Hotel Property Investments Beats Prospectus Distribution Guidance; No Change to Our Outlook

Hotel Property Investments has upgraded fiscal 2015 distribution guidance to AUD 0.161 per security, consistent with our forecast, and beating prospectus guidance of AUD 0.159 cents. The upgrade comes as no surprise given that the firm is benefiting from low interest rates and accretive acquisitions. We incorporate the transactions into our forecasts but our AUD 2.60 fair value estimate stands. At current prices, Hotel Property Investments looks fairly valued, offering a solid, 6.2% dividend yield. Since we initiated coverage in mid-2014, the stock has performed very well, paying two distributions and gaining 20% in price, enough to converge with our fair value estimate.