BETHESDA, Md., Oct. 12, 2011 /PRNewswire/ -- Host Hotels &
Resorts, Inc. (NYSE: HST), the nation's largest lodging real estate
investment trust (REIT), today announced results of operations for
the third quarter ended September 9,
2011.
(Logo: http://photos.prnewswire.com/prnh/20060417/HOSTLOGO )
- Owned hotel revenues increased 15% to $1.085 billion for the third quarter of 2011
and increased 12% to $3.166 billion for year-to-date 2011.
Revenues for the Company's comparable properties increased 5.3% for
both periods. The 14 hotels acquired since July 2010 contributed revenues of
$99 million and $213 million for the third quarter and
year-to-date, respectively.
Total revenues increased 14% for both the third quarter and
year-to-date 2011 to $1.142 billion and $3.340 billion, respectively, reflecting the
performance of the Company's owned hotels and the inclusion of
property-level revenues for 53 leased, select-service hotels for
which the Company previously recorded rental income.
- Net loss was $35 million, or $.05 per diluted share, for the third quarter of
2011 compared to net loss of $61 million, or $.09 per diluted share, for the third quarter of
2010. For year-to-date 2011, net loss was $32 million, or
$.05 per diluted share, compared to a
net loss of $126 million, or $.20 per diluted share, for year-to-date
2010.
The Company's operating results include transactions, such as
losses on debt extinguishments, litigation costs, acquisition costs
and non-cash impairment charges that can affect earnings and Funds
From Operations ("FFO") per diluted share. The net effect of these
items was a decrease in earnings per diluted share of $.01 and $.02 in the third quarter of 2011
and 2010, respectively, and $.03 and
$.04 for year-to-date 2011 and 2010,
respectively.
- FFO was $112 million, or $.16 per diluted share, for the third quarter of
2011 compared to $75 million, or $.11 per diluted share, for the third quarter of
2010. FFO was $399 million, or $.57 per diluted share, and $275 million, or
$.42 per diluted share, for
year-to-date 2011 and 2010, respectively. There was no FFO per
share impact from the above transactions affecting operating
results for the third quarter of 2011, but they did decrease FFO
per diluted share by $.02 in the
third quarter of 2010 and $.03 and
$.04 for year-to-date 2011 and 2010,
respectively.
- Adjusted EBITDA, which is Earnings before Interest Expense,
Income Taxes, Depreciation, Amortization and other items, increased
27.7% to $212 million for the quarter and 23.2% to
$669 million for year-to-date 2011.
For further detail of the transactions affecting net income,
earnings per diluted share, FFO and FFO per diluted share, refer to
the notes to the "Reconciliation of Net Loss to EBITDA, Adjusted
EBITDA and FFO per Diluted Share." Adjusted EBITDA, FFO, FFO per
diluted share and comparable hotel adjusted operating profit
margins (discussed below) are non-GAAP (generally accepted
accounting principles) financial measures within the meaning of the
rules of the Securities and Exchange Commission (SEC). See the
discussion included in this press release for information regarding
these non-GAAP financial measures.
OPERATING RESULTS
Comparable hotel RevPAR increased 6.4% for the third quarter, as
a result of the improvement of average room rate of 3.7%, combined
with an increase in occupancy of 1.9 percentage points to 75.8%.
For year-to-date 2011, comparable hotel RevPAR increased
6.3%, with the majority of the increase driven by rate improvement
of 4.5%, combined with an increase in occupancy of 1.2 percentage
points to 73.1%. Comparable hotel adjusted operating profit margins
increased 110 basis points and 80 basis points for the third
quarter and year-to-date 2011, respectively.
EUROPEAN JOINT VENTURE
On September 30, 2011, the Company's European joint
venture's second fund (the "Euro JV Fund II"), in which the Company
owns a 33.4% interest, completed the previously announced
acquisition of the 396-room Pullman Bercy in Paris for approximately euro 96 million,
including customary transfer taxes and notary fees. With a strong
location in Paris' growing
business district of Bercy, the hotel provides a first-class
meeting platform with 19,400 square feet of meeting space. The Euro
JV Fund II will invest an additional euro 9 million for the
renovation of the rooms and public space at the hotel and Accor
will continue to operate the hotel under the Pullman brand. The
Euro JV Fund II now owns two hotels and has approximately euro
360 million of committed equity investment capacity
remaining.
INVESTMENTS
On August 30, 2011, the Company purchased the remaining
interest in Tiburon Golf Ventures, L.P., which owns the golf club
surrounding The Ritz-Carlton, Naples Golf Resort, for $11 million. The Company previously held a 49%
limited partner interest in the entity.
RETURN ON INVESTMENT EXPENDITURES
The Company invested $32 million and $153 million in
return on investment (ROI) projects during the third quarter and
year-to-date of 2011, respectively. These projects are designed to
increase cash flow and improve profitability by capitalizing on
changing market conditions and the favorable locations of the
Company's properties. During the third quarter, the Company
completed the reinvention of the lobby at the New York Marriott
Marquis, including two signature restaurants and lounges.
Other on-going ROI projects include the renovation of all
guest-facing areas at the Atlanta Marriott Perimeter Center, which
encompasses the lobbies, rooms, restaurants and meeting space, and
the major redevelopment project at the Sheraton Indianapolis, which
includes the conversion of one tower of the hotel to apartment
rental units. The Company expects that its investment in ROI
expenditures for 2011 will total approximately $220 million to
$240 million.
RENEWAL AND REPLACEMENT EXPENDITURES
The Company also spent approximately $63 million and
$182 million in the third quarter and year-to-date of 2011,
respectively, for renewal and replacement expenditures designed to
ensure that the high-quality standards of both the Company and its
operators are maintained. Major renewal and replacement projects
substantially completed during the third quarter include the
renovation of the 45,000 square foot Broadway ballroom at the New
York Marriott Marquis. During the quarter, the Company also began
work on extensive room renovations at the JW Marriott, Desert
Springs Resort & Spa and the renovation of 40,000 square feet
of ballroom and meeting space at the New Orleans Marriott. The
Company expects that renewal and replacement expenditures for 2011
will total approximately $300 million to $320 million.
BALANCE SHEET
The Company utilized the proceeds from the second quarter
issuance of $500 million of 5 7/8%
Series W senior notes to repurchase approximately $105 million
face amount of its 2 5/8% Exchangeable Senior Debentures ("2007
Debentures"), for $106 million. The 2007 Debentures are
puttable to the Company in April 2012
and, based on the Company's current stock price, the Company
anticipates that the holders will exercise this option.
As of September 9, 2011, the Company had approximately
$524 million of cash and cash equivalents and approximately
$481 million of available capacity under its credit facility.
Additionally, the Company exercised its option to extend the
maturity date of its credit facility to September 2012.
DIVIDEND
On September 19, 2011, the Company's board of directors
authorized a regular quarterly cash dividend of $0.04 per share on its common stock. The dividend
is payable on October 17, 2011 to stockholders of record on
September 30, 2011. Based on the current guidance for 2011,
the Company intends to declare, subject to approval by the
Company's board of directors, a fourth quarter dividend of
$0.04 or $0.05 per share.
2011 OUTLOOK
The Company anticipates that for 2011:
- Comparable hotel RevPAR will increase 6.25% to 6.75%;
- Operating profit margins under GAAP would increase
approximately 170 basis points to 190 basis points; and
- Comparable hotel adjusted operating profit margins will
increase approximately 80 basis points to 90 basis points.
Based upon these parameters, the Company estimates that its full
year 2011 guidance is as follows:
- earnings (loss) per diluted share should range from
approximately $(.03) to $(.01);
- net income (loss) should range from $(22) million to
$(9) million;
- FFO per diluted share should be approximately $.86 to $.88 (including the effect of a reduction
of $.03 due to debt extinguishment
costs, pursuit costs for completed acquisitions and non-cash
impairments); and
- Adjusted EBITDA should be approximately $1,015 million to $1,025 million.
- The Company previously announced that it had reached an
agreement to acquire the 888-room Grand Hyatt Washington, D.C. for $442 million, which included a $15 million deposit and the possible assumption
of a $166 million mortgage loan. The
guidance issued by the Company on July 20, 2011, in
conjunction with its second quarter earnings, assumed that the
Grand Hyatt hotel acquisition would close in September. The July
guidance included $9 million of EBITDA related to the
acquisition. The Company recently amended the agreement to
extend the closing date to December 14,
2011, subject to customary closing conditions. Therefore,
the Company's current guidance assumes the transaction will close
on that date and there would be minimal EBITDA generated by the
hotel during the Company's ownership period. If the transaction is
not consummated, the Company will forfeit its $15 million deposit, but will not incur closing
costs and, as a result, the current forecast would decrease for
both the high and the low range for earnings per diluted share and
FFO per diluted share by $.01. In
addition, forecasted net income and Adjusted EBITDA would decrease
$8 million and $15 million, respectively.
