Host Hotels & Resorts, Inc. Reports Strong Performance for the Second Quarter of 2010
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Host Hotels & Resorts, Inc. Reports Strong Performance for the Second Quarter of 2010
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Catégorie : Monde - Économie du secteur -
Chiffres et études
Ceci est un communiqué de presse sélectionné par notre comité éditorial et mis en ligne gratuitement le 21-07-2010
Host Hotels & Resorts, Inc. (NYSE: HST), the nation's largest lodging real estate investment trust (REIT), today announced results of operations for the second quarter ended June 18, 2010.
econd Quarter Highlights
-- RevPAR increased 8.1% for the quarter.
-- Second quarter diluted earnings per share and funds from operations
(FFO) per diluted share were $.02 and $.23, respectively.
-- The Company reached agreements to acquire two high-quality
properties located in New York and Chicago.
-- The Company reached an agreement, through its Asian joint venture, for
the development of seven properties located in India.
Second Quarter Results
-- Total revenue increased $63 million, or 6%, for the second quarter of
2010 and $22 million, or 1%, for year-to-date 2010.
-- Net income was $20 million, or $.02 per diluted share, for the second
quarter of 2010 compared to a net loss of $(69) million, or $(.12) per
diluted share, for the second quarter of 2009. For year-to-date 2010,
the net loss was $(64) million, or $(.11) per diluted share, compared
to a net loss of $(129) million, or $(.24) per diluted share, for year-
to-date 2009.
-- FFO was $151 million, or $.23 per diluted share, for the second quarter
of 2010 compared to $68 million, or $.12 per diluted share, for the
second quarter of 2009. For year-to-date 2010, FFO was $200 million,
or $.31 per diluted share, and $126 million, or $.22 per diluted share,
for year-to-date 2009.
Net income and FFO were affected by certain transactions during the
periods presented. Net income was reduced by $.01 per diluted share
for the second quarter of 2010 and net income and FFO were reduced by
$.02 per diluted share, respectively, for year-to-date 2010, as a
result of costs associated with the redemption of preferred stock and
the repayment of debt, as well as additional accruals for the potential
litigation loss related to San Antonio Rivercenter. By comparison, both
net income and FFO included a net loss of $(.14) per diluted share for
the second quarter 2009 and net losses of $(.19) and $(.22) per diluted
share, respectively, for year-to-date 2009, associated with non-cash
impairment charges, partially offset by gains associated with hotel
dispositions and the extinguishment of debt.
-- Adjusted EBITDA, which is Earnings before Interest Expense, Income
Taxes, Depreciation, Amortization and other items was $250 million
for the second quarter and $376 million for year-to-date 2010, a
decrease of $6 million and $54 million, respectively, when compared
to the same periods in 2009.
For further detail of the transactions affecting net income, earnings per diluted share and FFO per diluted share, refer to the notes to the "Reconciliation of Net Income to EBITDA, Adjusted EBITDA and FFO per Diluted Share."
Adjusted EBITDA, 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 for the second quarter of 2010 increased 8.1%, driven by an occupancy increase of six percentage points, while the average daily rate fell 0.7%. The increase in RevPAR was significantly affected by an increase in transient demand of 8.1%, combined with an improvement in average room rate of 2.8%, the first such rate growth since the second quarter of 2008. Group demand increased 10%, though this was partially offset by a 4.7% decrease in rate. For year-to-date 2010, comparable RevPAR increased 3.5%.
While the Company's operating performance improved significantly in the second quarter, its comparable hotel adjusted operating profit margins were unchanged as a decrease of $16 million in incremental attrition and cancellation fees reduced margins by 100 basis points compared to 2009. For year-to-date 2010, margins declined 110 basis points and the decrease in attrition and cancellation fees was $28 million, which resulted in a similar 100 basis point decrease in operating margins. For further detail, see "Notes to the Financial Information."
ACQUISITIONS AND INVESTMENTS
On July 14, 2010, the Company participated in a settlement agreement with the owner of the W New York - Union Square and the property's mezzanine lenders under which the hotel owner will be acquired by a venture led by the Company and in which Istithmar World will be a minority member. The hotel is strategically located to take advantage of several of New York's most prominent business and leisure destinations and has over 7,000 square feet of meeting space. Closing is anticipated to occur by September of 2010 and is subject to bankruptcy court approval.
