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Host Hotels (HST) Q3 FFO Lags, Revenues Beat, View Revised

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Host Hotels & Resorts, Inc. (HST - Free Report) reported third-quarter adjusted funds from operations (FFO) per share of 38 cents, a whopping jump of 90% from the prior-year quarter’s 20 cents. The Zacks Consensus Estimate for the same was pegged at 39 cents.  

Results reflect better-than-anticipated top-line growth. Solid leisure travel demand for HST’s resorts and hotels in the Sunbelt markets and Hawaii region and improving group and business travel demand in urban markets aided its performance. The company also revised its outlook for 2022.

Host Hotels generated total revenues of $1.19 billion, beating the Zacks Consensus Estimate of $1.17 million. The top line improved 40.9% from the prior-year quarter’s $844 million.

On Nov 3, 2022, HST acquired the fee simple interest in the Four Seasons Resort and Residences Jackson Hole for $315 million in cash. The 125-room luxury resort is located in Jackson Hole, WY.

Behind the Headlines

Host Hotels’ all-owned-hotel revenue per available room (RevPAR) was $192.06 in the reported quarter, climbing 42% from the year-ago quarter’s $135.28. The figure improved 1.4% from third-quarter 2019 tally. The rise was attributable to the continuation of strong leisure demand for HST’s resorts and hotels in the Sunbelt markets and Hawaii region. Group demand, too, improved quarter over quarter, aiding group revenues that surpassed third-quarter 2019 levels.

All-owned-hotel EBITDA was $341 million, surging from $198 million reported a year ago. The figure also surpassed the third-quarter 2019 tally of $296 million.

The average room rate improved from $239.89 in the year-ago quarter to $275.73 in the third quarter. The figure also grew 15.8% from $238.14 reported in third-quarter 2019, primarily due to continued strong leisure demand and increased group and business travel leading to growth in the urban markets.

The all-owned-hotel average occupancy percentage in the quarter came in at 69.7%. The figure compared favorably with the prior-year quarter’s 56.6%. However, the figure was lower than the all-owned-hotel average occupancy of 79.5% in third-quarter 2019.

The room revenues from the transient business were $487 million, marking a fall of 7.9% from the prior quarter. However, it registered growth of 1.7% from the revenues recognized in the same period in 2019.

Room revenues from the group segment decreased 20.7% to $229 million sequentially. However, it improved 3.3% from the third-quarter 2019 levels.

The room revenues for contract businesses climbed to $28 million sequentially, reflecting a rise of 7.7%. When compared with third-quarter 2019 levels, it grew 9.4%.

The room nights for its transient and group businesses declined 18.4% and 2.6%, respectively, while it increased 21.2% for the contract business from the 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.

During the reported quarter, HST disposed of the Chicago Marriott Suites Downers Grove for $16 million. This included $2 million of furniture fixtures & equipment (FF&E) funds retained by the company.

Balance-Sheet Position

Host Hotels exited third-quarter 2022 with cash and cash equivalents of $883 million, up from $699 million as of Jun 30, 2022.

HST’s liquidity totaled $2.6 billion, including FF&E escrow reserves of $187 million as of Sep 30, 2022. It had $1.5 billion available under the revolver portion of the credit facility as of the same date.

During the third quarter, HST’s board of directors authorized an increase in its share repurchase program to $1 billion. The company did not repurchase any shares under this program in the quarter.

Capital Expenditure

From the beginning of 2022 through Sep 30, 2022, Host Hotels incurred around $357 million of capital expenditure. Of this, $240 million was the total return on investment project spend and $117 million was renewal and replacement expenditure.

2022 Guidance Revised

Host Hotels revised its outlook for 2022 based on the adverse impact of Hurricane Ian.

HST projects full-year adjusted FFO to lie in the range of $1.75-$1.79, revised from $1.71-$1.80 guided earlier. The Zacks Consensus Estimate for the same is presently pegged at $1.79.

It expects all owned-hotel RevPAR for full-year 2022 in the range of $193-$195 million, tweaked from $191-$195 million. Adjusted EBITDAre is estimated between $1.47 billion and $1.50 billion, revised from $1.45 billion and $1.51 billion guided earlier.

For full-year 2022, management retained its guidance for total capital expenditure in the range of $500-$575 million.

Host Hotels currently carries a Zacks Rank #3 (Hold). 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

Extra Space Storage Inc. (EXR - Free Report) reported third-quarter 2022 core FFO per share of $2.21, beating the Zacks Consensus Estimate of $2.18. The figure was also 19.5% higher than the prior-year quarter’s $1.85.

EXR's results reflect better-than-anticipated top-line growth. The same-store net operating income (NOI), too, improved year over year. It revises its outlook for 2022.

Public Storage's (PSA - Free Report) third-quarter 2022 core FFO per share of $4.13 surpassed the Zacks Consensus Estimate of $4.05. The figure also increased 20.8% year over year.

PSA’s results reflect better-than-anticipated top-line growth alongside an improvement in the realized annual rent per occupied square foot. The company also benefited from its expansion efforts through acquisitions, developments and extensions. It raised its guidance for 2022 FFO per share.
 
Healthpeak Properties, Inc.
reported third-quarter 2022 FFO as adjusted per share of 43 cents, in line with the Zacks Consensus Estimate. The reported figure was up 7.5% from the year-ago quarter’s 40 cents.

PEAK's performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company revised its 2022 outlook.

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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