Host Hotels Acquires Assets - Analyst Blog

Host Hotels & Resorts Inc. (HST), the largest lodging real estate investment trust (REIT) in the U.S., has recently decided to acquire seven hotels in New Zealand for $143 million. The transaction is expected to complete by January 2011.

Host Hotels purchased six hotels from the affiliates of Tourism Asset Holdings Ltd. – the largest owner of hotels in Australia and New Zealand, while the remaining was acquired from an affiliate of Accor – the world's leading hotel manager and market leader in Europe. The properties with over 1,200 rooms are spread across Auckland, Christchurch, Queenstown and Wellington.

The acquisition spree is part of the long-term strategy of the company to make the most of the improving market fundamentals by purchasing assets at discounted prices. Host Hotels anticipates the gradual revival of the overall economy to have a positive impact on its operating results in 2010, with comparable hotel revenue per available room (RevPAR) expected to increase in the range of 5.5% to 6.5% for the full year.

Host Hotels is one of the largest owners of luxury and upper-upscale hotels, primarily operated under premium brands, such as Marriott, Westin, Sheraton, Ritz-Carlton, Hyatt, W, Four Seasons and St. Regi. Based in Bethesda, Maryland. Host Hotels owns properties and conducts operations through Host Hotels & Resorts. L.P., which is a limited partnership, where Host Hotels & Resorts Inc. is the sole general partner, and holds approximately 98.0% of the partnership interests.

Host Hotels currently owns 104 properties in the U.S. and 9 international properties totaling approximately 62,000 rooms, and also holds a non-controlling interest in a joint venture that owns 11 hotels in Europe with approximately 3,500 rooms. Most of the properties of the company are located in areas with high barriers to entry, having the potential for significant capital appreciation.

The rating on Host Hotels is currently ‘Neutral'. The stock presently has a Zacks #3 Rank, which translates into a short-term ‘Hold' recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1−3 months. However, we have an ‘Outperform' recommendation and Zacks #1 Rank (‘Strong Buy') for MPG Office Trust, Inc. (MPG), one of the peers of Host Hotels.

 
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