On July 20, 2010, the Company reached an agreement to acquire the 424-room Westin Chicago River North for approximately $165 million. The hotel is located in the heart of Chicago's theater and financial district and has approximately 28,000 square feet of meeting space. The Company expects to complete this acquisition, which is subject to customary closing conditions, in August of 2010.
On July 20, 2010, the Company's joint venture in Asia, Asia Pacific Hospitality Venture Pte., Ltd. (the "Asian joint venture"), in which it is a 25% partner, reached an agreement with Accor and InterGlobe to develop seven properties totaling approximately 1,750 rooms for a total cost of approximately $325 million in three major cities in India; Bangalore, Chennai and Delhi (the "Indian joint venture"). The Asian joint venture will invest approximately $50 million to acquire approximately 36% of the interest in the Indian joint venture. The properties will be managed by Accor under the Pullman, Novotel, and Ibis brands. Development of the properties is underway, and the first hotel is expected to open in the second quarter of 2011.
BALANCE SHEET
As of June 18, 2010, the Company had nearly $1.2 billion of cash and cash equivalents and $600 million of available capacity under its credit facility. During the second quarter, the Company used available cash to redeem approximately 4 million shares of the 8 7/8% Class E cumulative redeemable preferred stock, which represents all of the issued and outstanding shares, at a redemption price of $25.00 per share plus accrued dividends. Subsequent to the acquisitions discussed above, the Company will have approximately $925 million in cash and cash equivalents.
CAPITAL EXPENDITURES
Capital expenditures totaled approximately $50 million and $100 million for the quarter and year-to-date 2010, respectively. These expenditures included return on investment and repositioning projects of approximately $10 million and $33 million for the quarter and year-to-date 2010. The Company anticipates that capital expenditures will be between $300 million and $320 million during 2010.
DIVIDEND
The Company paid a $.01 per share common dividend on July 15, 2010 and expects to continue to pay a quarterly $.01 per share common dividend in 2010 without regard to whether it generates taxable income.
2010 OUTLOOK
The Company believes that recent improvements in the economy will continue to positively affect the lodging industry and hotel operating results for the remainder of 2010. The Company now anticipates that for 2010:
RevPAR will increase 4% to 5.5%;
Operating profit margins under GAAP would increase approximately 205 basis points to 270 basis points; and
Comparable hotel adjusted operating profit margins would range from a decrease of approximately 50 basis points to flat.
Based upon these parameters, the Company estimates that its full year 2010 guidance is as follows:
loss per diluted share should be approximately $(.24) to $(.21);
net loss should be approximately $(152) million to $(129) million;
FFO per diluted share should be approximately $.66 to $.70; and
Adjusted EBITDA should be approximately $795 million to $825 million.
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 109 properties with approximately 60,000 rooms, and also holds a non-controlling interest in a joint venture that owns 11 hotels in Europe with approximately 3,500 rooms. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott(R), Ritz-Carlton(R), Westin(R), Sheraton(R), W(R), St. Regis(R), The Luxury Collection(R), Hyatt(R), Fairmont(R), Four Seasons(R), Hilton(R) and Swissotel(R)* 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 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; 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 filings 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 July 20, 2010, 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., or Host LP, of which we are the sole general partner. When distinguishing between Host and Host LP, the primary difference is approximately 2% of the partnership interests in Host LP held by outside partners as of June 18, 2010, 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, 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)
June 18, December 31,
2010 2009
---- ----
(unaudited)
-----------
ASSETS
------
Property and equipment, net $10,054 $10,231
Assets held for sale - 8
Due from managers 54 29
Investments in affiliates 135 153
Deferred financing costs, net 43 49
Furniture, fixtures and equipment
replacement fund 146 124
Other 311 266
Restricted cash 43 53
Cash and cash equivalents 1,171 1,642
----- -----
Total assets $11,957 $12,555
======= =======
LIABILITIES, NON-CONTROLLING
INTERESTS AND EQUITY
----------------------------
Debt
Senior notes, including $1,139
million and $1,123 million,
respectively, $4,207 $4,534
net of discount, of Exchangeable
Senior Debentures (b)
Mortgage debt 1,102 1,217
Other 86 86
--- ---
Total debt 5,395 5,837
Accounts payable and accrued
expenses 153 174
Other 190 194
--- ---
Total liabilities 5,738 6,205
----- -----
Non-controlling interests-Host
Hotels & Resorts, L.P. 169 139
Host Hotels & Resorts, Inc.
