New Credit Facility for Host Hotels - Analyst Blog
November 23 2011 - 7:15AM
Zacks
Host Hotels & Resorts
Inc. (HST) recently
announced that it has closed a new $1 billion revolving credit
facility, which represents a $400 million increase from its
existing facility, maturing September 2012. The company also has an
option to increase the principal amount of the new facility by an
additional $500 million, thus extending the total amount to $1.5
billion.
As a part of the company’s
corporate strategy, the new credit facility improves liquidity and
flexibility and bears an initial term of four years plus a one-year
extension option.
At the end of the reported quarter,
Host Hotels had over $524 million in cash and cash equivalents and
about $481 million available under its credit facility. Total debt
of the company at the end of the third quarter of 2011 was $5.5
billion.
Host Hotels is the largest lodging
REIT with high quality lodging assets in geographically diverse
locations. Over the years, the company has executed a focused and
disciplined long-term strategic plan to acquire high quality
lodging assets in hard-to-replicate areas, which have the potential
for significant capital appreciation. This provides a significant
upside potential for the company.
Host Hotels has a strong balance
sheet, which provides the financial flexibility to pursue
high-yielding acquisitions, high ROI (return on investments)
capital projects, dividend payouts and share buybacks. This augurs
well for its long-term growth.
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, LaSalle 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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