Stifel's reiterated Buy on Host Hotels looks straightforward until you decompose the Q1 beat and ask what the 8% dividend yield is actually pricing in. The answer should make REIT investors uncomfortable.
Host Hotels just exited two Four Seasons assets at a 14.9x EBITDA multiple while analysts cheer the capital recycling strategy. The question nobody's asking is what the buyers see in those properties that a $14 billion REIT decided wasn't worth keeping.
Citigroup just bumped Host Hotels' price target to $22, and three other analysts followed the same direction in the same month. The interesting number isn't $22... it's what $13B in market cap plus $5B in debt tells you about where Wall Street thinks luxury hotel yields are heading.
Host Hotels unloads Orlando and Jackson Hole for $1.1 billion. Wall Street calls it portfolio optimization. The properties call it Monday morning.
