BETHESDA, Md., Feb. 14, 2012 /PRNewswire/ -- Host Hotels &
Resorts, Inc. (NYSE: HST), the nation's largest lodging real estate
investment trust (REIT), today announced results of operations for
the fourth quarter and full year ended December 31, 2011. Operating results for
the quarter and full year include:
Operating
Results
|
|
(in
millions, except per share and hotel statistics)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended December 31,
|
Year ended
December 31,
|
|
|
|
|
|
|
Percent
|
|
|
Percent
|
|
|
|
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
|
Total revenues
|
|
|
$
1,658
|
$
1,491
|
11.2%
|
$
4,998
|
$
4,428
|
12.9%
|
|
Comparable hotel
revenues
|
|
1,414
|
1,333
|
6.1
|
4,315
|
4,087
|
5.6
|
|
Net income (loss)
|
|
16
|
(6)
|
N/M
|
(16)
|
(132)
|
87.9
|
|
Adjusted EBITDA
|
|
349
|
292
|
19.5
|
1,018
|
834
|
22.1
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share
|
|
$
.02
|
$
(.01)
|
N/M
|
$
(.02)
|
$
(.21)
|
90.5%
|
|
NAREIT FFO per diluted
share
|
|
.31
|
.26
|
19.2%
|
.89
|
.68
|
30.9
|
|
Adjusted FFO per diluted
share
|
|
.32
|
.28
|
14.3
|
.92
|
.74
|
24.3
|
|
|
|
|
|
|
|
|
|
|
|
Comparable hotel
RevPAR
|
|
$
131.23
|
$
123.97
|
5.9%
|
$
129.97
|
$
122.47
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
N/M=Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
(Logo: http://photos.prnewswire.com/prnh/20060417/HOSTLOGO
)
The increase in total revenues reflects the performance of the
Company's owned hotels and includes the 14 hotels (5,200 rooms)
acquired since July 2010, which
increased revenues by an incremental $83 million and
$296 million for the fourth quarter and full year 2011,
respectively. Total revenues also include incremental
property-level revenues for 53 leased, select service hotels of
$54 million for full year 2011.
The improvements in net income (loss), Adjusted EBITDA (which is
Earnings before Interest Expense, Income Taxes, Depreciation,
Amortization and other items), NAREIT Funds from Operations ("FFO")
and Adjusted FFO reflect the improvement in comparable hotel
operations and the effect of the Company's recent acquisitions.
All of these metrics were negatively impacted by the
forfeiture of a $15 million deposit
related to the Company's decision in December 2011 not to acquire the Grand Hyatt
Washington, D.C.
NAREIT FFO per diluted share, Adjusted FFO per diluted share,
Adjusted EBITDA and comparable hotel adjusted operating profit
margins 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 on why the Company believes these
supplemental measures are useful, reconciliations to the applicable
GAAP measure and the limitations on their use.
OPERATING RESULTS
The increase in comparable hotel RevPAR of 5.9% in the fourth
quarter reflects the improvement in average room rate of 3.8%,
combined with an increase in occupancy of 1.3 percentage points.
Similarly, for full year 2011, the increase in comparable hotel
RevPAR of 6.1% reflects the improvement in average room rate of
4.3% and a 1.3 percentage point increase in occupancy. Comparable
hotel revenues also include an increase in food and beverage
revenues of 6.8% and 5.5% for the quarter and full year,
respectively. The increase in revenues drove improvements in
the comparable hotel adjusted operating profit margins of 100 basis
points for the quarter and 90 basis points for the full year.
INVESTMENTS
- REDEVELOPMENT AND RETURN ON INVESTMENT
EXPENDITURES - The Company invested approximately
$202 million in 2011 in redevelopment and return on investment
("ROI") expenditures. 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 fourth quarter, the Company substantially completed the
redevelopment of 466 rooms along with 27,000 square feet of meeting
space at the Chicago Marriott O'Hare and over 11,000 square feet of
lobby, restaurant and meeting space at the Hilton Singer Island
Oceanfront Resort. The Company expects that its investment in ROI
expenditures for 2012 will total approximately $155 million to
$175 million.
- ACQUISITION EXPENDITURES – In conjunction with
the acquisition of a property, the Company prepares a capital
improvement plan designed to enhance the profitability of the
hotel. Consistent with plans developed for recent acquisitions,
during the fourth quarter of 2011, the Company began work on the
renovation of all 270 rooms at the W New
York – Union Square and the rebranding of the New York
Helmsley Hotel to a Westin, including a redesign of all 773 rooms
and a new lobby bar and restaurant. The Company spent approximately
$13 million on acquisition projects
in 2011 and expects to invest between $80
million and $100 million in 2012.
- RENEWAL AND REPLACEMENT EXPENDITURES - The
Company also invested approximately $327 million in 2011 in
renewal and replacement expenditures designed to ensure that the
high-quality standards of both the Company and its operators are
maintained. During 2011, the Company completed renovations to over
5,300 guestrooms, 98,000 square feet of restaurants, lobbies and
other public space and over 515,000 square feet of ballrooms and
meeting space, taking advantage of favorable construction pricing,
while significantly improving its properties. Major renewal and
replacement projects completed during the fourth quarter included
the renovation of all 371 rooms at the JW Marriott, Buckhead
Atlanta, all 296 rooms at the Tampa Airport Marriott and 24,100
square feet of remodeled ballroom and meeting space at the San
Ramon Marriott. The Company expects that renewal and replacement
expenditures for 2012 will total approximately $310 million to
$330 million.
BALANCE SHEET
During the fourth quarter, the Company continued to execute on
its strategic goal of strengthening its balance sheet by balancing
debt maturities through the following transactions:
- on November 18, 2011 the Company issued $300 million
of 6% Series Y senior notes due October
2021. The net proceeds of approximately $295 million
will be used, along with available cash, to repurchase or repay the
$388 million of 2⅝% exchangeable senior debentures, which are
expected to be put to the Company in April of 2012;
- on November 22, 2011 the Company
closed on a new senior revolving credit facility with a syndicate
of banks. The credit facility allows for borrowings in an aggregate
principal amount of up to $1 billion. The interest rate spread
for LIBOR-based borrowings ranges from 175 to 275 basis points.
