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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 001-14625 (Host Hotels & Resorts, Inc.)

0-25087 (Host Hotels & Resorts, L.P.)

 

HOST HOTELS & RESORTS, INC.

HOST HOTELS & RESORTS, L.P.

(Exact name of registrant as specified in its charter)

 

 

Maryland (Host Hotels & Resorts, Inc.)

Delaware (Host Hotels & Resorts, L.P.)

(State or Other Jurisdiction of

Incorporation or Organization)

 

53-0085950

52-2095412

(I.R.S. Employer

Identification No.)

 

 

 

4747 Bethesda Ave, Suite 1300

Bethesda, Maryland

(Address of Principal Executive Offices)

 

20814

(Zip Code)

(240) 744-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

 

Title of each class

 

Trading Symbol

 

Name of Each Exchange on Which Registered

Host Hotels & Resorts, Inc.

 

Common Stock, $.01 par value

 

HST

 

The Nasdaq Stock Market LLC

Host Hotels & Resorts, L.P.

 

None

 

None

 

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Host Hotels & Resorts, Inc.

 

Yes  

  

    

 

No  

  

Host Hotels & Resorts, L.P.

 

Yes  

  

    

 

No  

  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Host Hotels & Resorts, Inc.

 

Yes  

  

    

 

No  

  

Host Hotels & Resorts, L.P.

 

Yes  

  

    

 

No  

  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Host Hotels & Resorts, Inc.

 

Large accelerated filer    

Accelerated filer    

Non-accelerated filer    

Smaller reporting company    

Emerging growth company    

 

 

 

Host Hotels & Resorts, L.P.

 

Large accelerated filer    

Accelerated filer    

Non-accelerated filer    

Smaller reporting company    

Emerging growth company    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Host Hotels & Resorts, Inc.

 

Yes  

  

    

 

No  

  

Host Hotels & Resorts, L.P.

 

Yes  

  

    

 

No  

  

As of May 3, 2021, there were 706,086,096 shares of Host Hotels & Resorts, Inc.’s common stock, $.01 par value per share, outstanding.

 

 

 


 

 

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. Unless stated otherwise or the context requires otherwise, references to “Host Inc.” mean Host Hotels & Resorts, Inc., a Maryland corporation, and references to “Host L.P.” mean Host Hotels & Resorts, L.P., a Delaware limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between Host Inc. and Host L.P. We use the terms “we,” “our” or “the company” to refer to Host Inc. and Host L.P. together, unless the context indicates otherwise.

Host Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). Host Inc. owns properties and conducts operations through Host L.P., of which Host Inc. is the sole general partner and of which it holds approximately 99% of the partnership interests (“OP units”). The remaining OP units are owned by various unaffiliated limited partners. As the sole general partner of Host L.P., Host Inc. has the exclusive and complete responsibility for Host L.P.’s day-to-day management and control. Management operates Host Inc. and Host L.P. as one enterprise. The management of Host Inc. consists of the same persons who direct the management of Host L.P. As general partner with control of Host L.P., Host Inc. consolidates Host L.P. for financial reporting purposes, and Host Inc. does not have significant assets other than its investment in Host L.P. Therefore, the assets and liabilities of Host Inc. and Host L.P. are substantially the same on their respective condensed consolidated financial statements and the disclosures of Host Inc. and Host L.P. also are substantially similar. For these reasons, we believe that the combination into a single report of the quarterly reports on Form 10-Q of Host Inc. and Host L.P. results in benefits to management and investors.

The substantive difference between Host Inc.’s and Host L.P.’s filings is the fact that Host Inc. is a REIT with public stock, while Host L.P. is a partnership with no publicly traded equity. In the condensed consolidated financial statements, this difference primarily is reflected in the equity (or partners’ capital for Host L.P.) section of the consolidated balance sheets and in the consolidated statements of equity (or partners’ capital for Host L.P.). Apart from the different equity treatment, the condensed consolidated financial statements of Host Inc. and Host L.P. are nearly identical.

This combined Form 10-Q for Host Inc. and Host L.P. includes, for each entity, separate interim financial statements (but combined footnotes), separate reports on disclosure controls and procedures and internal control over financial reporting and separate CEO/CFO certifications. In addition, with respect to any other financial and non-financial disclosure items required by Form 10-Q, any material differences between Host Inc. and Host L.P. are discussed separately herein. For a more detailed discussion of the substantive differences between Host Inc. and Host L.P. and why we believe the combined filing results in benefits to investors, see the discussion in the combined Annual Report on Form 10-K for the year ended December 31, 2020 under the heading “Explanatory Note.”

