Host Hotels & Resorts Inc. (HST) – the lodging real estate investment trust (REIT) – disclosed three transactions to accelerate its strategic capital-recycling program to improve its portfolio quality and strengthen its position in vibrant markets globally. In particular, the company acquired two assets and divested one.
Transaction Details
Host Hotels bought the b2 miami downtown hotel (with 242 rooms), positioned in the center of Miami's business and financial district, for $57.5 million. Alongside, the company penned a management contract with Destination Hotels & Resorts for refurbishing and reintroducing the property under a new independent identity later this year.
Furthermore, Host Hotels, through its European joint venture, bought a 90% ownership stake in a company that owns Grand Hotel Esplanade (394 rooms) in Berlin. The gross purchase price was €81.0 million. This property is situated in the western part of Berlin and is in proximity to several embassies.
On the other hand, in order to reduce its exposure to non-strategic markets, the company divested Tampa Marriott Waterside Hotel & Marina (719 rooms) for $199 million.
Our View
We believe both the abovementioned buyouts will strengthen Host Hotels’ presence in the Downtown Miami region, which is looking to attract more people, and the flourishing premium markets of Germany. This will in turn boost the U.S. and European portfolio of Host Hotels. Additionally, Host Hotels’ portfolio repositioning efforts amid improving U.S. lodging fundamentals and rising international travels is expected to drive RevPAR growth, going forward (read: Hotel Industry Enjoys Growth Trends).
We look forward to Host Hotels’ third-quarter 2014 results that are scheduled to release on Oct 30, before the opening bell. The Zacks Consensus Estimate for third-quarter funds from operations (FFO) is currently pegged at 32 cents per share, depicting estimated year-over-year growth of 26.8%.
Host Hotels currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include FelCor Lodging Trust Inc. (FCH), Diamondrock Hospitality Co. (DRH) and Strategic Hotels & Resorts, Inc. (BEE). All three stocks carry a Zacks Rank #2 (Buy).
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