Host Hotels & Resorts Disposes of Sheraton New York Times Square Hotel
April 20 2022 - 8:30AM
Host Hotels & Resorts, Inc. (NASDAQ: HST), the nation's largest
lodging real estate investment trust (the "Company"), today
announced that it has sold the 1,780-room Sheraton New York Times
Square Hotel for approximately $373 million, which represents a
28.0x EBITDA multiple1 on 2019 EBITDA. The EBITDA multiple includes
approximately $136 million of estimated foregone capital
expenditures over the next five years. In connection with the sale,
the Company is providing a $250 million bridge loan to the
purchaser.
James F. Risoleo, president and chief executive
officer, said, “The sale of the Sheraton New York Times Square
Hotel represents another important step in the transformation of
our portfolio as we look to deploy capital into assets that will
bolster our EBITDA growth profile. Since the beginning of 2021, we
have invested $1.6 billion in early-cycle acquisitions, and we have
disposed of eight hotels at a value of $1.4 billion, including
amounts due under seller financing. The blended EBITDA multiple on
our seven hotel acquisitions is 13.0x2, which compares favorably to
the 17.7x1 EBITDA multiple, including estimated foregone capital
expenditures, on our eight hotel dispositions.”
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 74 properties in the United States and
five properties internationally totaling approximately 42,600
rooms. The Company also holds non-controlling interests in seven
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
(loss). 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 loss for
the Sheraton New York Times Square Hotel is (429.9)x. The Sheraton
New York Times Square Hotel 2019 net loss is $(1) million and the
difference between net loss and EBITDA is depreciation expense of
$19 million. The ratio of the purchase price to net income for the
combined 2021 and 2022 dispositions is 34.5x and estimated avoided
capital expenditures over the five years following disposition date
totaled $426 million. The combined net income of the 2021 and 2022
dispositions is $39 million and the difference between net income
and EBITDA is depreciation expense of $61 million.2 The blended
acquisition EBITDA multiple is based on 2019 operations for Hyatt
Regency Austin, Four Seasons Resort Orlando at Walt Disney World®
Resort, and Kimpton Hotel Van Zandt and the 2021 forecast at
acquisition for Baker’s Cay Resort Key Largo 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, as the hotel was re-opened with a new manager and
brand in 2021, 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 these acquisitions is 21.1x,
using net income of $74 million. The difference between combined
net income and EBITDA is depreciation expense of $46 million. In
addition, EBITDA includes an upward adjustment of $13 million to
reflect normalized operations for both The Laura Hotel and The
Alida, Savannah.
SOURAV GHOSH Chief Financial
Officer (240) 744-5267
JAIME MARCUS Investor Relations
(240) 744-5117 ir@hosthotels.com
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