list of stocks hitting new highs. Many REITs have rallied off of their October lows, but only a few have shown the kind of price strength recently seen in Service Properties Trust.
The company is a hotel and motel REIT benefitting from the receipt of $379 million as part of a deal involving the acquisition of Travel Centers of America Inc. TA by BP Amoco PLC BP. Service Properties owned about 8% of the common stock of Travel Centers of America.
The deal was announced in mid-February, and the REIT bounced but now continues to even higher prices.
Service Properties is based in Newton, Massachusetts, and handles a portfolio of 1,003 properties, including 238 hotels and 765 net-lease retail locations. Funds from operations (FFO) increased over the last 12 months by 75%. The FFO over the past five years is negative 21.7%.
The REIT trades at 1.34 times book value, and the price to free cash flow metric is 8.96.
The short float of 5.9% is higher than that of most real estate investment trusts — some of the current rally may be attributable to shorts forced to cover existing positions. The REIT is actively traded with an average daily volume on the Nasdaq Stock Exchange of 1.1 million shares.
The daily price chart for Service Properties Trust is here:
You can see the mid-February gap up after the news of the deal made headlines, and it’s clear that the price continues higher afterward. The relative strength indicator (RSI) below the price chart is up into its Overbought range.
The weekly chart looks like this:
The price is up to the level of the declining 200-week moving average (the red line) and well above the 50-week moving average (the blue line). It has a long way to travel before making it back to the early 2020 highs in the $21 to $22 area.
Not investment advice. For educational purposes only.
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