Good day and welcome to the Host Hotels & Resorts Incorporated Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'll turn the conference over to your host, to Ms. Gee Lingberg, Vice President, Investor Relations. Please go ahead, ma'am.

Thanks, Coleen. Good morning, everyone. Welcome to the Host Hotels & Resorts third quarter 2015 earnings call. Before we begin, I'd like to remind everyone that many of the comments made today are considered to be forward-looking statements under Federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed. And we're not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information such as FFO, adjusted EBITDA and comparable hotel results. You can find this information together with reconciliations to the most directly comparable GAAP information in today's earnings press release, in our 8-K filed with the SEC, and on our website at hosthotels.com. With me on the call today is Ed Walter, our President and Chief Executive Officer; and Greg Larson, our Chief Financial Officer. This morning, Ed will provide a brief overview of our second quarter results, and then will describe the current operating environment as well as the company's outlook for 2015. Greg will then provide greater detail on our second quarter performance by markets. Following their remarks, we will be available to respond to your questions. And now here is Ed.

Thanks, Gee. Good morning, everyone. Overall, we had a solid quarter and are pleased to be realizing some of the benefits of our proactive portfolio management strategy. While it's been an interesting last three months in the lodging space, we believe the reaction that's expressed through the equity markets has been over exaggerated, and we are intending to exploit that reaction both now and into 2016. But first, let's review our results for the quarter. Adjusted EBITDA was $323 million for the quarter and $1.66 billion year-to-date, reflecting a year-to-date increase of 1.5% as compared to the first nine months of 2014. Our adjusted FFO was $0.34 per share for the third quarter and $1.15 year-to-date, reflecting a 4.5% increase over the first nine months of last year. Both earnings measures beat consensus estimates for the quarter. These results were driven by several factors. We had expected weaker results because of the impact of the well-documented calendar changes, the late Labor Day holiday and earlier midweek timing of the Jewish holiday, which drove association business into the fourth quarter and generally limited group business overall in September. This proved correct, as our domestic group revenues looked flat for the quarter, as a roughly 2% increase in rate was offset by a 2% decline in demand. While group business at our international hotels was up significantly in terms of demand, gains were more than offset by a decline in rates, as our Rio Hotel had been able to charge very high rates during the World Cup in 2014. Overall, we saw group revenues decline by slightly more than 1% in the quarter compared to the same period last year. At our domestic hotels, we look to replace the deferred group demand with additional transient guests. We benefited from a 4.5% increase…

Thank you, Ed. I'll start by providing some additional details on our comparable hotel results by market. In the third quarter, our Seattle hotels increased RevPAR by approximately 10%, exceeding the Star upper upscale market results by 750 basis points. The outperformance was driven by an 11.6% average rate gain, as our managers were able to replace low-rated group business with higher-rated transient business during the summer season. In addition, our Westin Hotel experienced strong banquet and catering business from an international delegation from China, which resulted in food and beverage growth of 18%. Looking ahead to the fourth quarter, we note The W Seattle will be impacted by a rooms renovation starting in December, and will likely moderate the RevPAR growth for our hotels in Seattle. Our hotels in Los Angeles also had an impressive third quarter, with a RevPAR increase of 9%, driven by average rate growth of 7.6%. Both transient and group business were solid, with revenues for both up more than 7.5%. Food and beverage revenues were also strong and increased 11.5%. The strength in the Los Angeles market is expected to continue into the fourth quarter. RevPAR for our hotels in San Francisco grew more than 6% in the third quarter, beating the Star upper upscale RevPAR growth by 230 basis points. Strong transient business contributed to this outperformance, as demand increased 7% and average rate increased 5%, resulting in total revenue growth of 13%. Looking to the fourth quarter, consistent with our previous statements, our hotels in San Francisco are expected to perform only slightly above our portfolio, with one property beginning its renovation and construction at the Moscone Convention Center, which is expected to weigh on group business. RevPAR for hotels in San Diego market grew 5.6% this quarter, driven by strong transient…

[Operator Instructions] We will take our first question from Anthony Powell with Barclays.

Hi. Good morning. Ed, on the asset sales that you've identified, do you believe you'll be able to sell some of these noncore assets at prices or valuational tools that are above your current stock price -- stock trading multiple, rather?