stockholders' equity:
Cumulative redeemable preferred
stock (liquidation preference $0 - 97
and $100 million, respectively) 50
million shares authorized; 0 and
4 million shares issued and
outstanding, respectively
Common stock, par value $.01, 1,050
million shares authorized; 7 6
652.5 million shares and 646.3
million shares issued and
outstanding, respectively
Additional paid-in capital 6,907 6,875
Accumulated other comprehensive
income 2 12
Deficit (887) (801)
---- ----
Total equity of Host Hotels &
Resorts, Inc. stockholders 6,029 6,189
Non-controlling interests-other
consolidated partnerships 21 22
--- ---
Total equity 6,050 6,211
----- -----
Total liabilities, non-controlling
interests and equity $11,957 $12,555
======= =======
(a) Our consolidated balance sheet as of June 18, 2010 has been prepared
without audit. Certain information and footnote disclosures normally
included in financial statements presented in accordance with GAAP have
been omitted.
(b) The principal balance of the exchangeable senior debentures is
$1,251 million.
HOST HOTELS & RESORTS, INC.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Year-to-date
Quarter ended ended
------------- ------------
June June June
18, 19, 18, June 19,
2010 2009 2010 2009
---- ---- ---- ----
Revenues
Rooms $672 $622 $1,156 $1,122
Food and beverage 343 318 595 584
Other 72 86 129 155
--- --- --- ---
Total hotel sales 1,087 1,026 1,880 1,861
Rental income 27 25 57 54
--- --- --- ---
Total revenues 1,114 1,051 1,937 1,915
----- ----- ----- -----
Expenses
Rooms 178 164 319 298
Food and beverage 241 228 428 424
Other departmental and
support expenses 279 265 501 496
Management fees 47 41 75 73
Other property-level
expenses 96 95 181 176
Depreciation and
amortization (b) 139 137 275 292
Corporate and other
expenses 24 17 49 32
--- --- --- ---
Total operating costs
and expenses 1,004 947 1,828 1,791
----- --- ----- -----
Operating profit 110 104 109 124
Interest income 1 2 2 4
Interest expense (c) (82) (82) (179) (169)
Net gains on property
transactions and other - 1 - 2
Gain (loss) on foreign
currency transactions
and derivatives (3) 6 (5) 4
Equity in earnings
(losses) of affiliates - (32) (5) (34)
--- --- --- ---
Income (loss) before
income taxes 26 (1) (78) (69)
(Provision) benefit for
income taxes (6) (10) 16 4
--- --- --- ---
Income (loss) from
continuing operations 20 (11) (62) (65)
Loss from discontinued
operations - (58) (2) (64)
--- --- --- ---
Net income (loss) 20 (69) (64) (129)
Less: Net (income) loss
attributable to non-
controlling interests (1) 1 (1) 2
--- --- --- ---
Net income (loss)
attributable to Host
Hotels & Resorts,
Inc. 19 (68) (65) (127)
Less: Dividends on
preferred stock (2) (2) (4) (4)
Issuance costs of
redeemed preferred
stock (4) - (4) -
--- --- --- ---
Net income (loss)
available to common
stockholders $13 $(70) $(73) $(131)
=== ==== ==== =====
Basic and diluted
earnings (loss) per
common share:
Continuing operations $.02 $(.02) $(.11) $(.12)
Discontinued operations - (.10) - (.12)
--- ---- --- ----
Basic and diluted
earnings (loss) per
common share $.02 $(.12) $(.11) $(.24)
==== ===== ===== =====
(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) During 2009, we recorded non-cash impairment charges totaling $91
million for the second quarter and $131 million year-to-date based on
the difference between the discounted cash flows and the carrying amount.
