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Host Hotels Sells Grand Central Hotel for $302M in New York

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Host Hotels & Resorts, Inc. (HST - Free Report) recently completed the company’s previously-announced deal to sell its Westin New York Grand Central hotel for $302 million, inclusive of $20 million of FF&E funds. The move comes as part of the company’s efforts to reduce exposure in New York.

In fact, per management, including this transaction, Host Hotels has disposed three assets, along with the retail, signage, and theater condo space situated at New York Marriott Marquis for $1.1 billion. Further, these disposals provide the company with capital requirements for its strategic investments. 

Additionally, it remains focused to fortify its investment-grade balance sheet and drive long-term value for shareholders through portfolio investments, asset acquisitions and share-buyback efforts.

In fact, Host Hotels undertakes a strategic capital-recycling program to improve its portfolio quality, strengthen the company’s position in vibrant markets and reduce global footprint. In fact, in December 2018, it announced the closing of the sale of the company’s33% stake in the European joint venture (JV) to its partners. Net proceeds to the company will likely amount to €435 million.

The latest move is expected to bolster Host Hotel’s balance sheet and drive its capability to make strategic investments, and at the same lower the company’s New York exposure by selling assets at attractive prices.

However, elevated supply in some of the company’s key markets is expected to affect its pricing power. Moreover, dilutive impact on earnings from sale of assets and hike in interest rate adds to its woes.

Host Hotels currently has a Zacks Rank #3 (Hold). The company’s shares have depreciated 8.2% in the past three months, which is wider than its industry’s decline of 1.6%.


 

Key Picks

Some better-ranked stocks from the REIT space are Lamar Advertising Company (LAMR - Free Report) , PS Business Parks, Inc. (PSB - Free Report) and Terreno Realty Corporation (TRNO - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lamar’s funds from operations (FFO) per share estimates for 2019 have been marginally revised upward to $5.89 in the past 30 days.

PS Business Parks’ Zacks Consensus Estimate for 2019 FFO per share remained unchanged at $6.58 over the past month.

Terreno Realty’s FFO per share estimates for 2019 remained unrevised at $1.39 in 30 days’ time.

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