DOW JONES NEWSWIRES
Host Hotels & Resorts Inc.'s (HST) fourth-quarter net income
dropped 59% on slumping margins as the company unexpectedly
projected a loss for 2009.
The company also forecast 2009 capital spending at half of last
year's level and said it would suspend its quarterly dividend.
Real-estate investment trusts have been slammed by the global
recession as the housing market continues to drop because of tight
credit, high foreclosure rates and rising unemployment. Residential
REITs were hurt first, but commercial-property owners, including
hotel owners like Host, have started to get hit as consumers cut
back on travel and vacations in an effort to save money.
Host Hotels expects a loss this year of 13 cents to 26 cents a
share and funds from operations of 79 cents to 91 cents a share,
based on a 12% to 16% drop in revenue per available room. Analysts
polled by Thomson Reuters expected earnings of 14 cents and FFO of
$1.12.
Instead of a regular quarterly dividend, which the company had
slashed by 75% in December to 5 cents a share, Host said it will
declare a 30-cent to 35-cent dividend in the fourth quarter of
2009, payable either in cash or common stock.
It also forecast capital spending of about $340 million to $360
million for 2009, compared with $695 million last year.
Meanwhile, Host posted fourth-quarter net income of $122
million, or 19 cents a share, down from $294 million, or 54 cents a
share, a year earlier. Both periods included 4-cent gains from
hotel sales. Funds from operations, an important profitability
measurement for REITs, fell to 53 cents from 75 cents.
Revenue decreased 8.7% to $1.65 billion.
Analysts surveyed by Thomson Reuters expected earnings of 16
cents a share, FFO of 47 cents a share and revenue of $1.61
billion.
Operating margin fell to 13.1% from 20.6%.
Revenue per available room for comparable hotels fell 9.4%, in
line with the company's lowered November forecast.
Fitch Ratings in December lowered its outlook on Host and two
other major U.S. lodging companies, Starwood Hotels & Resorts
Worldwide (HOT) and Marriott International Inc. (MAR), saying
revenue per available room had weakened significantly and that some
markets that had been holding up, including New York City and some
international locales, also have seen falling demand.
Host, which is simply a hotel owner and doesn't have timeshare
or property-management businesses, likely will be more hurt than
the others by the downturn, Fitch said.
Host Hotels' shares closed at $4.20 on Tuesday and haven't
traded premarket. The stock is off 45% so far this year.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com