Host Hotels' (HST) Q4 FFO Meets Estimates, Occupancy Up Y/Y
Host Hotels & Resorts, Inc. HST reported fourth-quarter adjusted funds from operations (AFFO) per share of 44 cents, which was in line with the Zacks Consensus Estimate. Moreover, the figure remained unchanged from the prior-year quarter.
Results reflect higher revenues, driven by year-over-year occupancy growth. The lodging real estate investment trust also issued a better-than-anticipated 2024 outlook for AFFO per share.
Per James F. Risoleo, president and CEO of the company, “Our results during the quarter were driven by rate increases of 0.4% and continued occupancy improvements at our convention and downtown hotels.”
Host Hotels generated total revenues of $1.32 billion, beating the Zacks Consensus Estimate of $1.30 billion. The top line rose 4.8% on a year-over-year basis.
In 2023, HST reported AFFO per share of $1.92, up from the prior year’s $1.79. The reported figure was in line with the Zacks Consensus Estimate. Total revenues of $5.31 billion increased 8.2% year over year and beat the consensus mark of $5.29 billion.
Behind the Headlines
Host Hotels’ comparable hotel RevPAR was $202.92 in the reported quarter, climbing 1.5% from the year-ago quarter’s $199.97 and 4.4% from the fourth-quarter 2019 tally of $194.32. The rise was mainly backed by occupancy and rate growth in the quarter. We projected the same to be $205.15.
Comparable hotel EBITDA came in at $355 million, falling 5.3% from $375 million reported a year ago. The figure, however, surpassed the fourth-quarter 2019 tally of $337 million.
The average room rate of $301.84 in the fourth quarter increased from $300.71 reported in the year-ago quarter. The figure compared favorably with the $256.94 reported in fourth-quarter 2019.
The comparable average occupancy percentage in the quarter was 67.2%, up 70 basis points from the prior-year quarter. However, the figure was lower than the comparable average occupancy of 75.6% in fourth-quarter 2019.
The room nights for its transient business declined 2.5% year over year. The group business and contract businesses witnessed growth of 4.7% and 11.4%, respectively, from the prior-year period. Host Hotels’ transient, group and contract businesses accounted for roughly 61%, 35% and 4% of its 2023 room sales, respectively.
Balance Sheet Position
Host Hotels exited the fourth quarter with cash and cash equivalents of $1.14 billion, up from $916 million as of Sep 30, 2023.
HST’s liquidity totaled $2.9 billion, including FF&E escrow reserves of $217 million as of Dec 31, 2023. It had $1.5 billion available under the revolver portion of the credit facility as of the same date.
During the reported quarter, the company repurchased 1.9 million shares at an average price of $16.50 per share through its common share repurchase program for $31 million.
Capital Expenditure
As of Dec 31, 2023, Host Hotels’ capital expenditure aggregated $646 million. Of this, $195 million was the total return on investment project spend, $274 million was renewal and replacement expenditure, and $177 million was renewal and replacement insurable reconstruction.
2024 Outlook
Host Hotels issued its outlook for 2024.
It projects full-year AFFO to be in the range of $1.92-$2.04. This is higher than the Zacks Consensus Estimate of $1.89.
It expects comparable hotel RevPAR to be in the range of $217-$233 million while adjusted EBITDAre is estimated between $1.590 billion and $1.680 billion.
For 2024, management anticipates total capital expenditure in the range of $500-$605 million.
Host Hotels currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Host Hotels & Resorts, Inc. Price, Consensus and EPS Surprise
Host Hotels & Resorts, Inc. price-consensus-eps-surprise-chart | Host Hotels & Resorts, Inc. Quote
Performance of Other REITs
Ventas, Inc. VTR reported a fourth-quarter 2023 normalized funds from operations (FFO) per share of 76 cents, in line with the Zacks Consensus Estimate. The reported figure increased 4.1% from the prior-year quarter’s tally.
Results reflect better-than-anticipated revenues. Also, Ventas’ same-store cash NOI increased year over year on strong performance across the portfolio.
Healthpeak Properties, Inc. PEAK reported fourth-quarter 2023 FFO as adjusted per share of 46 cents, beating the Zacks Consensus Estimate by a whisker. The reported figure rose 4.5% year over year.
Results reflected better-than-anticipated revenues. Moreover, growth in same-store portfolio cash (adjusted) net operating income was witnessed across the portfolio. The company also issued its 2024 outlook.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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