(Update 21Oct09) Baird analyst downgraded BEE. The stock dropped quite a bit. Also, I found the web site of Vector Group Ltd here. Vector Group bought a 7.1% stake in BEE on July 8 (SEC filing here). Note the owners of BEE includes Bill Gates (via. his Cascade Investment). A Hotel REIT list.
(Original) Ticker symbol (NYSE:BEE), other hotel REITs for comparison: DRH, LHO.
Company web site. Note Bill Gates private investment fund bought a 5.6% stake on Oct. 2008 (Reuters; Seekingalpha).
National Real Estate Investor/Matt Valley: No Respite for Hoteliers
The epic downturn in hotel fundamentals is forecast to slow, but not before inflicting widespread pain.
CEO Lawrence Geller blog ( a bit old)
Other recent developments
Sold Four Seasons Mexico City, last year it sold Hyatt Phoenix. Interestingly, I saw it kept all the oceanfront and Paris, London, Washington DC and other hotels and resorts. Mexico city obviously was hurt by H1N1 flu thing. Phoenix, I don’t know whether it was related to the housing bust there. But look deeper, I think that’s also because there is a scarcity of oceanfront resorts. I remember going to Sanya (Hainan, China) and stayed at Marriott Sanya 2 years ago. Beautiful scene can not described by words. BTW, there were some new hotel and luxury condo developments in Sanya, but there are fewer and fewer place to develop. And in China, Sanya is the only tropical coastal city.
(WSJ Oct 13) “Hawaii Hotels Face Fewer Visitors, More Debt”.
one room cost as high as $800,000 in 2004 to 2008 booming years. For BEE, $172 m (market cap)
180 m / 8,000 rooms = $22,500 per room
Some rooms, like Ritz Carlton Laguna Niguel cost as much as $600 per room a night.
Disclosure: the author has long position on BEE as of this writing.
Appendix
(14Oct09) Host Hotels swings to third-quarter loss (marketWatch).
CHICAGO (MarketWatch) — Higher interest expense, along with a huge slowdown in business, dragged Host Hotels & Resorts into the loss column in the third quarter — and the lodging giant said Wednesday that it expects to remain in the red for the full year.
Host /quotes/comstock/13*!hst/quotes/nls/hst (HST 12.13, +0.85, +7.54%) said that it lost $58 million, or 9 cents a share, on the period, a turn from a profit of $47 million, or 9 cents a share, in the same quarter a year ago. However, on an operating basis, the company would have earned 11 cents a share, down from 31 cents.
The average estimate of analysts polled by FactSet Research had been for the company to earn 8 cents a share.
Revenue declined 19.9% to $912 million as revenue-per-available room — RevPAR is a key industry metric — fell 21.3%. Comparable profit margins slipped 685 basis points, the company said.
And things aren’t looking up anytime soon.
“The current recessionary climate continues to hinder the company’s ability to predict future operating results,” Host said in the earnings report.
Still, it is assuming that RevPAR will be down 20% to 22% for the full year, leading to a loss of 42 cents to 47 cents a share, or earnings of 46 cents to 51 cents on an operating basis.
“We believe the company is taking a more conservative stance given the industry’s poor performance the past few years and lack of clarity on longer term outlook,” wrote Steve Kent of Goldman Sachs in a note to investors. “We are especially focused on any improvement in RevPAR expectation as given Host’s operating leverage any improvement in top line translates into upside [operating profit] potential.”
Shares of Host were up almost 5% at $11.81 in morning action.
Appendix 2:
Baird analyst David Loeb cut his ratings on several hotel REITs, saying risks to the downside outweigh growth potential. He lowered Strategic Hotels & Resorts Inc. (BEE, $2.36, -$0.13, -5.22%), FelCor Lodging Trust Inc. (FCH, $4.20, -$0.20, -4.55%) and LaSalle Hotel Properties (LHO, $19.80, -$0.48, -2.37%) to underperform from neutral and reiterated his cautious stance on the hotel sector.
Meanwhile, Stifel Nicolaus analyst John Guinee cut his rating on Maguire Properties Inc. (MPG, $2.58, -$0.08, -3.01%)–one of the largest office landlords in Southern California–to sell from hold, noting there is no value to common shareholders at this time, assuming preferred shares are repaid at par of $25 a share plus accrued dividends. Stifel also boosted its rating on Brandywine Realty Trust (BDN, $10.50, +$0.43, +4.27%) and Parkway Properties Inc. (PKY, $20.13, +$0.68, +3.50%) to buy from hold based on valuation.
Appendix 3:
(Source: MarketWatch)