See the 2011 Forecast Schedules and Notes to Financial
Information for other assumptions used in the forecasts and items
that may affect forecasted results.
ABOUT HOST HOTELS & RESORTS
Host Hotels & Resorts, Inc. is an S&P 500 and Fortune
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 105 properties in the United States and 16 properties
internationally totaling approximately 65,000 rooms. The Company
also holds non-controlling interests in a joint venture in
Europe that owns 13 hotels with
approximately 4,200 rooms and a joint venture in India that is developing seven hotels in three
cities with approximately 1,800 rooms. Guided by a disciplined
approach to capital allocation and aggressive asset management, the
Company partners with premium brands such as Marriott®,
Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, Le Meridien®,
The Luxury Collection®, Hyatt®, Fairmont®, Four Seasons®, Hilton®,
Swissotel®, ibis®, Pullman®, and Novotel®* in the operation of
properties in over 50 major markets worldwide. For additional
information, please visit the Company's website at
www.hosthotels.com.
Note: This press release contains forward-looking statements
within the meaning of federal securities regulations. These
forward-looking statements include forecast results and 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 assumption
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: national and local economic and business
conditions, including the effect on travel of potential terrorist
attacks, that will affect occupancy rates at our hotels and the
demand for hotel products and services; operating risks associated
with the hotel business; risks associated with the level of our
indebtedness and our ability to meet covenants in our debt
agreements; relationships with property managers; our ability to
maintain our properties in a first-class manner, including meeting
capital expenditure requirements; our ability to compete
effectively in areas such as access, location, quality of
accommodations and room rate structures; changes in travel
patterns, taxes and government regulations which influence or
determine wages, prices, construction procedures and costs; our
ability to complete acquisitions and dispositions; the risk that
the Company's board of directors will determine to pay dividends at
a rate different than currently anticipated and our ability to
continue to satisfy complex rules in order for us to remain a REIT
for federal income tax purposes and other risks and uncertainties
associated with our business described in the Company's annual
report on Form 10K, quarterly reports on Form 10-Q and
current reports on Form 8-K filed with the SEC. The completion of
the acquisition of the Grand Hyatt Washington, D.C. is subject to numerous
closing conditions and there can be no assurances that the
transaction will be completed. These closing conditions include,
but are not limited to: the accuracy of the representations and
warranties and compliance with covenants, the absence of material
events or conditions and other customary closing conditions.
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 October 12, 2011, 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.
* This press release contains registered trademarks that are the
exclusive property of their respective owners. None of the owners
of these trademarks has any responsibility or liability for any
information contained in this press release.
*** Tables to Follow ***
Host Hotels & Resorts, Inc., herein referred to as "we" or
"Host," is a self-managed and self-administered real estate
investment trust (REIT) that owns hotel properties. We conduct our
operations as an umbrella partnership REIT through an operating
partnership, Host Hotels & Resorts, L.P. (Host LP), of which we
are the sole general partner. When distinguishing between Host and
Host LP, the primary difference is approximately 1.5% of the
partnership interests in Host LP held by outside partners as of
September 9, 2011, which is non-controlling interests in Host
LP in our consolidated balance sheets and is included in net
income/loss attributable to non-controlling interests in our
consolidated statements of operations. Readers are encouraged to
find further detail regarding our organizational structure in our
annual report on Form 10K.
For information on our reporting periods and non-GAAP financial
measures (including Adjusted EBITDA, FFO per diluted share and
comparable hotel adjusted operating profit margin) which we believe
is useful to investors, see the Notes to the Financial Information
included in this release.
HOST HOTELS
& RESORTS, INC.
|
|
Consolidated
Balance Sheets (a)
|
|
(in
millions, except shares and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
September
9,
|
December
31,
|
|
|
|
|
2011
|
2010
|
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Property and equipment,
net
|
$
11,444
|
$
10,514
|
|
Due from managers
|
34
|
45
|
|
Investments in
affiliates
|
171
|
148
|
|
Deferred financing costs,
net
|
44
|
44
|
|
Furniture, fixtures and
equipment replacement fund
|
166
|
152
|
|
Other
|
386
|
354
|
|
Restricted cash
|
36
|
41
|
|
Cash and cash
equivalents
|
524
|
1,113
|
|
Total assets
|
$
12,805
|
$
12,411
|
|
|
|
|
|
LIABILITIES,
NON-CONTROLLING INTERESTS AND EQUITY
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
Senior notes, including
$925 million and $1,156 million, respectively, net of
discount, of Exchangeable Senior Debentures
|
$
4,266
|
$
4,249
|
|
Credit facility
|
119
|
58
|
|
Mortgage debt
|
1,016
|
1,025
|
|
Other
|
87
|
145
|
|
Total debt
|
5,488
|
5,477
|
|
Accounts payable and accrued
expenses
|
173
|
208
|
|
Other
|
225
|
203
|
|
Total liabilities
|
5,886
|
5,888
|
|
|
|
|
|
Non-controlling interests-Host
Hotels & Resorts, L.P.
|
115
|
191
|
|
|
|
|
|
Host Hotels & Resorts, Inc.
stockholders’ equity:
|
|
|
|
Common stock, par value
$.01, 1,050 million shares authorized; 702.7 million
shares and 675.6 million shares issued and outstanding,
respectively
|
7
|
7
|
|
Additional paid-in
capital
|
7,760
|
7,236
|
|
Accumulated other
comprehensive income
|
31
|
25
|
|
Deficit
|
(1,032)
|
(965)
|
|
Total equity of Host
Hotels & Resorts, Inc. stockholders
|
6,766
|
6,303
|
|
Non-controlling interests-other
consolidated partnerships
|
38
|
29
|
|
Total equity
|
6,804
|
6,332
|
|
Total liabilities,
non-controlling interests and equity
|
$
12,805
|
$
12,411
|
|
|
|
|
|
(a) Our consolidated
balance sheet as of September 9, 2011 has been prepared without
audit. Certain information and footnote disclosures normally
included in financial statements
presented in accordance with GAAP have been omitted.
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Consolidated
Statements of Operations (a)
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Revenues
|
|
|
|
|
|
Rooms
|
$
733
|
$
627
|
$
2,034
|
$
1,781
|
|
Food and
beverage
|
285
|
253
|
935
|
848
|
|
Other
|
67
|
63
|
197
|
191
|
|
Owned hotel
revenues
|
1,085
|
943
|
3,166
|
2,820
|
|
Other revenues
(b)
|
57
|
60
|
174
|
117
|
|
Total revenues
|
1,142
|
1,003
|
3,340
|
2,937
|
|
Expenses
|
|
|
|
|
|
Rooms
|
207
|
178
|
563
|
496
|
|
Food and
beverage
|
236
|
212
|
706
|
639
|
|
Other departmental and
support expenses
|
304
|
276
|
851
|
775
|
|
Management fees
|
41
|
36
|
126
|
112
|
|
Other property-level
expenses (b)
|
139
|
124
|
393
|
306
|
|
Depreciation and
amortization
|
149
|
134
|
439
|
409
|
|
Corporate and other
expenses
|
12
|
20
|
58
|
69
|
|
Total operating costs and
expenses
|
1,088
|
980
|
3,136
|
2,806
|
|
Operating profit
|
54
|
23
|
204
|
131
|
|
Interest income
|
5
|
2
|
15
|
3
|
|
Interest expense (c)
|
(87)
|
(89)
|
(259)
|
(268)
|
|
Net gains on property
transactions and other
|
3
|
-
|
6
|
-
|
|
Loss on foreign currency
transactions and derivatives
|
(2)
|
(1)
|
-
|
(6)
|
|
Equity in losses of
affiliates
|
(5)
|
(1)
|
(3)
|
(5)
|
|
Loss before income
taxes
|
(32)
|
(66)
|
(37)
|
(145)
|
|
Benefit (provision) for income
taxes
|
(3)
|
5
|
9
|
21
|
|
Loss from continuing
operations
|
(35)
|
(61)
|
(28)
|
(124)
|
|
Loss from discontinued
operations, net of tax
|
-
|
-
|
(4)
|
(2)
|
|
Net loss
|
(35)
|
(61)
|
(32)
|
(126)
|
|
Less: Net loss attributable to
non-controlling interests
|
2
|
3
|
-
|
2
|
|
Net loss attributable to Host
Hotels & Resorts, Inc.