It will obviously depend upon the asset. But yes, I think that when you look at where we are trading right now, I think a number of these sales could happen at or slightly below that cap rate or that EBITDA multiple.

Right. Thanks. And even beyond the $2 billion that you've identified as potential candidates for sale, what percentage of your portfolio do you believe is noncore? And could there be more sales even beyond 2016?

Certainly, the $2 billion captures the bulk of what we would look at as noncore. I'm sure that there are -- I'm sure there's some incremental assets that, as time evolves, we could add into a sales program from the standpoint of looking at noncore sales. I think, ultimately, this is going to come down to exactly how long does the sale markets remain attractive, and what are some of the options that -- other options that we may see for that capital? Over time, what we've always wanted to be doing, and we have been doing, is looking to sell those assets in our portfolio where we see somewhat weaker growth prospects, and then redeploy that capital into higher-yielding opportunities, which today, is buying our stock.

All right, that's it for me. Thank you.

We will take our next question from Smedes Rose from Citi.

Hi. Thanks. I wanted to come back to -- you mentioned that you expect some disruption from CapEx projects in 2016. Is this related to projects that are currently underway that are finishing up next year? Or are they new projects? Maybe you could just sort of talk about what's sort of the major -- besides the three hotels that were closed and are reopening, what are some of the major projects that are underway or that you contemplate starting in 2016?

Smedes, what I was referring to there was that there are -- first of all, we are still spending capital. We are still investing money in CapEx programs in 2016. The overall level, as we tried to make it clear, is going to be less than what we did in 2015 by a pretty material amount -- about 10% in maintenance CapEx and 20% overall. So the spending is clearly going down. What I was trying to highlight is that you'll still have some disruption from those individual projects just because we're obviously still doing them. The larger projects that we would be starting at the end of this year that might carry into next year would be our renovation of the Denver Tech Marriott and the Hyatt, the San Francisco Hyatt near the airport in Burlingame. Those are probably our two single biggest projects that start in the fourth quarter and carry into the beginning of next year. And then we have a series of other rooms' renovations. But again, I think the point I would make there is that, overall, we would expect that there will be less disruption in the comp portfolio next year than what we experienced this year.

Okay. And then just you mentioned maybe about $1 billion of proceeds for the first tranche of sales and maybe 50% of that would go out as kind of a specials. Could you also break out what you would think the debt associated with those asset sales is?

I think what we are referring to more there is the fact that as you sell those assets, you are also losing EBITDA. And so, in the context of thinking about our overall balance sheet management, as you, if you sell $1 billion worth of assets, you dip into $0.5 billion, assuming that's how the math worked out; then some chunk of those remaining proceeds would be deployed to repay debt to ensure that we weren't exceeding leverage levels that we would be targeting. And then the other portion of those proceeds would be available for other uses, which would, in today's world, be used to buy back stock. I think as we indicated in our comments and we've talked about for a long period of time, we're generally looking at maintaining our leverage in the long run between 2.5 and 3 times. Right now we are in the middle of that range. In the near-term, we would be comfortable, given our operating outlook, to allowing that to -- that leverage level to fly towards the high end of that range. But as you are selling assets, you are ultimately going to have to make some adjustments to your debt balances to ensure that you don't go well above that range.

Okay, thanks for the color.

We will now hear from Shaun Kelley with Bank of America.

Hey, good morning, guys. Two questions for me. The first one would be -- we've heard some of the operators, including some of the big brand companies, talk a little bit about softness in the month of October on the transient side. Clearly, you guys have a little bit more group exposure and more sort of unique exposure to individual markets, but I'm curious -- are you seeing anything that's similar to that across the portfolio or any callouts on that front?

I would say that we are seeing a little bit of that, too. You make the right point, that we have a portfolio that's oriented towards group. And as I indicated, our group pace for the fourth-quarter was very solid. It improved over the course of the third-quarter because of good strong bookings in the third-quarter. But I think we are seeing some transient weakness in the fourth-quarter too.

Got it. Thanks, Ed. And then my follow-up would be -- the other thing that I think some of the other REITs that have reported earlier have talked a little bit about is, supply growth in some of the urban and CBD markets. I'm curious, when you guys look market by market, particularly for next year, any markets that stand out to you on the supply front? And how is that sort of impacting either your asset sale program or just your general outlook for the fundamentals in those markets?

