Host Hotels & Resorts Acquires Hotel Van Zandt and Disposes of Sheraton Boston
February 02 2022 - 4:30PM
Host Hotels & Resorts, Inc. (NASDAQ: HST), the nation's largest
lodging real estate investment trust (the "Company"), today
announced that it has acquired the fee simple interest in the Hotel
Van Zandt, a 319-room luxury lifestyle hotel in Austin, Texas for a
purchase price of approximately $246 million including its $4
million FF&E reserve. The net acquisition price of
approximately $242 million represents a 13.2x multiple on 2019
EBITDA1 and stabilization is expected in the 2025-2027 timeframe at
approximately 10-12x EBITDA1.
The Company funded the acquisition with
approximately $140 million in proceeds from recent dispositions,
and it assumed approximately $101.5 million of existing secured
debt. The debt matures in 2027, and the interest rate is fixed at
an annual rate of 4.67%.
This recently constructed hotel opened in 2015
with rooms that range in size from 330 to 1,100 square feet,
including 52 suites. The hotel offers 13,000 square feet of indoor
meeting space and three F&B outlets including a rooftop pool
bar and a full-service restaurant with a stage and nightly live
music.
Hotel Van Zandt is well-located in Austin’s
Rainey Street district, the most popular entertainment district in
the downtown area. Bolstered by the relocation of several Fortune
500 company headquarters, Austin is the third fastest growing city
of the last decade and its population is projected to grow another
30% by 2029. The Rainey Street submarket is poised to benefit from
several nearby mixed-use developments currently under construction
or in planning, as well as the $1.2 billion expansion of the
convention center, situated within walking distance of the
hotel.
In addition to the Hotel Van Zandt acquisition,
the Company also announced that it has sold the 1,220-room Sheraton
Boston for approximately $233 million. The sale price represents a
14.2x EBITDA multiple2 on 2019 EBITDA, which includes approximately
$135 million of estimated foregone capital expenditures over the
next five years. In connection with the sale, the Company is
providing a $163 million bridge loan to the purchaser.
James F. Risoleo, President and Chief Executive
Officer, said, “We are thrilled to add a second hotel in Austin to
our portfolio with the Hotel Van Zandt. The hotel is well-located
with no expected near-term capex in a market with multiple demand
drivers and a history of strong RevPAR growth. In addition, the
sale of the Sheraton Boston allowed us to redeploy capital into
other assets that we believe will bolster the EBITDA growth profile
of our portfolio. We continue to be very active on the capital
allocation front as we target new growing markets in the United
States. Since the beginning of 2021, we have invested $1.6 billion
in early-cycle acquisitions. The blended EBITDA multiple on our
seven hotel acquisitions is 13.0x3, which compares favorably to the
nearly $1 billion generated, including amounts due under seller
financing, from our seven hotel dispositions at a 15.4x2 EBITDA
multiple, including estimated foregone capital expenditures.”
About Host Hotels &
Resorts
Host Hotels & Resorts, Inc. is an S&P
500 company and is the largest lodging real estate investment trust
and one of the largest owners of luxury and upper-upscale hotels.
The Company currently owns 75 properties in the United States and
five properties internationally totaling approximately 44,400
rooms. The Company also holds non-controlling interests in six
domestic and one international joint venture.
