Investment Thesis
Host Hotels & Resorts (HST) is a hotel REIT in the United States. The REIT has a healthy balance sheet and a good track record of growing its funds from operation (“FFO”) and dividends in the past 7 years. The company should continue to benefit from the growing U.S. economy but is expected to face near-term oversupply in several of its key markets. In addition, sharing services such as Airbnb (Private:AIRB) may continue to reduce its pricing power and impact its FFO growth. Historically, its share price is sensitive to interest rate hikes. As rate continues to rise, its share price may fall. Hence, I would rather wait for a better entry point.
Source: Company Website
The Positives of Host Hotels & Resorts
Diversified Revenue Source
Host has a diversified portfolio of properties located in major markets in the United States with no one single market accounts for more than 12% of its EBITDA (earnings before income tax, depreciation, & amortization). This is highly beneficial as it helps the company to reduce some of the risks that may happen regionally such as a natural disaster.