There's no doubt that supply is picking up. I think one of the themes, though, that as we've looked at that, is there's also no doubt that the bulk of the supply that you are seeing nationwide is really being driven by the upscale and midscale segments. Supply and upper upscale and luxury is still well below long-term historical averages. And that applies both on a nationwide basis as well as on what we would look at as sort of the top 17 markets where our portfolio is deployed. So there is a little bit of a bifurcation there in terms of where that supply hits. I think some of the markets that are -- that I think that are widely known to have a high level of supply, that would include Houston, New York, and Miami. Those are certainly -- as we look out, and our analysis tends to do a bit of a weighting in terms of when that supply is going to hit and assumes that it feathers in over a 12-month timeframe. But it's clear that those three markets are going to see strong levels of supply in 2016.

I mean, the flipside to that would be there are certain markets like Hawaii where there is virtually no supply.

Great. Thank you both.

We will move on to Harry Curtis with Nomura.

Good morning. So following up on Shaun's question about the softness in October, as you speak to your customers and your peers, what do you think it's related to? And do you think that it's the beginning of a longer-term downtrend?

Harry, I think it's really hard to say. We -- first off, we're sort of all getting the October softness light. We are seeing it kind of a real-time. You know, our group element of our business has held up fairly well through October, at least based on all indications we have. I would imagine that we are still seeing the same international travel weakness that we saw in the summer. I suspect that that is still carrying into October. My guess is that will become less impactful as we get later in the year, because I suspect international travel tends to ebb a bit as you get into the late part of the fourth-quarter. But I'm sure that is contributing to it to some degree.

Second question is, Ed, you have seen a number of cycles. You've seen a number of REIT positive and negative cycles as it pertains to attracting funds on the investor side. What I'm -- where I'm going with this is, typically when the Fed raise rates, REIT mutual funds lose assets. Yet it's interesting that lodging REITs tend to do well. What do you think, if the Fed does begin to move rates a bit, what is your expectation as far as Host's ability to price up and keep lifting its dividend?

Well, I think you are right in your assessment, first off, that when -- historically, what we've seen is that when the Fed starts to raise rates, it reflects the fact that there is an expectation that the economy -- or a realization that the economy is doing better. And so while oftentimes I think you've seen a bit of a falloff in terms of REIT valuations, or a lodging REIT valuations when that first starts to happen, folks start to also recognize that a good economy is good for lodging. To the extent that the Fed raises rates at the end of this year, the beginning of next year, and it's also because of the fact that the Fed is really beginning to believe that business investment and GDP growth in 2016 are going to be stronger than what we've seen in 2015 -- and I think that's the consensus outlook at this point, but I would also tell you that's been the consensus outlook the last couple of years at this point, is that the next year will be better. If that all happens, I think that bodes well for us and for the other -- the lodging industry in general. One of the things that will be important for 2016 performance is to see some recovery in -- or some strengthening in demand. We obviously know that supply levels will be somewhat elevated compared to this year, so we are going to need more demand in order to accommodate that. You know, we are certainly seeing, as I mentioned in my comments, really strong bookings for next year, well better -- far better than where we stood at this time last year. And we are seeing -- a lot of our markets are really showing good, solid, advanced group bookings. So I think if we get -- if the Fed is raising rates because the economy is better, that's clearly a good sign. What I would hope with that too is that we would not only, this may be wishing for too much, it would be good if the currency didn't appreciate considerably compared to at least the euro and potentially the yen. Because I think the area where we've been hurt a bit in international travel this year has been a fall-off in travel from Japan and from Continental Europe. And the fact -- if the currencies would remain generally flat year-over-year, I think that would be helpful for international demand, which is something that's been important in this cycle. And it would be good to see that come back at a stronger level in 2016.

Yes, I think the only thing I would add, Ed, I agree with you, right, because of our strong group booking pace and because of some of the assets that you talked about that are closed this year that will reopen next year, it would be great to have very, as Ed mentioned, strong EBITDA growth next year, which obviously means our taxable income would be higher, which means our dividend would be higher. But in addition to all of that, as Ed mentioned in his comments, as we sell assets, obviously approximately 50% of the proceeds from those asset sales will also go towards the dividend. So for all those reasons, I think 2016 looks good from a dividend front.

Thank you.

Thank you.

Next question will come from Ryan Meliker with Canaccord Genuity.

