Host Hotels & Resorts Acquires The Alida, Savannah and Disposes of W Hollywood
December 20 2021 - 4:30PM
Host Hotels & Resorts, Inc. (NASDAQ: HST), the nation's largest
lodging real estate investment trust (the "Company"), today
announced that it has acquired the fee simple interest in The
Alida, Savannah, a 173-room boutique hotel, for approximately $103
million in cash.
This newly constructed hotel opened in October
2018 and benefits from soft branding in Marriott’s Tribute
Portfolio. Rooms average 371 square feet with high ceilings,
hardwood floors, built-in window seats and marble bathrooms. The
hotel offers 11,570 square feet of meeting space (5,170 indoor),
four F&B outlets including a rooftop bar with panoramic views,
an outdoor pool, and street-front retail space.
Stabilization for The Alida is expected in the
2024-2025 timeframe at approximately 11-12x EBITDA1 with RevPAR of
approximately $240. The stabilized EBITDA for the property is
consistent with the Company’s estimate of normalized 2019
operations, which adjusts for construction disruption to the
surrounding Plant Riverside District and the initial ramp-up of the
hotel operations.
The Alida is located in Savannah’s historic
district just one block from the Savannah River, directly adjacent
to a newly developed entertainment district, including the Plant
Riverside District. A strong tourism industry has contributed to
favorable market dynamics over the past several years – 2019 marked
10 consecutive years of record visitation, nine consecutive years
of record visitor spending, and a five-year RevPAR CAGR more than
100 basis points higher than the broader U.S. We expect future
growth to be buoyed by multiple leisure demand drivers including
the fact that Savannah is a drive-to leisure destination for
fast-growing feeder markets in the Southeast and there is
increasing air traffic through the Savannah/Hilton Head
International Airport. The hotel also benefits from both in-house
and out-of-house group demand, which are likely to be bolstered by
the $271 million convention center expansion expected to be
completed in 2024.
In addition to The Alida acquisition, the
Company also announced that it has sold the leasehold interest in
the 305-room W Hollywood for a total sales price of approximately
$197 million, including $3 million for the FF&E replacement
funds. The sale price represents a 25.0x EBITDA multiple2 on 2019
EBITDA including approximately $33 million of estimated foregone
capital expenditures over the next five years.
James F. Risoleo, President and Chief Executive
Officer, said, “We are pleased to further diversify our portfolio
with the acquisition of The Alida, Savannah. The hotel is like new
with no expected near-term capex in a market with favorable
operating costs, multiple demand drivers, and a history of strong
RevPAR growth while the sale of the W Hollywood reduces our ground
lease exposure and obviates the need for major capital investment
and associated disruption. We continue to be very active on the
capital allocation front as we target new markets. Year-to-date, we
have invested $1.3 billion in early-cycle acquisitions. The blended
EBITDA multiple on our six hotel acquisitions in 2021 is 12.9x3,
which compares favorably to the nearly $750 million generated from
our six hotel dispositions at a 16.0x2 EBITDA multiple, including
foregone capital expenditures.”
About Host Hotels &
Resorts
Host Hotels & Resorts, Inc. is an S&P
500 company and is the largest lodging real estate investment trust
and one of the largest owners of luxury and upper-upscale hotels.
The Company currently owns 75 properties in the United States and
five properties internationally totaling approximately 45,300
rooms. The Company also holds non-controlling interests in six
domestic and one international joint ventures.
