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Host Hotels Vends Marriott Property

Zacks Equity Research

The lodging real estate investment trusts (REITs) – Host Hotels & Resorts Inc. (HST) – sold ‘Ritz-Carlton, San Francisco’ to an investment vehicle sponsored by Thayer Lodging Group for about $161 million. The company intends to use the proceeds to finance proposed buyouts and for other corporate purposes.

The Ritz-Carlton, San Francisco is one of the premium branded properties of Marriott International, Inc. (MAR). The hotel, having 336 luxurious suites, is situated in the downtown area and conveniently connected to landmarks such as Union Square, Fisherman’s Wharf, The Embarcadero and the city’s Financial District. The property caters to both leisure and business travelers.

Host Hotels is well on track on improving its overall portfolio, though successful execution of its strategic capital recycling program. As part of this, the company is vending assets from time-to-time. It is reaping decent gains by selling core assets at favorable price in key markets and consequently investing the proceeds in acquisitions as well as in the development and redevelopment of quality assets.

In tune with this, Host Hotels completed dispositions over $600 million since the beginning of 2012. This includes the major divestiture of 1,663-room Atlanta Marriott Marquis for $293 million in first-quarter 2013. We expect such strategic moves to position Host Hotels favorably, going forward.

Of late, Host Hotels has been riding on growth trajectory by enhancing its presence in high-end markets. Last month, the company bought a Hyatt Hotels Corporation’s (H) property in Honolulu, Hawaii for $138.5 million.  

Host Hotels currently carries a Zacks Rank #2 (Buy). Another better performing lodging REIT that is worth a look is Sunstone Hotel Investors Inc. (SHO) which has a Zacks Rank #1 (Strong Buy).

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