Host Hotels & Resorts, Inc. ( HST ) recently announced that its sole general partner, Host Hotels & Resorts, L.P. has priced a private placement offering worth $350 million in aggregate principal amount of 5 1/4% senior notes maturing 2022. The offering is expected to close on March 22, 2012.
The company expects to generate net proceeds of approximately $344 million from the transaction and repay the $113 million principal amount outstanding of the 7.5% mortgage secured by the JW Marriott, Washington, D.C. and to redeem $250 million of 6 7/8% Series S senior notes due in 2014.
Host Hotels reported fourth quarter 2011 FFO (funds from operations) of $233 million or 31 cents per share compared with $187 million or 26 cents per share 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.
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 stood at $5.8 billion.
Host Hotels is the largest lodging real estate investment trust (REIT), and one of the largest owners of luxury and upper-upscale hotels, primarily operated under premium brand, such as Marriott, Westin, Sheraton, Ritz-Carlton, Hyatt, W, Four Seasons and St. Regis.
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 ) (LHOalso holds a Zacks #3 Rank.
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