The coronavirus pandemic has brought business and leisure travel to a screeching halt, and now inflation, record petrol prices and the uncertainty surrounding events in Europe are causing a sustained post travel boom. -pandemic seems even more distant.

But the pandemic appears to be easing in the United States, and the pent-up demand to get out and be social could well spur a travel boom this summer and beyond, especially if conditions improve and concerns escalate. mitigate.

Real estate has always been a good way for investors to counter stock market volatility in a portfolio, and even among the volatile hospitality and travel sectors, there are strong candidates to consider. Two of them are Host Hotels and Resorts ( HST -0.67% ) and REP properties (REP -1.69% ). Both are real estate investment trusts (REITs) and each has its potential appeal.

EPR Properties, a staycation and a drive-to-play

Being bullish on a REIT whose holdings are 45% movie theaters might seem odd, but EPR Properties has plenty of other strengths. The company’s $6.4 billion portfolio currently includes 353 local and drive-through locations occupied by more than 200 tenants in 44 states and Canada. Many are just the types of properties that will benefit when the holiday season arrives, but gas prices are making it more attractive to stay closer to home.

In addition to family entertainment centers and districts, this includes 175 theaters; 56 dining properties like the famous Topgolf franchise; 18 water and amusement parks and even indoor skydiving facilities; 11 ski resorts; 8 experiential hotel developments; and even a handful of cultural attractions like the City Museum of St. Louis, as well as a handful of wellness centers and gyms. Around 5% of EPR’s business is also carried out with operators of private schools and preschool education centres.

EPR has recovered well after losing money and briefly suspending its dividend at the height of the pandemic. Net income was $74.5 million in 2021, compared to $155.9 million in Red Ink, and company CEO Greg Silver said collections in the fourth quarter of 2021 were on track. up to expectations and indicate improved operating conditions for its tenants.

The company guides funds from operations (FFO) between $4.30 and $4.50 per share in 2022, which would represent a 42% gain over 2021 performance in the middle of that range. Its balance sheet is also pretty clean, with $288 million in cash and a zero balance on its $1 billion unsecured revolving credit. This should easily fuel the $500-700 million that EPR Properties plans to invest in 2022.

EPR just increased its monthly dividend by 10% to $0.275 per share, eight months after restoring it after 15 months without paying dividends from April 2020 to July 2021. That’s good for a return of around 5 .93% based on a stock price of approximately $52.42. , away from its 52-week low of $41.14 and approaching its 52-week high of $56.07.

The company also has a long tradition of rewarding shareholders, delivering a 1,241% return from the end of 1997 to the end of 2021, compared to 804% for the company. MSCI US REIT Index.

Host Hotels & Resorts, prime properties positioned for any rebound

Host Hotels & Resorts is the largest lodging REIT and one of the nation’s largest luxury and upscale hotel owners, with a portfolio of 75 properties in the United States and five international holdings.

The portfolio is heavy on properties that are notable parts of major city skylines and major presences in iconic coastal and inland destinations. Just a few: 1 South Beach Hotel in Miami; Alila Ventana Big Sur, California; Boston Marriott Copley Place; Four Seasons Resort Orlando, Florida; and Grand Hyatt Atlanta in Buckhead.

Conditions are improving. In its fourth quarter 2021 report, Host said revenue per available room (RevPAR) increased 13% from the prior quarter and the company was seeing particular recovery at its Sun Belt resorts and city-focused properties. commercial. 70 of its hotels reported positive hotel-level operating profits in the fourth quarter, including three in New York, two in downtown Boston and its San Francisco Marriott Marquis. These are the types of destinations that should also benefit from the growth in leisure traffic if it happens this summer.

Going forward, “we expect sequential quarterly improvements in RevPAR driven by demand growth across our portfolio and continued pricing strength at our resorts. We expect continued ramp-up in transient business and group business alongside continued strength in leisure,” the company said in its February 2022 Investor Presentation.

Host has reduced its portfolio by 14 properties over the past five years and is focusing its acquisition and improvement dollars on the Sun Belt and its most desirable urban properties.

For example, last month the company said it purchased the 319-room luxury Van Zandt Hotel in Austin, Texas, a $246 million investment in a property built only in 2015. Meanwhile, Host sold the 1,220-room Sheraton Boston for approximately $233 million and carried out major renovations at several properties, including the 1,966-room New York Marriott Marquis and the Ritz-Carlton in Naples, Florida.

Meanwhile, the company has just started paying dividends after stopping them in 2020 during the initial pandemic shutdown. They were then paying $0.20 per share. It is now $0.03 per share, which is only about 0.62% back at a share price of around $18.20, well below the 52-week low of $16.57. and still trailing its 52-week high of $19.75.

The host did not release guidance for 2022, citing the continued uncertainty the pandemic is causing in the travel, hospitality and event sectors. The company also said January results were down from December, but February looked more promising, at least when its year-end and fourth-quarter results were released on Feb. 16.

While REITs are generally considered revenue games, that’s not the case here, at least for now. The company has provided good payouts in the past, though, and it just might happen again. Host’s impressive portfolio of high-end destination properties gives reason to believe that growth and revenues could quickly return to attractive levels.

Nothing is certain, but these are good choices

It is undeniable that we live in uncertain times and that the travel and leisure industries are certainly among the most vulnerable.

But if you think there’s a turnaround afoot, these two companies are prime candidates if you want to invest in this trend. Based on their past performance, balance sheets and property portfolio, both should benefit from any new travel boom.