Sentiments about financial results for hotel real estate investment trusts were the most positive of all property sectors in Q2. Hotel investment registered the most positivity among investors on two accounts: transcript sentiment and numeric transparency scores.
The latest report from S&P Global Market Intelligence assessed earnings calls among REITs during the second quarter of this year. It used natural language processing to calculate the ratio between positive and negative words. The result showed that hotel REITs produced the most positive sentiments.
Most positive sentiment for the hotel sector
The report examined 16 hotel REITs in the US that trade on the Nasdaq, NYSE or NYSE American and revealed that their score for net positivity was the highest of all property sectors. In Q2, hotels registered a score of 1.28.
Next in the table were self-storage and retail investments, registering the second and third highest scores with 1.13 and 1.06, respectively. At the other end of the scale stood healthcare and industrial. The score for all REITs was 0.87.
Hotel REITs see the highest increase
When comparing Q2 with the previous four quarters, hotel REITs also fared well in positivity. The sector experienced a 0.11 increase on its previous four-quarter average, the second highest in the table. Just slightly ahead of hotels was healthcare with a 0.17 uptick.
In contrast, all other sectors saw a downturn in positivity and registered negative figures. The highest decrease in positive sentiment came in data centres with a 0.53 drop. The average was all types of REIT investments stood at -0.05.
Executives more upbeat than analysts
The S&P Global Market Intelligence report also examined the number of positive words used by executives and analysts. In general, the former used more positive words than the latter across the investment types.
In this section of the report, hotel investment again ranked as the most positive sector. The median net positivity score among executives reached 1.51, the highest on the table. While the ratio for analysts stood at 0.60, the second.
Hotel sector most transparent
Part of the language processing included comparing the ratio of numbers to words. REITs’ earnings calls using more numbers than words indicate higher numeric transparency, which may translate to greater transparency generally.
In this section, hotel REITs posted the best results yet again, with a total score of 3.40, considerably ahead of their nearest rival, diversified (casino, energy infrastructure, farmland and timber REITs). Residential REITs stood in third place with 2.88.
(Source: S&P Global Market Intelligence)