Host Hotels & Resorts Inc
) reported first quarter 2012 FFO (funds from operations) of $101
million or 14 cents per share compared with $77 million or 11 cents
per share in the year-earlier quarter and 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
The company reported first-quarter adjusted FFO of $102 million
or 14 cents per share, versus $82 million or 12 cents per share in
the year-earlier quarter.
Total revenue increased to $985 million during the reported
quarter from $893 million in the year-ago quarter. The increase in
revenue was driven by good performance of the company's owned
hotels including the ten hotels acquired in 2011.
Comparable hotel revenue per available room (RevPAR) jumped 6.1%
during the reported quarter, driven by a rise in occupancy and
average daily rates. The increase in RevPAR was primarily
attributable to a 2.9% rise in average room rates and a 2.1% rise
Comparable hotel adjusted operating margin in the reported
quarter increased 100 basis points (bps) in the first quarter.
During the quarter, adjusted EBITDA (Earnings before Interest
Expense, Income Taxes, Depreciation and Amortization) increased
22.2% to $176 million.
During the first quarter of 2012, the company completed the
renovation of 270 rooms at the W New York - Union Square. The
company has invested approximately $14 million on acquisitions in
the quarter. Additionally, the company completed the redevelopment
of the Chicago Marriott O'Hare, Atlanta Marriott Perimeter Center
and the 95,000 square feet of meeting space at the San Diego
Marriott Marquis & Marina.
During the quarter , the company invested $48 million on
redevelopment and return on investment (
) projects, which are expected to enhance the company's
profitability amid the challenging market conditions. Further, Host
Hotels incurred renewal and replacement expenditures of
approximately $100 million to ensure the standards of its
During the reported quarter, the company sold the 685-room San
Francisco airport Marriott for $108 million.
During the reported quarter, the company issued approximately
11.1 million shares at an average price of $15.67 per share for
approximately $172 million. The company issued
$350 million of 5 1/4% Series A senior notes maturing in
2022, for net proceeds of $344 million during the quarter.
At the end of the first quarter, Host Hotels had over $1,312
million in cash and cash equivalents and about $859 million
available under its credit facility. Total debt of the company at
the end of first quarter 2012 was $6.1 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 5.0% to 7.0% for
the full year. For fiscal 2012, Host Hotels expects to incur
approximately $300 million to $330 million in renewal and
replacement expenditures and $150 million-$170 million as ROI
expenditure and $100 million-$110 million in acquisitions. The
company currently expects adjusted FFO for full-year 2012 in the
range of $1.01 per share to $1.08 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
La Salle Hotel properties
) holds a Zacks #1 Rank, which implies a short-term Strong Buy
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