Host Hotels & Resorts Inc . (HST) recently announced that it has closed a new $1 billion revolving credit facility, which represents a $400 million increase from its existing facility, maturing September 2012. The company also has an option to increase the principal amount of the new facility by an additional $500 million, thus extending the total amount to $1.5 billion.
As a part of the company's corporate strategy, the new credit facility improves liquidity and flexibility and bears an initial term of four years plus a one-year extension option.
At the end of the reported quarter, Host Hotels had over $524 million in cash and cash equivalents and about $481 million available under its credit facility. Total debt of the company at the end of the third quarter of 2011 was $5.5 billion.
Host Hotels is the largest lodging REIT with high quality lodging assets in geographically diverse locations. Over the years, the company has executed a focused and disciplined long-term strategic plan to acquire high quality lodging assets in hard-to-replicate areas, which have the potential for significant capital appreciation. This provides a significant upside potential for the company.
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) also holds a Zacks #3 Rank