Lodging real estate investment trust (REIT) Host Hotels & Resorts announced the acquisition of the fee simple interest in Hyatt Regency Austin, which has a 448 room capacity. Hyatt will continue operating the Hyatt Regency Austin under a long-term management agreement.
Host Hotels & Resorts (HST) is paying a total consideration of $161 million for this acquisition. This acquisition price shows a 10% capitalization rate and an EBITDA multiple of 8.8x based on 2019 results.
Hyatt Regency Austin is located near Lady Bird Lake on about six acres and offers 45,000 square feet of meeting space, two food and beverage outlets, an outdoor pool and a fitness center.
Host Hotels’ President and CEO, James F. Risoleo, said, “We are excited to have executed an off-market, opportunistic acquisition of a high-quality hotel in one of the nation’s fastest growing cities, which continues to be a top beneficiary of corporate and people relocation. As travel resumes, we expect the well located Hyatt Regency Austin to benefit from a strong rebound led by Austin’s multiple leisure and business demand drivers that are anchored in world renowned music festivals, sporting events and blue-chip corporations.”
Risoleo added, “Our goal is for the Hyatt Regency Austin to exceed 2019 levels of revenues and EBITDA on a stabilized basis as Hyatt leverages Host’s data driven asset management and enterprise analytics platfor to drive incremental expense reductions and productivity improvements at the hotel.”
Notably, Host Hotels expects the acquisition to increase its EBITDA growth and enhance its geographic diversification. (See Host Hotels stock analysis on TipRanks)
On March 12, BTIG analyst James W. Sullivan reiterated a Buy rating on the stock and raised its price target to $19 (3.15% upside potential) from $17.
Turning to the rest of the Street, the stock has a Moderate Buy consensus rating alongside an average analyst price target of $17.75 (3.64% downside potential), based on 4 Buys and 4 Holds. Shares have rallied about 76% over the past year.
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