Just to clarify, I'm not saying this stock should go to $4. In...

Just to clarify, I'm not saying this stock should go to $4. In fact, I would think the possibility of that is close to 0% based on the current earnings profile.

The earnings yield on REITS, especially a hotel focussed REIT should be a least a few percentage points above the bank interest rate. Why would you expose your capital to risk factors such as interest rates, property prices, vacancy rates, bad tenants etc if you could get a similar return by putting your money in the bank virtually risk free?

REIT investors should and do, demand a 'risk premium' on their investments, to compensate them for the risk they take on by investing in the asset class. For an example of how the potential risks can become a reality, take a look at the performance of almost any property company during the GFC.

HPI is not a stock i follow closely, but I would imagine it will go up in correlation with its distributable surplus. Given most of its leases are inflation linked (to an extent), and it pays out almost all its cash earnings as distributions, I wouldn't be buying this stock for it's share price performance.