Kevin Milota at JPMorgan sees opportunity in the recent pullback in Ryman Hospitality Properties shares. He has raised his rating on Ryman to 'overweight' from 'hold' and lifted his price target to $42 from $40. Ryman shares (Ticker: RHP) are up slightly in Monday trading and have given up about 14 percent in the past month.
We believe the transition of the sales responsibility from the property level to the regional level led to reduced conversion activity, which fell short of Ryman's previous forecast. With that said, group bookings for 2014 and beyond remain strong, and we do not believe the softness in short-term group is indicative of a monumental slowdown in longer-dated group-booking activity.
Cowen & Co. analysts have lowered their rating on shares of Delek US Holdings to 'hold' from 'buy.' The move comes after Delek is rallying back toward its all-time highs around $40. (Cowen's target is $42.) The stock (Ticker: DK) is up 50 percent year to date.
Over at BMO Capital Markets, Richard Anderson is making a similar move regarding Healthcare Realty Trust shares. He now rates the Nashville-based medical REIT (Ticker: HR) at 'market perform' instead of 'outperform.' His $29 price target is unchanged and is now about 4 percent below where Healthcare Realty is changing hands.
The investment management firm headed up by Mario Gabelli continues to trim its stake in Ryman Hospitality Properties. GAMCO Investors filed papers this week with the Securities and Exchange Commission saying it now owns 11.1 percent of Ryman, down from 13.5 percent a year ago and 12 percent in the fall.
Gabelli last year opposed the conversion of Gaylord Entertainment into Ryman, which is organized as a real estate investment trust. Shares of Ryman (Ticker: RHP) are up almost 40 percent since the REIT conversion.
Corrections Corp. of America is front and center in a Sunday New York Times story about the growing corporate trend of converting from a standard corporation to a real estate investment trust.
The Nashville-based prison operator (Ticker: CXW) expects to save $70 million on a REIT conversion in 2013 and recently announced a $675 million special dividend payout to shareholders, or about $6.63 per share.
One industry analyst tells the Times the interest in REIT conversion is the highest it’s been in 30 years. Another analyst says he expects more conversions to come in railroads, highways, mines, landfills, vineyards, farmland or other immovable structures that generate revenues.
The tax savings and potential benefit to shareholders of REIT conversions can’t be denied, but the trend worries some industry experts. Some think it could jeopardize the tax status of traditional trusts, while others question the need for more tax-saving strategies for corporations when there are already so many available.