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Host Hotels (HST) Beats on Q4 FFO, Productivity Improves
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Host Hotels & Resorts, Inc. (HST - Free Report) came up with fourth-quarter 2016 adjusted funds from operations ("FFO") of 41 cents per share, beating the Zacks Consensus Estimate of 38 cents. Adjusted FFO per share was up 5.1% from the year-ago tally of 39 cents.
Results reflect growth in comparable hotel revenues and improvement in productivity at many of the company’s hotels.
The company posted total revenues of nearly $1.34 billion, which beat the Zacks Consensus Estimate of $1.31 billion. It compared favorably with the year-ago number of $1.33 billion. The increase was attributed to rooms and food & beverage revenue, partly offset by lost revenue from hotel dispositions.
For full-year 2016, the company came up with adjusted FFO of $1.69 per share, 9.7% ahead of the year ago tally of $1.54. Revenues of $5.4 billion denoted an increase of 1.5% year over year.
Quarter in Details
Comparable hotel RevPAR (on a constant dollar basis) was up 1.7% year over year, driven by a 0.6% increase in average room rate and 80 basis point expansion in occupancy to 75.0%. Results highlight strength in group demand, but the positive was partly offset by a decline in corporate transient business, as a result of weakness in business travel during the year.
At its domestic properties, comparable RevPAR increased 2.1% and the markets that outperformed the portfolio were San Diego, Phoenix, Los Angeles and Washington, D.C. markets. However, RevPAR declined at the Houston and Florida properties.
RevPAR at the company’s comparable international properties were down 9.5 % on a constant-dollar basis. Results reflect a decline in the company’s Latin America markets on account of political uncertainty and continued Zika virus fears in Brazil.
During the quarter under review, the company invested around $39 million for redevelopment, and return on investment (ROI) capital expenditures. It also spent approximately $75 million on renewal and replacement.
Finally, the company exited fourth-quarter 2016 with around $372 million of cash and $788 million of available capacity remaining under the revolver portion of its credit facility. Moreover, as of Dec 31, 2016, total debt was $3.6 billion, having an average maturity of 5.2 years and an average interest rate of 3.8%.
Share Repurchase Update
Host Hotels repurchased 0.7 million shares at an average price of $15.82 for the quarter. In full-year 2016, the company bought back 13.8 million shares at an average price of $15.79, for a total of around $218 million. Notably, this share repurchase program ended on Dec 31, 2016.
Further, on Feb 21, 2017, a new share repurchase program to buy back up to $500 million of common stock was authorized by the board of directors.
Outlook
For full-year 2017, Host Hotels expects adjusted FFO per share in a range of $1.60–$1.70, backed by comparable hotel revenue per available room (RevPAR) (constant U.S. dollar basis) growth of 0.0–2.0%. The Zacks Consensus Estimate for the same is currently pegged at $1.64.
In Conclusion
Going forward, we believe that a solid portfolio of upscale hotels across lucrative markets, strategic capital-recycling program and a healthy balance sheet have the capability to place the company well for growth. Recently, the company acquired the Don CeSar and Beach House Suites complex in St. Pete Beach, FL for $214 million. The purchase is a strategic fit for long term growth. However, above average supply growth, specifically in the company’s key markets, remains our concern. Moreover, any hike in interest rate can add to its woes.
Further, shares of Host Hotels outperformed the Zacks categorized REIT and Equity Trust – Other industry over the past three months. Over this time frame, Host Hotels shares logged in a return of 10.4% against the 5.7% ascend of the industry.
Key Picks
Investors interested in the REIT industry may consider stocks like The GEO Group, Inc. (GEO - Free Report) , Mack-Cali Realty Corporation and Cousins Properties Incorporated (CUZ - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
The GEO Group’s 2017 estimates climbed 3.8% to $2.99 per share, over the past 60 days.
Mack-Cali, currently, has a long-term growth rate of 5.8%.
