Back to top

Analyst Blog

Zacks Equity Research

Hyatt Offloads Denver Property

HOT H

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Since late 2010, transition to an “asset light” business model has gained momentum in the hotels and REIT industry. Hoteliers such as Hyatt Hotels Corporation (H - Snapshot Report), Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report), Red Lion Hotels Corporation and Morgans Hotel Group Co. have embarked on such a strategy.

The asset sale is part of the companies' long-term strategy to improve financial flexibility, which in turn will maximize shareholder value. The companies aim to unlock real estate value by giving away ownership of selective assets.  A higher concentration of franchise fee reduces earnings volatility and provides a more stable growth profile. Companies use the sale proceeds to invest in brand positioning as well as to restructure their balance sheet that often includes debt repayment.

As part of this asset-light strategy, Hyatt recently offloaded the 451-room Hyatt Regency Denver Tech Center property to an affiliate of JMI Realty for $60.0 million. Post sale, the property will be managed by Davidson Hotels & Resorts under the Hyatt Regency brand.

Despite the divestiture, Hyatt will be able to retain its brand presence in the Denver Tech Center area and increase its capital. The property’s meeting space underwent an extensive makeover recently. The renovated space is likely to be a prime location for meetings and events at the Denver Tech Center.

This Zacks Rank #2 (Buy) company has adopted this strategy of divesting properties to grow in a less capital-intensive way. In Jun 2013, the hotelier divested a San Francisco-based property, Hyatt Fisherman's Wharf, to Chesapeake Lodging Trust for $103.5 million.

Earlier in March, a Manhattan-based Hyatt branded property, Hyatt Place New York Midtown South, was sold to Chesapeake for $76.2 million. In addition to this, Chesapeake owns two other Hyatt-branded hotels – Hyatt Regency Boston and Hyatt Regency Mission Bay Spa & Marina – in the U.S.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%