Hey, good morning, guys. I guess just the first question I was hoping you guys could kind of give some more color on, and you gave some on the call already, is -- as we're looking out to 2016, it might be helpful to get a good understanding of what the renovation disruption you've put into guidance for 2015 was, so we know that that's going to be added back. And then also what you think the EBITDA impact from your net acquisitions and dispositions that you guys have already closed on. I'm not asking for any forward guidance, just what the impact is in your 2015 guidance from those things, so we can make sure that we adjust accordingly.

Well, I think we tried to explain that in our comments, that if you look -- the assets that we owned for a portion of this year, which we sold in 2015, generated about $20 million worth of EBITDA in 2015. And then we had a -- and then when you -- we also obviously owned The Phoenician for a part of this year, which generated, call it, $6 million or so of EBITDA for this year so far. So, when we look at what -- when you take that $20 million out and you add in the full benefit of The Phoenician in 2016, we are sort of expecting The Phoenician will be in that $30 million to $31 million level next year. So that's where we get basically a lift of $3 million to $5 million on a year-over-year basis for comparing the benefit of The Phoenician versus the sales of the assets that have gone out the door this year.

That's helpful.

Okay. And then on the redevelopment side, again, we had $4 million -- we took a $4 million hit from those three assets and we expect to see a $20 million to $22 million lift from that, those are probably the most significant year-over-year drivers. We obviously know that we are spending less on CapEx next year. We know that the number of the investments we made, especially in the first half of this year, were disruptive. Without going through the whole budget process, it's hard to understand what that incremental lift will be. So, unfortunately, we'll have more detail on that as we get into our call in February.

No, that's really helpful. Thanks for giving a little bit more detail on that. And then just the second question I was hoping you guys could answer for me was -- year-to-date, your suburban assets have been kind of your strongest performers. I know that's not always the case, and obviously, as we happen to go through the cycle, things change. But I guess the question I would ask is, is now the right time to be selling those assets, given they are kind of driving your RevPAR growth more than any other segment? And with occupancy levels where they are across the industry, you would tend to think that we'll see more compression demand into a lot of those suburban markets.

I think that's a very good question, part of our assessment there. And so we think about that in the context of the assets that we are selling. I think the flipside of that is there's no better time to sell an asset than when its performance is extremely strong. And so I think partly what you are seeing here is our assessment that, while the assets are performing well now, probably will -- should perform well again next year. As we think about where we want to be invested in the long run, at least for those assets that we would end up selling, those would be the ones that we would be comfortable in letting go, even though, in the near-term, their performance has been stronger.

Okay, that's it for me. Thanks a lot, guys.

Thanks.

Rich Hightower with Evercore ISI has our next question.

Good morning, guys. So I actually want to follow up on Shaun's earlier question about supply growth. So, while it is true that midscale and upscale represent most of the growth that's going on in a lot of these markets, I guess my question is, would you say that some of those hotels are actually competitive with urban upper upscale properties such as those that Host owns? Because I think LaSalle and Pebblebrook sort of made that point on their calls, where they said some of the demand that might be -- might have previously gone into those types of hotels is actually gravitating towards either the limited service category or even some of the suburban markets. So, I'm wondering if you are noticing the same shift, or if you have a different perspective?

Shaun, I mean...

It's Rich.

Rich, I think you are right in that assessment that, first of all, supply is supply. And whether it comes in the midscale or upscale segment or in other segments, it's going to have an impact on the market. So at the end of the day, there still is an impact from that supply. But I think part of our point, though, is that there still is a distinction between the different segments. The supply at the upper price points is not as high. Another differentiation is, from a standpoint of the type of customer, those upscale hotels are really not in a position -- or midscale hotels are not really in a position to be able to handle the group business that our -- the bulk of our portfolio is able to accommodate. So, I would agree that I am concerned about supply, whether it's in the higher price points or in the mid-price points. But I do think that mid-price points supply will be a bit less impactful in our portfolio, in part because of our orientation towards group.

Okay. That's helpful, Ed. Thanks. And then my second question has to do with the group pace number that you mentioned for 2016. I think it's held steady at plus 6% for maybe the past quarter or so. It's a solid number. Is there any reason, though, that it maybe isn't accelerating at this point? Or is it just too early to know or to have the data?