|
(33)
|
(58)
|
(32)
|
(124)
|
|
Less: Dividends on preferred
stock
|
-
|
-
|
-
|
(4)
|
|
Issuance costs of redeemed
preferred stock
|
-
|
-
|
-
|
(4)
|
|
Net loss available to common
stockholders
|
$
(33)
|
$
(58)
|
$
(32)
|
$
(132)
|
|
Basic and diluted loss per
common share:
|
|
|
|
|
|
Continuing
operations
|
$
(.05)
|
$
(.09)
|
$
(.04)
|
$
(.20)
|
|
Discontinued
operations
|
-
|
-
|
(.01)
|
-
|
|
Basic and diluted loss per
common share
|
$
(.05)
|
$
(.09)
|
$
(.05)
|
$
(.20)
|
|
|
|
|
|
|
|
|
|
(a) Our consolidated
statements of operations presented above have been prepared without
audit. Certain information and footnote disclosures normally
included in financial statements presented in accordance with GAAP
have been omitted.
|
|
(b) On July 6, 2010, we
terminated the subleases for the 71 select-service hotels that we
leased from Hospitality Properties Trust ("HPT") (18 of such leases
were terminated effective December 31, 2010). As a result of the
transaction, we record the gross hotel revenues and expenses of
these hotels as opposed to rental income earned under the
subleases; however, we are subject to the rental expense due to
HPT. The chart below details the other revenue and other
property-level expenses for the third quarter and year-to-date of
2011 and 2010 related to the HPT properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Hotel sales revenue
|
$
53
|
$
50
|
$
150
|
$
50
|
|
Rental revenue
|
-
|
6
|
-
|
43
|
|
Total HPT
revenue
|
$
53
|
$
56
|
$
150
|
$
93
|
|
Property-level
expenses
|
$
38
|
$
37
|
$
111
|
$
37
|
|
Rental expense
|
16
|
19
|
47
|
57
|
|
Total HPT
expenses
|
$
54
|
$
56
|
$
158
|
$
94
|
|
|
|
|
|
|
|
|
(c) Interest expense
includes the following items:
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Non-cash interest for
exchangeable debentures
|
$
7
|
$
7
|
$
22
|
$
23
|
|
Debt extinguishment
costs
|
4
|
7
|
8
|
15
|
|
Total
|
$
11
|
$
14
|
$
30
|
$
38
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Earnings per
Common Share
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Net loss
|
$
(35)
|
$
(61)
|
$
(32)
|
$
(126)
|
|
Net loss attributable to
non-controlling interests
|
2
|
3
|
-
|
2
|
|
Dividends on preferred
stock
|
-
|
-
|
-
|
(4)
|
|
Issuance costs of redeemed
preferred stock (a)
|
-
|
-
|
-
|
(4)
|
|
Loss available to common
stockholders
|
(33)
|
(58)
|
(32)
|
(132)
|
|
Diluted loss available to common
stockholders
|
$
(33)
|
$
(58)
|
$
(32)
|
$
(132)
|
|
|
|
|
|
|
|
Basic weighted average shares
outstanding
|
702.1
|
654.5
|
688.4
|
651.7
|
|
Diluted weighted average shares
outstanding (b)
|
702.1
|
654.5
|
688.4
|
651.7
|
|
Basic and diluted loss per share
(c)
|
$
(.05)
|
$
(.09)
|
$
(.05)
|
$
(.20)
|
|
|
|
|
|
|
|
(a) Represents the
original issuance costs associated with the Class E preferred
stock, which were redeemed during the second quarter of 2010.
|
|
(b) Dilutive securities
may include shares granted under comprehensive stock plans,
preferred OP Units held by minority partners, exchangeable debt
securities and other non-controlling interests that have the option
to convert their limited partnership interests to common OP Units.
Due to the net loss for all periods presented, all of our
securities are anti-dilutive and, therefore, no effect for such
securities is shown.
|
|
(c) See notes to the
"Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and
FFO per Diluted Share" for information on significant items
affecting diluted earnings per common share.
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Comparable
Hotel Operating Data
|
|
(unaudited)
|
|
|
|
|
|
|
|
Comparable
Hotels by Region (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
September 9, 2011
|
Quarter
ended September 9, 2011
|
Quarter
ended September 10, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Pacific
|
26
|
14,581
|
$ 170.78
|
82.6%
|
$141.04
|
$ 161.40
|
78.8%
|
$127.20
|
10.9%
|
|
Mid-Atlantic
|
10
|
8,352
|
225.52
|
82.1
|
185.22
|
210.06
|
82.3
|
172.96
|
7.1
|
|
South Central
|
9
|
5,687
|
132.65
|
66.0
|
87.59
|
129.87
|
64.7
|
84.07
|
4.2
|
|
Florida
|
9
|
5,677
|
143.40
|
66.5
|
95.33
|
145.43
|
64.5
|
93.76
|
1.7
|
|
DC Metro
|
12
|
5,416
|
174.81
|
77.9
|
136.13
|
171.91
|
77.7
|
133.55
|
1.9
|
|
North Central
|
10
|
4,358
|
149.10
|
79.7
|
118.80
|
146.25
|
76.2
|
111.43
|
6.6
|
|
New England
|
7
|
3,924
|
168.32
|
82.5
|
138.92
|
170.94
|
81.9
|
139.94
|
(0.7)
|
|
Atlanta
|
7
|
3,846
|
151.93
|
65.7
|
99.80
|
149.58
|
63.1
|
94.43
|
5.7
|
|
Mountain
|
7
|
2,889
|
129.30
|
63.8
|
82.45
|
124.10
|
59.2
|
73.46
|
12.2
|
|
International
|
7
|
2,473
|
166.84
|
64.6
|
107.78
|
151.89
|
66.6
|
101.22
|
6.5
|
|
All Regions
|
104
|
57,203
|
169.30
|
75.8
|
128.32
|
163.27
|
73.9
|
120.62
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
September 9, 2011
|
Year-to-date
ended September 9, 2011
|
Year-to-date
ended September 10, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Pacific
|
26
|
14,581
|
$ 171.39
|
77.2%
|
$132.31
|
$ 160.70
|
72.9%
|
$117.19
|
12.9%
|
|
Mid-Atlantic
|
10
|
8,352
|
224.25
|
75.9
|
170.32
|
208.00
|
79.9
|
166.11
|
2.5
|
|
South Central
|
9
|
5,687
|
149.05
|
69.7
|
103.93
|
142.95
|
68.5
|
97.97
|
6.1
|
|
Florida
|
9
|
5,677
|
186.02
|
74.2
|
137.94
|
184.48
|
71.7
|
132.30
|
4.3
|
|
DC Metro
|
12
|
5,416
|
193.97
|
75.2
|
145.95
|
188.18
|
76.0
|
142.97
|
2.1
|
|
North Central
|
10
|
4,358
|
141.52
|
70.9
|
100.34
|
135.93
|
69.5
|
94.44
|
6.2
|
|
New England
|
7
|
3,924
|
168.17
|
71.6
|
120.39
|
169.37
|
70.6
|
119.51
|
0.7
|
|
Atlanta
|
7
|
3,846
|
155.66
|
66.1
|
102.88
|
153.71
|
64.4
|
99.01
|
3.9
|
|
Mountain
|
7
|
2,889
|
158.47
|
66.2
|
104.95
|
148.74
|
64.6
|
96.02
|
9.3
|
|
International
|
7
|
2,473
|
169.22
|
66.3
|
112.22
|
154.43
|
65.2
|
100.71
|
11.4
|
|
All Regions
|
104
|
57,203
|
176.89
|
73.1
|
129.39
|
169.32
|
71.9
|
121.76
|
6.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Hotels by Property Type (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
September 9, 2011
|
Quarter
ended September 9, 2011
|
Quarter
ended September 10, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Urban
|
50
|
32,282
|
$ 183.60
|
78.8%
|
$144.65
|
$ 176.05
|
77.9%
|
$137.22
|
5.4%
|
|
Suburban
|
28
|
10,564
|
142.84
|
72.3
|
103.25
|
137.68
|
68.1
|
93.79
|
10.1
|
|
Resort/Conference
|
13
|
8,082
|
185.65
|
65.0
|
120.62
|
183.34
|
63.2
|
115.79
|
4.2
|
|
Airport
|
13
|
6,275
|
118.69
|
80.3
|
95.34
|
111.74
|
76.5
|
85.43
|
11.6
|
|
All Types
|
104
|
57,203
|
169.30
|
75.8
|
128.32
|
163.27
|
73.9
|
120.62
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
September 9, 2011
|
Year-to-date
ended September 9, 2011
|
Year-to-date
ended September 10, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Urban
|
50
|
32,282
|
$ 188.14
|
74.2%
|
$139.64
|
$ 179.71
|
74.1%
|
$133.10
|
4.9%
|
|
Suburban
|
28
|
10,564
|
145.60
|
69.0
|
100.48
|
138.94
|
66.6
|
92.52
|
8.6
|
|
Resort/Conference
|
13
|
8,082
|
217.99
|
70.7
|
154.22
|
209.63
|
68.4
|
143.37
|
7.6
|
|
Airport
|
13
|
6,275
|
120.94
|
77.7
|
93.97
|
114.92
|
74.4
|
85.47
|
10.0
|
|
All Types
|
104
|
57,203
|
176.89
|
73.1
|
129.39
|
169.32
|
71.9
|
121.76
|
6.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See the Notes to
Financial Information for a discussion of reporting periods and
comparable hotel results.