Moreover, Cousins Properties’ 2017 estimates increased 1.7% to 60 cents per share, over the past 30 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Host Hotels (HST) Beats on Q4 FFO, Productivity Improves
Host Hotels & Resorts, Inc. (HST - Free Report) came up with fourth-quarter 2016 adjusted funds from operations ("FFO") of 41 cents per share, beating the Zacks Consensus Estimate of 38 cents. Adjusted FFO per share was up 5.1% from the year-ago tally of 39 cents.
Results reflect growth in comparable hotel revenues and improvement in productivity at many of the company’s hotels.
The company posted total revenues of nearly $1.34 billion, which beat the Zacks Consensus Estimate of $1.31 billion. It compared favorably with the year-ago number of $1.33 billion. The increase was attributed to rooms and food & beverage revenue, partly offset by lost revenue from hotel dispositions.
For full-year 2016, the company came up with adjusted FFO of $1.69 per share, 9.7% ahead of the year ago tally of $1.54. Revenues of $5.4 billion denoted an increase of 1.5% year over year.
Quarter in Details
Comparable hotel RevPAR (on a constant dollar basis) was up 1.7% year over year, driven by a 0.6% increase in average room rate and 80 basis point expansion in occupancy to 75.0%. Results highlight strength in group demand, but the positive was partly offset by a decline in corporate transient business, as a result of weakness in business travel during the year.
At its domestic properties, comparable RevPAR increased 2.1% and the markets that outperformed the portfolio were San Diego, Phoenix, Los Angeles and Washington, D.C. markets. However, RevPAR declined at the Houston and Florida properties.
RevPAR at the company’s comparable international properties were down 9.5 % on a constant-dollar basis. Results reflect a decline in the company’s Latin America markets on account of political uncertainty and continued Zika virus fears in Brazil.
During the quarter under review, the company invested around $39 million for redevelopment, and return on investment (ROI) capital expenditures. It also spent approximately $75 million on renewal and replacement.
Finally, the company exited fourth-quarter 2016 with around $372 million of cash and $788 million of available capacity remaining under the revolver portion of its credit facility. Moreover, as of Dec 31, 2016, total debt was $3.6 billion, having an average maturity of 5.2 years and an average interest rate of 3.8%.
Share Repurchase Update
Host Hotels repurchased 0.7 million shares at an average price of $15.82 for the quarter. In full-year 2016, the company bought back 13.8 million shares at an average price of $15.79, for a total of around $218 million. Notably, this share repurchase program ended on Dec 31, 2016.
Further, on Feb 21, 2017, a new share repurchase program to buy back up to $500 million of common stock was authorized by the board of directors.
Outlook
For full-year 2017, Host Hotels expects adjusted FFO per share in a range of $1.60–$1.70, backed by comparable hotel revenue per available room (RevPAR) (constant U.S. dollar basis) growth of 0.0–2.0%. The Zacks Consensus Estimate for the same is currently pegged at $1.64.
In Conclusion
Going forward, we believe that a solid portfolio of upscale hotels across lucrative markets, strategic capital-recycling program and a healthy balance sheet have the capability to place the company well for growth. Recently, the company acquired the Don CeSar and Beach House Suites complex in St. Pete Beach, FL for $214 million. The purchase is a strategic fit for long term growth. However, above average supply growth, specifically in the company’s key markets, remains our concern. Moreover, any hike in interest rate can add to its woes.
Host Hotels currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Host Hotels & Resorts, Inc. Price, Consensus and EPS Surprise
Host Hotels & Resorts, Inc. Price, Consensus and EPS Surprise | Host Hotels & Resorts, Inc. Quote
Further, shares of Host Hotels outperformed the Zacks categorized REIT and Equity Trust – Other industry over the past three months. Over this time frame, Host Hotels shares logged in a return of 10.4% against the 5.7% ascend of the industry.
Key Picks
Investors interested in the REIT industry may consider stocks like The GEO Group, Inc. (GEO - Free Report) , Mack-Cali Realty Corporation and Cousins Properties Incorporated (CUZ - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
The GEO Group’s 2017 estimates climbed 3.8% to $2.99 per share, over the past 60 days.
Mack-Cali, currently, has a long-term growth rate of 5.8%.
Moreover, Cousins Properties’ 2017 estimates increased 1.7% to 60 cents per share, over the past 30 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>