Of these impairment charges, $20 million was included in 2009 year-to-
date depreciation expense and $57 million and $77 million for second
quarter and year-to-date 2009, respectively, have been included in
discontinued operations. The remaining $34 million of impairment charges
in 2009 was for our investment in the European joint venture, which is
included in equity in earnings (losses) of affiliates.
(c) Interest expense includes the following items:
Year-to-date
Quarter ended ended
------------- ------------
June June June
18, 19, 18, June 19,
2010 2009 2010 2009
---- ---- ---- ----
Non-cash interest for exchangeable
debentures $7 $6 $15 $13
Loss on repurchase of Series M
senior notes - - 8 -
Gain on debt extinguishments - (7) - (10)
--- --- --- ---
Total $7 $(1) $23 $3
=== === === ===
HOST HOTELS & RESORTS, INC.
Earnings per Common Share
(unaudited, in millions, except per share amounts)
Year-to-date
Quarter ended ended
------------- ------------
June June June June
18, 19, 18, 19,
2010 2009 2010 2009
---- ---- ---- ----
Net income (loss) $20 $(69) $(64) $(129)
Net (income) loss
attributable to non-
controlling interests (1) 1 (1) 2
Dividends on preferred stock (2) (2) (4) (4)
Issuance costs of redeemed
preferred stock (a) (4) - (4) -
--- --- --- ---
Income (loss) available to
common stockholders 13 (70) (73) (131)
Assuming deduction of gain
recognized for the
repurchase of the 2004
Debentures (b) - - - (2)
--- --- --- ---
Diluted income (loss)
available to common
stockholders $13 $(70) $(73) $(133)
=== ==== ==== =====
Basic weighted average shares
outstanding 652.5 575.0 650.3 550.3
Diluted weighted average
shares outstanding (c) 654.1 575.0 650.3 552.2
Basic and diluted earnings
(loss) per share (d)(e) $.02 $(.12) $(.11) $(.24)
(a) Represents the original issuance costs associated with the
Class E preferred stock, which were redeemed during the second
quarter of 2010.
(b) During the first quarter of 2009, we repurchased $75 million
face amount of our 31/4% Exchangeable Senior Debentures ("the 2004
Debentures") with a carrying value of $72 million for $69 million.
The adjustments to dilutive earnings per common share related to
the 2004 Debentures repurchased during the first quarter 2009
include the $3 million gain on repurchase, net of interest expense
on the repurchased debentures.
(c) 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. No effect is shown for any securities
that are anti-dilutive.
(d) Basic earnings per common share is computed by dividing net
income available to common stockholders by the weighted average
number of shares of common stock outstanding. Diluted earnings per
common share is computed by dividing net income available to common
stockholders, as adjusted for potentially dilutive securities, by
the weighted average number of shares of common stock outstanding
plus potentially dilutive securities.
(e) See notes to the "Reconciliation of Net Income to EBITDA,
Adjusted EBITDA and FFO per Diluted Share" for information on
significant items affecting diluted earnings per common share for
which no adjustments were made.
HOST HOTELS & RESORTS, INC.