|
|
|
|
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Comparable
Hotel Operating Data
|
|
Schedule of
Comparable Hotel Results (a)
|
|
(unaudited,
in millions, except hotel statistics)
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
|
|
|
|
Number of hotels
|
104
|
104
|
104
|
104
|
|
Number of rooms
|
57,203
|
57,203
|
57,203
|
57,203
|
|
Percent change in comparable
hotel RevPAR
|
6.4%
|
-
|
6.3%
|
-
|
|
Operating profit margin under
GAAP (b)
|
4.7%
|
2.3%
|
6.1%
|
4.5%
|
|
Comparable hotel adjusted
operating profit margin (b)
|
18.6%
|
17.5%
|
21.7%
|
20.9%
|
|
|
|
|
|
|
|
Comparable hotel
sales
|
|
|
|
|
|
Room
|
$
640
|
$
601
|
$
1,838
|
$
1,730
|
|
Food and beverage
|
257
|
247
|
878
|
838
|
|
Other
|
61
|
61
|
184
|
187
|
|
Comparable hotel sales (c)
|
958
|
909
|
2,900
|
2,755
|
|
Comparable hotel
expenses
|
|
|
|
|
|
Room
|
181
|
172
|
508
|
481
|
|
Food and beverage
|
215
|
207
|
660
|
629
|
|
Other
|
37
|
37
|
107
|
106
|
|
Management fees, ground
rent and other costs
|
347
|
334
|
995
|
962
|
|
Comparable hotel expenses
(d)
|
780
|
750
|
2,270
|
2,178
|
|
Comparable hotel adjusted
operating profit
|
178
|
159
|
630
|
577
|
|
Non-comparable hotel results,
net (e)
|
37
|
18
|
77
|
31
|
|
Income (loss) from hotels leased
from HPT and office buildings
|
-
|
-
|
(6)
|
1
|
|
Depreciation and amortization
|
(149)
|
(134)
|
(439)
|
(409)
|
|
Corporate and other expenses
|
(12)
|
(20)
|
(58)
|
(69)
|
|
Operating profit
|
$
54
|
$
23
|
$
204
|
$
131
|
|
|
|
|
|
|
|
(a) See the Notes to the
Financial Information for discussion of non-GAAP measures,
reporting periods and comparable hotel results.
|
|
(b) Operating profit
margins are calculated by dividing the applicable operating profit
by the related revenue amount. GAAP margins are calculated using
amounts presented in the consolidated statement of operations.
Comparable margins are calculated using amounts presented in the
above table.
|
|
(c) The reconciliation of
total revenues per the consolidated statements of operations to the
comparable hotel sales is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
Revenues per the consolidated
statements of operations
|
$
1,142
|
$
1,003
|
$
3,340
|
$
2,937
|
|
|
|
Non-comparable hotel
sales
|
(141)
|
(47)
|
(323)
|
(116)
|
|
|
|
Hotel sales for the property for
which we record rental income, net
|
11
|
10
|
36
|
36
|
|
|
|
Revenues for hotels leased from
HPT and office buildings
|
(54)
|
(57)
|
(153)
|
(97)
|
|
|
|
Adjustment for hotel sales for
comparable hotels to reflect Marriott’s fiscal year for
Marriott- managed hotels
|
-
|
-
|
-
|
(5)
|
|
|
|
Comparable hotel
sales
|
$
958
|
$
909
|
$
2,900
|
$
2,755
|
|
|
|
|
|
|
|
|
|
(d) The reconciliation of
operating costs per the consolidated statements of
operations to the comparable
hotel expenses is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
Operating costs and expenses per
the consolidated statements of operations
|
$
1,088
|
$
980
|
$
3,136
|
$
2,806
|
|
|
|
Non-comparable hotel
expenses
|
(104)
|
(29)
|
(247)
|
(85)
|
|
|
|
Hotel expenses for the property
for which we record rental income
|
11
|
10
|
37
|
36
|
|
|
|
Expense for hotels leased from
HPT and office buildings
|
(54)
|
(57)
|
(159)
|
(96)
|
|
|
|
Adjustment for hotel expenses
for comparable hotels to reflect Marriott’s fiscal year for
Marriott-managed hotels
|
-
|
-
|
-
|
(5)
|
|
|
|
Depreciation and
amortization
|
(149)
|
(134)
|
(439)
|
(409)
|
|
|
|
Corporate and other
expenses
|
(12)
|
(20)
|
(58)
|
(69)
|
|
|
|
Comparable hotel
expenses
|
$
780
|
$
750
|
$
2,270
|
$
2,178
|
|
|
|
|
|
|
|
|
|
(e) Non-comparable hotel
results, net, includes the results of operations of our
non-comparable hotels whose operations are included in our
consolidated statements of operations as
continuing operations and the difference
between the number of days of operations reflected in the
comparable hotel results and the number of days of operations
reflected in the consolidated statements of operations.
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Other
Financial and Operating Data
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
September
9,
|
December
31,
|
|
|
|
|
|
2011
|
2010
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Common shares
outstanding
|
702.7
|
675.6
|
|
Common shares outstanding
assuming conversion of non-controlling interest OP Units
(a)
|
713.5
|
686.3
|
|
Preferred OP Units
outstanding
|
.02
|
.02
|
|
|
|
|
|
|
|
|
Security pricing
|
|
|
|
|
|
Common (b)
|
$
10.69
|
$
17.87
|
|
3 1/4% Exchangeable Senior
Debentures (c)
|
$
1,017.5
|
$
1,179.4
|
|
2 5/8% Exchangeable Senior
Debentures (c)
|
$
1,002.1
|
$
991.9
|
|
2 1/2% Exchangeable Senior
Debentures (c)
|
$
1,038.9
|
$
1,416.6
|
|
|
|
|
|
|
|
|
Dividends declared per share for
calendar year
|
|
|
|
Common (d)
|
|
|
$
.09
|
$
.04
|
|
Class E Preferred
(e)
|
|
|
$
-
|
$
.95
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes
|
Rate
|
Maturity
date
|
|
|
|
Series K
|
7 1/8%
|
11/2013
|
$
-
|
$
250
|
|
Series O
|
6 3/8%
|
3/2015
|
650
|
650
|
|
Series Q
|
6 3/4%
|
6/2016
|
800
|
800
|
|
Series S
|
6 7/8%
|
11/2014
|
498
|
498
|
|
Series T
|
9%
|
5/2017
|
390
|
388
|
|
Series V
|
6%
|
11/2020
|
500
|
500
|
|
Series W (f)
|
5 7/8%
|
6/2019
|
496
|
-
|
|
Exchangeable senior debentures
(g)(h)
|
3 1/4%
|
4/2024
|
175
|
325
|
|
Exchangeable senior debentures
(g)(i)
|
2 5/8%
|
4/2027
|
413
|
502
|
|
Exchangeable senior debentures
(g)
|
2 1/2%
|
10/2029
|
337
|
329
|
|
Senior notes
|
10%
|
5/2012
|
7
|
7
|
|
Credit facility (j)
|
2.1%
|
9/2012
|
119
|
58
|
|
|
|
|
|
4,385
|
4,307
|
|
Mortgage debt and
other
|
|
|
|
|
|
Mortgage debt (non-recourse)
(k)
|
3.2-10.8%
|
2/2012-12/2023
|
1,016
|
1,025
|
|
Other
|
7.0-7.8%
|
10/2014-12/2017
|
87
|
145
|
|
Total debt
(l)(m)
|
|
|
$
5,488
|
$
5,477
|
|
|
|
|
|
|
|
|
Percentage of fixed rate
debt
|
|
|
90%
|
90%
|
|
Weighted average interest
rate
|
|
|
6.4%
|
6.2%
|
|
Weighted average debt
maturity
|
|
|
4.3 years
|
4.4 years
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Hotel Operating Statistics for
All Properties (n)
|
|
|
|
|
|
Average daily rate
|
$
171.84
|
$
163.16
|
$
178.24
|
$
168.52
|
|
Average occupancy
|
75.9%
|
73.6%
|
72.9%
|
71.1%
|
|
RevPAR
|
$
130.43
|
$
120.10
|
$
129.94
|
$
119.88
|
|
|
|
|
|
|
|
(a) Each OP Unit is
redeemable for cash or, at the option of the Company, 1.021494
common shares of Host. At September 9, 2011 and December 31, 2010,
there were 10.6 million and 10.5 million common OP Units,
respectively, held by non-controlling interests that were
redeemable into 10.8 million and 10.7 million shares, respectively,
of Host common stock.
