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Host Hotels (HST) Beats on Q2 FFO & Revenues, Doubles Dividend

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Host Hotels & Resorts, Inc. (HST - Free Report) reported adjusted FFO per share of 58 cents, surpassing the Zacks Consensus Estimate of 49 cents. The figure compared favorably with the prior-year quarter’s 12 cents.

Results reflect better-than-anticipated top-line growth, mainly driven by leisure travel with strong rates at resort properties. Additionally, urban markets witnessed an increase in group demand sequentially. HST also doubled its quarterly dividend.

Host Hotels generated total revenues of $1.4 billion, beating the Zacks Consensus Estimate of $1.3 million. The top line also improved significantly from the prior-year quarter’s $649.0 million.

Behind the Headlines

During the second quarter, leisure travel improved, which led to strong rates at resort properties. Moreover, group demand in the urban markets rose sequentially. Host Hotels’ all-owned-hotel revenue per available room (RevPAR) was $219.3 million in the reported quarter, almost doubling from the prior quarter’s $110.7 million.

All-owned-hotel EBITDA was $510 million, surging from $151 million reported a year ago. The figure also surpassed the second-quarter 2019 tally of $427 million, owing to positive quarterly sequential improvements in RevPAR and operations.

The average room rate improved to $296.9 from $246.5 in the year-ago quarter and $258.7 in second-quarter 2019.

The all-owned-hotel average occupancy percentage in the quarter remained strong at 73.9%. The figure compared favorably with the prior-year quarter’s 44.9%. Further, average occupancy was close enough to 81.8% recorded in second-quarter 2019.

The room revenues from the transient business were $531 million, marking a rise of 22.9% from the prior quarter. Moreover, it registered growth of 9.6% from the revenues recognized in the same period in 2019.

Room revenues from the group segment increased 56.5% to $288 million sequentially. However, it declined 2.9% from the second-quarter 2019 levels.

The room revenues for contract businesses climbed to $26 million sequentially, reflecting a rise of 23.8%. When compared with second-quarter 2019 levels, it grew 2.1%.

Moreover, room nights for its transient and group businesses declined 10.3% and 8.5%, respectively, while it increased 12.4% for the contract business from the respective same-period levels of 2019. Host Hotels’ transient, group and contract businesses accounted for roughly 61%, 35% and 4% of its 2019 room sales, respectively.

In April 2022, 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. It also disposed of YVE Hotel Miami for $50 million, including $1 million of FF&E funds.

Balance-Sheet Position

Host Hotels exited second-quarter 2022 with cash and cash equivalents of $699 million, up from $266 million as of Mar 31, 2022.

HST’s liquidity totaled $2.4 billion, including furniture fixtures & equipment (FF&E) escrow reserves of $179 million as of Jun 30, 2022. It had $1.5 billion available under the revolver portion of the credit facility as of the same date.

It has no significant debt maturities until 2024.

Capital Expenditure

During the second quarter, Host Hotels incurred around $240 million of capital expenditure. Of this, $162 million was return on investment project spend and $78 million was renewal and replacement project expenditure.

Dividend Update

On Aug 3, 2022, the board of directors announced a regular quarterly cash dividend of 12 cents on its common stock, marking a 100% increase over the prior quarter’s payment of 6 cents. The dividend will be paid on Oct 17 to stockholders of record on Sep 30, 2022.

2022 Guidance

HST projects full-year adjusted FFO to lie in the range of $1.71-$1.80. The Zacks Consensus Estimate for the same is pegged at $1.68.

It expects all owned-hotel RevPAR in the range of $191-$195 million for full-year 2022. Adjusted EBITDAre is estimated between $1.45 billion and $1.51 billion.

For full-year 2022, management expects to incur a total capital expenditure of $500-$575 million.

Host Hotels currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) 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

Simon Property Group, Inc.’s (SPG - Free Report) second-quarter 2022 comparable FFO per share of $2.96 exceeded the Zacks Consensus Estimate of $2.91. The figure compares favorably with the year-ago quarter’s $2.92.

SPG’s quarterly results reflected healthy operating performance and growth in occupancy levels. The retail REIT behemoth also raised the 2022 FFO per share outlook based on the quarterly results. It also announced a hike in the quarterly dividend.

Boston Properties Inc.’s (BXP - Free Report) second-quarter 2022 FFO per share of $1.94 beat the Zacks Consensus Estimate of $1.85. The figure also compared favorably with the year-ago quarter’s $1.72.

BXP’s quarterly results reflect growth in the bottom line. Also, it experienced strong leasing activity during the quarter.

Extra Space Storage Inc. (EXR - Free Report) reported second-quarter 2022 core funds from operations (FFO) per share of $2.13, beating the Zacks Consensus Estimate of $2.04. The figure also came in 29.9% higher than the prior-year quarter’s $1.64.

EXR’s results reflect better-than-anticipated top-line growth. Also, the same-store net operating income (NOI) improved year over year.

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.