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Host Hotels (HST) Beats on Q1 FFO & Revenues, Doubles Dividend

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Host Hotels & Resorts, Inc. (HST - Free Report) came out with better-than-anticipated first-quarter 2022 results in terms of adjusted funds from operations (FFO) per share and revenues, mainly driven by leisure travel with strong rates at resort properties. Additionally, urban markets witnessed improvements with group revenues increasing sequentially.

The hotel REIT reported an adjusted FFO per share of 39 cents, surpassing the Zacks Consensus Estimate of 26 cents. HST had reported adjusted FFO per share of 1 cent in the prior-year quarter.

Host Hotels generated total revenues of $1.07 billion, beating the Zacks Consensus Estimate of $948 million. The top line also improved significantly from the prior-year quarter’s $399 million.

Backed by acceleration in lodging recovery, HST also announced doubling of its quarterly dividend.

Subsequently, Host Hotels sold the Sheraton New York Times Square Hotel for $373 million. This includes a $250 million bridge loan provided by the company to the buyer, with an initial term of six months and three potential six-month extensions.

Behind the Headlines

During the first quarter, demand continued to rise backed by leisure travel at drive-to and resort destinations. Host Hotels’ revenue per available room (RevPAR) was $166.9 million in the reported quarter, depicting a more than double increase from the prior quarter.

All owned-hotel pro-forma EBITDA was $330 million, surging from $49 million reported a year ago. However, when compared with first-quarter 2019, it fell 17.7%.

On a year-over-year basis, the average occupancy percentage increased to 54.6% from 28.5% while average room rate improved to $305.6 from $253.9, marking a 20.4% rise.

The room revenues from the transient business were $432 million, marking a marginal rise of 1.4% from the prior quarter. However, it registered a fall of 3.2% from the revenues recognized in the same period in 2019.

Room revenues from group segment increased 33.3% to $184 million sequentially. However, it declined 39.2% from the first-quarter 2019 levels.

The room revenues for contract businesses remained unchanged at $21 million sequentially. When compared with first-quarter 2019 levels, it fell 12.7%.

Moreover, room nights for HST’s transient segment declined 1.4% to $1278 from the prior quarter and 19.1% from first-quarter 2019 levels. For the group business, room nights increased 14% to $682 quarter over quarter while it declined 42% from the same-period levels in 2019. The contract business witnessed a fall of 1.6% in room nights from the prior quarter and 1.4% from the first-quarter level of 2019.

Balance-Sheet Position

Host Hotels exited first-quarter 2022 with cash and cash equivalents of $266 million, down from $807 million as of Dec 31, 2021.

HST’s liquidity totaled $1.9 billion, including FF&E escrow reserves of $163 million for the same period. It had $1.5 billion available under the revolver portion of the credit facility. As of the same date, HST’s debt balance amounted to $4.2 billion with an average maturity of 5.3 years and average interest rate of 3.4%. It has no significant maturities until 2024.

Capital Expenditure

During the first quarter, Host Hotels had incurred around $122 million of capital expenditure. Of this, $83 million was return on investment projects spend, and $39 million was renewal and replacement project expenditure.

Dividend Update

On May 4, 2022, the board of directors announced a regular quarterly cash dividend of 6 cents on its common stock, marking a 100% increase over the prior quarter. The dividend will be paid on Jul 15 to stockholders of record on Jun 30, 2022.

Guidance

HST expects all owned hotel (pro forma) RevPAR in the range $195-$205 million for the second quarter. Adjusted EBITDAre is estimated between $375 million and $410 million.

For full-year 2022, management expects to incur capital expenditure of $500-$600 million.

Host Hotels currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Host Hotels & Resorts, Inc. Price, Consensus and EPS Surprise Host Hotels & Resorts, Inc. Price, Consensus and EPS Surprise

Host Hotels & Resorts, Inc. price-consensus-eps-surprise-chart | Host Hotels & Resorts, Inc. Quote

Performance of Other REITs

Extra Space Storage Inc. (EXR - Free Report) reported first-quarter 2022 core FFO per share of $2.01, beating the Zacks Consensus Estimate of $1.86. The figure also came in 34% higher than the prior-year quarter’s $1.50.

EXR’s results reflect strong top-line growth backed by higher average rates for new and existing customers and higher late fees, partly muted by lower occupancy. The company also raised its 2022 guidance.

Quarterly revenues were $443.6 million, up 23.6% year over year. The top line also exceeded the Zacks Consensus Estimate of $432 million.

Extra Space Storage currently carries a Zacks Rank of 2 (Buy).

Boston Properties, Inc.’s (BXP - Free Report) first-quarter 2022 FFO per share of $1.82 beat the Zacks Consensus Estimate of $1.74. The figure also compared favorably with the year-ago quarter’s $1.56.

BXP’s quarterly results reflect decent growth in lease revenues. Also, it experienced strong leasing activity during the quarter.

Quarterly revenues from lease came in at $718.1 million, up 4.7% from $685.8 million in the year-ago quarter. Moreover, the figure surpassed the consensus mark of $700.6 million.

Boston Properties currently carries a Zacks Rank of 3 (Hold).

Vornado Realty Trust’s (VNO - Free Report) first-quarter 2022 FFO plus assumed conversions as adjusted per share of 79 cents topped the Zacks Consensus Estimate of 76 cents.

Vornado’s results display year-over-year growth in the same-store net operating income (NOI) in its New York, theMART and 555 California Street portfolios.

VNO’s total revenues came in at $442.1 million in the reported quarter, surpassing the Zacks Consensus Estimate of $422.3 million.

Further, on a year-over-year basis, both FFO per share and revenues grew 21.5% and 16.4%, respectively.

Vornado currently carries a Zacks Rank of 4 (Sell).

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.