|
|
(b) Share prices are the
closing price as reported by the New York Stock Exchange.
|
|
(c) Amount reflects market
price of a single $1,000 debenture as quoted by Bloomberg L.P.
|
|
(d) On September 19, 2011,
the Company declared a third quarter common cash dividend of $0.04
per share.
|
|
(e) On June 18, 2010, the
Company redeemed its 8 7/8% Class E cumulative redeemable preferred
stock at a redemption price of $25.00 per share, plus accrued
dividends.
|
|
(f) Reflects the $425
million and $75 million of 5 7/8% Series W senior notes issued on
May 11, 2011 and May 25, 2011, respectively, net of original issue
discounts totaling $4 million.
|
|
(g) The principal balance
outstanding of the 2 5/8% Exchangeable Senior Debentures due 2027
(the "2007 Debentures") and the 2 1/2% Exchangeable Senior
Debentures due 2029 (the "2009 Debentures") is $421 million and
$400 million, respectively. The discounts related to these
exchangeable debentures are amortized through the first date at
which the holders can require Host to repurchase the exchangeable
debentures for cash (April 2012 for the 2007 Debentures and October
2015 for the 2009 Debentures). The discount related to the 3 1/4%
Exchangeable Senior Debentures due 2024 (the "2004 Debentures") has
been fully amortized as of December 31, 2010.
|
|
(h) In May 2011, the
Company gave notice of its intent to redeem $150 million face
amount of the 2004 Debentures. In June 2011, holders of
approximately $134 million of our 2004 Debentures elected to
exchange their debentures for shares of the Company’s common stock
totaling approximately 8.8 million shares in lieu of receiving the
cash redemption proceeds, while the remaining $16 million of the
called debentures were redeemed for cash.
|
|
(i) During the third
quarter of 2011, the Company repurchased approximately $105 million
face amount of the 2007 Debentures, with a carrying value of $102
million, for $106 million and recorded a loss on the repurchase of
approximately $4 million. The 2007 Debentures are puttable to the
Company in April 2012 and, based on the Company’s current stock
price, the Company anticipates that the holders will exercise this
option.
|
|
(j) The interest rate
shown is the weighted average rate of the outstanding credit
facility at September 9, 2011. At September 9, 2011, we had $481
million of available capacity under the revolver portion of the
credit facility.
|
|
(k) Mortgage debt is
secured by real estate assets with an undepreciated book value of
$1.6 billion and has a weighted average interest rate of 5.3% and
4.7% at September 9, 2011 and December 31, 2010, respectively,
maturing through December 2023. The book value of the assets
securing mortgage debt does not represent the current fair value of
the assets.
|
|
(l) In accordance with
GAAP, total debt includes the debt of entities that we consolidate,
but do not own 100% of the entity, and excludes the debt of
entities that we do not consolidate, but have a non-controlling
ownership interest and record our investment therein under the
equity method of accounting. As of September 9, 2011, our
non-controlling partners’ share of consolidated debt is $67 million
and our share of debt in unconsolidated investments is $323
million.
|
|
(m) Total debt as of
September 9, 2011 and December 31, 2010 includes net discounts of
$70 million and $95 million, respectively.
|
|
(n) The operating
statistics reflect all consolidated properties as of September 9,
2011 and September 10, 2010, respectively. The operating statistics
include the results of operations through their date of disposition
for one property disposed of and one property transferred to the
European joint venture in 2011 and two properties disposed of in
2010.
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Reconciliation of Net Loss to
EBITDA, Adjusted EBITDA
|
|
and Funds
From Operations per Diluted Share
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Net loss
|
$
(35)
|
$
(61)
|
$
(32)
|
$
(126)
|
|
Interest
expense
|
87
|
89
|
259
|
268
|
|
Depreciation and
amortization
|
149
|
134
|
439
|
409
|
|
Income taxes
|
3
|
(5)
|
(9)
|
(21)
|
|
EBITDA
|
204
|
157
|
657
|
530
|
|
Acquisition
costs
|
-
|
3
|
4
|
4
|
|
Losses on
dispositions
|
-
|
-
|
-
|
1
|
|
Non-cash impairment
charges
|
-
|
-
|
3
|
-
|
|
Amortization of deferred
gains
|
(3)
|
-
|
(6)
|
-
|
|
Equity investment
adjustments:
|
|
|
|
|
|
Equity in losses of
affiliates
|
5
|
1
|
3
|
5
|
|
Pro rata EBITDA of equity
investments
|
8
|
6
|
19
|
13
|
|
Consolidated partnership
adjustments:
|
|
|
|
|
|
Pro rata EBITDA
attributable to non-controlling partners in other
consolidated partnerships
|
(2)
|
(1)
|
(11)
|
(10)
|
|
Adjusted EBITDA
|
$
212
|
$
166
|
$
669
|
$
543
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year-to-date
ended
|
|
|
September
9,
|
September
10,
|
September
9,
|
September
10,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Net loss
|
$
(35)
|
$
(61)
|
$
(32)
|
$
(126)
|
|
Less: Net loss
attributable to non-controlling interests
|
2
|
3
|
-
|
2
|
|
Dividends on preferred
stock
|
-
|
-
|
-
|
(4)
|
|
Issuance costs of redeemed
preferred stock
|
-
|
-
|
-
|
(4)
|
|
Net loss available to common
stockholders
|
(33)
|
(58)
|
(32)
|
(132)
|
|
Adjustments:
|
|
|
|
|
|
Losses on dispositions,
net of taxes
|
-
|
-
|
-
|
1
|
|
Amortization of deferred
gains and other property transactions, net of taxes
|
(3)
|
-
|
(6)
|
-
|
|
Depreciation and
amortization
|
149
|
133
|
439
|
409
|
|
Partnership
adjustments
|
1
|
1
|
4
|
2
|
|
FFO of non-controlling
interests of Host LP
|
(2)
|
(1)
|
(6)
|
(5)
|
|
Funds From
Operations
|
112
|
75
|
399
|
275
|
|
Adjustments for dilutive
securities:
|
|
|
|
|
|
Assuming conversion of
2004 Debentures
|
1
|
2
|
4
|
-
|
|
Assuming deduction of
interest - redeemed/exchanged 2004 Debentures
|
-
|
-
|
2
|
-
|
|
Diluted FFO
|
$
113
|
$
77
|
$
405
|
$
275
|
|
|
|
|
|
|
|
Diluted weighted average shares
outstanding-EPS
|
702.1
|
654.5
|
688.4
|
651.7
|
|
Assuming issuance of
common shares granted under the Comprehensive Stock Plan
|
1.5
|
2.1
|
1.6
|
2.0
|
|
Assuming conversion of
2004 Debentures
|
11.5
|
21.2
|
11.5
|
-
|
|
Weighted average
outstanding shares - redeemed/exchanged 2004
Debentures
|
-
|
-
|
6.8
|
-
|
|
Diluted weighted average shares
outstanding- FFO (a)(b)
|
715.1
|
677.8
|
708.3
|
653.7
|
|
FFO per diluted share
(a)(b)
|
$
.16
|
$
.11
|
$
.57
|
$
.42
|
|
|
|
|
|
|
|
(a) Earnings/loss per
diluted share and FFO per diluted share are adjusted for the
effects of dilutive securities. Dilutive securities may include
shares granted under comprehensive stock plans, preferred OP Units
held by non-controlling partners, exchangeable debt securities and
other non-controlling interests that have the option to convert
their limited partnership interest to common OP Units. No effect is
shown for securities if they are anti-dilutive.
