Hilton Worldwide CEO: Start Thinking About Returning Capital To Shareholders In The Second Half Of This Year

Hilton Worldwide Holdings Inc HLT recently closed its $1.95 billion Waldorf Astoria New York deal with Beijing-based Anbang Insurance Group Co. Ltd.

Chris Nassetta, Hilton Worldwide CEO, was on CNBC to talk about the deal and the company’s plans for returning capital to shareholders.

How Do You Feel About The Waldorf Transactions?

“We obviously feel really good about it. Something we have been working on for a long time,” Nassetta said. “The Waldorf is obviously an incredibly unique piece of real estate and that’s why we were able to achieve the kind of pricing at almost $2 billion and 32 times.”

He continued, “We feel like the buyers are going to have a great opportunity to totally redevelop and reposition that asset and for us we get to exchange at that multiple, at a high multiple, into some fabulous assets in Florida and San Francisco, which are higher growth markets at the moment at a much lower multiple and have created a huge arbitrage in terms of our earnings of the company on an EBITDA basis and in overall value basis. So, it seems like investors have been quite pleased with it and obviously we are as well.”

What Are Your Plans For Dividends And Buybacks?

“We have been paying out significant amount of debt,” Nassetta replied. “A billion dollars last year, expect to pay off another $800 [million] to $1 billion this year and with the outperformance on bottom-line earnings, with the benefit of the Waldorf 10-31 exchange and those debt pay downs we expect that in the second half of the year we are going to have credit ratios in the zone that we have set our target which is 3 to 4 times debt to [EBITDA], but at that point it would be our intention to start thinking about returning capital.”