I'm actually fairly encouraged that it's stayed as constant as it has. Because I see -- the reality is, if you think about that, is that right now if you can tell me that we can do better than 6% group revenues in 2015, I would be pleased, or 2016, I would be pleased. Typically, what we have found is some other phases of this particular cycle is that when we are -- when we sort of had very strong advanced bookings, as you get closer to the actual period of time when the numbers are real, you tend to see that because so much space has been sold, you start to have less available to sell, and consequently that sort of the improvement over the prior year in group tends to decline a bit. So the fact that we've been consistently strong for 2016 throughout this year, really I view as a fairly favorable -- as a good thing. It's a good thing. You know, I would offer up too is that it's not just 2016 that looks good; we've got pretty good advanced bookings for 2017 too. So that trend is going to continue past this year.

All right, great. Thank you.

Moving on to Steven Kent with Goldman Sachs.

Hi. Good morning. Just a couple questions. You noted your third-quarter trends coming in better than Street expectations. But then it didn't really look like you flowed it through for the full-year. I just wanted to understand that a little bit more what I'm missing there. And then you mentioned your stock is attractive, but why not use full-service asset sale proceeds and increase presence maybe in the select service market? Is that something you'd think about maybe longer-term, as select service has evolved and seems to be doing -- seems to be showing good returns, taking share, et cetera?

You know, Steve, it's a good -- let me deal with the second one -- question first. It's a good question about whether we should be orienting more as a select service. And if you look at what we've acquired over the course of the last couple of years, we have acquired some assets in that segment as a business. Given what I just said about supply, I probably -- and the fact that the bulk of the supply that we are seeing is directly targeted at the select service segment, I'd probably be reluctant right now, if we were in an investment mode, I would probably be reluctant to deploy a lot of capital into that space, because I think I would be concerned about the -- just the high degree of supply that's coming into that sector. And what we've traditionally seen over time is that new select service competes incredibly effectively with older select service. And so is the fact that you are seeing the increase in supply being so squarely centered in those segments would concern me in terms of accelerating our investments in select service assets at this point. Now thinking longer-term, as we think about where the Company would be in four to six to seven years, I would certainly expect that select service would be a bigger part of our portfolio looking out. But this is probably not quite the right time to be a buyer of those assets if we were in a buying mode. As it relates to the Q3/Q4 comparison, I think some of what you are seeing on the EBITDA side is really related to some improvements, as Greg highlighted in his comments, some improvements in Europe. And then you are also seeing on compensation, the low stock price at the end of the quarter, when run through the appropriate models for calculating stock compensation expense. Really, what we hope, at least, is move some compensation expense out of the third quarter and into the fourth quarter. We'll obviously see how that plays out at the end of the year, but I'm sure you could all guess how we are rooting. But that I think there was some deltas that happened as a result of that. Greg, what do you want to add to that?

Obviously, in the fourth quarter, October certainly will be one of the better quarters or better months of the year on one hand. On the other hand, certainly, I think our hotel forecast for October today is lower than what it was a quarter ago. And I'd say the same thing about our fourth quarter in general. Our fourth quarter in general rates to be pretty decent. But as we sit here today, I think our forecast as a hotel forecast for the fourth quarter is lower today than what it was a quarter ago.

Thanks.

Our next question will come from Joseph Greff with JPMorgan. Joseph, please check your mute function.

Good morning, guys. Did you actually talk about what October RevPAR growth was?

No, we did not, Joe. I don't -- we just don't have a number quite yet. But it's certainly been running better than what we've seen for the rest of the year, but I don't have an updated number yet for the month.

You gave us a bunch of things to think about in terms of asset sales and capital return. How do you feel about other types of corporate actions either separating the portfolios, making them smaller and then affording you potentially longer-term down the road, larger percentage growth opportunities? How do you view those types of opportunities?

