Host Hotels & Resorts, Inc. is a lodging real estate company that currently owns or holds controlling interests in upper upscale and luxury hotel properties primarily operated under premium brands. Host Hotels & Resorts will be the premier lodging real estate company. Creating value through aggressive asset management and disciplined capital allocation to generate superior performance would maximize shareholders' returns through a combination of dividends, growth in funds from operations and increasing asset value.
Industry:REIT-EQTY TRUST -OTHER Sector: Finance Fiscal Year End:December Last Reported Quarter:03/31/12 Next EPS Date:07/18/12
Capital Structure Solvency and Cash Flow
Liquidity
As of September 10, 2010, the Company had approximately $838 million of cash and cash equivalents and $543 million of available capacity under its credit facility. The Company intends to use $121 million of cash to pay back the mortgage debt assumed with the September 2010 acquisition of the W New York-Union Square. Subsequent to the defeasance and the acquisition of the JW Marriott, Rio de Janeiro, the Company will have approximately $670 million of cash and cash equivalents.
During 3Q10, the Company issued 7.4 million shares of common stock at an average price of $14.08 for net proceeds of approximately $103.5 million. These sales were made in at-the-market offerings, pursuant to two separate Sales Agency Financing Agreements with BNY Mellon Capital Markets, LLC, each of which had an aggregate offering price of $400 million. All shares available under the first agreement have been issued, while the second agreement has approximately $350 million of capacity remaining.
Capital Expenditure
Capital expenditures totaled approximately $49 million and $149 million in 3Q10 and year-to-date 2010, respectively. These expenditures included return on investment and repositioning projects of approximately $17 million and $50 million for 3Q10 and year-to-date 2010. The Company estimates that capital expenditures will be between $300 million and $320 million during 2010.
Last edited Thu Dec 30, 2010 05:33 AM by MadhubantiMaitra (Zacks Investment Research)
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Governance Social Responsibility and Employee Relations
Acquisitions and Dispositions
During 3Q10, the Company completed the acquisition of three, high-quality hotel assets in New York, Chicago and London for a total investment of approximately $430 million, including assumed consolidated debt of $166 million. Consistent with the Company's long-term strategy, each hotel is located in a key urban market and is operated under a premium brand.
Subsequent to quarter end, the Company acquired the 245-room JW Marriott Hotel Rio de Janeiro, Brazil for approximately $48 million, which represents the Company's second international acquisition this year and an expansion into a new strategic market. The property is consistently rated as one of the top Latin American hotels for leisure travel and is located beside the world famous Copacabana Beach.
On July 20, 2010, the Company's joint venture in Asia, Asia Pacific Hospitality Venture Pte., Ltd. (the "Asian joint venture"), in which it is a 25% partner, reached an agreement with Accor and InterGlobe to develop seven properties totaling approximately 1,750 rooms for a total cost of approximately $325 million in three major cities in India; Bangalore, Chennai and Delhi (the "Indian joint venture"). The Asian joint venture will invest approximately $50 million to acquire approximately 36% of the interest in the Indian joint venture. The properties will be managed by Accor under the Pullman, Novotel, and Ibis brands. Development of the properties is underway, and the first hotel is expected to open in the second quarter of 2011.
On August 25, 2010, the Company redeemed $225 million of its 7 1/8% Series K senior notes that were due in November of 2013 and recorded a $7 million loss on debt extinguishment.
Last edited Thu Dec 30, 2010 05:34 AM by MadhubantiMaitra (Zacks Investment Research)
Recent and Upcoming Events
Major Risks
• Concentration in higher-rated chain scales: The majority of Host's portfolio is concentrated in the luxury and upper-upscale segments, which have been the weakest performing segments in the current downturn.
• Hotel Industry: The hotel industry is a cyclical industry, and is heavily dependent on the overall health of the U.S. economy, as well as room supply and demand.
• Interest Rates: The price of the Company's equity securities might vary substantially depending on the changes in market interest rates.
• Energy Costs: The significant increases in energy costs could have an adverse impact on operating margins.
• Volatility: HST’s earnings stream can be volatile due to the Company’s high degree of operating leverage, combined with its financial leverage and timing of acquisitions and dispositions.
Last edited Thu Dec 30, 2010 05:35 AM by MadhubantiMaitra (Zacks Investment Research)
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