FORWARD LOOKING STATEMENTS
Note: This press release contains
forward-looking statements within the meaning of federal securities
regulations. These forward-looking statements are identified by
their use of terms and phrases such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,”
“predict,” “project,” “will,” “continue” and other similar terms
and phrases, including references to assumptions and forecasts of
future results. Forward-looking statements are not guarantees of
future performance and involve known and unknown risks,
uncertainties and other factors which may cause the actual results
to differ materially from those anticipated at the time the
forward-looking statements are made. These risks include, but are
not limited to: the duration and scope of the COVID-19 pandemic and
its short and longer-term impact on the demand for travel,
transient and group business, and levels of consumer confidence;
actions governments, businesses and individuals take in response to
the pandemic, including limiting or banning travel; the impact of
the pandemic and actions taken in response to the pandemic on
global and regional economies, travel, and economic activity,
including the duration and magnitude of its impact on unemployment
rates, business investment and consumer discretionary spending; the
pace of recovery when the COVID-19 pandemic subsides; general
economic uncertainty in U.S. markets where we own hotels
and a worsening of economic conditions or low levels of economic
growth in these markets; other changes (apart from the COVID-19
pandemic) in national and local economic and business conditions
and other factors such as natural disasters and weather that will
affect occupancy rates at our hotels and the demand for hotel
products and services; the impact of geopolitical developments
outside the U.S. on lodging demand; volatility in global
financial and credit markets; operating risks associated with the
hotel business; risks and limitations in our operating flexibility
associated with the level of our indebtedness and our ability to
meet covenants in our debt agreements; risks associated with our
relationships with property managers and joint venture partners;
our ability to maintain our properties in a first-class manner,
including meeting capital expenditure requirements; the effects of
hotel renovations on our hotel occupancy and financial results; our
ability to compete effectively in areas such as access, location,
quality of accommodations and room rate structures; risks
associated with our ability to complete acquisitions and
dispositions and develop new properties and the risks that
acquisitions and new developments may not perform in accordance
with our expectations; our ability to continue to satisfy complex
rules in order for us to remain a real estate investment trust for
federal income tax purposes; and other risks and uncertainties
associated with our business described in the Company’s annual
report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K filed with the SEC. Although the Company
believes the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that the expectations will be attained or that any
deviation will not be material. All information in this release is
as of the date of this release and the Company undertakes no
obligation to update any forward-looking statement to conform the
statement to actual results or changes in the Company’s
expectations.
1 Consistent with industry practice, we calculate the EBITDA
multiple as the ratio of the purchase price to the property’s
EBITDA. EBITDA is a non-GAAP measure. The comparable GAAP metric to
EBITDA multiple is the ratio of the purchase price to net income.
The ratio of the purchase price to 2019 net income is 22.4x based
on net income of $11 million. The ratio of the purchase price to
stabilized net income is 15.8x based on forecast stabilized net
income of $15 million. The difference between net income and EBITDA
is depreciation expense of $7.5 million for both periods.
Stabilized results are illustrative only. Our ability to achieve
the 2025-2027 results is subject to various uncertainties and
actual results may be materially different.2 Disposition multiples
are calculated as the ratio between the sales price (plus estimated
avoided capital expenditures) and 2019 EBITDA. The ratio of the
purchase price to 2019 net income for the Sheraton Boston is 18.2x.
The Sheraton Boston 2019 net income is $13 million and the
difference between net income and EBITDA is depreciation expense of
$13 million. The ratio of the purchase price to net income for the
combined 2021 and 2022 dispositions is 24.4x and estimated avoided
capital expenditures over the five years following disposition date
totaled $290 million. The combined net income of the 2021 and 2022
dispositions is $40 million and the difference between net income
and EBITDA is depreciation expense of $42 million.3 The blended
EBITDA multiple is based on 2019 operations for Hyatt Regency
Austin, Four Seasons Resort Orlando at Walt Disney World® Resort,
and Hotel Van Zandt and the 2021 forecast at acquisition for
Baker’s Cay Resort and Alila Ventana Big Sur, as these hotels
experienced renovation disruption and closures in 2019. Estimated
normalized 2019 operations were used for The Laura Hotel, assuming
a new manager and brand, and for The Alida, Savannah, adjusting for
construction disruption to the surrounding Plant Riverside District
and for initial ramp-up of hotel operations. The blended ratio of
the purchase price to net income for these acquisitions is 21.1x,
using net income of $74 million. The difference between combined
net income and EBITDA is depreciation expense of $46 million. In
addition, EBITDA includes an upward adjustment of $13 million to
reflect normalized operations for both The Laura Hotel and The
Alida, Savannah.
SOURAV GHOSH Chief Financial Officer (240)
744-5267 |
JAIME MARCUS Investor Relations (240) 744-5117
ir@hosthotels.com |
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