Based on the Company's credit statistics at December 31, 2011, the spread would be 200 basis
points. The credit facility has an initial maturity of November 2015 with an option to extend for one
additional year, subject to certain conditions and the payment of
an extension fee; and
- in November 2011, the Company
refinanced the mortgage loan on the Hilton Melbourne South Wharf,
which extended the maturity of the loan to 2016 and lowered the
effective interest rate by 400 basis points. For the A$82 million loan, 75% bears interest at a fixed
rate of 6.7%, through an interest rate swap, while the remaining
25% bears interest at a floating rate based on the 3-month Reuters'
Bank Bill Swap Bid Rate (BBSY) plus 230 basis points for a combined
rate of 6.77% at December 31,
2011.
As of December 31, 2011, the Company had approximately
$826 million of cash and cash equivalents and
$883 million of available capacity under its credit
facility.
EUROPEAN JOINT VENTURE
Comparable hotel RevPAR for the portfolio of hotels owned by the
joint venture in Europe, in which
the Company holds an approximate one-third partnership interest,
increased 1.0% for the fourth quarter and 5.5% year-to-date on a
constant Euro basis. The growth was driven by an increase in
average room rate of 5.3% and 5.5% for the fourth quarter and full
year 2011, respectively.
DIVIDEND
On January 17, 2012, the Company paid a fourth quarter
dividend of $0.05 per share on its
common stock. The Company's policy on common dividends is generally
to distribute, over time, 100% of its taxable income. Based
on its guidance for 2012, the Company intends to declare, subject
to approval by the Company's board of directors, a quarterly
dividend of $.06 per share in the
first quarter.
2012 OUTLOOK
The Company anticipates for 2012 that:
- Comparable hotel RevPAR will increase 4% to 6%;
- Operating profit margins under GAAP would increase
approximately 140 basis points to 230 basis points; and
- Comparable hotel adjusted operating profit margins will
increase approximately 25 basis points to 75 basis points.
Based upon these parameters, the Company estimates that its full
year 2012 guidance is as follows:
- earnings per diluted share should range from
approximately $.08 to $.15;
- net income should range from $57 million
to $112 million;
- NAREIT and Adjusted FFO per diluted share should be
approximately $.97 to $1.04;
and,
- Adjusted EBITDA should be approximately $1,090 million
to $1,145 million.
See the 2012 Forecast Schedules and Notes to Financial
Information for other assumptions used in the forecasts and items
that may affect forecasted results. Effective with this press
release the Company began reporting Adjusted FFO per diluted share.
Adjusted FFO reflects FFO as defined by NAREIT adjusted for
costs associated with financing transactions, acquisition costs and
litigation expenses outside the normal course of operations.
For further discussion of Adjusted FFO and other non-GAAP
measures, see the Notes to the Financial Information included with
this press release.
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 investing in seven hotels with
approximately 1,750 rooms that are in various stages of development
in three cities. 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 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 February 14, 2012, 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
December 31, 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 10-K.
For information on our reporting periods and non-GAAP financial
measures (including Adjusted EBITDA, NAREIT and Adjusted 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)
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
December
31,
|
|
|
|
|
2011
|
2010
|
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Property and equipment,
net
|
$
11,383
|
$
10,514
|
|
Due from managers
|
37
|
45
|
|
Investments in
affiliates
|
197
|
148
|
|
Deferred financing costs,
net
|
55
|
44
|
|
Furniture, fixtures and
equipment replacement fund
|
166
|
152
|
|
Other
|
368
|
354
|
|
Restricted cash
|
36
|
41
|
|
Cash and cash
equivalents
|
826
|
1,113
|
|
Total assets
|
$
13,068
|
$
12,411
|
|
|
|
|
|
LIABILITIES,
NON-CONTROLLING INTERESTS AND EQUITY
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
Senior notes, including
$902 million and $1,156 million, respectively, net of
discount, of
Exchangeable Senior Debentures
|
$
4,543
|
$
4,249
|
|
Credit facility
|
117
|
58
|
|
Mortgage debt
|
1,006
|
1,025
|
|
Other
|
87
|
145
|
|
Total debt
|
5,753
|
5,477
|
|
Accounts payable and accrued
expenses
|
175
|
161
|
|
Other
|
269
|
250
|
|
Total liabilities
|
6,197
|
5,888
|
|
|
|
|
|
Non-controlling interests-Host
Hotels & Resorts, L.P.
|
158
|
191
|
|
|
|
|
|
Host Hotels & Resorts, Inc.
stockholders' equity:
|
|
|
|
Common stock, par value
$.01, 1,050 million shares authorized; 705.1 million
shares and
675.6 million shares issued and outstanding,
respectively
|
7
|
7
|
|
Additional paid-in
capital
|
7,750
|
7,236
|
|
Accumulated other
comprehensive income (loss)
|
(1)
|
25
|
|
Deficit
|
(1,079)
|
(965)
|
|
Total equity of Host
Hotels & Resorts, Inc. stockholders
|
6,677
|
6,303
|
|
Non-controlling interests-other
consolidated partnerships
|
36
|
29
|
|
Total equity
|
6,713
|
6,332
|
|
Total liabilities,
non-controlling interests and equity
|
$
13,068
|
$
12,411
|
|
|
|
|
|
|
(a) Our consolidated balance
sheet as of December 31, 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
ended
|
|
|
|
|
December
31,
|
December
31,
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Revenues
|
|
|
|
|
|
Rooms
|
$
988
|
$
880
|
$
3,022
|
$
2,661
|
|
Food and
beverage
|
493
|
444
|
1,427
|
1,291
|
|
Other
|
99
|
85
|
296
|
277
|
|
Owned
hotel revenues
|
1,580
|
1,409
|
4,745
|
4,229
|
|
Other revenues
(b)
|
78
|
82
|
253
|
199
|
|
Total
revenues
|
1,658
|
1,491
|
4,998
|
4,428
|
|
Expenses
|
|
|
|
|
|
Rooms
|
269
|
238
|
832
|
734
|
|
Food and
beverage
|
356
|
325
|
1,062
|
965
|
|
Other departmental and
support expenses
|
410
|
376
|
1,261
|
1,151
|
|
Management
fees
|
64
|
60
|
189
|
171
|
|
Other property-level
expenses (b)
|
176
|
182
|
569
|
488
|
|
Depreciation and
amortization
|
213
|
182
|
652
|
591
|
|
Corporate and other
expenses (c)
|
53
|
40
|
111
|
108
|
|
Gain on insurance
settlement
|
(2)
|
(3)
|
(2)
|
(3)
|
|
Total
operating costs and expenses
|
1,539
|
1,400
|
4,674
|
4,205
|
|
Operating profit
|
119
|
91
|
324
|
223
|
|
Interest income
|
5
|
5
|
20
|
8
|
|
Interest expense (d)
|
(112)
|
(116)
|
(371)
|
(384)
|
|
Net gains on property
transactions and other
|
1
|
1
|
7
|
1
|
|
Gain (loss) on foreign currency
transactions and derivatives
|
4
|
-
|
3
|
(6)
|
|
Equity in earnings (losses) of
affiliates
|
7
|
5
|
4
|
(1)
|
|
Income (loss) before income
taxes
|
24
|
(14)
|
(13)
|
(159)
|
|
Benefit (provision) for income
taxes
|
(8)
|
10
|
1
|
31
|
|
Income (loss) from continuing
operations
|
16
|
(4)
|
(12)
|
(128)
|
|
Loss from discontinued
operations, net of tax
|
-
|
(2)
|
(4)
|
(4)
|
|
Net income (loss)
|
16
|
(6)
|
(16)
|
(132)
|
|
Less: Net loss attributable to
non-controlling interests
|
1
|
-
|
1
|
2
|
|
Net income (loss) attributable to Host Hotels & Resorts, Inc.
