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Host Hotels (HST) Purchases Hyatt Regency Austin for $161M

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Host Hotels & Resorts Inc. (HST - Free Report) has acquired a fee simple interest in the Hyatt Regency Austin in Austin, TX, for approximately $161 million in cash. The 448-room hotel will continue to be managed by Hyatt Regency Austin under a long-term management agreement.

The acquisition was executed at attractive pricing, with the purchase price representing a 10% capitalization rate and an 8.8X EBITDA multiple based on 2019 actual results.

The 670,000 square-foot property is situated on 5.8 acres in a park-like setting in the central business district along the Lady Bird Lake. Moreover, the waterfront hotel offers easy access to a variety of leisure attractions, including the South Congress entertainment area, Zilker Park, and the Colorado River that offers recreational water activities. Hence, with the resumption of travel and recovery in leisure demand, the hotel is well-placed to attract leisure travelers.

Also, the hotel offers 45,000 square feet of total meeting space, including ballrooms spanning 14,000 and 10,000 square feet, two food and beverage outlets, a fitness center, and an outdoor pool. Hence, this enables the property to attract in-house demand and offers scope for higher group and business bookings.

Further, with a renovation of rooms and a meeting space expansion in 2015 as well as a meeting space revamp in 2018, the property is unlikely to need any significant capital expenditure in the near term.

Per management, “we expect this acquisition to raise our EBITDA growth profile, while positively enhancing our geographic diversification by adding a market with a thriving economy and a young and vibrant population.”

Notably, the company’s strong liquidity position has enabled it to add the property to its portfolio. As of the fourth-quarter 2020 end, its liquidity position was an impressive $2.5 billion, consisting of a cash balance of $2.3 billion and $139 million FF&E escrow reserves.

Moreover, the acquisition is in line with its recently expanded acquisition focus to include urban markets beyond the top 25 ones that offer higher portfolio EBITDA and revenues.

Shares of this Zacks Rank #3 (Hold) company have jumped 69.1% over the past year compared with the industry’s growth of 48.3%.



However, going forward, the company expects its suspended luxury and upper-upscale hotels to reopen at low occupancies in the second and third quarters. Also, recovery in the demand for core business transient is likely to be choppy in the ongoing year due to travel restrictions and delayed return to offices.

Stocks to Consider

Alpine Income Property Trust, Inc.’s (PINE - Free Report) funds from operations (FFO) per share estimates for the current year have moved up 9.5% to $1.61 in the past month. The company sports a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Extra Space Storage Inc.’s (EXR - Free Report) Zacks Consensus Estimate for 2021 FFO per share has moved up 1.3% to $5.97 in the past week. The company currently carries a Zacks Rank of 2 (Buy).

Global Net Lease, Inc. (GNL - Free Report) has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2021 FFO per share has been revised 4% at $2.10 in a month’s time.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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