Comparable Hotel Operating Data
(unaudited)
Comparable Hotels by Region (a)
As of June Quarter ended June 18,
18, 2010 2010
---------- -----------------------
Average
No. of No. of Average Occupancy
Room
Properties Rooms Rate Percentages RevPAR
---------- ----- ----- ----------- ------
Pacific 27 15,941 $162.80 72.8% $118.45
Mid-Atlantic 10 8,328 217.46 85.1 185.01
North Central 13 5,897 133.26 68.2 90.84
South Central 9 5,687 150.15 69.8 104.87
Florida 9 5,677 196.28 74.3 145.78
DC Metro 12 5,416 204.93 83.6 171.23
Atlanta 8 4,252 149.39 62.3 93.12
New England 7 3,924 183.14 74.7 136.85
Mountain 7 2,889 157.64 69.4 109.41
International 7 2,473 163.71 65.2 106.66
--- -----
All Regions 109 60,484 175.47 73.8 129.44
=== ======
Quarter ended June 19,
2009
-----------------------
Average Percent
Change
Average Occupancy in
Room
Rate Percentages RevPAR RevPAR
----- ----------- ------ ------
Pacific $176.06 67.2% $118.23 0.2%
Mid-Atlantic 208.67 77.3 161.33 14.7
North Central 133.51 62.3 83.22 9.2
South Central 148.89 65.0 96.79 8.3
Florida 197.36 66.9 132.11 10.3
DC Metro 199.43 81.3 162.22 5.6
Atlanta 154.70 58.5 90.55 2.8
New England 175.86 63.6 111.83 22.4
Mountain 174.89 62.3 108.88 0.5
International 137.37 60.9 83.69 27.5
All Regions 176.64 67.8 119.76 8.1
As of June Year-to-date ended
18, 2010 June 18, 2010
---------- ------------------
Average
No. of No. of Average Occupancy
Room
Properties Rooms Rate Percentages RevPAR
---------- ----- ----- ----------- ------
Pacific 27 15,941 $163.06 69.4% $113.15
Mid-Atlantic 10 8,328 206.84 78.5 162.41
North Central 13 5,897 124.90 60.8 76.00
South Central 9 5,687 149.00 70.5 104.98
Florida 9 5,677 201.98 75.5 152.54
DC Metro 12 5,416 197.24 75.1 148.03
Atlanta 8 4,252 151.45 64.1 97.13
New England 7 3,924 168.24 64.2 108.05
Mountain 7 2,889 160.65 67.5 108.46
International 7 2,473 155.88 64.4 100.43
--- -----
All Regions 109 60,484 171.69 70.0 120.23
=== ======
Year-to-date ended
June 19, 2009
------------------
Average Percent
Change
Average Occupancy in
Room
Rate Percentages RevPAR RevPAR
----- ----------- ------ ------
Pacific $180.89 64.8% $117.21 (3.5)%
Mid-Atlantic 207.93 70.6 146.69 10.7
North Central 128.34 56.9 73.02 4.1
South Central 152.68 65.1 99.44 5.6
Florida 209.66 68.6 143.90 6.0
DC Metro 205.47 74.7 153.46 (3.5)
Atlanta 157.57 59.6 93.88 3.5
New England 165.36 55.9 92.42 16.9
Mountain 182.85 60.3 110.35 (1.7)
International 138.08 60.9 84.14 19.4
All Regions 179.27 64.8 116.19 3.5
Comparable Hotels by Property Type (a)
As of June Quarter ended June 18,
18, 2010 2010
---------- -----------------------
Average
No. of No. of Average Occupancy
Room
Properties Rooms Rate Percentages RevPAR
---------- ----- ----- ----------- ------
Urban 53 34,482 $186.86 75.9% $141.88
Suburban 29 10,964 140.44 67.3 94.53
Resort/Conference 13 8,082 219.46 72.8 159.82
Airport 14 6,956 115.49 74.2 85.67
--- -----
All Types 109 60,484 175.47 73.8 129.44
=== ======
Quarter ended June 19,
2009
-----------------------
Average Percent
Change
Average Occupancy in
Room
Rate Percentages RevPAR RevPAR
----- ----------- ------ ------
Urban $184.73 69.9% $129.12 9.9%
Suburban 143.38 60.3 86.42 9.4
Resort/Conference 231.93 67.6 156.71 2.0
Airport 117.15 69.4 81.31 5.4
All Types 176.64 67.8 119.76 8.1
As of June Year-to-date ended
18, 2010 June 18, 2010
---------- ------------------
Average
No. of No. of Average Occupancy
Room
Properties Rooms Rate Percentages RevPAR
---------- ----- ----- ----------- ------
Urban 53 34,482 $181.14 71.0% $128.68
Suburban 29 10,964 138.48 65.4 90.53
Resort/Conference 13 8,082 222.45 71.3 158.54
Airport 14 6,956 116.20 71.0 82.53
--- -----
All Types 109 60,484 171.69 70.0 120.23
=== ======
Year-to-date ended
June 19, 2009
------------------
