Host Hotels CEO Explains Rationale Behind REIT's Share Buyback

W. Edward Walter, CEO of Host Hotels & Resorts Inc. (NYSE: HST), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.

During 2015, Host launched two share repurchase programs, each totaling $500 million. Walter discussed the rationale behind the decision. He explained that lodging sector stock prices have come under pressure in recent months because of concerns about the sector’s top-line growth outlook. At this point, Host and most of the other stocks in the lodging sector are trading at pretty significant discounts to net asset value (NAV), Walter said.

“In an environment like this, while we’re always looking for opportunities to grow the company, it’s pretty clear that the best use of any spare capital would be to buy back our stock and try to close that gap,” he noted.

Meanwhile, Walter said the recent news that Marriott International will acquire Starwood Hotels & Resorts Worldwide will dominate the headlines in the lodging sector in 2016. The combination of two of the top three lodging players in the United States has ramifications for some of the other large hotel operators, Walter said.

Operators will now try to assess how they should react to the news and whether it warrants additional acquisition activity on their part, he added.

Walter expressed confidence that Marriott will be able to achieve the “massive integration job” it now faces.