Credit Suisse Initiates Coverage On Host Hotel & Resorts Inc.

Credit Suisse initiated coverage on Host Hotel & Resorts Inc. HST Tuesday with a Neutral rating and $24 price target.

The rating was part of the firm’s initiation of coverage on 34 REITs.

Analysts led by Ian Weissman noted a number of positives, including “Strong group momentum - with job growth accelerating, and business sentiment improving, group business is finally starting to rebound. A dramatic improvement in group trends is good news for HST, with 40 percent+ of its demand driven by group business.”

“HST has among the strongest balance sheets in the sector with a net/debt to EBITDA multiple of just 2.8x by YE14 (the lowest in the sector); a BBB- rating by S&P; $1.2bn of available cash/liquidity (including $440mn of cash); and a fixed charge coverage ratio of 2.8x,” according to Weissman.

The report concluded that with “HST likely to remain on the acquisition sidelines, we expect HST to use its excess liquidity to drive outsized dividend growth over the next two years—modeling 30 percent dividend growth per annum, through 2016 assuming a 60-65 percent payout ratio.”

Host Hotel & Resorts Inc. recently traded at $22.69, down 0.31 percent.