Post Earnings Coverage as Host Hotels & Resorts' Quarterly FFO Jumped 7.3%
Upcoming AWS Coverage on Ryman Hospitality Properties Post-Earnings Results
LONDON, UK / ACCESSWIRE / May 11, 2017 / Active Wall St. announces its post-earnings coverage on Host Hotels & Resorts, Inc. (NYSE: HST). The Company released its first quarter fiscal 2017 results on April 28, 2017. The nation's largest lodging real estate investment trust surpassed top- and bottom-line expectations. Register with us now for your free membership at:
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One of Host Hotels & Resorts' competitors within the REIT - Hotel/Motel space, Ryman Hospitality Properties, Inc. (NYSE: RHP), reported its Q1 2017 earnings results on Tuesday, May 02, 2017. AWS will be initiating a research report on Ryman Hospitality Properties in the coming days.
Today, AWS is promoting its earnings coverage on HST; touching on RHP. Get our free coverage by signing up to:
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Earnings Reviewed
For the quarter ended March 31, 2017, Host Hotels & Resorts' total revenues increased 0.7% to $1.35 billion compared to revenue $1.34 billion for Q1 2016. The growth was driven by an increase in RevPAR at the Company's comparable hotels, as well as an increase in F&B revenues due to a favorable shift in the Easter holiday, partially offset by a decrease of $53 million due to the net effect of the Company's acquisitions and dispositions. Host Hotels & Resorts revenue numbers exceeded Wall Street's expectations of $1.32 billion.
For Q1 2017, Host Hotels & Resorts' net income decreased $23 million to $161 million, primarily due to a decrease of $42 million in gain on sale of assets, as only one hotel was sold during the reported quarter compared to three dispositions the year earlier same quarter. Diluted earnings per share decreased by 12.5% for the quarter as a result of the decrease in net income, partially offset by the decrease in the weighted average shares outstanding due to the Company's repurchase of approximately 14 million shares in 2016.
During Q1 2017, Host Hotels & Resorts' funds from operations (FFO) totaled $0.44 per share, up 7.3% compared to FFO of $0.41 per share in Q1 2016. The average analysts' consensus was for FFO of $0.39 per share.
Company Metrics
During Q1 2017, Host Hotels & Resorts' comparable hotel EBITDA improved $20 million, or 6.5%, driven by strong comparable hotel EBITDA margin improvement of 85 basis points. Group performance continued to drive comparable revenue growth of 3.1% for the quarter. Host Hotels & Resorts' adjusted EBITDA increased $22 million, or 6.4%, due to the improvement in comparable hotel EBITDA and strong performance of the Company's non-comparable hotels.
For Q1 2017, Host Hotels & Resorts comparable RevPAR on a constant dollar basis improved 3.4%, driven by a 2.4% increase in average room rate and an 80-basis point increase in occupancy to 75.8%. Comparable RevPAR at the Company's domestic properties improved 3.8% for the reported quarter. The Washington D.C. market outperformed the portfolio during Q1 2017 due to the Presidential inauguration and Women's March, with a RevPAR increase of 20.1%. The Company's San Francisco and New York properties lagged behind the portfolio, with RevPAR decreases of 6.3% and 3.9%, respectively, for the quarter.
On a constant dollar basis, RevPAR at the Company's comparable international properties decreased 7.1% in Q1 2017, primarily as a result of a significant decrease at its three properties in Rio de Janeiro, due to the very weak Brazilian economy.
Acquisitions and Dispositions
During Q1 2017, Host Hotels & Resorts acquired the Don CeSar and W Hollywood. These transactions coincided with formation of the Enterprise Analytics group, which the Company believes will be a key contributor in evaluating future investments to drive portfolio-wide improvement through leveraging technology and deep-dive analytics.
Host Hotels & Resorts also continued to strategically dispose of non-core assets where it expects lower growth and/or higher capital expenditures requirements. Subsequent to its quarter end, the Company sold the Sheraton Memphis Downtown for $67 million and expects to record a gain of approximately $28 million in Q2 2017. The Company is also under contract to sell the Hilton Melbourne South Wharf, which it expects to close in the upcoming quarter, subject to customary closing conditions. The sale of this property will represent the Company's last hotel in Australia. For the three properties sold or under contract for sale in 2017, the combined average 2016 RevPAR was $134 compared to an average 2016 RevPAR for the two properties acquired in 2017 of $243.
Renewal and Replacement Expenditures
During Q1 2017, Host Hotels & Resorts deployed approximately $64 million in renewal and replacement capital expenditures. Projects completed during the reported quarter included the renovation of all 285 rooms at the San Francisco Marriott Fisherman's Wharf and renovation of almost 43,000 square feet of meeting space at the Westfield's Marriott Washington Dulles.
For 2017, the Company expects to invest a total of $275 million to $300 million in renewal and replacement capital expenditures.
Balance Sheet
On March 20, 2017, Host Hotels & Resorts issued $400 million of Series G senior notes due April of 2024 at an interest rate of 3.875%. The proceeds were used to repay $250 million that had been drawn under the revolver portion of the credit facility earlier in the reported quarter and for general corporate purposes.
At March 31, 2017, the Company had approximately $411 million of unrestricted cash and $784 million of available capacity remaining under the revolver portion of its credit facility. Total debt as of March 31, 2017, was $4.0 billion, with an average maturity of 5.1 years and an average interest rate of 3.8%.
Outlook
For fiscal 2017, Host Hotels & Resorts is forecasting adjusted FFO per share in the range of $1.60–$1.68, and comparable hotel RevPAR growth in the band of 0.0%–2.0%.
Stock Performance
At the closing bell, on Wednesday, May 10, 2017, Host Hotels & Resorts' stock climbed 1.01%, ending the trading session at $18.01. A total volume of 7.77 million shares were traded at the end of the day. In the last six months and previous twelve months, shares of the Company have advanced 17.47% and 13.66%, respectively. The Company's shares are trading at a PE ratio of 18.10 and have a dividend yield of 4.44%. At Wednesday's closing price, the stock's net capitalization stands at $13.47 billion.
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