Host Hotels Reports Mixed Results - Analyst Blog
October 12 2011 - 10:41AM
Zacks
Host Hotels (HST) reported third quarter 2011 FFO
(funds from operations) of $112 million or 16 cents per share,
compared with $75 million or 11 cents in the year-earlier quarter.
Funds from operations, 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. The third
quarter 2011 FFO missed the Zacks Consensus Estimate by a
penny.
Total revenue increased to $1,142 million during the reported
quarter from $1,003 million in the year-ago quarter. The reported
revenues exceeded the Zacks Consensus Estimate by $10 million.
Comparable hotel revenue per available room (RevPAR) jumped 6.4%
during the reported quarter, driven by a rise in occupancy and
average daily rates. The increase in RevPAR was primarily
attributable to higher average room rates and a 1.9% rise in
occupancy.
Comparable hotel adjusted operating margins in the reported quarter
increased 110 basis points (bps). During the quarter, adjusted
EBITDA (Earnings before Interest Expense, Income Taxes,
Depreciation and Amortization) increased 27.7% to $212 million.
During the third quarter of 2011, the company purchased the
remaining interest in Tiburon Golf Ventures, L.P. for $11 million.
The company previously held a 49% limited partnership interest.
During the quarter, the company invested $32 million in return on
investment (ROI) projects, which are expected to increase the
company’s profitability amidst the changing market conditions.
During the quarter, the company's European joint venture's second
fund (the Euro JV Fund II), where the company owns a 33.4%
interest, completed the acquisition of the 396-room Pullman Bercy
in Paris for approximately €96 million.
In the third quarter of 2011, Host Hotels incurred renewal and
replacement expenditures of approximately $63 million to ensure the
standards of its portfolio.
During the quarter, Host Hotels commenced extensive room
renovations at JW Marriott, Desert Springs Resort & Spa and the
renovation of 40,000 square feet of ballroom and meeting space at
New Orleans Marriott.
At the end of the reported quarter, Host Hotels had over $524
million of cash and cash equivalents and about $481 million
available under its credit facility. Additionally, the company
exercised its option to extend the maturity date of its credit
facility to September 2012. Total debt of the company at the end of
third quarter 2011 was $5.5 billion.
Host Hotels anticipates the gradual revival of the overall economy
to boost its operating results in 2011, with comparable hotel
RevPAR expected to increase in the range of 6.25% to 6.75% for the
full year. For fiscal 2011, Host Hotels expects to incur
approximately $300 million to $320 million as renewal and
replacement expenditures and $220 million-$240 million as ROI
expenditures. The company currently expects FFO for full-year 2011
in the range of 86 cents to 88 cents per share.
Host Hotels currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We are also maintaining our
long-term Neutral recommendation on the stock. One of its
competitors,
La Salle Hotel Properties (LHO) also
holds a Zacks #3 Rank.
HOST HOTEL&RSRT (HST): Free Stock Analysis Report
LASALLE HTL PRP (LHO): Free Stock Analysis Report
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