Host Hotels & Resorts, Inc.
) - the lodging real estate investment trust (REIT) - disclosed
fourth-quarter 2013 adjusted funds from operations (FFO) per
share of 33 cents, exceeding the Zacks Consensus Estimate by 2
cents and the year-ago figure by 3 cents.
Quarterly year-over-year increase of 10% in adjusted FFO was
benefited from the significant rise in total owned hotels
revenues and comparable hotel Revenue Per Available Room
(RevPAR). Prompted by its results, Host Hotels declared a 7.7%
sequential increase in its quarterly dividend.
Also, including certain non-recurring items, FFO was 33 cents
per share, up from 29 cents in the prior-year quarter.
Total revenue came in at $1,331 million, which increased 3.2%
on year over year basis. This also surpassed the Zacks Consensus
Estimate of $1,291 million.
For full-year 2013, Host Hotels reported adjusted FFO per
share of $1.31 on revenues of $5,166 million. Results were
substantially higher than the prior-year adjusted FFO per share
of $1.10 on revenues of $5,059 million. Additionally, reported
FFO for 2013 was $1.26 per share, up from $1.04 per share in
Notably, on Jan 1, 2013, Host Hotels shifted to calendar
quarter reporting periods, instead of the fiscal quarter
reporting period that it followed earlier. Consequently, the
company adjusted the 2012 fiscal figures on a calendar-quarter
Total owned hotel revenue climbed 7.5% year over year to
$1,318 million, driven by the impressive performance of its
During the reported quarter, comparable hotel RevPAR climbed
6.6% year over year to $150.03, primarily driven by continued
improvement in average room rates and occupancy. Average room
rates increased 4.4% year over year to $205.44 and occupancy rose
140 basis points (bps) to 73.0% on a year-over-year basis, in the
On the other hand, comparable hotel adjusted operating profit
margin upped 130 bps year over year at 25.6% and adjusted
earnings before interest, tax, depreciation and amortization
(EBITDA) rose 2.5% to $322 million on a year-over-year basis.
Portfolio Restructuring Activity in Q4
During the quarter, Host Hotels spent $26 million in
redevelopment and return on investment (ROI) expenditures. The
company also expended nearly $64 million in renewal and
replacement expenses. Additionally, Host Hotels used up
approximately $7 million for capital and operational improvement
of the acquired asset.
In the quarter under review, Host Hotels paid
$19.9 million as a final incremental amount for the buyout
of the fee simple interest in the land at the New York Marriott
Marquis Times Square. Also, the company attributed $25 million,
paid in accordance with the ground lease terms, towards the land
Moreover, Host Hotels divested the Four Seasons Hotel Atlanta
(including the furniture, fixtures and equipment replacement
fund) for $63 million and garnered a profit of about $11 million
from it. Additionally, the company offloaded the Dallas/Addison
Marriott Quorum by the Galleria (including the furniture,
fixtures and equipment replacement fund) for $56 million and
reaped a profit of around $15 million from the sale.
As of Dec 31, 2013, Host Hotels had cash and cash equivalents
of $861 million, up from $417 million at the prior-year end.
On Feb 18, 2014, the board of directors of Host Hotels
authorized a quarterly cash dividend of 14 cents per share. This
depicts a 7.7% increase over the last dividend payment of 13
cents. The dividend is payable on Apr 15, 2014 to shareholders of
record on Mar 31.
Host Hotels provided guidance for 2014 adjusted FFO per share
in the range of $1.40-$1.44. The Zacks Consensus Estimate of
$1.43 for the same lies within this guidance.
We are encouraged with the impressive quarterly results at
Host Hotels. We believe that given its solid portfolio of luxury
and upper upscale hotels, the company is poised to deliver better
results in the quarters ahead too. Notably, the strategic
portfolio restructuring activities bode well for Host Hotels'
Also, the dividend hike for the 13
consecutive time boosts investors' confidence in the stock and
thus seems promising. Going forward, we believe that the
company's properties across hard-to-replicate areas have the
potential for significant capital appreciation.
Host Hotels currently carries a Zacks Rank #3 (Hold). However,
better-ranked REIT-Equity Trust - Other stocks include
Liberty Property Trust
PS Business Parks Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
Note: FFO, 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.
HOST HOTEL&RSRT (HST): Free Stock Analysis
LIBERTY PPTY TR (LRY): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
PS BUSINESS PKS (PSB): Free Stock Analysis
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