 

 

 

i


 

 

HOST HOTELS & RESORTS, INC. AND HOST HOTELS & RESORTS, L.P.

INDEX

PART I. FINANCIAL INFORMATION

 

 

  

 

Page No.

Item 1.

  

Financial Statements for Host Hotels & Resorts, Inc.:

 

 

 

 

 

 

  

Condensed Consolidated Balance Sheets -

March 31, 2021 (unaudited) and December 31, 2020

1

 

 

 

 

 

  

Condensed Consolidated Statements of Operations (unaudited) -

Quarter ended March 31, 2021 and 2020

2

 

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) -

Quarter ended March 31, 2021 and 2020

3

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows (unaudited) -

Quarter ended March 31, 2021 and 2020

4

 

 

 

 

 

  

Financial Statements for Host Hotels & Resorts, L.P.:

 

 

 

 

 

 

  

Condensed Consolidated Balance Sheets -

March 31, 2021 (unaudited) and December 31, 2020

6

 

 

 

 

 

  

Condensed Consolidated Statements of Operations (unaudited) -

Quarter ended March 31, 2021 and 2020

7

 

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) -

Quarter ended March 31, 2021 and 2020

8

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows (unaudited) -

Quarter ended March 31, 2021 and 2020

9

 

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements (unaudited)

11

 

 

 

 

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

39

 

 

 

 

Item 4.

  

Controls and Procedures

40

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

41

 

 

 

 

Item 6.

  

Exhibits

42

 

 

 

ii


 

 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2021 and December 31, 2020

(in millions, except share and per share amounts)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

Property and equipment, net

 

$

9,506

 

 

$

9,416

 

Right-of-use assets

 

 

596

 

 

 

597

 

Due from managers

 

 

26

 

 

 

22

 

Advances to and investments in affiliates

 

 

34

 

 

 

21

 

Furniture, fixtures and equipment replacement fund

 

 

131

 

 

 

139

 

Other

 

 

420

 

 

 

360

 

Cash and cash equivalents

 

 

2,008

 

 

 

2,335

 

Total assets

 

$

12,721

 

 

$

12,890

 

 

 

 

 

 

 

 

 

 

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY

 

Debt

 

 

 

 

 

 

 

 

Senior notes

 

$

3,066

 

 

$

3,065

 

Credit facility, including term loans of $996 and $997, respectively

 

 

2,469

 

 

 

2,471

 

Other debt

 

 

5

 

 

 

5

 

Total debt

 

 

5,540

 

 

 

5,541

 

Lease liabilities

 

 

609

 

 

 

610

 

Accounts payable and accrued expenses

 

 

76

 

 

 

71

 

Due to managers

 

 

56

 

 

 

64

 

Other

 

 

166

 

 

 

170

 

Total liabilities

 

 

6,447

 

 

 

6,456

 

 

 

 

 

 

 

 

 

 

Redeemable non-controlling interests - Host Hotels & Resorts, L.P.

 

 

124

 

 

 

108

 

 

 

 

 

 

 

 

 

 

Host Hotels & Resorts, Inc. stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01, 1,050 million shares authorized,

     706.1 million shares and 705.4 million shares issued and

     outstanding, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

7,547

 

 

 

7,568

 

Accumulated other comprehensive loss

 

 

(77

)

 

 

(74

)

Deficit

 

 

(1,332

)

 

 

(1,180

)

Total equity of Host Hotels & Resorts, Inc. stockholders

 

 

6,145

 

 

 

6,321

 

Non-redeemable non-controlling interests—other consolidated partnerships

 

 

5

 

 

 

5

 

Total equity

 

 

6,150

 

 

 

6,326

 

Total liabilities, non-controlling interests and equity

 

$

12,721

 

 

$

12,890

 

See notes to condensed consolidated financial statements.

