In a research note this morning, JPMorgan analyst Joseph Greff downgraded Chesapeake Lodging Trust (CHSP), Sunstone Hotel (SHO) and LaSalle Hotel (LHO) to Underweight, a sell-equivalent rating, pointing to recent outperformance, valuation, and fundamentals and outlooks that he still sees as soft.

SELL AFTER OUTPERFORMANCE: In a research note to investors, JPMorgan's Greff downgraded Chesapeake Lodging Trust, Sunstone Hotel and LaSalle to Underweight from Neutral saying the valuations of Lodging REITs are “relatively rich” following the quarter to date outperformance. Prospects of U.S. corporate tax reform eventually stimulating business travel are already reflected in the stocks prices, Greff added. Further, the analyst argued that while investors' expectation for flat to very low single digit RevPAR growth is “the bogey for 2018,” he does not see great risk-reward. At the very least, Greff thinks they will be relative underperformers. The analyst kept a $23 price target on Chesapeake Lodging shares, $14 price target on Sunstone's stock, and $24 on LaSalle.

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