Host Hotels & Resorts Inc. (HST) is gaining traction on its strong portfolio of premium hotels as well as improving U.S. lodging market fundamentals, especially in the West Coast market.
Impressively, continuing with its efforts to enhance stockholders’ value, the company raised its quarterly cash dividend by 7.1% sequentially to 15 cents per share, in May. The company has hiked its dividend payout for the 14th consecutive time, since Mar 2011.
Additionally, Host Hotels & Resorts came up with encouraging first-quarter 2014 results. Adjusted funds from operations (FFO) per share of 33 cents exceeded the Zacks Consensus Estimate by 3 cents and rose by a nickel from the year-ago quarter. Results reflect a notable rise in RevPAR and food and beverage operations, in the comparable hotels.Encouragingly, the company also increased its adjusted FFO per share guidance for full-year 2014.
We believe that Host Hotels’ solid portfolio and strategic portfolio restructuring activity bode well for its long term growth. Also, improving fundamentals in the U.S. lodging industry and rising international travels are expected to drive RevPAR growth, going forward. The West Coast market remains attractive with strong lodging demand and lower supply.
Yet, headwinds from the East Coast, especially high supply growth in the New York market are likely to temper its growth momentum. Also, high concentration in the upper-scale and luxury segments makes its operations vulnerable to economic downturns.
For further insight into Host Hotels, you can refer to our updated research report, which was issued on Jul 9, 2014.
Over the last 30 days, the Zacks Consensus Estimate for 2014 FFO per share remained stable at $1.45. Nonetheless, for 2015, it increased by 2 cents to $1.61. This lodging real estate investment trust (REIT) currently has a Zacks Rank #2 (Buy).
Stocks That Warrant a Look
In addition to Host Hotels, once could also consider other hoteliers like Pebblebrook Hotel Trust (PEB), Ashford Hospitality Trust, Inc. (AHT) and Hersha Hospitality Trust (HT). All have the same rank as Host Hotels.
Note: FFO, 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.
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