|
|
(b) FFO per diluted share
and earnings per diluted share were affected by certain
transactions, the effects of which are shown in the table below (in
millions, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Quarter
ended
|
|
|
|
September 9,
2011
|
September
10, 2010
|
|
|
|
Net
Loss
|
FFO
|
Net
Loss
|
FFO
|
|
|
Loss on debt extinguishments
(1)
|
$
(5)
|
$
(5)
|
$
(7)
|
$
(7)
|
|
|
Acquisition costs (2)
|
-
|
-
|
(3)
|
(3)
|
|
|
Total
|
$
(5)
|
$
(5)
|
$
(10)
|
$
(10)
|
|
|
Diluted shares
|
702.1
|
715.7
|
654.5
|
677.8
|
|
|
Per diluted
share
|
$
(.01)
|
$
-
|
$
(.02)
|
$
(.02)
|
|
|
|
|
|
|
|
|
|
|
Year-to-date
ended
|
Year-to-date
ended
|
|
|
|
September 9,
2011
|
September
10, 2010
|
|
|
|
Net
Loss
|
FFO
|
Net
Loss
|
FFO
|
|
|
Loss on dispositions, net of
tax
|
$
-
|
$
-
|
$
(1)
|
$
-
|
|
|
Non-cash impairment
charges
|
(3)
|
(3)
|
-
|
-
|
|
|
Loss on debt extinguishments
(1)
|
(10)
|
(10)
|
(15)
|
(15)
|
|
|
Acquisition costs (2)
|
(4)
|
(4)
|
(4)
|
(4)
|
|
|
Preferred stock redemption
(3)
|
-
|
-
|
(4)
|
(4)
|
|
|
Dilutive effect of 2009
Debentures
|
-
|
(17)
|
-
|
-
|
|
|
Potential loss on litigation
(4)
|
-
|
-
|
(4)
|
(4)
|
|
|
Loss attributable to
non-controlling interests (5)
|
-
|
-
|
1
|
1
|
|
|
Total
|
$
(17)
|
$
(34)
|
$
(27)
|
$
(26)
|
|
|
Diluted shares
|
688.4
|
736.7
|
651.7
|
653.7
|
|
|
Per diluted
share
|
$
(.03)
|
$
(.03)
|
$
(.04)
|
$
(.04)
|
|
|
|
|
|
|
|
|
|
(1) Represents costs
associated with the redemption of the Series K Senior Notes and
2007 Debentures in 2011 and the Series M Senior Notes in 2010.
|
|
|
(2) Represents costs
incurred related to successful acquisitions.
|
|
|
(3) Represents the
original issuance costs of Class E preferred stock, which were
redeemed on June 18, 2010.
|
|
|
(4) Includes the accrual
of a potential litigation loss in the first quarter of 2010.
|
|
|
(5) Represents the portion
of the significant items attributable to non-controlling partners
in Host LP
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Reconciliation of Net Income
(Loss) to EBITDA, Adjusted EBITDA
|
|
and Funds
From Operations per Diluted Share
|
|
for Full
Year 2011 Forecasts (a)
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
Full Year
2011
|
|
|
Low-end
|
High-end
|
|
|
of
range
|
of
range
|
|
Net loss
|
$ (22)
|
$
(9)
|
|
Interest expense
|
372
|
372
|
|
Depreciation and
amortization
|
637
|
637
|
|
Income taxes
|
1
|
(2)
|
|
EBITDA
|
988
|
998
|
|
Acquisition
costs
|
12
|
12
|
|
Non-cash impairment
charges
|
3
|
3
|
|
Amortization of deferred
gains
|
(7)
|
(7)
|
|
Equity investment
adjustments:
|
|
|
|
Equity in losses of
affiliates
|
4
|
4
|
|
Pro rata Adjusted EBITDA
of equity investments
|
31
|
31
|
|
Consolidated partnership
adjustments:
|
|
|
|
Pro rata Adjusted EBITDA
attributable to non-controlling partners in other
consolidated partnerships
|
(16)
|
(16)
|
|
Adjusted EBITDA
|
$
1,015
|
$
1,025
|
|
|
|
|
|
|
Full Year
2011 Forecast
|
|
|
Low-end
|
High-end
|
|
|
of
range
|
of
range
|
|
Net loss
|
$ (22)
|
$
(9)
|
|
Less: Net income attributable to
non-controlling interests
|
(1)
|
(1)
|
|
Net loss available to common
stockholders
|
(23)
|
(10)
|
|
Adjustments:
|
|
|
|
Depreciation and
amortization
|
636
|
636
|
|
Amortization of deferred
gains
|
(7)
|
(7)
|
|
Partnership
adjustments
|
7
|
7
|
|
FFO of non-controlling
interests of Host LP
|
(9)
|
(9)
|
|
Funds From
Operations
|
604
|
617
|
|
Adjustment for dilutive
securities:
|
|
|
|
Assuming conversion of
exchangeable senior debentures
|
32
|
32
|
|
Diluted FFO
|
$
636
|
$
649
|
|
|
|
|
|
Weighted average diluted shares
- (EPS)
|
692.8
|
692.8
|
|
Weighted average diluted shares-
(FFO) (b)
|
741.4
|
741.4
|
|
Income per diluted
share
|
$ (.03)
|
$ (.01)
|
|
FFO per diluted
share
|
$
.86
|
$
.88
|
|
|
|
|
|
|
|
|
|
|
(a) The full year 2011
forecasts were based on the below assumptions:
|
|
- Comparable hotel RevPAR
will increase 6.25% to 6.75% for the low and high ends of the
forecasted range, respectively.
|
|
- Comparable hotel
adjusted operating profit margins will increase 80 basis points to
90 basis points for the low and high ends of the forecasted range,
respectively.
|
|
- We expect to complete
the acquisition of the Grand Hyatt Washington, D.C. in late
December of 2011; therefore, only transaction costs have been
included in operating results.
|
|
- Costs associated with
debt extinguishments, acquisition costs and non-cash impairment
charges will decrease earnings and FFO per share by $.03.
|
|
- Interest expense
includes approximately $44 million related to non-cash interest
expense for exchangeable senior debentures, amortization of
original issue discounts and deferred financing fees.
|
|
- We expect to spend
approximately $220 million to $240 million on ROI capital
expenditures.
|
|
- We expect to spend
approximately $300 million to $320 million on renewal and
replacement expenditures in 2011.
|
|
For a discussion of
additional items that may affect forecasted results, see Notes to
the Financial Information.
|
|
(b) The full year 2011
forecast FFO per diluted share includes 47 million shares for the
dilution of the 2004 and 2009 Exchangeable Senior Debentures.
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Schedule of
Comparable Hotel Adjusted Operating Profit Margin
|
|
for Full
Year 2011 Forecasts (a)
|
|
(unaudited,
in millions, except hotel statistics)
|
|
|
|
|
|
|
|
|
Full Year
2011
|
|
|
|
Low-end
|
High-end
|
|
|
|
of
range
|
of
range
|
|
Operating profit margin under
GAAP (b)
|
6.7%
|
6.9%
|
|
Comparable hotel adjusted
operating profit margin (c)
|
22.2%
|
22.3%
|
|
|
|
|
|
Comparable hotel
sales
|
|
|
|
Room
|
$ 2,712
|
$ 2,725
|
|
Other
|
1,579
|
1,586
|
|
Comparable hotel sales
(d)
|
4,291
|
4,311
|
|
Comparable hotel
expenses
|
|
|
|
Rooms and other
departmental costs
|
1,872
|
1,882
|
|
Management fees, ground
rent and other costs
|
1,466
|
1,468
|
|
Comparable hotel expenses
(e)
|
3,338
|
3,350
|
|
Comparable hotel adjusted
operating profit
|
953
|
961
|
|
Non-comparable hotel results,
net
|
126
|
127
|
|
Hotels leased from HPT and
office buildings, net
|
(11)
|
(11)
|
|
Depreciation and amortization
|
(637)
|
(637)
|
|
Corporate and other
expenses
|
(98)
|
(98)
|
|
Operating
profit
|
$
333
|
$
342
|
|
|
|
|
|
|
|
|
|
|
(a) Forecasted comparable
hotel results include 104 hotels that we have assumed will be
classified as comparable as of December 31, 2011. No assurances can
be made as to the hotels that will be in the comparable hotel set
for 2011. Also, see the notes to the "Reconciliation of Net Income
(Loss) to EBITDA, Adjusted EBITDA and Funds From Operations per
Diluted Share For Full Year 2011 Forecasts" for other forecast
assumptions.
|
|
(b) Operating profit
margin under GAAP is calculated as the operating profit divided by
the forecast total revenues per the consolidated statements of
operations. See (d) below for forecasted revenues.
|
|
(c) Comparable hotel
adjusted operating profit margin is calculated as the comparable
hotel adjusted operating profit divided by the comparable hotel
sales per the table above.
