- The Washington Times - Monday, November 13, 2006

Shares of Host Hotels & Resorts Inc., a Bethesda real estate investment trust, have jumped nearly 40 percent in the past 12 months as investors applauded its strategy of taking profits in the U.S. and seeking growth opportunities overseas.

Host, formerly Host Marriott Corp., earlier this year sold two of its major properties, the Drake Hotel in New York and the Fort Lauderdale Marina in Florida for $586 million.

“These strategic sales are indicative of our strategy of capitalizing on value enhancement opportunities inherent in our portfolio,” said Christopher Nassetta, president and chief executive officer of Host.

“Right now it is a seller’s market,” said Rod Petrik, an analyst at Stifel Nicolaus, a St. Louis brokerage and investment banking firm. “If Host Hotels & Resorts makes any acquisitions, they will be very selective about them.”

“Our outlook is not forecasting additional acquisitions for this year, but on the sales side we will continue to recycle capital in our low-growth assets,” said Host Vice President of Investor Relations Kevin Jacobs.

While realizing gains in the richly priced domestic market, Host is actively pursuing new international investments through a joint venture with two other companies.

“The company’s focus will be to drive internal growth through renovations, to selectively prune its portfolio and approach the joint venture platform internationally,” said analyst Gustavo Sarago an analyst of Friedman, Billings, Ramsey, an Arlington investment banking firm.

“Host has been looking for acquisitions outside of the U.S., because it sees higher returns on its investments abroad,” said Mr. Sarago.

The company expanded its presence in the international market in the first quarter when its joint venture group bought 28 international hotels from Starwood Hotels & Resorts.

Host has a 32.1 percent stake in the joint venture. Its partners are Stichting Pensioenfonds ABP, a Netherlands pension fund, and Jasmine Hotels Pte., an affiliate of the Government of Singapore Investment Corp.

The Starwood transaction “was a great deal for both Host and Starwood,” said Mike Salinsky, an analyst at RBC Capital Markets in Toronto. “The pricing was good, and it was a good strategic move to give Starwood cash upfront.”

“The company has a strong international performance at this point, as the pipeline for Europe seems to be strong,” Mr. Salinsky said. “I wouldn’t be surprised to see them looking into opportunities in Asia.”

Host reported net income of $40 million (7 cents per diluted share) for the third quarter ended Sept. 8 compared with a net loss of $5 million (3 cents) a year ago. Funds from operations rose 46.6 percent to 152,000,000 (28 cents) a year ago.

It’s lodging portfolio included 128 hotels with approximately 67,000 rooms valued at $265,000 per room at quarter end.

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