|
17
|
(6)
|
(15)
|
(130)
|
|
Less: Dividends on preferred
stock
|
-
|
-
|
-
|
(4)
|
|
Issuance costs of redeemed preferred stock
|
-
|
-
|
-
|
(4)
|
|
Net income (loss) available to
common stockholders
|
$
17
|
$
(6)
|
$
(15)
|
$
(138)
|
|
Basic and diluted earnings
(loss) per common share:
|
|
|
|
|
|
Continuing
operations
|
$
.02
|
$
(.01)
|
$
(.01)
|
$
(.20)
|
|
Discontinued
operations
|
-
|
-
|
(.01)
|
(.01)
|
|
Basic and diluted earnings
(loss) per common share
|
$
.02
|
$
(.01)
|
$
(.02)
|
$
(.21)
|
|
|
|
|
|
|
|
|
|
(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. HPT rental revenue recorded in 2011 represents payments that
the subtenant made to us as part of an agreement to satisfy their
obligations under the terminated subleases. The remaining leases
will be terminated effective December 31, 2012. The chart below
details the other revenue and other property-level expenses for the
quarter and full year ended 2011 and 2010 related to the HPT
properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year
ended
|
|
|
|
|
December
31,
|
December
31,
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Hotel sales revenue
|
$
63
|
$
74
|
$
214
|
$
123
|
|
Rental revenue
|
7
|
-
|
7
|
44
|
|
Total HPT
revenue
|
$
70
|
$
74
|
$
221
|
$
167
|
|
Property-level
expenses
|
$
48
|
$
60
|
$
159
|
$
96
|
|
Rental expense
|
21
|
27
|
68
|
84
|
|
Total HPT
expenses
|
$
69
|
$
87
|
$
227
|
$
180
|
|
|
|
|
|
|
|
|
|
(c) Corporate and other expenses
for fourth quarter and full year 2011 include a charge of $15
million related to the forfeited deposit due to our decision not to
acquire the Grand Hyatt Washington, D.C.
(d) Interest expense includes
the following items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year
ended
|
|
|
|
|
December
31,
|
December
31,
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Non-cash interest for
exchangeable debentures
|
$
9
|
$
9
|
$
31
|
$
32
|
|
Debt extinguishment
costs
|
1
|
6
|
9
|
21
|
|
Total
|
$
10
|
$
15
|
$
40
|
$
53
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Earnings per
Common Share
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
Year
ended
|
|
|
|
|
December
31,
|
December
31,
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Net income (loss)
|
$
16
|
$
(6)
|
$
(16)
|
$
(132)
|
|
Net loss attributable to
non-controlling interests
|
1
|
-
|
1
|
2
|
|
Dividends on preferred
stock
|
-
|
-
|
-
|
(4)
|
|
Issuance costs of redeemed
preferred stock (a)
|
-
|
-
|
-
|
(4)
|
|
Income (loss) available to
common stockholders
|
17
|
(6)
|
(15)
|
(138)
|
|
Diluted income (loss) available to common stockholders
|
$
17
|
$
(6)
|
$
(15)
|
$
(138)
|
|
|
|
|
|
|
|
Basic weighted average shares
outstanding
|
703.2
|
666.1
|
693.0
|
656.1
|
|
Diluted weighted average shares
outstanding (b)
|
705.1
|
666.1
|
693.0
|
656.1
|
|
Basic and diluted earnings
(loss) per share
|
$
.02
|
$
(.01)
|
$
(.02)
|
$
(.21)
|
|
|
|
|
|
|
|
|
|
(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
operating partnership units ("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. No effect is shown for any securities that were
anti-dilutive for the period.
