Host Hotels & Resorts, Inc. HST reported third-quarter adjusted funds from operations (AFFO) per share of 36 cents, in line with the Zacks Consensus Estimate. However, the figure decreased by 12.2% from the prior-year quarter.
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Results reflect a year-over-year rise in revenues triggered by higher room, food and beverages and other revenues. However, the lodging real estate investment trust lowered its 2024 guidance.
Host Hotels generated total revenues of $1.32 billion, surpassing the Zacks Consensus Estimate by 2.2%. The top line rose 8.6% on a year-over-year basis.
Per James F. Risoleo, president and CEO of the company, “Host delivered comparable hotel Total RevPAR growth of 3.1% over the third quarter of 2023, driven by improvements in food and beverage revenues from group business. Comparable hotel RevPAR increased 0.8% for the quarter as a result of continued strong group demand and improving trends in Maui.”
Behind HST’s Headlines
In the reported quarter, Host Hotels’ comparable hotel RevPAR was $206.21, rising marginally from the year-ago quarter’s $204.56. Though group demand remained strong, the growth was hindered by a slower-than-anticipated recovery in Maui and moderate domestic leisure demand.
Comparable hotel EBITDA came in at $329 million, decreasing by 1.8% year over year, with a comparable hotel EBITDA margin decline of 130 basis points to 25.3%.
The average room rate of $287.57 in the third quarter increased from $284.61 reported in the year-ago quarter.
The comparable average occupancy percentage in the quarter was 71.7%, down from 71.9% reported in the prior-year quarter.
The room nights for its transient, group and contract businesses witnessed a marginal decline from the prior-year period.
In July 2024, HST completed the acquisition of the fee simple interest in the 234-room, 1 Hotel Central Park for $265 million. During the same period, HST also acquired the 450-room, The Ritz-Carlton O’ahu, Turtle Bay for $680 million, net of key money received from Marriott International.
HST’s Balance Sheet Position
Host Hotels exited the third quarter with cash and cash equivalents of $564 million, down from $805 million as of June 30, 2024.
HST’s liquidity totaled $2.3 billion, including FF&E escrow reserves of $240 million and $1.5 billion available under the revolver portion of the credit facility as of Sept. 30, 2024.
HST’s Capital Expenditure
As of Sept. 30, 2024, Host Hotels’ capital expenditure aggregated $375 million. Of this, $164 million was the total return on investment project spend, $181 million was a renewal and replacement expenditure, and $30 million was a renewal and replacement for property damage reconstruction.
HST’s 2024 Outlook
Host Hotels lowered its full-year AFFO per share guidance at the midpoint by 2 cents to $1.92 from $1.94 guided earlier. The Zacks Consensus Estimate is presently pegged at $1.96, which is above the guided midpoint.
The company kept its comparable hotel RevPAR projection for the current year at $215.
The adjusted EBITDAre is now expected at $1.63 billion, down from $1.65 billion projected earlier.
For 2024, management revised its total capital expenditure guidance in the range of $485-$580 million compared with the prior guidance of $500-$600 million.
Host Hotels currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Host Hotels & Resorts, Inc. Price, Consensus and EPS Surprise
Host Hotels & Resorts, Inc. price-consensus-eps-surprise-chart | Host Hotels & Resorts, Inc. Quote
Performance of Other REITs
Highwoods Properties Inc.HIW reported a third-quarter 2024 FFO per share of 90 cents, which beat the Zacks Consensus Estimate of 88 cents. However, the figure was lower than the prior-year quarter’s 93 cents.
Quarterly results reflected healthy leasing activity with rent growth amid rising demand for premium office spaces. However, higher interest expenses undermined the results to an extent. HIW raised its outlook for 2024.
Cousins Properties CUZ reported a third-quarter 2024 FFO per share of 67 cents, in line with the Zacks Consensus Estimate. The figure improved by 3.1% on a year-over-year basis.
Results reflected strong leasing activity and higher rent realizations amid rising demand for office spaces. However, the rise in interest expenses year over year undermined the results to some extent. CUZ also raised its 2024 outlook for FFO per share.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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