|
|
(d) The reconciliation of
forecast total revenues to the forecast comparable hotel sales is
as follows (in millions):
|
|
|
|
|
|
|
|
Full Year
2011
|
|
|
Low-end
|
High-end
|
|
|
of
range
|
of
range
|
|
Revenues
|
$ 4,964
|
$ 4,987
|
|
Non-comparable hotel
sales
|
(506)
|
(509)
|
|
Revenues for hotels leased from
HPT and office buildings
|
(218)
|
(218)
|
|
Hotel sales for the property for
which we record rental income, net
|
51
|
51
|
|
Comparable hotel
sales
|
$
4,291
|
$
4,311
|
|
|
|
|
|
(e) The reconciliation of
forecast operating costs and expenses to the comparable hotel
expenses is as follows (in millions):
|
|
|
Full Year
2011
|
|
|
Low-end
|
High-end
|
|
|
of
range
|
of
range
|
|
Operating costs and
expenses
|
$ 4,631
|
$ 4,645
|
|
Non-comparable hotel and other
expenses
|
(380)
|
(382)
|
|
Expenses for hotels leased from
HPT and office buildings
|
(229)
|
(229)
|
|
Hotel expenses for the property
for which we record rental income
|
51
|
51
|
|
Depreciation and
amortization
|
(637)
|
(637)
|
|
Corporate and other
expenses
|
(98)
|
(98)
|
|
Comparable hotel
expenses
|
$
3,338
|
$
3,350
|
|
|
|
|
FORECASTS
Our forecast of earnings per diluted share, FFO, FFO per diluted
share, EBITDA, Adjusted EBITDA and comparable hotel adjusted
operating profit margins are forward-looking statements and are not
guarantees of future performance and involve known and unknown
risks, uncertainties and other factors which may cause actual
results and performance to differ materially from those expressed
or implied by these forecasts. Although we believe the expectations
reflected in the forecasts are based upon reasonable assumptions,
we can give no assurance that the expectations will be attained or
that the results will not be materially different. Risks that may
affect these assumptions and forecasts include the following:
potential changes in overall economic outlook make it inherently
difficult to forecast the level of RevPAR and margin growth; the
amount and timing of acquisitions and dispositions of hotel
properties is an estimate that can substantially affect financial
results, including such items as net income, depreciation and gains
on dispositions; the level of capital expenditures may change
significantly, which will directly affect the level of depreciation
expense and net income; the amount and timing of debt payments may
change significantly based on market conditions, which will
directly affect the level of interest expense and net income; the
amount and timing of transactions involving shares of our common
stock may change based on market conditions; and other risks and
uncertainties associated with our business described herein and in
our annual report on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K filed with the SEC.
REPORTING PERIODS FOR STATEMENT OF OPERATIONS
The results we report in our consolidated statements of
operations are based on results of our hotels reported to us by our
hotel managers. Our hotel managers use different reporting periods.
Marriott International, Inc. (Marriott), the manager of the
majority of our properties, uses a fiscal year ending on the Friday
closest to December 31 and reports twelve weeks of operations
for the first three quarters and sixteen or seventeen weeks for the
fourth quarter of the year for its Marriott-managed hotels. In
contrast, other managers of our hotels, such as Starwood and Hyatt,
report results on a monthly basis. Additionally, Host, as a REIT,
is required by tax laws to report results on a calendar year. As a
result, we elected to adopt the reporting periods used by Marriott
except that our fiscal year always ends on December 31 to
comply with REIT rules. Our first three quarters of operations end
on the same day as Marriott but our fourth quarter ends on
December 31 and our full year results, as reported in our
consolidated statement of operations, always includes the same
number of days as the calendar year.
Two consequences of the reporting cycle we have adopted are:
(1) quarterly start dates will usually differ between years,
except for the first quarter which always commences on
January 1, and (2) our first and fourth quarters of operations
and year-to-date operations may not include the same number of days
as reflected in prior years. For example, the third quarter of 2011
ended on September 9, and the third quarter of 2010 ended on
September 10, though both quarters reflect twelve weeks of
operations. In contrast, the September 9, 2011 year-to-date
operations included 252 days of operations, while the
September 10, 2010 year-to-date operations included 253 days
of operations.
While the reporting calendar we adopted is more closely aligned
with the reporting calendar used by the manager of a majority of
our properties, one final consequence of our calendar is we are
unable to report the month of operations that ends after our fiscal
quarter-end until the following quarter because our hotel managers
using a monthly reporting period do not make mid-month results
available to us. Hence, the month of operation that ends after our
fiscal quarter-end is included in our quarterly results of
operations in the following quarter for those hotel managers
(covering approximately 42% of our hotels). As a result, our
quarterly results of operations include results from hotel managers
reporting results on a monthly basis as follows: first
quarter (January, February), second quarter (March to May), third
quarter (June to August) and fourth quarter (September to
December). While this does not affect full-year results, it does
affect the reporting of quarterly results.
REPORTING PERIODS FOR HOTEL OPERATING STATISTICS AND
COMPARABLE HOTEL RESULTS
In contrast to the reporting periods for our consolidated
statement of operations, our hotel operating statistics (i.e.,
RevPAR, average daily rate and average occupancy) and our
comparable hotel results are always reported based on the reporting
cycle used by Marriott for our Marriott-managed hotels. This
facilitates year-to-year comparisons, as each reporting period will
be comprised of the same number of days of operations as in the
prior year (except in the case of fourth quarters comprised of
seventeen weeks (such as fiscal year 2008) versus sixteen weeks).
This means, however, that the reporting periods we use for hotel
operating statistics and our comparable hotels results will
typically differ slightly from the reporting periods used for our
statements of operations for the first and fourth quarters and the
full year. Results from hotel managers reporting on a monthly basis
are included in our operating statistics and comparable hotels
results consistent with their reporting in our consolidated
statement of operations herein:
- Hotel results for the third quarter of 2011 reflect 12 weeks of
operations for the period from June 18, 2011 to
September 9, 2011 for our Marriott-managed hotels and results
from June 1, 2011 to August 31, 2011 for operations of
all other hotels which report results on a monthly basis.
- Hotel results for the third quarter of 2010 reflect 12 weeks of
operations for the period from June 19, 2010 to
September 10, 2010 for our Marriott-managed hotels and results
from June 1, 2010 to August 31, 2010 for operations of
all other hotels which report results on a monthly basis.
- Hotel results for year-to-date 2011 reflect 36 weeks of
operations for the period from January 1, 2011 to
September 9, 2011 for our Marriott-managed hotels and results
from January 1, 2011 to August 31, 2011 for operations of
all other hotels which report results on a monthly basis.
- Hotel results for year-to-date 2010 reflect 36 weeks of
operations for the period from January 2, 2010 to
September 10, 2010 for our Marriott-managed hotels and results
from January 1, 2010 to August 31, 2010 for operations of
all other hotels which report results on a monthly basis.
COMPARABLE HOTEL OPERATING STATISTICS
We present certain operating statistics (i.e., RevPAR, average
daily rate and average occupancy) and operating results (revenues,
expenses, adjusted operating profit and associated margins) for the
periods included in this report on a comparable hotel basis. We
define our comparable hotels as properties (i) that are owned
or leased by us and the operations of which are included in our
consolidated results, whether as continuing operations or
discontinued operations for the entirety of the reporting periods
being compared and (ii) that have not sustained substantial
property damage or business interruption, or undergone large-scale
capital projects during the reporting periods being compared. Of
the 121 hotels that we owned on September 9, 2011, 104 have
been classified as comparable hotels. The operating results of the
following hotels that we owned or leased as of September 9,
2011 are excluded from comparable hotel results for these
periods:
- Hilton Melbourne South Wharf (acquired in April 2011);
- New York Helmsley Hotel (acquired in March 2011);
- Manchester Grand Hyatt San Diego (acquired in March 2011);
- The portfolio of seven hotels in New
Zealand (acquired in February
2011);
- JW Marriott, Rio de Janeiro
(acquired in September 2010);
- W New York, Union Square
(acquired in September 2010);
- Westin Chicago River North (acquired in August 2010);
- Atlanta Marriott Perimeter Center (business interruption due to
significant renovations);
- Chicago Marriott O'Hare (business interruption due to
significant renovations);
- Sheraton Indianapolis Hotel & Suites (business interruption
due to significant renovations); and
- San Diego Marriott Marquis & Marina (business interruption
due to significant renovations).
The operating results of the Le Meridien Piccadilly, which was
transferred to the Euro JV Fund II, one hotel we disposed of during
the third quarter of 2011 and two hotels we disposed of during
2010, as well as the 53 Courtyard by Marriott properties leased
from HPT, are not included in comparable hotel results for the
periods presented herein. Moreover, because these statistics and
operating results are for our hotel properties, they exclude
results for our non-hotel properties and other real estate
investments.
NON-GAAP FINANCIAL MEASURES
Included in this press release are certain "non-GAAP financial
measures," which are measures of our historical or future financial
performance that are not calculated and presented in accordance
with GAAP, within the meaning of applicable SEC rules. They are as
follows: (i) FFO and FFO per diluted share, (ii) EBITDA, (iii)
Adjusted EBITDA and (iv) Comparable Hotel Operating Results. The
following discussion defines these terms and presents why we
believe they are useful supplemental measures of our
performance.
FFO and FFO per Diluted Share
We present FFO and FFO per diluted share as non-GAAP measures of
our performance in addition to our earnings per share (calculated
in accordance with GAAP). We calculate FFO per diluted share for a
given operating period as our FFO (defined as set forth below) for
such period, as adjusted for the effect of dilutive securities,
divided by the number of fully diluted shares outstanding during
such period. NAREIT defines FFO as net income (calculated in
accordance with GAAP) excluding gains (losses) from sales of real
estate, the cumulative effect of changes in accounting principles,
real estate-related depreciation and amortization and adjustments
for unconsolidated partnerships and joint ventures. We present FFO
on a per share basis after making adjustments for the effects of
dilutive securities and the payment of preferred stock dividends,
in accordance with NAREIT guidelines.