FORWARD LOOKING STATEMENTS
Note: This press release contains
forward-looking statements within the meaning of federal securities
regulations. These forward-looking statements are identified by
their use of terms and phrases such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,”
“predict,” “project,” “will,” “continue” and other similar terms
and phrases, including references to assumptions and forecasts of
future results. Forward-looking statements are not guarantees of
future performance and involve known and unknown risks,
uncertainties and other factors which may cause the actual results
to differ materially from those anticipated at the time the
forward-looking statements are made. These risks include, but are
not limited to: the duration and scope of the COVID-19 pandemic and
its short and longer-term impact on the demand for travel,
transient and group business, and levels of consumer confidence;
actions governments, businesses and individuals take in response to
the pandemic, including limiting or banning travel; the impact of
the pandemic and actions taken in response to the pandemic on
global and regional economies, travel, and economic activity,
including the duration and magnitude of its impact on unemployment
rates, business investment and consumer discretionary spending; the
pace of recovery when the COVID-19 pandemic subsides; general
economic uncertainty in U.S. markets where we own hotels
and a worsening of economic conditions or low levels of economic
growth in these markets; other changes (apart from the COVID-19
pandemic) in national and local economic and business conditions
and other factors such as natural disasters and weather that will
affect occupancy rates at our hotels and the demand for hotel
products and services; the impact of geopolitical developments
outside the U.S. on lodging demand; volatility in global
financial and credit markets; operating risks associated with the
hotel business; risks and limitations in our operating flexibility
associated with the level of our indebtedness and our ability to
meet covenants in our debt agreements; risks associated with our
relationships with property managers and joint venture partners;
our ability to maintain our properties in a first-class manner,
including meeting capital expenditure requirements; the effects of
hotel renovations on our hotel occupancy and financial results; our
ability to compete effectively in areas such as access, location,
quality of accommodations and room rate structures; risks
associated with our ability to complete acquisitions and
dispositions and develop new properties and the risks that
acquisitions and new developments may not perform in accordance
with our expectations; our ability to continue to satisfy complex
rules in order for us to remain a real estate investment trust for
federal income tax purposes; and other risks and uncertainties
associated with our business described in the Company’s annual
report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K filed with the SEC. Although the Company
believes the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that the expectations will be attained or that any
deviation will not be material. All information in this release is
as of the date of this release and the Company undertakes no
obligation to update any forward-looking statement to conform the
statement to actual results or changes in the Company’s
expectations.
____________________________1 Consistent with industry practice,
we calculate the EBITDA multiple as the ratio of the purchase price
to the property’s EBITDA. EBITDA is a non-GAAP measure. The
comparable GAAP metric to EBITDA multiple is the ratio of the
purchase price to net income. The ratio of the purchase price to
stabilized net income for The Alida, Savannah, which is expected to
occur in the 2024-2025 timeframe, is 18.2x based on forecast
stabilized net income of $6 million. The difference between net
income and EBITDA is depreciation expense of $3 million. Stabilized
results are illustrative only. Our ability to achieve the 2024-2025
results is subject to various uncertainties and actual results may
be materially different.2 Disposition multiples are calculated as
the ratio between the sales price (plus estimated avoided capital
expenditures) and 2019 EBITDA. The ratio of the purchase price to
2019 net income for the W Hollywood is 142x. The W Hollywood 2019
net income is $1 million and the difference between net income and
EBITDA is depreciation expense of $8 million. The ratio of the
purchase price to net income for the combined 2021 dispositions is
27x and estimated avoided capital expenditures over the five years
following disposition date totaled $155 million. The combined net
income of the 2021 dispositions is $27 million and the difference
between net income and EBITDA is depreciation expense of $29
million.3 The blended EBITDA multiple is based on 2019 operations
for the Hyatt Regency Austin and Four Seasons Resort Orlando at
Walt Disney World® Resort and the 2021 forecast at acquisition for
Baker’s Cay Resort and Alila Ventana Big Sur, as these hotels
experienced renovation disruption and closures in 2019. Estimated
normalized 2019 operations were used for The Laura Hotel, assuming
a new manager and brand, and for The Alida, Savannah, adjusting for
construction disruption to the surrounding Plant Riverside District
and for initial ramp-up of hotel operations. The blended ratio of
the purchase price to net income for the 2021 acquisitions is
20.8x, using net income of $62 million. The difference between
combined net income and EBITDA is depreciation expense of $38
million. In addition, EBITDA includes an adjustment of $13 million
to reflect normalized operations for both The Laura Hotel and The
Alida, Savannah.
SOURAV GHOSHChief Financial Officer(240)
744-5267 |
JAIME
MARCUS Investor Relations(240)
744-5117ir@hosthotels.com |
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