FBR Capital Maintains an 'Outperform' on Hyatt Hotels (H); Puts Under Levered Balance Sheet to Work
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Price: $40.91 +1.06%
Rating Summary:
7 Buy, 14 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Rating Summary:
7 Buy, 14 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Trade H Now!
FBR Capital maintains an 'Outperform' on Hyatt Hotels (NYSE: H).
FBR analyst says, "Thursday evening, H announced that the company had signed an agreement to acquire a portfolio of assets from LodgeWorks, a private hotel development, ownership and management company. The acquisition includes 24 hotels with a price tag of $802M and an estimated Adj. EBITDA of $50M in 2012, which suggests H paid 16x 2012E Adj. EBITDA for the portfolio. We note that while the purchase multiple appears high optically, several of the assets appear to be in initial phases of ramp-up, so purchase multiple 2-3 years out will likely be much lower. Plus, Hyatt will be managing all properties post-acquisition. The closings for the majority of the asset purchases are expected to take place in the third and fourth quarters of 2011. The purchases of the remaining assets are expected to close by the end of the first quarter 2012. Little if any EBITDA accretion is expected in the current year form the transaction. Our additional thoughts on the transaction are as follows: Bottom line: We see this transaction in a positive light given that H is able to finally put its underlevered balance sheet to work, using its large pool of cash (we estimate over $1B in 2Q) to buy relatively new assets that the company can brand with one of its own flags and increase its footprint in markets where the company is under represented."
For more ratings news on Hyatt Hotels click here and for the rating history of Hyatt Hotels click here.
Shares of Hyatt Hotels closed at $39.27 yesterday, with a 52 week range of $34.19-$50.00.
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FBR analyst says, "Thursday evening, H announced that the company had signed an agreement to acquire a portfolio of assets from LodgeWorks, a private hotel development, ownership and management company. The acquisition includes 24 hotels with a price tag of $802M and an estimated Adj. EBITDA of $50M in 2012, which suggests H paid 16x 2012E Adj. EBITDA for the portfolio. We note that while the purchase multiple appears high optically, several of the assets appear to be in initial phases of ramp-up, so purchase multiple 2-3 years out will likely be much lower. Plus, Hyatt will be managing all properties post-acquisition. The closings for the majority of the asset purchases are expected to take place in the third and fourth quarters of 2011. The purchases of the remaining assets are expected to close by the end of the first quarter 2012. Little if any EBITDA accretion is expected in the current year form the transaction. Our additional thoughts on the transaction are as follows: Bottom line: We see this transaction in a positive light given that H is able to finally put its underlevered balance sheet to work, using its large pool of cash (we estimate over $1B in 2Q) to buy relatively new assets that the company can brand with one of its own flags and increase its footprint in markets where the company is under represented."
For more ratings news on Hyatt Hotels click here and for the rating history of Hyatt Hotels click here.
Shares of Hyatt Hotels closed at $39.27 yesterday, with a 52 week range of $34.19-$50.00.
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