Shares of Host Hotels & Resorts Inc. HST inched up 0.6% to $16.54 from Mar 8 to Mar 10. Recently, the company noted a gradual recovery in hotel demand, which is leading to an improvement in revenue per available room (RevPAR).
Supported by easing market restrictions, it has reopened a number of hotels, with 76 of the company’s 80 hotels being open as of Feb 18, 2021. Also, 20 of its hotels (24% of rooms) achieved a breakeven or positive hotel-level operating profit in fourth-quarter 2020.
While strict nationwide lockdown and increased travel restrictions dampened the demand for hotels and RevPAR in the first half of 2020, the company has been seeing a gradual improvement in RevPAR on account of hotel reopenings and leisure demand surges. In fact, RevPAR (for all owned hotels) was $58.32 as of Feb 27, 2021, rising from $39.10 as of December 2020.
Also, monthly RevPAR for February declined 70.8% year over year compared with a 76.2% decrease in January. Moreover, on a year-over-year basis, RevPAR dipped 79.7% in the fourth quarter. The company is seeing a similar deceleration in ADR and occupancy declines.
Going forward, Host Hotel properties’ prime locations, with restaurants and other amenities and attractions in the vicinity, will likely facilitate the company to attract significant leisure-transient demand when travel and tourism recover in urban markets such as San Francisco, New York, Boston and Chicago.
Host Hotels is also the only lodging REIT, which has an investment-grade credit rating. It has a decent balance sheet and has been undertaking steps to preserve liquidity to withstand any market mayhem. In February, the company announced a second amendment to its credit agreement, extending financial covenant waivers through first-quarter 2022. This will help it preserves liquidity amid the COVID-19 outbreak-led setbacks.
Also, Host Hotels exited fourth-quarter 2020 with $2.5 billion of liquidity, consisting of a cash balance of $2.3 billion and $139 million FF&E escrow reserves.
However, the recovery in the company’s core business transient demand is likely to be slow and choppy in 2021 due to travel restrictions and delayed return to offices.
Shares of this Zacks Rank #3 (Hold) company have gained 17.9% over the past three months compared with the industry’s growth of 3.9%.
Stocks to Consider
Alpine Income Property Trust, Inc.’s PINE funds from operations (FFO) per share estimates for the current year have moved up 5.4% to $1.55 in the past month. The company sports a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Extra Space Storage Inc.’s EXR Zacks Consensus Estimate for 2021 FFO per share has moved up 3.2% to $5.84 in the past month. The company currently carries a Zacks Rank of 2 (Buy).
Global Net Lease, Inc. GNL has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2021 FFO per share has been revised 4% at $2.10 in a week’s time.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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