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Is Host Hotels Mulling Over Sale of Portfolio Worth $2B?

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Host Hotels & Resorts, Inc. (HST - Free Report) may be considering the shedding of a huge portfolio of non-core hotels, per news from Bloomberg. Although the properties that are expected to be sold off have not been finalized yet, the value of the same, in aggregate, is likely to cross $2 billion, per the report.

Notably, Host Hotels has a strategic capital-recycling program to improve its portfolio quality and strengthen the company’s position in vibrant markets. Furthermore, the company has been monetizing a considerable part of real estate in Washington D.C. and lowering its exposure in New York.

Particularly, during first-quarter 2018, Host Hotels completed the acquisition of the 301-room Andaz Maui at Wailea Resort, 668-room Grand Hyatt San Francisco and 454-room Hyatt Regency Coconut Point Resort and Spa, for $1 billion.

Moreover, during the first quarter, the company expended around $115 million on capital expenditures — $29 million was return on investment (ROI) capital projects, and $86 million for renewal and replacement projects. Also, the company continues to expect capital expenditures of $475-$550 million for the year. This comprises $185-$220 million in ROI projects, and $290-$330 million in renewal and replacement projects. Such investments are likely to help the company enhance its portfolio quality and bolster revenues as well.

Host Hotels is expected to benefit from its solid portfolio of upscale hotels across potential markets and strategic capital-recycling program, going forward. Further, its productivity-improvement efforts are anticipated to drive the company’s performance over the long term. In addition, the company has a healthy balance sheet with ample liquidity that augurs well for its growth endeavors. Nevertheless, elevated supply in some of the company’s key markets might affect its pricing power.

Furthermore, in the past three months, shares of Host Hotels have gained 13.0%, outperforming its industry’s growth of 6.4%. The estimate revision trend for the current-quarter funds from operations (FFO) per share indicates a decent outlook for the company.



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

Other Key Picks

A few similarly-ranked stocks from the same space are Extra Space Storage Inc. (EXR - Free Report) , Lamar Advertising Company (LAMR - Free Report) and Prologis, Inc. (PLD - Free Report) .

Extra Space Storage’s Zacks Consensus Estimate for 2018 funds from operations (FFO) per share inched up 0.7% to $4.62 in the last 60 days.

Lamar’s FFO per share estimates for the current year moved up 1.1%, in the last 30 days, to $5.40.

Prologis’ FFO per share estimates for 2018 moved 1.4% north to $3.00, in 60 days’ time.

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

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