* Sees 2009 FFO between 46 cents and 51 cents
* Q3 FFO 11 cents vs. 8 cents average estimate
* Q3 revenue down 20 percent at $912 million
* Shares up nearly 5 percent
(Recasts; adds share movement, comments from conference call,
By Deepa Seetharaman
NEW YORK, Oct 14 A nearly 10 percent drop in
costs and higher-than-expected revenue helped Host Hotels &
Resorts (HST.N) post third-quarter results that surpassed
expectations, and its shares rose nearly 5 percent.
The owner of 112 luxury and upscale hotels also said on
Wednesday that there were signs of improved demand for hotel
"While overall demand continues to be weak compared to
pre-downturn levels... we did see several positive trends
develop this quarter," said Chief Executive Edward Walter
during a conference call with analysts.
One positive trend was that corporate demand fell just 10
percent, the lowest decline in the past five quarters, Walter
said. The number of transient room nights sold was flat from a
year earlier, marking the first time in seven quarters this
measure did not show a significant decline.
Host reported funds from operations (FFO) of 11 cents per
share, down from 31 cents a year earlier. Analysts on average
had expected 8 cents, according to Thomson Reuters I/B/E/S.
FFO removes the profit-reducing effect of depreciation, a
noncash accounting item. FFO is a common performance measure
for real estate investment trusts (REITs).
Host swung to a net loss of $58 million, or 9 cents per
share, compared with a profit of $47 million a year earlier.
Analysts had forecast a 14-cent loss.
Revenue fell 20 percent to $912 million, beating analysts'
estimates of slightly below $893 million, said Host, which owns
hotels run by operators that include Marriott International
MAR.N and Starwood Hotels & Resorts HOT.N.
Revenue per available room, a standard gauge of health in
the hotel industry, fell 21.3 percent for the quarter.
Host shares were up 56 cents to $11.84 in noon trading on
the New York Stock Exchange, near a session high of $11.86.
DISTRESSED ACQUISITIONS POSSIBLE
Some $30 billion in hotel debt backed by commercial
mortgage-backed securities matures through 2012. As owners
scramble to meet their payments, they may seek to sell hotels.
Walter said this may offer Host the chance to buy assets
"that meet our pricing and quality requirements."
"There still are a lot of properties that are over-levered
that are ultimately going to make their way to the market,"
Not all possible sellers will be distressed, Walter said.
Host, for example, sold four hotels during the quarter for
about $90 million and recorded a $9 million gain from the
A decline in business travel has hurt upscale and luxury
hotels in the past year, forcing operators to lower room rates.
This in turn has hurt margins for hotel owners and forced them
to cut costs and slow development.
Host said its capital expenditures in the third quarter
fell nearly 60 percent to $63 million.
The Bethesda-based company expects its revpar to fall
between 20 percent and 22 percent for 2009, a slightly narrower
range than the 20-23 percent range previously reported.
Host forecast FFO of 46 cents to 51 cents a share for the
year, while analysts forecast, on average, 50 cents per share.
The lodging REIT also said it expected full-year EBITDA of
$760 million to $800 million, while analysts expected about
(Reporting by Deepa Seetharaman; Editing by Lisa Von Ahn,
Maureen Bavdek, Tim Dobbyn)