 

 

 

1


 

 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter ended March 31, 2021 and 2020

(unaudited, in millions, except per share amounts)

 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

REVENUES

 

 

 

 

 

 

 

 

Rooms

 

$

257

 

 

$

626

 

Food and beverage

 

 

77

 

 

 

330

 

Other

 

 

65

 

 

 

96

 

Total revenues

 

 

399

 

 

 

1,052

 

EXPENSES

 

 

 

 

 

 

 

 

Rooms

 

 

65

 

 

 

187

 

Food and beverage

 

 

62

 

 

 

245

 

Other departmental and support expenses

 

 

160

 

 

 

319

 

Management fees

 

 

11

 

 

 

30

 

Other property-level expenses

 

 

78

 

 

 

93

 

Depreciation and amortization

 

 

165

 

 

 

164

 

Corporate and other expenses

 

 

24

 

 

 

25

 

Total operating costs and expenses

 

 

565

 

 

 

1,063

 

OPERATING LOSS

 

 

(166

)

 

 

(11

)

Interest income

 

 

1

 

 

 

6

 

Interest expense

 

 

(42

)

 

 

(37

)

Other losses

 

 

(1

)

 

 

(2

)

Equity in earnings of affiliates

 

 

9

 

 

 

4

 

LOSS BEFORE INCOME TAXES

 

 

(199

)

 

 

(40

)

Benefit for income taxes

 

 

46

 

 

 

37

 

NET LOSS

 

 

(153

)

 

 

(3

)

Less: Net loss attributable to non-controlling interests

 

 

1

 

 

 

 

NET LOSS ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.

 

$

(152

)

 

$

(3

)

Basic loss per common share

 

$

(.22

)

 

$

 

Diluted loss per common share

 

$

(.22

)

 

$

 

See notes to condensed consolidated financial statements.

 

 

2


 

 

 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter ended March 31, 2021 and 2020

(unaudited, in millions)

 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

NET LOSS

 

$

(153

)

 

$

(3

)

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

 

 

 

 

 

 

 

 

Foreign currency translation and other comprehensive income of unconsolidated affiliates

 

 

(2

)

 

 

(19

)

Change in fair value of derivative instruments

 

 

(1

)

 

 

3

 

OTHER COMPREHENSIVE LOSS, NET OF TAX

 

 

(3

)

 

 

(16

)

COMPREHENSIVE LOSS

 

 

(156

)

 

 

(19

)

Less: Comprehensive loss attributable to non-controlling interests

 

 

1

 

 

 

 

COMPREHENSIVE LOSS ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.

 

$

(155

)

 

$

(19

)

See notes to condensed consolidated financial statements.

 

 

 

3


 

 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter ended March 31, 2021 and 2020

(unaudited, in millions)

 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

 

$

(153

)

 

$

(3

)

Adjustments to reconcile net loss to net cash provided by (used in) operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

165

 

 

 

164

 

Amortization of finance costs, discounts and premiums, net

 

 

2

 

 

 

2

 

Stock compensation expense

 

 

4

 

 

 

3

 

Other losses

 

 

1

 

 

 

2

 

Equity in earnings of affiliates

 

 

(9

)

 

 

(4

)

Change in due from/to managers

 

 

(13

)

 

 

22

 

Changes in other assets

 

 

(39

)

 

 

(18

)

Changes in other liabilities

 

 

(7

)

 

 

(11

)

Net cash provided by (used in) operating activities

 

 

(49

)

 

 

157

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from sales of assets, net

 

 

3

 

 

 

1

 

Proceeds from loan receivable

 

 

9

 

 

 

28

 

Advances to and investments in affiliates

 

 

(5

)

 

 

(1

)

Acquisitions

 

 

(189

)

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

Renewals and replacements

 

 

(32

)

 

 

(55

)

Return on investment

 

 

(61

)

 

 

(76

)

Net cash used in investing activities

 

 

(275

)

 

 

(103

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Financing costs

 

 

(3

)

 

 

 

Draws on credit facility

 

 

 

 

 

1,500

 

Common stock repurchase

 

 

 

 

 

(147

)

Dividends on common stock

 

 

 

 

 

(179

)

Distributions and payments to non-controlling interests

 

 

 

 

 

(2

)

Other financing activities

 

 

(8

)

 

 

(6

)

Net cash provided by (used in) financing activities

 

 

(11

)

 

 

1,166

 

Effects of exchange rate changes on cash held

 

 

 

 

 

(8

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND

     RESTRICTED CASH

 

 

(335

)

 

 

1,212

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING

     OF PERIOD

 

 

2,476

 

 

 

1,750

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

2,141

 

 

$

2,962

 

 

See notes to condensed consolidated financial statements.