Average Percent
Change
Average Occupancy in
Room
Rate Percentages RevPAR RevPAR
----- ----------- ------ ------
Urban $186.13 65.9% $122.63 4.9%
Suburban 146.76 59.4 87.13 3.9
Resort/Conference 241.16 66.5 160.42 (1.2)
Airport 121.66 66.2 80.60 2.4
All Types 179.27 64.8 116.19 3.5
(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 Year-to-
ended date ended
------- ----------
June June June June
18, 19, 18, 19,
2010 2009 2010 2009
---- ---- ---- ----
Number of hotels 109 109 109 109
Number of rooms 60,484 60,484 60,484 60,484
Percent change in comparable hotel
RevPAR 8.1% - 3.5% -
Operating profit margin under GAAP
(b) 9.9% 9.9% 5.6% 6.5%
Comparable hotel adjusted operating
profit margin (b) 24.7% 24.7% 22.5% 23.6%
Comparable hotel sales
Room $681 $630 $1,175 $1,135
Food and beverage 351 323 610 592
Other (c) 74 88 133 159
--- --- --- ---
Comparable hotel sales (d) 1,106 1,041 1,918 1,886
----- ----- ----- -----
Comparable hotel expenses
Room 180 165 321 300
Food and beverage 245 232 437 428
Other 41 40 71 72
Management fees, ground rent and
other costs 367 347 657 641
--- --- --- ---
Comparable hotel expenses (e) 833 784 1,486 1,441
--- --- ----- -----
Comparable hotel adjusted operating
profit 273 257 432 445
Non-comparable hotel results, net
(f) - - - 3
Office buildings and select service
properties, net (g) - 1 1 -
Depreciation and amortization (139) (137) (275) (292)
Corporate and other expenses (24) (17) (49) (32)
--- --- --- ---
Operating profit $110 $104 $109 $124
==== ==== ==== ====
(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 (loss) 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) Other revenues for 2009 include incremental cancellation and
attrition fees of $16 million and $28 million for the second quarter
and year-to-date, respectively. The incremental attrition and
cancellation fees adversely affected 2010 comparable hotel adjusted
operating profit margins by 100 basis points when compared to 2009 for
both the quarter and year-to-date periods.
(d) The reconciliation of total revenues per the consolidated
statements of operations to the comparable hotel sales is as follows:
Quarter Year-to-
ended date ended
------- ----------
June June June June
18, 19, 18, 19,
2010 2009 2010 2009
---- ---- ---- ----
Revenues per the consolidated
statements of operations $1,114 $1,051 $1,937 $1,915
Hotel sales for the property for
which we record rental income, net 12 10 25 22
Rental income for office buildings
and select service hotels (20) (20) (39) (39)
Adjustment for hotel sales for
comparable hotels to reflect
Marriott's - - (5) (12)
fiscal year for Marriott-managed
hotels --- --- --- ---
Comparable hotel sales $1,106 $1,041 $1,918 $1,886
====== ====== ====== ======
(e) The reconciliation of operating costs per the consolidated
statements of operations to the comparable hotel expenses is as
follows:
Quarter Year-to-
ended date ended
------- ----------
June June June June
18, 19, 18, 19,
2010 2009 2010 2009
---- ---- ---- ----
Operating costs and expenses per the
consolidated statements of
operations $1,004 $947 $1,828 $1,791
Hotel expenses for the property for
which we record rental income 12 10 25 22
Rent expense for office buildings and
select service hotels (20) (19) (38) (39)
Adjustment for hotel expenses for
comparable hotels to reflect - - (5) (9)
Marriott's fiscal year for Marriott-
managed hotels
Depreciation and amortization (139) (137) (275) (292)
Corporate and other expenses (24) (17) (49) (32)
--- --- --- ---
Comparable hotel expenses $833 $784 $1,486 $1,441
==== ==== ====== ======
(f) 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.
(g) Represents rental income less rental expense for select service
properties and office buildings.
HOST HOTELS & RESORTS, INC.
