Host Hotels & Resorts, Inc. ( HST ) disclosed the sale of a large stake in a Philadelphia hotel. The move comes as this hotel real estate investment trust (REIT) continues to lower its exposure to non-core assets.
In particular, Host Hotels offloaded an 89% stake in the entity, which owns the Philadelphia Marriott Downtown. The sale took place based on a gross entity value of $303.4 million. An 11% stake is, however, retained by Host Hotels in the joint venture along with Clearview and funds managed by Oaktree Capital Management L.P.
As a matter of fact, for Host Hotels the West Coast market remains attractive with strong lodging demand and lower supply. But an expected rise in supply in the East Coast in the upcoming year is a matter of concern.
Moreover, in the East Coast, the company experienced declines in group demand in Philadelphia and Washington, DC in the most recently reported quarter. Hence, the shedding of this stake is a strategic one for this Zacks Rank #2 (Buy) stock.
Host Hotels is well on track to improve its overall portfolio through the execution of its strategic capital recycling program. The company is focusing on strengthening its position in vibrant markets globally and reducing exposure to non-target markets.
In recent times, the company disclosed the vending of the Dallas/Addison Marriott Quorum for $55.7 million as well as the $62 million divestiture of the Four Seasons Hotel Atlanta and the associated office space. Notably, the current sale leads to total dispositions of approximately $1.1 billion since the start of 2012.
Encouragingly, recently Host Hotels hiked its quarterly cash dividend by 8.3% sequentially to 13 cents per share, reflecting the12th consecutive quarterly dividend increase. The increased dividend will be paid on Jan 15, 2014 to shareholders of record as of Dec 31, 2013. Notably, the company's history of increasing its quarterly dividend reflects its long-term strategy to provide attractive risk-adjusted returns to shareholders.
Investors interested in the REIT Equity Trust - Other industry may also consider stocks like Getty Realty Corp. ( GTY ), National Health Investors Inc. ( NHI ) and Pebblebrook Hotel Trust ( PEB ). All these carry a Zacks Rank #1 (Strong Buy).