 

 

4


 

 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

Quarter ended March 31, 2021 and 2020

(unaudited)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the amount shown in the statements of cash flows:

  

 

March 31, 2021

 

 

 

 

March 31, 2020

 

Cash and cash equivalents

 

$

2,008

 

 

 

 

$

2,796

 

Restricted cash (included in other assets)

 

 

2

 

 

 

 

 

1

 

Cash included in furniture, fixtures and equipment replacement fund

 

 

131

 

 

 

 

 

165

 

Total cash and cash equivalents and restricted cash shown in the statements of cash flows

 

$

2,141

 

 

 

 

$

2,962

 

 The following table presents cash paid for the following: 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

Total interest paid

 

$

35

 

 

$

27

 

Income taxes paid

 

$

 

 

$

1

 

 

See notes to condensed consolidated financial statements.

 

 

 

5


 

 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2021 and December 31, 2020

(in millions)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

Property and equipment, net

 

$

9,506

 

 

$

9,416

 

Right-of-use assets

 

 

596

 

 

 

597

 

Due from managers

 

 

26

 

 

 

22

 

Advances to and investments in affiliates

 

 

34

 

 

 

21

 

Furniture, fixtures and equipment replacement fund

 

 

131

 

 

 

139

 

Other

 

 

420

 

 

 

360

 

Cash and cash equivalents

 

 

2,008

 

 

 

2,335

 

Total assets

 

$

12,721

 

 

$

12,890

 

 

 

 

 

 

 

 

 

 

LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL

 

Debt

 

 

 

 

 

 

 

 

Senior notes

 

$

3,066

 

 

$

3,065

 

Credit facility, including term loans of $996 and $997, respectively

 

 

2,469

 

 

 

2,471

 

Other debt

 

 

5

 

 

 

5

 

Total debt

 

 

5,540

 

 

 

5,541

 

Lease liabilities

 

 

609

 

 

 

610

 

Accounts payable and accrued expenses

 

 

76

 

 

 

71

 

Due to managers

 

 

56

 

 

 

64

 

Other

 

 

166

 

 

 

170

 

Total liabilities

 

 

6,447

 

 

 

6,456

 

 

 

 

 

 

 

 

 

 

Limited partnership interests of third parties

 

 

124

 

 

 

108

 

 

 

 

 

 

 

 

 

 

Host Hotels & Resorts, L.P. capital:

 

 

 

 

 

 

 

 

General partner

 

 

1

 

 

 

1

 

Limited partner

 

 

6,221

 

 

 

6,394

 

Accumulated other comprehensive loss

 

 

(77

)

 

 

(74

)

Total Host Hotels & Resorts, L.P. capital

 

 

6,145

 

 

 

6,321

 

Non-controlling interests—consolidated partnerships

 

 

5

 

 

 

5

 

Total capital

 

 

6,150

 

 

 

6,326

 

Total liabilities, limited partnership interests of third parties and

     capital

 

$

12,721

 

 

$

12,890

 

See notes to condensed consolidated financial statements.

 

 

 

6


 

 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter ended March 31, 2021 and 2020

(unaudited, in millions, except per unit amounts)

 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

REVENUES

 

 

 

 

 

 

 

 

Rooms

 

$

257

 

 

$

626

 

Food and beverage

 

 

77

 

 

 

330

 

Other

 

 

65

 

 

 

96

 

Total revenues

 

 

399

 

 

 

1,052

 

EXPENSES

 

 

 

 

 

 

 

 

Rooms

 

 

65

 

 

 

187

 

Food and beverage

 

 

62

 

 

 

245

 

Other departmental and support expenses

 

 

160

 

 

 

319

 

Management fees

 

 

11

 

 

 

30

 

Other property-level expenses

 

 

78

 

 

 

93

 

Depreciation and amortization

 

 

165

 

 

 

164

 

Corporate and other expenses

 

 

24

 

 

 

25

 

Total operating costs and expenses

 

 

565

 

 

 

1,063

 

OPERATING LOSS

 

 

(166

)

 

 

(11

)

Interest income

 

 

1

 

 

 

6

 

Interest expense

 

 

(42

)

 

 

(37

)

Other losses

 

 

(1

)

 

 

(2

)

Equity in earnings of affiliates

 

 

9

 

 

 

4

 

LOSS BEFORE INCOME TAXES

 

 

(199

)

 

 

(40

)

Benefit for income taxes

 

 

46

 

 

 

37

 

NET LOSS

 

 

(153

)

 

 

(3

)

Less: Net loss attributable to non-controlling interests

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.