Other Financial and Operating Data (a)
(unaudited, in millions, except per share amounts)
December
June 18, 31,
2010 2009
---- ----
Equity
------
Common shares outstanding 652.5 646.3
Common shares outstanding assuming 663.5 658.2
conversion of minority partner OP
Units (a)
Preferred OP Units outstanding .02 .02
Class E Preferred shares outstanding
(b) - 4.0
Security pricing
----------------
Common (c) $15.51 $11.67
Class E Preferred (b)(c) $- $25.23
31/4% Exchangeable Senior Debentures
(d) $1,080.4 $1,002.8
25/8% Exchangeable Senior Debentures
(d) $960.1 $942.1
21/2% Exchangeable Senior Debentures
(d) $1,240.7 $1,062.8
Dividends declared per share for
calendar year
--------------------------------
Common (e)(f) $.02 $.25
Class E Preferred (b) $.95 $2.22
Debt
----
Coupon Maturity
Senior notes rate date
------------ ------- ---------
Series K 71/8% 11/2013 $725 $725
Series M 7% 8/2012 - 344
Series O 63/8% 3/2015 650 650
Series Q 63/4% 6/2016 800 800
Series S 67/8% 11/2014 498 498
Series T 9% 5/2017 388 387
Exchangeable senior
debentures (g) 31/4% 4/2024 325 323
Exchangeable senior
debentures (h) 25/8% 4/2027 492 484
Exchangeable senior
debentures (h) 21/2% 10/2029 322 316
Senior notes 10% 5/2012 7 7
--- ---
4,207 4,534
----- -----
Mortgage debt
and other
-------------
Mortgage debt
(non-recourse)
(i) 3.9-9.8% 3/2011-12/2023 1,102 1,217
Other 7.0-7.8% 10/2014-12/2017 86 86
--- ---
Total debt
(j)(k)(l) $5,395 $5,837
====== ======
Percentage of
fixed rate debt 87% 88%
Weighted average
interest rate 6.6% 6.6%
Weighted average 4.3
debt maturity years 4.4 years
Year-to-date
Quarter ended ended
------------- ------------
June 18, June 19, June 18, June 19,
2010 2009 2010 2009
---- ---- ---- ----
Hotel Operating
Statistics for All
Properties (m)
Average daily rate $175.33 $175.24 $171.55 $177.83
Average occupancy 73.6% 67.0% 69.8% 64.1%
RevPAR $129.01 $117.36 $119.76 $114.01
(a) Each OP Unit is convertible into 1.021494 common shares of Host. At
June 18, 2010 and December 31, 2009, there were 10.7 million and 11.7
million common OP Units, respectively, held by minority partners that
were convertible into 10.9 and 11.9 million shares, respectively, of Host
common stock.
(b) On June 18, 2010, the Company redeemed its 87/8% Class E cumulative
redeemable preferred stock at a redemption price of $25.00 per share,
plus accrued dividends.
(c) Share prices are the closing price as reported by the New York Stock
Exchange.
(d) Amount reflects market price of a single $1,000 debenture as quoted
by Bloomberg L.P.
(e) On December 18, 2009, Host paid approximately 90% of the 2009 special
dividend with Host common stock or 13.4 million common shares, with the
remaining 10% paid with cash of approximately $15.6 million.
(f) On June 18, 2010, the Company declared a second quarter common cash
dividend of $0.01 per share.
(g) On April 15, 2010, holders of the 2004 Debentures had the option to
require Host to repurchase the exchangeable debentures for cash equal to
100% of the aggregate principal amount. None of the holders exercised
this option and, therefore, the $325 million principal balance remains
outstanding. Subsequent to April 15, 2010, the interest expense for the
2004 Debentures will equal the cash coupon of 3.25%.
(h) The principal balance outstanding of the 25/8% Exchangeable Senior
Debentures due 2027 (the "2007 Debentures") and the 21/2% Exchangeable
Senior Debentures due 2029 (the "2009 Debentures") is $526 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).
(i) Mortgage debt is secured by real estate assets with an undepreciated
book value of $1.7 billion and $2.1 billion and an average interest rate
of 4.9% and 5.1% at June 18, 2010 and December 31, 2009, respectively,
maturing through December 2023. The assets securing mortgage debt
represents the book value of real estate assets. These amounts do not
represent the current market value of the assets.
(j) We have $600 million of available capacity under the revolver portion
of the credit facility.
