Yahoo Finance Host Hotels' (HST) Q1 FFO & Revenues Beat, '23 View Raised
Host Hotels & Resorts, Inc. HST reported first-quarter adjusted funds from operations (AFFO) per share of 55 cents, beating the Zacks Consensus Estimate of 48 cents and our estimate of 44 cents. The figure jumped a whopping 41% from the prior-year quarter’s 39 cents.
Results reflect better-than-anticipated revenues, aided by continued strong leisure demand and growth in city center markets. The company also raised its 2023 outlook.
Host Hotels generated total revenues of $1.38 billion, outpacing the Zacks Consensus Estimate of $1.32 million and our estimate of $1.27 billion. Moreover, the top line improved 28.6% from the prior-year quarter’s $1.07 billion.
Per James F. Risoleo, president and CEO of the company, “Host delivered strong results in the first quarter as we continued to benefit from operational improvements across our portfolio. Notably, comparable hotel RevPAR increased 31% over the first quarter of 2022, exceeding the top end of our guidance by four percentage points. Our results in the first quarter were driven by continued rate strength and increases in occupancy, with meaningful improvement in the group business segment.”
Behind the Headlines
Host Hotels’ comparable revenue per available room (RevPAR) was $217.77 in the reported quarter, climbing 31.1% from the year-ago quarter’s $166.12. The figure improved 7.4% from the first-quarter 2019 tally. The rise was backed by continued strong leisure demand and growth in city center markets.
Comparable EBITDA came in at $439 million, climbing 43.9% from $305 million reported a year ago. The figure also surpassed the first-quarter 2019 tally of $373 million.
The average room rate improved from $305.60 in the year-ago quarter to $318.49 in the first quarter. The figure also grew 15.6% from $265.90 reported in first-quarter 2019.
The comparable average occupancy percentage in the quarter was 68.4%, comparing favorably with the prior-year quarter’s 54.4%. However, the figure was lower than the comparable average occupancy of 76.3% in first-quarter 2019.
The room nights for its transient, group and contract businesses improved 9.2%, 60.2% and 11.9%, respectively, year over year. Host Hotels’ transient, group and contract businesses accounted for roughly 65%, 32% and 3% of its 2022 room sales, respectively.
Portfolio Activity
During the quarter, Host Hotels disposed of The Camby, Autograph Collection for $110 million, which resulted in a gain on sale of $69 million.
HST also unveiled plans to develop and sell 40 fee-simple condominiums on a five-acre development parcel at Golden Oak in Orlando, located adjacent to Four Seasons Resort Orlando at Walt Disney World® Resort. The construction of the same is slated to begin in fourth-quarter 2023 and is expected to be completed in fourth-quarter 2025. The sales are tentatively scheduled to take place in the first half of 2024.
Balance-Sheet Position
Host Hotels exited first-quarter 2023 with cash and cash equivalents of $563 million, down from $667 million as of Dec 31, 2022.
HST’s liquidity totaled $2.3 billion, including FF&E escrow reserves of $203 million as of Mar 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, HST repurchased 3.2 million shares at an average price of $15.65 per share for $50 million through its common share repurchase program. It had around $923 million of remaining capacity under the repurchase program as of Mar 31, 2023.
Capital Expenditure
In the first quarter, Host Hotels incurred around $146 million in capital expenditure. Of this, $51 million was the total return on investment project spend, $65 million was renewal and replacement expenditure, and $30 million was renewal and replacement insurable reconstruction.
2023 Outlook Raised
Host Hotels raised its outlook for 2023 based on its strong first-quarter performance.
It now projects full-year AFFO to lie in the range of $1.84-$1.95, up from the prior-guided range of $1.60-$1.83. The Zacks Consensus Estimate for the same is presently pegged at $1.76.
The company raised its comparable hotel RevPAR projection for the current year to $211-$216 from $199-$211 guided earlier. The adjusted EBITDAre is now estimated between $1.545 billion and $1.625 billion, up from $1.380 billion and $1.545 billion.
For full-year 2023, management maintained its expectations for total capital expenditure in the range of $600-$725 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
Boston Properties Inc.’s BXP first-quarter 2023 FFO per share of $1.73 outpaced the Zacks Consensus Estimate of $1.70. It also surpassed our estimate of $1.68. However, the reported figure fell 4.9% year over year.
BXP’s quarterly results reflected better-than-anticipated revenues on healthy leasing activity. However, the company noted that higher interest expenses during the quarter marred its year-over-year FFO per share growth. BXP raised its outlook for 2023 FFO per share.
Welltower Inc.’s WELL first-quarter 2023 normalized FFO per share of 85 cents surpassed the Zacks Consensus Estimate of 82 cents. It also beat our estimate of 81 cents for the quarter. The reported figure improved 3.7% from the prior-year quarter’s actual.
WELL’s results reflected better-than-anticipated revenues. The total same-store net operating income (SSNOI) increased year over year, driven by SSNOI growth in the seniors housing operating portfolio. The company also raised its guidance for 2023 FFO per share.
Vornado Realty Trust’s VNO first-quarter 2023 FFO plus assumed conversions as adjusted per share of 60 cents missed the Zacks Consensus Estimate of 62 cents. Moreover, the figure declined 24.1% year over year.
VNO’s quarterly results displayed better-than-anticipated revenues aided by healthy leasing activity. However, higher operating expenses acted as a dampener.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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