 

$

(153

)

 

$

(3

)

Basic loss per common unit

 

$

(.22

)

 

$

 

Diluted loss per common unit

 

$

(.22

)

 

$

 

See notes to condensed consolidated financial statements.

7


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter ended March 31, 2021 and 2020

(unaudited, in millions)

 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

NET LOSS

 

$

(153

)

 

$

(3

)

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

 

 

 

 

 

 

 

 

Foreign currency translation and other comprehensive income of unconsolidated affiliates

 

 

(2

)

 

 

(19

)

Change in fair value of derivative instruments

 

 

(1

)

 

 

3

 

OTHER COMPREHENSIVE LOSS, NET OF TAX

 

 

(3

)

 

 

(16

)

COMPREHENSIVE LOSS

 

 

(156

)

 

 

(19

)

Less: Comprehensive loss attributable to non-controlling interests

 

 

 

 

 

 

COMPREHENSIVE LOSS ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.

 

$

(156

)

 

$

(19

)

See notes to condensed consolidated financial statements.

8


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter ended March 31, 2021 and 2020

(unaudited, in millions)

 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

 

$

(153

)

 

$

(3

)

Adjustments to reconcile net loss to net cash provided by (used in) operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

165

 

 

 

164

 

Amortization of finance costs, discounts and premiums, net

 

 

2

 

 

 

2

 

Stock compensation expense

 

 

4

 

 

 

3

 

Other losses

 

 

1

 

 

 

2

 

Equity in earnings of affiliates

 

 

(9

)

 

 

(4

)

Change in due from/to managers

 

 

(13

)

 

 

22

 

Changes in other assets

 

 

(39

)

 

 

(18

)

Changes in other liabilities

 

 

(7

)

 

 

(11

)

Net cash provided by (used in) operating activities

 

 

(49

)

 

 

157

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from sales of assets, net

 

 

3

 

 

 

1

 

Proceeds from loan receivable

 

 

9

 

 

 

28

 

Advances to and investments in affiliates

 

 

(5

)

 

 

(1

)

Acquisitions

 

 

(189

)

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

Renewals and replacements

 

 

(32

)

 

 

(55

)

Return on investment

 

 

(61

)

 

 

(76

)

Net cash used in investing activities

 

 

(275

)

 

 

(103

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Financing costs

 

 

(3

)

 

 

 

Draws on credit facility

 

 

 

 

 

1,500

 

Repurchase of common OP units

 

 

 

 

 

(147

)

Distributions on common OP units

 

 

 

 

 

(181

)

Other financing activities

 

 

(8

)

 

 

(6

)

Net cash provided by (used in) financing activities

 

 

(11

)

 

 

1,166

 

Effects of exchange rate changes on cash held

 

 

 

 

 

(8

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND

     RESTRICTED CASH

 

 

(335

)

 

 

1,212

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING

     OF PERIOD

 

 

2,476

 

 

 

1,750

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

2,141

 

 

$

2,962

 

 

See notes to condensed consolidated financial statements.

 

 

9


 

 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

Quarter ended March 31, 2021 and 2020

(unaudited)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the amount shown in the statements of cash flows: 

 

 

March 31, 2021

 

 

 

 

March 31, 2020

 

Cash and cash equivalents

 

$

2,008

 

 

 

 

$

2,796

 

Restricted cash (included in other assets)

 

 

2

 

 

 

 

 

1

 

Cash included in furniture, fixtures and equipment replacement fund

 

 

131

 

 

 

 

 

165

 

Total cash and cash equivalents and restricted cash shown in the statements of cash flows

 

$

2,141

 

 

 

 

$

2,962

 

The following table presents cash paid for the following:

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

Total interest paid

 

$

35

 

 

$

27

 

Income taxes paid

 

$

 

 

$

1

 

 

See notes to condensed consolidated financial statements.

 

 

 

10


 

 

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

1.

Organization

Description of Business

Host Hotels & Resorts, Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”), with its operations conducted solely through Host Hotels & Resorts, L.P. and its subsidiaries. Host Hotels & Resorts, L.P., a Delaware limited partnership, operates through an umbrella partnership structure, with Host Hotels & Resorts, Inc., a Maryland corporation, as its sole general partner. In the notes to these unaudited condensed consolidated financial statements, we use the terms “we” or “our” to refer to Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. together, unless the context indicates otherwise. We also use the term “Host Inc.” specifically to refer to Host Hotels & Resorts, Inc. and the term “Host L.P.” specifically to refer to Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. As of March 31, 2021, Host Inc. holds approximately 99% of Host L.P.’s partnership interests.