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Comparable
Hotel Operating Data (a)
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2011
|
Quarter
ended December 31, 2011
|
Quarter
ended December 31, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
Region
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Pacific
|
26
|
14,581
|
$
173.89
|
71.5%
|
$
124.30
|
$
162.91
|
68.8%
|
$
112.08
|
10.9%
|
|
Mid-Atlantic
|
10
|
8,352
|
275.53
|
82.2
|
226.42
|
263.35
|
80.1
|
211.01
|
7.3
|
|
South Central
|
9
|
5,687
|
145.04
|
65.9
|
95.61
|
142.54
|
63.8
|
90.93
|
5.1
|
|
Florida
|
9
|
5,677
|
175.38
|
60.1
|
105.40
|
162.47
|
62.0
|
100.71
|
4.7
|
|
DC Metro
|
12
|
5,416
|
195.65
|
71.3
|
139.49
|
199.44
|
69.9
|
139.39
|
0.1
|
|
North Central
|
10
|
4,358
|
152.46
|
69.9
|
106.53
|
147.77
|
68.0
|
100.52
|
6.0
|
|
New England
|
7
|
3,924
|
178.20
|
70.8
|
126.26
|
178.36
|
67.6
|
120.49
|
4.8
|
|
Atlanta
|
7
|
3,846
|
161.05
|
62.8
|
101.11
|
162.60
|
64.7
|
105.27
|
(3.9)
|
|
Mountain
|
7
|
2,889
|
156.60
|
62.3
|
97.58
|
150.63
|
60.2
|
90.68
|
7.6
|
|
International
|
7
|
2,473
|
173.81
|
63.2
|
109.85
|
165.09
|
66.8
|
110.34
|
(0.4)
|
|
All Regions
|
104
|
57,203
|
188.04
|
69.8
|
131.23
|
181.10
|
68.5
|
123.97
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2011
|
Year ended
December 31, 2011
|
Year ended
December 31, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
Region
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Pacific
|
26
|
14,581
|
$
172.15
|
75.4%
|
$
129.74
|
$
161.38
|
71.6%
|
$
115.55
|
12.3%
|
|
Mid-Atlantic
|
10
|
8,352
|
241.47
|
77.9
|
188.17
|
225.63
|
79.9
|
180.38
|
4.3
|
|
South Central
|
9
|
5,687
|
147.86
|
68.6
|
101.36
|
142.83
|
67.1
|
95.80
|
5.8
|
|
Florida
|
9
|
5,677
|
183.14
|
69.7
|
127.71
|
178.23
|
68.7
|
122.37
|
4.4
|
|
DC Metro
|
12
|
5,416
|
194.48
|
74.0
|
143.90
|
191.55
|
74.0
|
141.83
|
1.5
|
|
North Central
|
10
|
4,358
|
145.00
|
70.6
|
102.33
|
139.68
|
69.0
|
96.39
|
6.2
|
|
New England
|
7
|
3,924
|
171.39
|
71.3
|
122.28
|
172.19
|
69.6
|
119.83
|
2.1
|
|
Atlanta
|
7
|
3,846
|
157.31
|
65.0
|
102.32
|
156.55
|
64.5
|
101.00
|
1.3
|
|
Mountain
|
7
|
2,889
|
157.90
|
65.0
|
102.59
|
149.32
|
63.2
|
94.30
|
8.8
|
|
International
|
7
|
2,473
|
170.64
|
65.3
|
111.46
|
157.91
|
65.7
|
103.80
|
7.4
|
|
All Regions
|
104
|
57,203
|
180.32
|
72.1
|
129.97
|
172.95
|
70.8
|
122.47
|
6.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2011
|
Quarter
ended December 31, 2011
|
Quarter
ended December 31, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
Property Type
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Urban
|
50
|
32,282
|
$
208.02
|
72.7%
|
$
151.22
|
$
202.71
|
71.3%
|
$
144.55
|
4.6%
|
|
Suburban
|
28
|
10,564
|
145.45
|
65.4
|
95.07
|
140.60
|
64.6
|
90.80
|
4.7
|
|
Resort/Conference
|
13
|
8,082
|
208.26
|
60.6
|
126.22
|
192.98
|
58.8
|
113.38
|
11.3
|
|
Airport
|
13
|
6,275
|
127.23
|
74.2
|
94.34
|
118.53
|
72.8
|
86.31
|
9.3
|
|
All Types
|
104
|
57,203
|
188.04
|
69.8
|
131.23
|
181.10
|
68.5
|
123.97
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2011
|
Year ended
December 31, 2011
|
Year ended
December 31, 2010
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Percent
|
|
|
No.
of
|
No.
of
|
Average
|
Occupancy
|
|
Average
|
Occupancy
|
|
Change
in
|
|
Property Type
|
Properties
|
Rooms
|
Room
Rate
|
Percentages
|
RevPAR
|
Room
Rate
|
Percentages
|
RevPAR
|
RevPAR
|
|
Urban
|
50
|
32,282
|
$
194.40
|
73.7%
|
$
143.33
|
$
186.87
|
73.2%
|
$
136.76
|
4.8%
|
|
Suburban
|
28
|
10,564
|
145.56
|
67.9
|
98.77
|
139.45
|
66.0
|
91.98
|
7.4
|
|
Resort/Conference
|
13
|
8,082
|
215.19
|
67.5
|
145.24
|
204.83
|
65.3
|
133.76
|
8.6
|
|
Airport
|
13
|
6,275
|
122.85
|
76.6
|
94.09
|
116.03
|
73.9
|
85.73
|
9.7
|
|
All Types
|
104
|
57,203
|
180.32
|
72.1
|
129.97
|
172.95
|
70.8
|
122.47
|
6.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See the Notes to Financial
Information for a discussion of reporting periods and comparable
hotel results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
Operating Statistics for All Properties (a)
|
|
|
|
|
|
|
|
Quarter
ended December 31
|
Year ended
December 31
|
|
|
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily rate
|
$
189.96
|
$
183.46
|
$
181.88
|
$
173.17
|
|
|
|
|
|
Average occupancy
|
69.7%
|
68.0%
|
71.9%
|
70.1%
|
|
|
|
|
|
RevPAR
|
$
132.31
|
$
124.80
|
$
130.70
|
$
121.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The operating statistics
reflect all consolidated properties as of December 31, 2011 and
December 31, 2010, respectively, and include the results of
operations of properties sold or transferred during the year
through the date of their disposition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Comparable
Hotel Operating Data
|
|
Schedule of
Comparable Hotel Results (a)
|
|
(unaudited,
in millions, except hotel statistics)
|
|
|
|
|
|
|
|
|
Quarter
ended December 31
|
Year ended
December 31
|
|
|
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
|
5.9%
|
-
|
6.1%
|
-
|
|
Operating profit margin under
GAAP (b)
|
7.2%
|
6.1%
|
6.5%
|
5.0%
|
|
Comparable hotel adjusted operating profit margin (b)
|
23.4%
|
22.4%
|
22.3%
|
21.4%
|
|
|
|
|
|
|
|
Comparable hotel
sales
|
|
|
|
|
|
Room
|
$
870
|
$
822
|
$
2,709
|
$
2,552
|
|
Food and beverage
|
456
|
427
|
1,334
|
1,265
|
|
Other
|
88
|
84
|
272
|
270
|
|
Comparable hotel sales (c)
|
1,414
|
1,333
|
4,315
|
4,087
|
|
