Hospitality shares fall more on dividend suspension

April 13 (Reuters) - Shares of Hospitality Properties Trust (HPT.N: Quote, Profile, Research) fell as much as 14 percent as investors continued to sell after the real estate investment trust said last Wednesday it would suspend its dividend for the rest of 2009.

"It takes multiple days for people to cycle out of this, and you're talking about people unwinding very large positions in what is traditionally viewed as a yield play," analyst Mike Salinsky of RBC Capital Markets told Reuters.

The company said it had decided to suspend its dividend because of severe limitations on the availability of capital to meet obligations such as debt maturities from 2010 to 2012.

In a research note on Friday, Salinsky said, "We believe the decision to preserve capital amid the extremely challenging operating environment to be both prudent and strategic in that it should allow Hospitality to better weather the current downturn."

He rates the stock "outperform."

Analyst Rod Petrik at Stifel Nicolaus said Hospitality Properties was one of the only lodging REITs that did not slash dividend after the Sept. 11, 2001, attacks on the United States, and this pullback comes five months after it had "adamantly" defended its common dividend.

"The suspended dividend will save $72 million a quarter," Petrik wrote in a note to clients. Last week, he had downgraded the Newton, Massachusetts-based company to "hold" from "buy" on valuation.

Hospitality, which has investments in 289 hotels, said last week that Marriott International Inc (MAR.N: Quote, Profile, Research) had defaulted on an $837,601 payment due for the four-week period beginning March 28.