Liquidity and Management’s Plans

The COVID-19 pandemic has had a significant adverse impact on U.S. and global economic activity and has contributed to significant volatility in financial markets beginning in the first quarter of 2020. The adverse economic impact continues as various restrictive measures remain in place in many jurisdictions where we own hotels, including quarantines, restrictions on travel, school closings, limitations on the size of gatherings and/or restrictions on types of business that may continue to operate. As a result, the COVID-19 pandemic continues to negatively impact almost every industry directly or indirectly, including having a severe impact on the U.S. lodging industry generally and our company specifically.

At the start of the pandemic, we suspended operations at 35 hotels and, as of March 31, 2021, operations remain suspended at four of these hotels, with one additional hotel reopening subsequent to quarter end. The ongoing effects of COVID-19 on our operations and future bookings have had, and will continue to have, a material negative impact on our financial results and cash flows, and such negative impact may continue well after restrictive measures imposed by federal, state, local and other government authorities to contain the outbreak have been lifted. In 2020, we drew down $1.5 billion on the revolver portion of our credit facility as a precautionary measure in order to increase our cash position and preserve financial flexibility. We are continuing to take further measures to preserve our liquidity, including operating expense reductions, capital expenditures deferrals, suspension of dividends and suspension of common stock repurchases. We also have reached agreements with our hotel managers to temporarily suspend furniture, fixture and equipment (“FF&E”) replacement fund contributions for our hotels and to defer certain hotel initiatives and brand standards.

Consolidated Portfolio

As of March 31, 2021, our consolidated portfolio, primarily consisting of luxury and upper upscale hotels, is located in the following countries:

 

 

Hotels

 

United States

 

76

 

Brazil

 

3

 

Canada

 

2

 

Total

 

81

 

 

 

 

2.

Summary of Significant Accounting Policies

We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10–K for the year ended December 31, 2020.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at

11


HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 

the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of March 31, 2021, and the results of our operations and cash flows for the quarters ended March 31, 2021 and 2020, respectively. Interim results are not necessarily indicative of full year performance because of the effect of seasonal variations as well as the impact from the COVID-19 pandemic.

Three of the partnerships in which we own an interest are considered variable interest entities (VIEs) as the general partner maintains control over the decisions that most significantly impact such partnerships. These VIEs include the operating partnership, Host L.P., which is consolidated by Host Inc., of which Host Inc. is the sole general partner and holds approximately 99% of its partnership interests; the consolidated partnership that owns the Houston Airport Marriott at George Bush Intercontinental; and the unconsolidated partnership that owns the Philadelphia Marriott Downtown. Host Inc.’s sole significant asset is its investment in Host L.P. and, consequently, substantially all of Host Inc.’s assets and liabilities consists of the assets and liabilities of Host L.P. All of Host Inc.’s debt is an obligation of Host L.P. and may be repaid only with assets of Host L.P.

Reclassifications

Certain prior year financial statement amounts have been reclassified to conform with the current year presentation.

 

 

 

3.

Earnings (Loss) Per Common Share (Unit)

Basic earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders) by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding. Diluted earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders), as adjusted for potentially dilutive securities, by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding plus other potentially dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans or the Host L.P. common units distributed to Host Inc. to support such shares granted, and other non-controlling interests that have the option to convert their limited partner interests to Host L.P. common units. No effect is shown for any securities that are anti-dilutive. We have 7.2 million Host L.P. common units, which are convertible into 7.3 million common shares, that are not included in Host Inc.’s calculation of earnings (loss) per share as their effect is not dilutive. The calculation of Host Inc. basic and diluted earnings (loss) per common share is shown below (in millions, except per share amounts):

 

 

 

Quarter ended March 31,

 

 

 

2021

 

 

2020

 

Net loss

 

$

(153

)

 

$

(3

)

Less: Net loss attributable to non-controlling interests

 

 

1

 

 

 

 

Net loss attributable to Host Inc.

 

$

(152

)

 

$

(3

)

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

705.6

 

 

 

708.1

 

Diluted weighted average shares outstanding

 

 

705.6

 

 

 

708.1