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Host Hotels' (HST) Q4 FFO and Revenues Trump Estimates

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Host Hotels & Resorts, Inc. HST reported fourth-quarter 2019 adjusted funds from operations (FFO) per share of 41 cents, outpacing the Zacks Consensus Estimate of 40 cents. However, the reported figure fell 4.7% from the year-ago tally of 43 cents.

Results reflect improvement in total revenues on a comparable hotel basis. However, the net effect of acquisitions and dispositions partly offset the positives.

The company generated total revenues of $1.3 billion, surpassing the Zacks Consensus Estimate by 0.8%. However, the top line declined nearly 2% year over year.

For full-year 2019, Host Hotels reported an adjusted FFO per share of $1.78, up 0.6% from the prior-year figure of $1.77. Revenues for the full year came in at $5.5 billion, reflecting a decline of 1% year on year.

Behind the Headlines

During the fourth quarter, comparable hotel revenues inched up 1.9% year over year to $1.1 billion. Moreover, comparable hotel total RevPAR (on a constant-dollar basis) went up 1.9% year over year to $292.4 million. This upside resulted from improvement in food and beverage revenues as well as growth in other revenues.

For domestic properties, comparable hotel total RevPAR (on a nominal-dollar basis) inched up 1.7%, while the same for International properties increased 6.9%.

For the December-end quarter, comparable hotel EBITDA moved up 1.3% to $312 million, while comparable hotel EBITDA margin shrunk 10 basis points (bps) to 28.1%.

Finally, the company exited fourth-quarter 2019 with $1.6 billion of unrestricted cash, not including $176 million in the FF&E escrow reserve and $1.5 billion of available balance under its credit facility’s revolver. In addition, as of Dec 31, 2019, total debt was $3.8 billion, with average maturity of 5.4 years and average interest rate of 3.8%.

Host Hotels repurchased 4.7 million shares at an average price of $17.39 per share, aggregating $82 million in the reported quarter. At present, the company has $391 million of capacity available under its repurchase program.

In October, the company sold the Hyatt Regency Cambridge and the Sheraton San Diego Hotel & Marina for a total of $297 million.

During the October-December period, the company invested around $166 million in capital expenditures. Of this, $125 million were return on investment (ROI) capital projects, and $41 million were renewal and replacement projects.

Outlook

Host Hotels expects 2020 adjusted FFO per share of $1.65-$1.71. The Zacks Consensus Estimate for the same is currently pinned at $1.68.

The company’s full-year projection assumes total comparable hotel RevPAR (constant U.S. dollar basis) growth of 0-1%. Additionally, the company projects capital expenditures of $550-$650 million for the year. This includes $310-$360 million in ROI projects, and $240-$290 million in renewal and replacement projects.

Dividend Update

On Feb 19, the company announced a regular quarterly cash dividend of 20 cents per share. The dividend will be paid on Apr 15, to stockholders of record on Mar 31, 2020.

 

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


Host Hotel currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We, now, look forward to the earnings releases of other REITs like Public Storage PSA, American Tower Corporation AMT and Mack-Cali Realty Corporation CLI, all of which are slated to report their quarterly numbers next week.

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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