Comparable hotel
expenses
|
|
|
|
|
|
Room
|
237
|
224
|
745
|
705
|
|
Food and beverage
|
328
|
313
|
988
|
943
|
|
Other
|
50
|
49
|
157
|
154
|
|
Management fees, ground
rent and other costs
|
468
|
449
|
1,464
|
1,410
|
|
Comparable hotel expenses
(d)
|
1,083
|
1,035
|
3,354
|
3,212
|
|
Comparable hotel adjusted
operating profit
|
331
|
298
|
961
|
875
|
|
Non-comparable hotel results,
net (e)
|
53
|
28
|
132
|
60
|
|
Income (loss) from hotels leased
from HPT
|
1
|
(13)
|
(6)
|
(13)
|
|
Depreciation and amortization
|
(213)
|
(182)
|
(652)
|
(591)
|
|
Corporate and other expenses
|
(53)
|
(40)
|
(111)
|
(108)
|
|
Operating profit
|
$
119
|
$
91
|
$
324
|
$
223
|
|
|
|
|
|
|
|
|
|
(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 December 31
|
Year ended
December 31
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Revenues per the consolidated statements of operations
|
$
1,658
|
$
1,491
|
$
4,998
|
$
4,428
|
|
Non-comparable hotel revenues
(e)
|
(188)
|
(97)
|
(513)
|
(222)
|
|
Hotel sales for which we record
rental income, net
|
14
|
13
|
51
|
48
|
|
Revenues for hotels leased from
HPT
|
(70)
|
(74)
|
(221)
|
(167)
|
|
Comparable hotel
sales
|
$
1,414
|
$
1,333
|
$
4,315
|
$
4,087
|
|
|
|
|
|
|
|
|
|
(d) The reconciliation of
operating costs per the consolidated statements of operations to
the comparable hotel expenses is as follows:
|
|
|
|
|
Quarter
ended December 31
|
Year ended
December 31
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Operating costs and expenses per
the consolidated
statements of
operations
|
$
1,539
|
$
1,400
|
$
4,674
|
$
4,205
|
|
Non-comparable hotel expenses
(e)
|
(135)
|
(69)
|
(381)
|
(162)
|
|
Hotel expenses for which we
record rental income
|
14
|
13
|
51
|
48
|
|
Expense for hotels leased from
HPT
|
(69)
|
(87)
|
(227)
|
(180)
|
|
Depreciation and
amortization
|
(213)
|
(182)
|
(652)
|
(591)
|
|
Corporate and other
expenses
|
(53)
|
(40)
|
(111)
|
(108)
|
|
Comparable hotel
expenses
|
$
1,083
|
$
1,035
|
$
3,354
|
$
3,212
|
|
|
|
|
|
|
|
|
|
(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,
gains on insurance settlements, the results of our office buildings
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
December
31,
|
|
|
|
|
|
|
2011
|
2010
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Common shares
outstanding
|
705.1
|
675.6
|
|
Common shares outstanding
assuming conversion of non-controlling interest OP Units
(a)
|
715.8
|
686.3
|
|
Preferred OP Units
outstanding
|
.02
|
.02
|
|
|
|
|
|
|
|
|
|
Security pricing
|
|
|
|
|
|
Common (b)
|
$
14.77
|
$
17.87
|
|
3 1/4% Exchangeable Senior
Debentures (c)
|
$
1,084.0
|
$
1,179.4
|
|
2 5/8% Exchangeable Senior
Debentures (c)
|
$
1,002.6
|
$
991.9
|
|
2 1/2% Exchangeable Senior
Debentures (c)
|
$
1,242.6
|
$
1,416.6
|
|
|
|
|
|
|
|
|
|
Dividends declared per share for
calendar year
|
|
|
|
Common
|
|
|
$
.14
|
$
.04
|
|
Class E
Preferred
|
|
|
$
-
|
$
.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 (d)
|
5 7/8%
|
6/2019
|
496
|
-
|
|
Series Y
|
6%
|
10/2021
|
300
|
-
|
|
Exchangeable senior
debentures
|
3 1/4%
|
4/2024
|
175
|
325
|
|
Exchangeable senior debentures (e)
|
2 5/8%
|
4/2027
|
385
|
502
|
|
Exchangeable senior debentures
(e)
|
2 1/2%
|
10/2029
|
342
|
329
|
|
Senior notes
|
10%
|
5/2012
|
7
|
7
|
|
Credit facility (f)
|
3.4%
|
11/2015
|
117
|
58
|
|
|
|
|
|
|
4,660
|
4,307
|
|
Mortgage debt and
other
|
|
|
|
|
|
Mortgage debt
(non-recourse)
|
3.4-8.5%
|
4/2013-12/2023
|
1,006
|
1,025
|
|
Other
|
7.0-7.8%
|
10/2014-12/2017
|
87
|
145
|
|
Total debt (g)
(h)
|
|
|
$
5,753
|
$
5,477
|
|
|
|
|
|
|
|
|
|
Percentage of fixed rate
debt
|
|
|
90%
|
90%
|
|
Weighted average interest
rate
|
|
|
6.3%
|
6.2%
|
|
Weighted average debt
maturity
|
|
|
4.4 years
|
4.4 years
|
|
|
|
|
|
|
|
|
|
(a) Each OP Unit is redeemable
for cash or, at the option of the Company, for 1.021494 common
shares of Host. At both December 31, 2011 and December 31, 2010,
there were 10.5 million common OP Units held by non-controlling
interests.
|
|
(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) The 5 7/8% Series W senior
notes were exchanged for 5 7/8% Series X senior notes in January
2012.
|
|
(e) The principal balance
outstanding of the 2 5/8% Exchangeable Senior Debentures due 2027
and the 2 1/2% Exchangeable Senior Debentures due 2029 is $388
million and $400 million, respectively. The discounts related to
these debentures are amortized through April 2012 and October 2015,
respectively.
|
|
(f) The interest rate shown is
the weighted average rate of the outstanding credit facility at
December 31, 2011, which reflects borrowings in Canadian dollars at
a rate of 3.4% and British pounds at a rate of 3.0%. Based on our
current credit statistics, our U.S. Dollar denominated borrowings
could be drawn at a rate of LIBOR plus 200 basis points.
|
|
(g) In accordance with GAAP,
total debt includes the debt of entities that we consolidate, but
of which we do not own 100%, and excludes the debt of entities that
we do not consolidate, but of which we have a non-controlling
ownership interest and record our investment therein under the
equity method of accounting. As of December 31, 2011, our
non-controlling partners’ share of consolidated debt is $67 million
and our share of debt in unconsolidated investments is $328
million.
|
|
(h) Total debt as of December
31, 2011 and December 31, 2010 includes net discounts of $63
million and $95 million, respectively.