We believe that FFO per diluted share is a useful supplemental
measure of our operating performance and that the presentation of
FFO per diluted share, when combined with the primary GAAP
presentation of earnings per share, provides beneficial information
to investors. By excluding the effect of real estate depreciation,
amortization and gains and losses from sales of real estate, all of
which are based on historical cost accounting and which may be of
lesser significance in evaluating current performance, we believe
such measures can facilitate comparisons of operating performance
between periods and with other REITs, even though FFO per diluted
share does not represent an amount that accrues directly to holders
of our common stock. Historical cost accounting for real estate
assets implicitly assumes that the value of real estate assets
diminishes predictably over time. As noted by NAREIT in its
April 2002 "White Paper on Funds From
Operations," since real estate values have historically risen or
fallen with market conditions, many industry investors have
considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient by
themselves. For these reasons, NAREIT adopted the definition of FFO
in order to promote an industry-wide measure of REIT operating
performance.
EBITDA
Earnings before Interest Expense, Income Taxes, Depreciation and
Amortization (EBITDA) is a commonly used measure of performance in
many industries. Management believes EBITDA provides useful
information to investors regarding our results of operations
because it helps us and our investors evaluate the ongoing
operating performance of our properties and facilitates comparisons
between us and other lodging REITs, hotel owners who are not REITs
and other capital-intensive companies. Management uses EBITDA to
evaluate property-level results and as one measure in determining
the value of acquisitions and dispositions and, like FFO per
diluted share, it is widely used by management in the annual budget
process.
Adjusted EBITDA
Historically, management has adjusted EBITDA when evaluating our
performance because we believe that the exclusion of certain
additional items described below provides useful supplemental
information to investors regarding our ongoing operating
performance and that the presentation of Adjusted EBITDA, when
combined with the primary GAAP presentation of net income, is
beneficial to an investor's complete understanding of our operating
performance and is a relevant measure in calculating certain credit
ratios. We adjust EBITDA for the following items, which may occur
in any period, and refer to this measure as Adjusted EBITDA:
- Real Estate Transactions – We exclude the effect of gains and
losses, including the amortization of deferred gains, recorded on
the disposition of assets and property insurance gains in our
consolidated statement of operations because we believe that
including them in Adjusted EBITDA is not consistent with reflecting
the ongoing performance of our remaining assets. In addition,
material gains or losses from the depreciated value of the disposed
assets could be less important to investors given that the
depreciated asset often does not reflect the market value of real
estate assets (as noted above for FFO).
- Equity Investment Adjustments – We exclude the equity in
earnings (losses) of unconsolidated investments in partnerships and
joint ventures as presented in our consolidated statement of
operations because it includes our pro rata portion of
depreciation, amortization and interest expense. We include our pro
rata share of the Adjusted EBITDA of our equity investments as we
believe this more accurately reflects the performance of our
investment. The pro rata Adjusted EBITDA of equity investments is
defined as the EBITDA of our equity investments adjusted for any
gains or losses on property transactions multiplied by our
percentage ownership in the partnership or joint venture.
- Consolidated Partnership Adjustments – We deduct the
non-controlling partners' pro rata share of the Adjusted EBITDA of
our consolidated partnerships as this reflects the non-controlling
owners' interest in the EBITDA of our consolidated partnerships.
The pro rata Adjusted EBITDA of non-controlling partners is defined
as the EBITDA of our consolidated partnerships adjusted for any
gains or losses on property transactions multiplied by the
non-controlling partners' positions in the partnership or joint
venture.
- Cumulative Effect of a Change in Accounting Principle –
Infrequently, the Financial Accounting Standards Board (FASB)
promulgates new accounting standards that require the consolidated
statement of operations to reflect the cumulative effect of a
change in accounting principle. We exclude these one-time
adjustments because they do not reflect our actual performance for
that period.
- Impairment Losses – We exclude the effect of impairment losses
recorded because we believe that including them in Adjusted EBITDA
is not consistent with reflecting the ongoing performance of our
remaining assets. In addition, we believe that impairment
charges are similar to gains (losses) on dispositions and
depreciation expense, both of which are also excluded from
EBITDA.
- Acquisition Costs – Effective January 1, 2009, the
accounting treatment under GAAP for costs associated with completed
property acquisitions changed and these costs are now expensed in
the year incurred as opposed to capitalized as part of the
acquisition. Beginning in 2011, we have excluded the effect of
these costs because we believe it is not reflective of the ongoing
performance of our properties. This is consistent with the EBITDA
calculation under the prior GAAP accounting treatment which
expensed these costs over time as part of depreciation expense,
which is excluded from EBITDA.
Limitations on the Use of FFO per Diluted Share, EBITDA and
Adjusted EBITDA
We calculate FFO per diluted share in accordance with standards
established by NAREIT, which may not be comparable to measures
calculated by other companies who do not use the NAREIT definition
of FFO or calculate FFO per diluted share in accordance with NAREIT
guidance. In addition, although FFO per diluted share is a useful
measure when comparing our results to other REITs, it may not be
helpful to investors when comparing us to non-REITs. EBITDA and
Adjusted EBITDA, as presented, may also not be comparable to
measures calculated by other companies. This information should not
be considered as an alternative to net income, operating profit,
cash from operations or any other operating performance measure
calculated in accordance with GAAP. Cash expenditures for various
long-term assets (such as renewal and replacement capital
expenditures), interest expense (for EBITDA and Adjusted EBITDA
purposes only) and other items have been and will be incurred and
are not reflected in the EBITDA, Adjusted EBITDA and FFO per
diluted share presentations. Management compensates for these
limitations by separately considering the impact of these excluded
items to the extent they are material to operating decisions or
assessments of our operating performance. Our consolidated
statement of operations and cash flows include interest expense,
capital expenditures, and other excluded items, all of which should
be considered when evaluating our performance, as well as the
usefulness of our non-GAAP financial measures. Additionally, FFO
per diluted share, EBITDA and Adjusted EBITDA should not be
considered as a measure of our liquidity or indicative of funds
available to fund our cash needs, including our ability to make
cash distributions. In addition, FFO per diluted share does not
measure, and should not be used as a measure of, amounts that
accrue directly to stockholders' benefit.
Comparable Hotel Operating Results
We present certain operating results for our hotels, such as
hotel revenues, expenses, adjusted operating profit (and the
related margin) and food and beverage adjusted profit (and the
related margin), on a comparable hotel, or "same store," basis as
supplemental information for investors. Our comparable hotel
results present operating results for hotels owned during the
entirety of the periods being compared without giving effect to any
acquisitions or dispositions, significant property damage or large
scale capital improvements incurred during these periods. We
present these comparable hotel operating results by eliminating
corporate-level costs and expenses related to our capital
structure, as well as depreciation and amortization. We eliminate
corporate-level costs and expenses to arrive at property-level
results because we believe property-level results provide investors
with supplemental information into the ongoing operating
performance of our hotels. We eliminate depreciation and
amortization because, even though depreciation and amortization are
property-level expenses, these non-cash expenses, which are based
on historical cost accounting for real estate assets, implicitly
assume that the value of real estate assets diminishes predictably
over time. As noted earlier, because real estate values have
historically risen or fallen with market conditions, many industry
investors have considered presentation of operating results for
real estate companies that use historical cost accounting to be
insufficient by themselves.
As a result of the elimination of corporate-level costs and
expenses and depreciation and amortization, the comparable hotel
operating results we present do not represent our total revenues,
expenses, operating profit or operating profit margin and should
not be used to evaluate our performance as a whole. Management
compensates for these limitations by separately considering the
impact of these excluded items to the extent they are material to
operating decisions or assessments of our operating performance.
Our consolidated statements of operations include such amounts, all
of which should be considered by investors when evaluating our
performance.
We present these hotel operating results on a comparable hotel
basis because we believe that doing so provides investors and
management with useful information for evaluating the
period-to-period performance of our hotels and facilitates
comparisons with other hotel REITs and hotel owners. In particular,
these measures assist management and investors in distinguishing
whether increases or decreases in revenues and/or expenses are due
to growth or decline of operations at comparable hotels (which
represent the vast majority of our portfolio) or from other
factors, such as the effect of acquisitions or dispositions. While
management believes that presentation of comparable hotel results
is a "same store" supplemental measure that provides useful
information in evaluating our ongoing performance, this measure is
not used to allocate resources or to assess the operating
performance of each of these hotels, as these decisions are based
on data for individual hotels and are not based on comparable hotel
results. For these reasons, we believe that comparable hotel
operating results, when combined with the presentation of GAAP
operating profit, revenues and expenses, provide useful information
to investors and management.
SOURCE Host Hotels & Resorts, Inc.