I only recently added this stock to my high-yield income portfolio. That said, though, U.S. recession risks are growing and hotel REITs are highly cyclical investments. Its volatile RevPAR and payout ratio raise distribution risks during a downturn. Shares are still moderately valued. I see a 50-60 percent chance of a U.S. recession over the next twelve months.
Apple Hospitality REIT, Inc. (APLE) is vulnerable to a cyclical downturn in the hotel industry, which is why I am going to scale back my exposure to the hotel real estate investment trust this week. I added the lodging REIT to my investment portfolio only a couple of months ago but believe downside risks have grown considerably since then. Investors still seem to be largely in denial of growing risks to the economy, which is another red flag for me. Time to tread carefully.
Source: Seeking Alpha
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