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Reconciliation of Net Income
(Loss) to EBITDA and Adjusted EBITDA
|
|
(unaudited,
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended December 31,
|
Year ended
December 31,
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Net income (loss)
|
$
16
|
$
(6)
|
$
(16)
|
$
(132)
|
|
Interest
expense
|
112
|
116
|
371
|
384
|
|
Depreciation and
amortization
|
208
|
182
|
647
|
591
|
|
Income taxes
|
8
|
(10)
|
(1)
|
(31)
|
|
Discontinued operations
(a)
|
-
|
1
|
-
|
-
|
|
EBITDA
|
344
|
283
|
1,001
|
812
|
|
Losses on
dispositions
|
-
|
1
|
-
|
2
|
|
Acquisition
costs
|
-
|
6
|
5
|
10
|
|
Non-cash impairment
charges (b)
|
5
|
-
|
8
|
-
|
|
Amortization of deferred
gains
|
(1)
|
-
|
(7)
|
-
|
|
Equity investment
adjustments:
|
|
|
|
|
|
Equity in (earnings)
losses of affiliates
|
(7)
|
(5)
|
(4)
|
1
|
|
Pro rata Adjusted EBITDA
of equity investments
|
11
|
11
|
29
|
23
|
|
Consolidated partnership
adjustments:
|
|
|
|
|
|
Pro rata Adjusted EBITDA
attributable to non-controlling partners in other consolidated
partnerships
|
(3)
|
(4)
|
(14)
|
(14)
|
|
Adjusted EBITDA
|
$
349
|
$
292
|
$
1,018
|
$
834
|
|
|
|
|
|
|
|
|
|
(a) Reflects the interest
expense, depreciation and amortization and incomes taxes included
in discontinued operations.
|
|
(b) The $8 million of impairment
charges for the year ended December 31, 2011 includes $3 million of
charges that are presented in discontinued operations in our
statement of operations.
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Reconciliation of Net Income
(Loss) to NAREIT
|
|
and Adjusted
Funds From Operations per Diluted Share
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended December 31,
|
Year ended
December 31,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Net income (loss)
|
$
16
|
$
(6)
|
$
(16)
|
$
(132)
|
|
Less: Net loss
attributable to non-controlling interests
|
1
|
-
|
1
|
2
|
|
Dividends on preferred stock
|
-
|
-
|
-
|
(4)
|
|
Issuance costs of redeemed preferred stock
|
-
|
-
|
-
|
(4)
|
|
Net income (loss) available to common stockholders
|
17
|
(6)
|
(15)
|
(138)
|
|
Adjustments:
|
|
|
|
|
|
Losses on dispositions,
net of taxes
|
-
|
1
|
-
|
2
|
|
Amortization of deferred
gains and other property
transactions,
net of taxes
|
(1)
|
-
|
(7)
|
-
|
|
Depreciation and
amortization
|
207
|
182
|
645
|
591
|
|
Non-cash impairment
charges
|
5
|
-
|
8
|
-
|
|
Partnership
adjustments
|
(1)
|
3
|
4
|
4
|
|
FFO of non-controlling
interests of Host LP
|
(3)
|
(3)
|
(9)
|
(7)
|
|
NAREIT FFO
|
224
|
177
|
626
|
452
|
|
Adjustments:
|
|
|
|
|
|
Losses on the
extinguishment of debt (a)
|
1
|
8
|
10
|
26
|
|
Acquisition costs
(b)
|
3
|
6
|
8
|
10
|
|
Litigation losses for
non-ordinary course litigation
|
5
|
-
|
5
|
4
|
|
Loss attributable to
non-controlling interests
|
-
|
-
|
-
|
(1)
|
|
Adjusted FFO
|
$
233
|
$
191
|
$
649
|
$
491
|
|
|
|
|
|
|
|
Adjustments for dilutive
securities (c):
|
|
|
|
|
|
Assuming conversion of
Exchangeable Senior
Debentures
|
$
9
|
$
10
|
$
30
|
$
13
|
|
Assuming deduction of
interest -
redeemed/exchanged 2004 Debentures
|
-
|
-
|
2
|
-
|
|
Diluted NAREIT FFO
(c)
|
$
233
|
$
187
|
$
658
|
$
465
|
|
Diluted Adjusted FFO
(c)
|
$
242
|
$
201
|
$
681
|
$
504
|
|
|
|
|
|
|
|
Diluted weighted average shares
outstanding-EPS
|
705.1
|
666.1
|
693.0
|
656.1
|
|
Assuming issuance of
common shares granted under
the
Comprehensive Stock Plan
|
-
|
3.0
|
2.0
|
2.9
|
|
Assuming conversion of
Exchangeable Senior
Debentures
|
39.8
|
49.6
|
39.8
|
21.2
|
|
Weighted average
outstanding shares -
redeemed/exchanged 2004 Debentures
|
-
|
-
|
4.7
|
-
|
|
Diluted weighted average shares
outstanding-
NAREIT FFO and
Adjusted FFO
|
744.9
|
718.7
|
739.5
|
680.2
|
|
NAREIT FFO per diluted share (c)
(d)
|
$
.31
|
$
.26
|
$
.89
|
$
.68
|
|
Adjusted FFO per diluted share
(c)(d)
|
$
.32
|
$
.28
|
$
.92
|
$
.74
|
|
|
|
|
|
|
|
|
|
(a) 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 and the
original issuance costs of Class E preferred stock, which were
redeemed on June 18, 2010.
|
|
(b) Includes approximately $3
million for the quarter and year ended December 31, 2011 related to
the Company’s share of acquisition costs incurred by unconsolidated
joint ventures.
|
|
(c) Earnings/loss per diluted
share, NAREIT FFO per diluted share and Adjusted 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.
