Hotel Property Earnings: Solid Result and Headwind From Rising Debt Costs Is Abating

No-moat-rated Hotel Property Investments reported a solid fiscal 2024 result. Adjusted funds from operations increased by 4% to AUD 38 million on 3.3% growth in rental income. With slight equity dilution from the distribution reinvestment plan, AFFO per security and distributions increased by 2% to AUD 0.19 per unit. The result aligned with our expectations, but guidance for distributions of AUD 19.5 cents in fiscal 2025 was slightly better than we expected. We upgrade our near-term forecasts and lift our fair value estimate by 3% to AUD 3.50 per unit. At current prices, the trust offers a forward distribution yield of 5.7% and screens as fairly valued.