You know, I think we are constantly evaluating a variety of different options for the portfolio. Certainly, one of the questions we've gotten before is about whether we could sell some of these assets in a portfolio sale context, for instance. And that's something we've looked at throughout the year, and the last couple of years, frankly. And we'll continue to look at. So far, the response we've gotten from the market has suggested that the tact we're taking, which is individual asset sales, is probably the most productive one in the long-term. But to the extent that the opportunity presents itself to sell assets in bulk, similar to what we did in Europe, albeit that transaction took almost a year to complete. Then we would try to take advantage of that. You know, as you look at other types of transactions, I know that there's been a lot of discussion about spins and things like that in the market over the course of the last couple of years. I think in the current environment, when the entire -- all of the lodging REIT stocks are trading at a significant discount to NAV, it's hard to imagine that a spin is necessarily going to close that gap as effectively as asset sales, because you are still going to -- after the spin, you are still going to have two entities that would, are going to trade, while you may see an improvement in multiple in general from having taken the step, I don't know that you are necessarily going to radically have those companies trade at a different multiple and a different relationship to NAV than the rest of the industry. So, all this is evolving. We frankly have only been in this sort of situation where the stocks are trading at this big of a discount to NAV for sort of half of this year. We are trying to take advantage of that as best as we can. We're trying to take advantage of the balance sheet strength that we have to deploy that right now to benefit from that. And we'll continue to evaluate all sorts of options as we work our way through 2016 and 2017.

Thank you.

Our next question will come from Chris Woronka with Deutsche Bank.

Good morning, guys. I wanted to -- Ed, I wanted to ask you kind of a theoretical question. If there ends up being some kind of M&A in this space, maybe involving some of your brand companies that you do business with, what do you think the broader implications might be? And not really getting specific, but historically, what do you think that could mean for -- do they go for more leverage with you guys? Can you guys renegotiate some things? Just high-level thoughts. Thanks.

It's hard to deal with that question in the abstract, just because you need to know -- you ultimately need to know who is combining or who is buying who. So it's sort of tricky to say. I mean, our contract rights flow out of individual contracts or corporate level agreements with Starwood and Marriott. And so I don't know that those particular corporate level agreements are necessarily -- in fact, I'm fairly confident that they are not specifically affected by any transactions that might happen at the corporate level by any of those companies. So ultimately, I think our valuation of whatever might occur, whatever combinations would occur or whatever change in ownership would occur, are going to be based upon who's in charge and what their plans are for the brands and the properties that we own.

Okay. That's good color. And then just, you know, you guys have, I think you've sold some assets pretty well, actually, in this cycle. But I guess there is also -- some people ask if there's an implication if smart guys are selling assets. Does it imply that the cycle is coming to an end and at the same time you buy back stocks? How do you kind of jive all that from a very high level perspective?

Well, first of all, we don't think the cycle is coming to an end. We see solid growth in 2016. And as we look out past that point in time, assuming that economic growth continues to be at least at the levels that we've seen lately, we don't see why the cycle wouldn't be continuing past that. You know, I think there's a lot of different reasons to sell assets. In our case, it's not necessarily because we think we are timing it at the top. It's really driven more by an approach to how we manage our portfolio and a long-term perspective to reduce exposure to certain markets, and then, over time, increase it to others, is the way of managing the portfolio. I would envision that other than in those periods of time that are shortly after a decline, where we probably would be -- wouldn't be comfortable that we were getting fair value for our hotels, we tend to be a seller throughout a significant chunk of the cycle. So I don't know that I would read a lot into that other than this is just a continuation of a program that we've been working on for awhile.

You know, and I think this is, obviously, Chris, as you know, this is sort of a unique situation right now where we can sell assets that are sort of in the bottom sort of, call it, bottom quartile of our portfolio, assets that maybe have slower growth rates, higher CapEx issues. But we can sell those assets at sort of lower cap rates than where we trade today. Right? And then take those proceeds and either put it out in the form of a dividend or buy back our stock at, which today, is close to an 8% cap rate.

And then I think lastly in terms of the notion of buying stock back at this point in time, I mean, that's something that we obviously give a lot of thought to. But I think we are comfortable, especially at these levels, that buying the stock is a good investment. And I think we are being thoughtful about how we pursue that, because nobody knows exactly what the future holds. But at this point in time, as we are sort of -- in effect, we are shrinking the Company with some of these sales. And shrinking and buying back stock is a way to help sort of get the benefit of that shrinkage.

Okay, very good. Thanks, guys.

Jeff Donnelly with Wells Fargo has our next question.

Good morning, guys. Maybe just to comment that a little differently on share repurchases, I mean, how do you think about balancing the timing of your share repurchases, given your outlook on the direction of real estate values rather than, say, RevPAR at this point in the cycle? And is there a specific maybe discount to NAV that you want to see at a minimum when you make purchases? I'm just curious how you're thinking about that.