|
|
(d) NAREIT FFO per diluted share
and Adjusted FFO per diluted share for the quarter and year ended
December 31, 2011 was reduced by $.02 per diluted share due to the
$15 million deposit forfeited as a result of the terminated Grand
Hyatt Washington, D.C. acquisition.
|
|
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Reconciliation of Net Income to
EBITDA, Adjusted EBITDA and NAREIT
|
|
and Adjusted
Funds From Operations per Diluted Share
|
|
for Full
Year 2012 Forecasts (a)
|
|
(unaudited,
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Full Year
2012
|
|
|
|
|
Low-end
|
High-end
|
|
|
|
|
of
range
|
of
range
|
|
Net income
|
$
57
|
$
112
|
|
Interest expense
|
362
|
362
|
|
Depreciation and
amortization
|
652
|
652
|
|
Income taxes
|
9
|
9
|
|
EBITDA
|
1,080
|
1,135
|
|
Amortization of deferred
gains
|
(4)
|
(4)
|
|
Equity investment
adjustments:
|
|
|
|
Equity in earnings of
affiliates
|
(1)
|
(1)
|
|
Pro rata Adjusted EBITDA
of equity investments
|
30
|
30
|
|
Consolidated partnership
adjustments:
|
|
|
|
Pro rata Adjusted EBITDA
attributable to non-controlling partners in other
consolidated partnerships
|
(15)
|
(15)
|
|
Adjusted EBITDA
|
$
1,090
|
$
1,145
|
|
|
|
|
|
|
|
|
|
|
Full Year
2012 Forecast
|
|
|
|
|
Low-end
|
High-end
|
|
|
of
range
|
of
range
|
|
Net income
|
$
57
|
$
112
|
|
Less: Net income attributable to
non-controlling interests
|
(3)
|
(3)
|
|
Net income available to common
stockholders
|
54
|
109
|
|
Adjustments:
|
|
|
|
Depreciation and
amortization
|
650
|
650
|
|
Amortization of deferred
gains
|
(4)
|
(4)
|
|
Partnership
adjustments
|
11
|
11
|
|
FFO of non-controlling
interests of Host LP
|
(10)
|
(11)
|
|
NAREIT FFO
|
701
|
755
|
|
Adjustments:
|
|
|
|
Debt extinguishment and
acquisition costs
|
4
|
4
|
|
Adjusted FFO
|
705
|
759
|
|
Adjustment for dilutive
securities:
|
|
|
|
Assuming conversion of
exchangeable senior debentures
|
31
|
31
|
|
Diluted Adjusted FFO
|
$
736
|
$
790
|
|
|
|
|
|
Weighted average diluted shares
- EPS
|
717.2
|
717.2
|
|
Weighted average diluted shares-
NAREIT and Adjusted FFO (b)
|
757.9
|
757.9
|
|
Earnings per diluted
share
|
$
.08
|
$
.15
|
|
NAREIT and Adjusted FFO per
diluted share
|
$
.97
|
$
1.04
|
|
|
|
|
|
|
|
|
|
(a) The full year 2012 forecasts
were based on the below assumptions:
|
|
- Comparable hotel RevPAR will
increase 4.0% to 6.0% for the low and high ends of the forecasted
range, respectively.
- Comparable hotel adjusted
operating profit margins will increase 25 basis points to 75 basis
points for the low and high ends of the forecasted range,
respectively.
- Interest expense includes
approximately $32 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
$155 million to $175 million on ROI/redevelopment capital
expenditures and approximately $80 million to $100 million on
acquisition capital expenditures.
- We expect to spend approximately
$310 million to $330 million on renewal and replacement
expenditures.
- We expect to complete
dispositions of between $100 million and $115 million in the first
half of 2012.
For a discussion of
additional items that may affect forecasted results, see Notes to
the Financial Information.
|
|
(b) The full year 2012 forecast
Adjusted FFO per diluted share includes 41 million shares for the
dilution of exchangeable senior debentures.
|
|
|
|
|
|
|
HOST HOTELS
& RESORTS, INC.
|
|
Schedule of
Comparable Hotel Adjusted Operating Profit Margin
|
|
for Full
Year 2012 Forecasts (a)
|
|
(unaudited,
in millions, except hotel statistics)
|
|
|
|
|
|
|
|
|
|
|
Full Year
2012
|
|
|
|
|
Low-end
|
High-end
|
|
|
|
|
of
range
|
of
range
|
|
Operating profit margin under
GAAP (b)
|
7.9%
|
8.8%
|
|
Comparable hotel adjusted
operating profit margin (c)
|
22.7%
|
23.2%
|
|
|
|
|
|
Comparable hotel
sales
|
|
|
|
Room
|
$
2,908
|
$
2,966
|
|
Other
|
1,693
|
1,727
|
|
Comparable hotel sales
(d)
|
4,601
|
4,693
|
|
Comparable hotel
expenses
|
|
|
|
Rooms and other
departmental costs
|
1,989
|
2,026
|
|
Management fees, ground
rent and other costs
|
1,566
|
1,577
|
|
Comparable hotel expenses
(e)
|
3,555
|
3,603
|
|
Comparable hotel adjusted
operating profit
|
1,046
|
1,090
|
|
Non-comparable hotel results,
net
|
120
|
130
|
|
Loss from hotels leased from
HPT
|
(8)
|
(8)
|
|
Depreciation and amortization
|
(652)
|
(652)
|
|
Corporate and other
expenses
|
(93)
|
(93)
|
|
Operating
profit
|
$
413
|
$
467
|
|
|
|
|
|
|
|
(a) Forecasted comparable hotel
results include 107 hotels that we have assumed will be classified
as comparable as of December 31, 2012. No assurances can be made as
to the hotels that will be in the comparable hotel set for 2012.
