The lodging real estate investment trust (REIT) Host Hotels & Resorts Inc. (HST), bought a Hawaii-based premium property – Hyatt Place Waikiki Beach – for $138.5 million. The move marks the company’s efforts to spread its presence in high-end markets and thereby strengthen its overall portfolio.
Host Hotels acquired the property from an affiliate of Chartres Lodging Group, LLC – Kokua Hospitality – and Morgan Stanley Real Estate Fund VII Global of Morgan Stanley (MS). Post acquisition, Kokua Hospitality will oversee Hyatt Place Waikiki Beach, as per a franchise deal with Hyatt Hotels Corporation (H).
Located in proximity to Waikiki Beach of Honolulu, Hyatt Place Waikiki Beach comprises 426 rooms. The property is well-connected to various tourist spots of Honolulu such as Waikiki Aquarium, the Honolulu Zoo and the Kalakaua shopping district.
Waikiki has a high barrier-to-entry leisure market, with an occupancy rate of around 90%. Moreover, Hawaii is one of the most popularly sought destinations in the world, with a flourishing tourism industry. In Apr 2013, total expenditures by visitors who came to Hawaii increased 1.8% year-over-year to $1.1 billion, according to the Hawaii Tourism Authority. This was particularly driven by a 3.1% year-over-year rise in total visitor arrivals.
Considering the aforementioned facts, we remain upbeat regarding Host Hotels’ decision to expand its footprint in the Hawaiian market. Notably, apart from the newly acquired hotel, the company has 2 other premium properties in Hawaii – Hyatt Regency Maui Resort & Spa, and The Fairmont Kea Lani. With the buy-out of Hyatt Place Waikiki Beach, Host Hotels now owns 104 premium properties located across the U.S. and 15 properties abroad which position it well globally for future growth.
The company currently carries a Zacks Rank #2 (Buy). Other well performing lodging REITs include LaSalle Hotel Properties (LHO) which has the same Zacks rank as Host Hotels.
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