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Hotel REITs with local assets have mixed earnings results

Hotel real estate investment trusts with major assets in San Diego County have had varying degrees of success in this year's second quarter.

Aliso Viejo, Calif.-based Sunstone Hotel Investors (NYSE: SHO) posted $11.85 million in net income on $237.84 million in revenues for the three months ended June 30, compared with $38.93 million on $214.57 million in revenues for the same quarter a year earlier.

For the six months ended at mid-year, Sunstone recorded a loss of $1.11 million on $438.87 million in revenues, compared with $90.26 million in net income on $369.92 million in revenues for the same period a year earlier.

Sunstone has returned 11 hotels to their respective lenders, including the W San Diego, the Holiday Inn (now a Four Points Sheraton) and two hotels in Old Town. It then paid $475 million for a 75 percent stake in the 1,190-room Hilton San Diego Bayfront. Both of these events happened within the past 18 months.

Sunstone is in the process of selling the 284-room Marriott Del Mar to the Thayer Hotel Lodging private investment firm for $66 million.

Sunstone may have lost money in the year's first half, but Ken Cruse, Sunstone CEO, seems upbeat.

"Looking ahead, we continue to build a solid base for future growth," Cruse said in a statement. "On a same-store basis, our managers booked more group room nights in the second quarter of 2012 than in any other second quarter over the past five years.”

Sunstone’s stock ended at $10.42, up 12 cents or 1.17 percent Friday. The stock has ranged from $4.79 to $11.14 during the past 52 weeks.

Bethesda, Md.-based Host Hotels & Resorts (NYSE: HST), which paid $570 million for the 1,625-room Manchester Grand Hyatt last year, recorded $83 million in net income on $1.36 billion in revenues for the quarter ended June 15, compared to $64 million in net income on $2.53 billion in revenues for the same quarter in 2011.

Due to a flat first quarter, net income for the year's first six months was also about $83 million on $2.53 billion in revenues, compared to $4 million in net income on $2.17 billion in revenues for the same period in 2011.

Taking its acquisition of the Manchester Grand Hyatt and the resulting need to repay its $400 million in debt into account, Host said it still has $760 million remaining under its credit facility for more acquisitions.

Aside from the Manchester Grand Hyatt, Host owns other major hotels in the region, including the 1,360-room San Diego Marquis & Marina, now in the midst of a $200 million, four-year renovation; the Coronado Island Marriott Resort & Spa; the Sheraton San Diego Hotel & Marina; and San Diego Marriott Mission Valley.

Host’s stock ended the day Tuesday at $15.23, up 4 cents, or 0.23 percent. The stock has ranged from $9.78 to $17.26 during the past 52 weeks.

LaSalle Hotel Properties (NYSE: LHO), also of Bethesda, owns such local assets as the 357-room Hilton on Mission Bay, 462-room Paradise Point Resort on Mission Bay, 283-room Hilton San Diego Gaslamp and 235-room Hotel Solamar.

LaSalle had a strong quarter and a solid first half of the year.

For the quarter ended June 30, the company recorded $35.33 million in net income on $242.09 million in revenues, compared with $24.13 million in net income on $202.55 million in revenues for the comparable period last year.

For the year's first half, LaSalle posted $26.6 million in net income on $414.41 million in revenues, compared with $13.33 million on $340.09 million in revenues for the same period a year earlier.

LaSalle’s stock price ended at $27.04, down 24 cents, or 0.88 percent, Tuesday. The stock has ranged from $15.17 to $30.46 during the past 52 weeks.

Ashford Hospitality Trust (NYSE: AHT) has local assets that include the 394-room Hilton La Jolla Torrey Pines, 260-room Sheraton Mission Valley and 150-room Residence Inn by Marriott in Mission Valley.

Ashford has had some trouble remaining profitable for the past couple of years. For the quarter ended June 30, the Dallas-based REIT posted a loss of $5.94 million on $249.13 million in revenues, compared with a loss of $7.26 million on $230.09 million in revenues for the same quarter in 2011.

For the six months ended June 30, Ashford recorded a loss of $30.09 million on $475.02 million in revenues, compared to a loss of $36.62 million on $441.89 million in revenues for the like period a year earlier.

As was the case with Sunstone, Ashford has some reason to be hopeful, despite its midyear balance sheet.

“Following the recession of 2008-2009, the lodging industry began experiencing improvement in fundamentals, which has continued into 2012," Ashford officials said in a press release. "Room rates, measured by the average daily rate, or ADR, which typically lags occupancy growth in the early stage of a recovery, have shown upward growth.”

Ashford stated the next couple of years could be difficult.

“We believe that in the current cycle, hotel values and cash flows, for the most part, peaked in 2007, and we believe we will not achieve similar cash flows and values in the immediate future,” Ashford officials continued. “Industry experts have suggested that cash flows within our industry may achieve these previous highs again in 2014 through 2016.”

Ashford’s stock ended at $8.35, down 1 cent, or 0.12 percent, Tuesday. The stock has ranged from $5.93 to $10.70 during the past 52 weeks.

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