Also, see the notes to the "Reconciliation of Net Income to EBITDA,
Adjusted EBITDA and Adjusted Funds From Operations per Diluted
Share For Full Year 2012 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
2012
|
|
|
|
|
Low-end
|
High-end
|
|
|
|
|
of
range
|
of
range
|
|
Revenues
|
$
5,224
|
$
5,325
|
|
Non-comparable hotel
revenues
|
(447)
|
(456)
|
|
Revenues for hotels leased from
HPT
|
(229)
|
(229)
|
|
Hotel sales for which we record
rental income, net
|
53
|
53
|
|
Comparable hotel
sales
|
$
4,601
|
$
4,693
|
|
|
|
|
|
|
|
(e) The reconciliation of
forecast operating costs and expenses to the comparable hotel
expenses is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
Full Year
2012
|
|
|
|
|
Low-end
|
High-end
|
|
|
|
|
of
range
|
of
range
|
|
Operating costs and
expenses
|
$
4,811
|
$
4,858
|
|
Non-comparable hotel and other
expenses
|
(327)
|
(326)
|
|
Expenses for hotels leased from
HPT
|
(237)
|
(237)
|
|
Hotel expenses for which we
record rental income
|
53
|
53
|
|
Depreciation and
amortization
|
(652)
|
(652)
|
|
Corporate and other
expenses
|
(93)
|
(93)
|
|
Comparable hotel
expenses
|
$
3,555
|
$
3,603
|
|
|
|
|
|
|
HOST HOTELS & RESORTS, INC.
Notes to Financial Information
FORECASTS
Our forecast of earnings per diluted share, Adjusted 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
approximately 54% 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 fourth quarter results for 2011
reflect 113 days of operations, while our fourth quarter results
for 2010 reflect 112 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 46% 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 fourth quarter of 2011 reflect 16 weeks
of operations for the period from September 10, 2011 to
December 30, 2011 for our Marriott-managed hotels and results
from September 1, 2011 to December 31, 2011 for
operations of all other hotels which report results on a monthly
basis.
- Hotel results for the fourth quarter of 2010 reflect 16 weeks
of operations for the period from September 11, 2010 to
December 31, 2010 for our Marriott-managed hotels and results
from September 1, 2010 to December 31, 2010 for
operations of all other hotels which report results on a monthly
basis.
- Hotel results for full year 2011 reflect 52 weeks for the
period from January 1, 2011 to December 30, 2011 for our
Marriott-managed hotels and results from January 1, 2011 to
December 31, 2011 for operations of all other hotels which
report results on a monthly basis.
- Hotel results for full year 2010 reflect 52 weeks for the
period from January 2, 2010 to December 31, 2010 for our
Marriott-managed hotels and results from January 1, 2010 to
December 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 December 31, 2011, 104 have
been classified as comparable hotels. The operating results of the
following hotels that we owned or leased as of December 31,
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 at Keystone Crossing (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, and of three hotels we disposed
of in 2011 and 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. The 107 comparable hotels projected for 2012 includes
the 2011 comparable set, as well as the addition of the three
hotels purchased in 2010: the JW Marriott, Rio de Janeiro, W
New York-Union Square and Westin Chicago River North less
any hotels disposed of in 2012.
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 (both NAREIT and
Adjusted), (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.
NAREIT FFO and NAREIT FFO per Diluted
Share
We present NAREIT FFO and NAREIT 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 NAREIT
FFO per diluted share as our NAREIT FFO (defined as set forth
below) for a given operating period, as adjusted for the effect of
dilutive securities, divided by the number of fully diluted shares
outstanding during such period in accordance with NAREIT
guidelines. 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, amortization and impairments and
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect our pro rata FFO of those entities on the
same basis.
We believe that NAREIT FFO per diluted share is a useful
supplemental measure of our operating performance and that the
presentation of NAREIT 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, impairments 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 NAREIT 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 FFO metric in order to promote an
industry-wide measure of REIT operating performance.
Adjusted FFO per Diluted Share
Effective with this press release, we also present Adjusted FFO
per diluted share when evaluating our performance because
management believes that the exclusion of certain additional items
described below provides useful supplemental information to
investors regarding our ongoing operating performance. While
we are presenting Adjusted FFO per diluted share as part of this
earnings release for the first time, management has historically
made the adjustments detailed below in evaluating our performance,
in our annual budget process and for our compensation programs. We
believe that the presentation of Adjusted FFO per diluted share,
when combined with both the primary GAAP presentation of earnings
per share and FFO per diluted share as defined by NAREIT, provides
useful supplemental information that is beneficial to an investor's
complete understanding of our operating performance. We
adjust NAREIT FFO per diluted share for the following items, which
may occur in any period, and refer to this measure as Adjusted FFO
per diluted share:
- Gains and Losses on the Extinguishment of Debt – We exclude the
effect of finance charges and premiums associated with the
extinguishment of debt, including the acceleration of deferred
financing costs associated with the original issuance of the debt
being redeemed or retired. We also exclude the gains on debt
repurchases and the original issuance costs associated with the
retirement of preferred stock. We believe that these items
are not reflective of the ongoing finance costs for the
Company.
- Acquisition Costs – Under GAAP, costs associated with completed
property acquisitions are expensed in the year incurred. We exclude
the effect of these costs because we believe they are not
reflective of the ongoing performance of the Company.
- Litigation Gains and Losses – We exclude the effect of gains or
losses associated with litigation recorded under GAAP that we
consider outside the ordinary course of business. We believe that
including these items is not consistent with the ongoing operating
performance of the Company.
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 after removing the impact
of the Company's capital structure (primarily interest expense) and
its asset base (primarily depreciation and amortization).
Management also believes the use of EBITDA 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 and
Adjusted FFO per diluted share, it is widely used by management in
the annual budget process and for our compensation programs.
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. Adjusted EBITDA is also 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 or acquisition 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 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 value often does not reflect the market value of
real estate assets as noted above.
- 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, which are excluded
from EBITDA. 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 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, which are based off of historical cost accounting values,
are similar to gains (losses) on dispositions and depreciation
expense, both of which are excluded from EBITDA.
- Acquisition Costs – Under GAAP, costs associated with completed
property acquisitions are expensed in the year incurred. We exclude
the effect of these costs because we believe they are not
reflective of the ongoing performance of the Company.
Limitations on the Use of NAREIT FFO per Diluted Share,
Adjusted FFO per Diluted Share, EBITDA and Adjusted EBITDA
We calculate NAREIT 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 do not 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. We also calculate Adjusted FFO per diluted share,
which is not in accordance with NAREIT guidance and may not be
comparable to measures calculated by other 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, NAREIT FFO per
diluted share and Adjusted 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, NAREIT FFO per diluted share,
Adjusted 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, NAREIT FFO per diluted share
and Adjusted FFO per diluted share do 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.