Host Hotels & Resorts Earnings Call Nuggets: Non-Comp Pool and Equity Issuance
Host Hotels & Resorts (NYSE:HST) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Joshua Attie – Citi: Same-store growth was up 5.1, but the total portfolio was up 6.6. Can you talk about some of the properties in the non-comp pool that drove that upside and do you expect a gap of that magnitude between comp and non-comp RevPAR to persist through the remainder of the year?
W. Edward Walter – President and CEO: Certainly, Josh. Let me try to clarify a couple of things here though. The 6.6% change in RevPAR, that (Josh) is referencing is a comparison of what was our RevPAR for all of our properties in the first quarter of last year compared to what is our RevPAR in the first quarter of 2013 for everything that we own today. So, part of what’s captured in that difference and the RevPAR in 2013 is 6.6% higher than what it was before, a big part of what’s captured in there compared to our 5.1% RevPAR growth in the first quarter is the strong performance of a number of the hotels that we have invested capital in and as we consequently have significantly improved their operation as well as some of the hotels that we purchased, which are not part of our concept, which are performing well. So, all of those hotels – so that subgroup that I just described had RevPAR growth above 27% in the first quarter. The other piece though of that calculation that we need to remember is that the (comp set) in 2012 is slightly different – the overall number of hotels we owned in 2012 is different from what we owned in 2013. So, for instance, what’s in the 2012 number is the Atlanta Marquis, what’s in the 2013 number is the Grand Hyatt in D.C. So, there is two factors that are applying there. At the bottom line point, Josh, as you’ve identified which is at the broader portfolio is growing a bit faster than what our comparable portfolio is growing is true.
Joshua Attie – Citi: Do you expect that gap of 100 basis points, 150 basis points to persist sort of the rest of the year?
W. Edward Walter – President and CEO: I can’t sit here and say that I have exactly looked at it, but the reality is that other than to the extent that those numbers are affected by sales or acquisitions which would change that relationship a little bit. The reality is it should generally continue at that level.
Joshua Attie – Citi: If I kind of follow-up that with one more question on equity. You issued $100 million through the ATM in the quarter and that’s on top of $270 million that you issued last year. I understand you are working towards a leverage target of three times in that those aren’t very big numbers in the context of your market cap, but they do add up over time. And at the same time, asset sales seem like they accelerated it could be a source of capital for you. Can you just explain the rationale for the equity issuance and also is there an acquisition pipeline where you might be able to put some of that money to work in the near-term.