DOW JONES NEWSWIRES 
 

Host Hotels & Resorts Inc.'s (HST) fourth-quarter net income dropped 59% on slumping margins as the company unexpectedly projected a loss for 2009.

The company also forecast 2009 capital spending at half of last year's level and said it would suspend its quarterly dividend.

Real-estate investment trusts have been slammed by the global recession as the housing market continues to drop because of tight credit, high foreclosure rates and rising unemployment. Residential REITs were hurt first, but commercial-property owners, including hotel owners like Host, have started to get hit as consumers cut back on travel and vacations in an effort to save money.

Host Hotels expects a loss this year of 13 cents to 26 cents a share and funds from operations of 79 cents to 91 cents a share, based on a 12% to 16% drop in revenue per available room. Analysts polled by Thomson Reuters expected earnings of 14 cents and FFO of $1.12.

Instead of a regular quarterly dividend, which the company had slashed by 75% in December to 5 cents a share, Host said it will declare a 30-cent to 35-cent dividend in the fourth quarter of 2009, payable either in cash or common stock.

It also forecast capital spending of about $340 million to $360 million for 2009, compared with $695 million last year.

Meanwhile, Host posted fourth-quarter net income of $122 million, or 19 cents a share, down from $294 million, or 54 cents a share, a year earlier. Both periods included 4-cent gains from hotel sales. Funds from operations, an important profitability measurement for REITs, fell to 53 cents from 75 cents.

Revenue decreased 8.7% to $1.65 billion.

Analysts surveyed by Thomson Reuters expected earnings of 16 cents a share, FFO of 47 cents a share and revenue of $1.61 billion.

Operating margin fell to 13.1% from 20.6%.

Revenue per available room for comparable hotels fell 9.4%, in line with the company's lowered November forecast.

Fitch Ratings in December lowered its outlook on Host and two other major U.S. lodging companies, Starwood Hotels & Resorts Worldwide (HOT) and Marriott International Inc. (MAR), saying revenue per available room had weakened significantly and that some markets that had been holding up, including New York City and some international locales, also have seen falling demand.

Host, which is simply a hotel owner and doesn't have timeshare or property-management businesses, likely will be more hurt than the others by the downturn, Fitch said.

Host Hotels' shares closed at $4.20 on Tuesday and haven't traded premarket. The stock is off 45% so far this year.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com