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Host Hotels Closes Sale of 3 Non-Core Hotels for $175M

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Host Hotels & Resorts, Inc. (HST - Free Report) has made the announcement of closing the sale of three non-core hotels for around $175 million. This sale is in sync with the Bethesda, MD-based lodging real estate investment trust’s (“REIT”) strategy of enhancing its portfolio and creating value for its shareholders

In fact, over the past one year, the company profitably divested over $1.2 billion of non-core assets, which raised its portfolio quality. In line with its perceived strategy, Host Hotels continues to deploy proceeds generated from these sales to reward its shareholders in the form of dividends and share buyback.

The latest disposition included the Sheraton Santiago Hotel and Convention Center, San Cristobal Tower, Santiago and Manhattan Beach Marriott. These three properties have average revenue per available room (“RevPAR”) of $124, which is much lower than the average RevPAR of more than $170 for the overall portfolio of the company in 2015.

Host Hotels is engaged in the ownership, acquisition, and redevelopment of luxury and upper-upscale hotels in the U.S and abroad. The company reported first-quarter 2016 adjusted funds from operations (“FFO”) per share of 41 cents, exceeding the Zacks Consensus Estimate of 38 cents and improving 17.1% from the prior-year quarter figure of 35 cents. Results reflect an increase in comparable RevPAR backed by an uptick in average room rate and occupancy. The company has also attributed the better-than-expected result in the quarter to less disruption from renovations.

The stock presently has a Zacks Rank #3 (Hold).

However, investors interested in the REIT sector can consider stocks like Brookfield Canada Office Properties BOXC, Summit Hotel Properties, Inc. INN and W. P. Carey Inc. WPC. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

Note: 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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