I don't know that we've gotten quite that formulaic about it, Jeff. It's sort of -- we've been in a good position, I guess, in terms of how we thought about it since we've initiated the programs. It's been relatively easy to be comfortable that buying our stock was the best alternative for the capital that we had or that we would be generating. Now, if you go back to what we would've talked about in April, when our stock price was higher and we spoke about this, our assessment at that point in time was as we generated capital from asset sales or from other sources, we would look at buying -- the returns from buying the stock relative to the returns from investing in other things, whether it was new assets or whether it would be ROI investments. And so as we look to a point in time that I hope happens sooner or later, which is that the gap closes between NAV and our stock -- and by the way, I'm hoping that happens because our stock is going up, of course, as that gap starts to close, then we will continue to evaluate what are those best options for the capital that we are generating if, at that future time, you could see an acceleration in ROI investments if those proved to be more attractive. But if, on the other hand, we are at a point in the cycle where we don't think it makes sense to make new investments or new acquisitions, then you would still be buying the stock back at that environment, even though the returns might not be as attractive as they are today.

And maybe to circle back in your comment about portfolio sales versus individual asset sales, I think in the case of another one of your peers who recently structured a transaction to sell itself, I think people were initially a little disappointed that pricing wasn't as robust as they had hoped. Is that maybe an indicator maybe of what you are referring to is that the market is a little bit stronger for single asset sales than there are portfolio sales? And that's why you feel you have more success going that route? I think that's a good insight. It's just -- there's a lot of activity on the individual basis. But as you start to move up in bulk, the number of players is thinner. And I don't -- I haven't had an opportunity to read everything that Strategic published. But while I think they had a high level of interest, it seems like I heard that at the end of the day, there was really -- there were only a few serious bidders. And so that is somewhat of an indication of what you are describing.

And what's your thinking on refocusing maybe more exclusively on the US market? I know you are pulling back in Asia and you've shrunk in some other markets. But there's been some success in doing that, I think, for other companies who have sort of retrenched into the US and maybe cut their overhead a little bit. How do you weigh that?

Well, I think in the near-term, that's exactly what we're doing. I mean, we're obviously going to cut all the overhead that was in Asia-Pacific region. We only have the international offices in Europe -- are the only ones that would be left sort of as we get into early next year. In Europe, I think we've got a number of opportunities to enhance the value of the remaining 10 hotels that we have. And I think the decision has been made at this stage, is to continue to work that portfolio and then watch for what opportunities might develop in the long run. But certainly at this point in time, as we deal with worldwide capital flows, which we are making investing in Asia very difficult to do, at least on our parameters, the best markets to focus on right now are in the US.

And then just last question, I don't want to leave Greg out. Greg, you referenced the potential for special dividends. I might have missed it. But are you able to give us just some more specifics on the potential timing of distributions, or perhaps an order of magnitude relative to, say, your current share price or current distribution, just to give folks a better sense of how you're thinking about that?

Sure. So, as Ed mentioned, right, we are currently marketing $1 billion worth of assets. Certainly, I'm not sure if all of those assets will actually complete. But as we sell those assets and complete those sales in 2016, certainly that will increase our taxable income. And so, look it, I think the way we look at it is, at a minimum, as Ed mentioned, approximately half of the proceeds will go out in the form of a dividend. And so at a minimum, we could just put it out in a special dividend next year, which would be in the fourth quarter; or to minimize that special dividend, what you could see us do at some point next year is raise our standard dividend. And so, effectively, we've have the same dividend for the year out in 2016. But you could see us stair-step, increase our standard dividend, which would effectively reduce that special dividend at the end of 2016.

Thank you.

Look, it's too early to know that, but I think at the end of the day, you could do the math, Jeff, right? If we sell X number of assets and if 50% of the proceeds go into the form of a dividend, divide that by our share count, you can see what we are talking about in the form of an extra dividend.

Okay. Thanks, guys.

That does conclude today's question-and-answer session. Mr. Ed Walter, at this time, I will turn the conference back over to you for any additional or closing remarks.

Thank you all for joining us on the call today. We appreciate the opportunity to discuss our third-quarter results and outlook. We look forward to talking with you in February to discuss both our year-end 2015 results and provide much more detailed insights into 2016. Have a great day, everybody.