HST Host Hotels and Resorts Inc

Host Hotels & Resorts, Inc (HST) reported fourth quarter 2011 FFO (funds from operations) of $233 million or 31 cents per share, compared with $187 million or 26 cents in the year-earlier quarter. The fourth quarter 2011 FFO beat the Zacks Consensus Estimate by a penny.

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 company also reported fourth quarter adjusted FFO (funds from operations) of $242 million or 32 cents per share, compared with $201 million or 28 cents in the year-earlier quarter.

Total revenue increased to $1,658 million during the reported quarter from $1,491 million in the year-ago quarter. The reported revenue also exceeded the Zacks Consensus Estimate by $31 million.

For fiscal 2011, the company reported revenue of $4998 million compared with $4428 million in 2010. The fiscal 2011 revenue beat the Zacks Consensus Estimate by 73 million.

For fiscal 2011, the company reported FFO of $658 million or 89 cents per share versus $465 million or 68 cents in 2010. The fiscal 2011 FFO was also ahead of the Zacks Consensus Estimate by a penny

For fiscal 2011, the company reported adjusted FFO of $681 million or 92 cents per share, compared with $504 million or 74 cents in 2010.

Comparable hotel revenue per available room (RevPAR) jumped 5.9% during the reported quarter, driven by a rise in occupancy and average daily rates. The increase in RevPAR was primarily attributable to  average room rates increase of 3.8% and a 1.3% rise in occupancy.

Similarly, for fiscal year 2011, the increase  of 6.1% in comparable hotel RevPar reflects the improvement in average room rate of 4.3% and a 1.3 % increase in occupancy.

Comparable hotel adjusted operating margins in the reported quarter increased 100 basis points (bps) for the fourth quarter and 90 bps for fiscal 2011. During the quarter, adjusted EBITDA (Earnings before Interest Expense, Income Taxes, Depreciation and Amortization) increased 19.5% to $349 million and 22.1% to $1018 million in fiscal 2011

During the fourth quarter of 2011, the company commenced renovation of 270 rooms at the W New York – Union Square and the rebranding of the New York Helmsley Hotel to a Westin, including a redesign of all 773 rooms. The company has invested approximately $13 million on acquisition projects in fiscal 2011.

During the fourth quarter, the company completed the redevelopment of 466 rooms along with 27,000 square feet of space at the Chicago Marriott O'Hare and over 11,000 square feet of space at the Hilton Singer Island Oceanfront Resort.

During fiscal 2011, the company invested $202 million in redevelopment and return on investment (ROI) projects, which are expected to  enhance the company’s profitability amidst the changing market conditions.

In fiscal 2011, Host Hotels incurred renewal and replacement expenditures of approximately $327 million to ensure the standards of its portfolio.

At the end of the year, Host Hotels had over $826 million in cash and cash equivalents and about $883 million  under its credit facility. Total debt of the company at the end of  fourth quarter 2011 was $5.8 billion.

Host Hotels anticipates the gradual revival of the overall economy to boost its operating results in 2012, with comparable hotel RevPAR expected to increase in the range of 4.0% to 6.0% for the full year. For fiscal 2012, Host Hotels expects to incur approximately $310 million to $330 million in renewal and replacement expenditures and $155 million-$175 million as ROI expenditure and $80 million- $100 million in acquisition expenditure. The company currently expects adjusted FFO for full-year 2012 in the range of 97 cents to $1.04 per share.

Host Hotels currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, La Salle Hotel Properties (LHO) holds a Zacks #3 Rank which translates into a short-term Hold rating.

 
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