Citigroup: Lodging/Hotel REIT Earnings Preview

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On February 13, Citigroup published a report "Rose are Red, Violets Are Blue…" which included Lodging Strategy for hotel companies reporting the week of February 17, including:

  • Hyatt Hotel Corp. H,
  • Hilton Worldwide HLT,
  • LaSalle Hotel Properties LHO,
  • Sunstone Hotel Investors SHO,
  • Host Hotels & Resorts HST and
  • Marriott International MAR.

Citi Lodging - Overview

  • Fundamentals Remain Favorable: Reports out of US-centric lodging names next week should be in line or ahead of consensus given strong 4Q RevPAR trends of +9.6%;
  • Marriott & Hilton: Should benefit from exposure to midscale/upper midscale price points, which look to be outperforming.
  • Starwood: On its 4Q call, raised its 2015 RevPAR outlook to 5-7%, in part reflecting better US trends.

Overall, Citi expects a fairly upbeat outlook from companies previewed in the report.

Tuesday, February 17 - After Hours

Sunstone Hotel Investors

  • Q4 2014E: Citi FFO estimate of $0.27 is in line with consensus, and at the midpoint of the $0.26-$0.28 guidance. (In late January, the company noted it expects to report at or above the guidance midpoint).
  • Citi 2015E: Citi FFO estimate of $1.27 is slightly below the $1.29 consensus.
  • 2015 Guidance: In addition to its updated RevPAR and FFO outlook for 2015, we would look for updates around the company's renovation/repositioning projects underway in Boston and Hawaii.

Notably, will be the first conference call as CEO for recently appointed John Arabia.

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Wednesday, February 18 - Premarket

Hyatt Hotels

  • Q4 2014E: Citi EPS of $0.20 is slightly below the $0.22 consensus; Citi noted a range of estimates at $0.16-$0.24.
  • Citi 2015E: $1.25 EPS forecast is towards the higher end of a wide range of forecasts of $0.95 - $1.39 (Hyatt does not provide operating guidance).
  • Acquisitions/Dispositions: Hyatt has been a seller of assets over the course of 2014, and Citi estimates net proceeds of $884 million.
  • City-Center Hotels: Citi is looking for an update on group bookings which will be important for performance at these hotels.

Hilton Worldwide

  • Q4 201414E: Citi EPS of $0.18 is at the high end of the $0.16-$0.18 guidance range and is in line with consensus. (US RevPAR trends for midscale / upper midscale properties were strong during the quarter, approximately 10%, which could drive upside to forecasts).
  • Citi 2015E: estimates $0.88, ahead of $0.85 consensus; integration of properties purchased with proceeds from the sale of the Waldorf Astoria could drive upside to Citi Research estimates.
  • 2015 RevPAR guidance: Citi expects no change to guidance of 5-7%, but looking for updates around group and transient bookings.

LaSalle Hotel Properties

  • Q4 2014E: Citi FFO estimate of $0.58 is toward the low end of the $0.57 – $0.61 guidance range, and a penny below consensus. (Citi estimate incorporates 4Q REVPAR growth of +8.6% vs. guidance of 7-9%).
  • Acquisitions/Dispositions: LaSalle completed a $349m equity raise in December (8.7m shares), with proceeds used to purchase two hotels. (Citi is looking for more detail surrounding the transactions as well as expectations for 2015).
  • Core Markets: Citi is looking for updates on Washington D.C., and New York (where supply increases may contribute to weakness).

Marriott International

  • Q4 2014E: Citi EPS estimate of $0.65 is in-line with consensus.
  • Citi 2015E: Citi estimate of $3.05 is slightly above consensus of $3.03.
  • 2015 RevPAR guidance: Citi expects Marriott to provide initial 2015 guidance. Marriott has previously guided to 5-7% RevPAR growth for 2015, which Citi believes will be unchanged.

Thursday, February 19 - Premarket

Host Hotels & Resorts

  • Q4 2014E: Citi FFO estimate of $0.38 is in-line with the Street.
  • Citi 2015E: Citi FFO estimate of $1.63 is $0.02 below the Street.
  • 4Q EBITDA: Citi estimate of $359 million is in line with consensus.
  • 2015 RevPAR guidance: Citi anticipates mid-single digit RevPAR guidance for the year, (and Citi forecasts incorporate 6% portfolio-wide growth).

A Quick Look Back - TTM Performance

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