(k) In accordance with GAAP, total debt includes the debt of entities
that we consolidate, but do not own 100% of the interests, 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 June 18, 2010, our non-
controlling partners' share of consolidated debt is $68 million and our
share of debt in unconsolidated investments is $283 million.
(l) Total debt as of June 18, 2010 and December 31, 2009 includes net
discounts of $114 million and $142 million, respectively.
(m) The operating statistics reflect all consolidated properties as of
June 18, 2010 and June 19, 2009, respectively. The operating statistics
include the results of operations through their date of disposition for
two properties disposed of in 2010 and six properties disposed of in
2009.
HOST HOTELS & RESORTS, INC.
Reconciliation of Net Income to EBITDA, Adjusted EBITDA
and Funds From Operations per Diluted Share
(unaudited, in millions, except per share amounts)
Quarter ended Year-to-date ended
------------- ------------------
June 18, June 19, June 18, June 19,
2010 2009 2010 2009
---- ---- ---- ----
Net income
(loss) $20 $(69) $(64) $(129)
Interest
expense 82 82 179 169
Depreciation
and
amortization 139 137 275 272
Income taxes 6 10 (16) (4)
Discontinued
operations
(a) - 4 (1) 8
--- --- --- ---
EBITDA 247 164 373 316
(Gains)
losses on
dispositions 1 1 1 (18)
Non-cash
impairment
charges - 91 - 131
Amortization
of deferred
gains - (1) - (2)
Equity
investment
adjustments:
Equity in
(earnings)
losses of
affiliates - (2) 5 -
Pro rata
EBITDA of
equity
investments 6 6 6 10
Consolidated
partnership
adjustments:
Pro rata
EBITDA
attributable
to non-
controlling (4) (3) (9) (7)
partners in
other
consolidated
partnerships --- --- --- ---
Adjusted
EBITDA $250 $256 $376 $430
==== ==== ==== ====
Quarter ended Year-to-date ended
------------- ------------------
June 18, June 19, June 18, June 19,
2010 2009 2010 2009
---- ---- ---- ----
Net income (loss) $20 $(69) $(64) $(129)
Less: Net
(income) loss
attributable to
non-controlling
interests (1) 1 (1) 2
Dividends on
preferred stock (2) (2) (4) (4)
Issuance costs of
redeemed
preferred stock (4) - (4) -
--- --- --- ---
Net income (loss)
available to
common
stockholders 13 (70) (73) (131)
Adjustments:
(Gains) losses on
dispositions,
net of taxes 1 1 1 (17)
Amortization of
deferred gains
and other
property
transactions, - (1) - (2)
net of taxes
Depreciation and
amortization (b) 138 140 275 279
Partnership
adjustments 2 - 1 -
FFO of non-
controlling
interests of
Host LP (3) (2) (4) (3)
--- --- --- ---
Funds From
Operations 151 68 200 126
Adjustments for
dilutive
securities (c):
Assuming
deduction of
gain recognized
for the
repurchase - - - (2)
of the 2004
Debentures (d)
Assuming
conversion of
2004
Exchangeable
Senior
Debentures 3 - - -
Assuming
conversion of
2009
Exchangeable
Senior
Debentures 5 - - -
--- --- --- ---
Diluted FFO
(c)(e) $159 $68 $200 $124
==== === ==== ====
Diluted weighted
average shares
outstanding
(c)(e) 703.7 575.8 651.6 552.8
Diluted FFO per
share (c)(e) $.23 $.12 $.31 $.22
(a) Reflects the interest expense, depreciation and amortization and
income taxes included in discontinued operations.
(b) In accordance with the guidance on FFO per diluted share
provided by the National Association of Real Estate Investment
Trusts, we do not adjust net income for the non-cash impairment
charges when determining our FFO per diluted share.
(c) FFO per diluted share in accordance with NAREIT is 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. Diluted weighted
average shares outstanding for the second quarter 2010 include 49.6
million related to the shares issuable upon the conversion of our
2004 and 2009 Debentures.
(d) During the first quarter of 2009, we repurchased $75 million of
the 2004 Debentures with a carrying value of $72 million for $69
million. The adjustments to dilutive FFO related to the 2004
Debentures repurchased during the year include the $3 million gain
on repurchase, net of interest expense on the repurcha
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