Business News
Host Hotels & Resorts, Inc. Reports Solid Results of Operations for the Second Quarter of 2008
2008-07-16 05:00:00
BETHESDA, Md., July 16 /EMWNews-FirstCall/ -- Host Hotels & Resorts, Inc. (NYSE: HST), the nation's largest lodging real estate investment trust (REIT), today announced its results of operations for the second quarter ended June 13, 2008. -- Total revenue increased $34 million, or 2.5%, to $1,415 million for the second quarter and $63 million, or 2.6%, to $2,473 million for year-to-date 2008. -- Net income increased $41 million to $190 million and income from continuing operations increased $34 million to $179 million for the second quarter of 2008. For year-to-date 2008, net income decreased $85 million to $251 million and income from continuing operations increased $53 million to $239 million compared to year-to-date 2007. Earnings per diluted share increased $.08 to $.35 for the second quarter and decreased $.16 to $.46 for year-to-date 2008. Net income in 2008 included a net gain of approximately $10 million, or $.02 per diluted share, for the second quarter and year-to-date associated with hotel dispositions. By comparison, net income in 2007 included a net loss of approximately $46 million, or $.08 per diluted share, for the second quarter associated with the refinancing of debt, and a net gain of $90 million, or $.16 per diluted share, for year-to-date 2007 associated with the refinancing of debt and net gains on hotel dispositions. -- Funds from Operations (FFO) per diluted share increased 16.7% to $.56 for the second quarter and 14.1% to $.89 for year-to-date 2008. In 2007, FFO was reduced by $.08 per diluted share for costs associated with debt refinancings for both the second quarter and year-to-date. The Company also announced the following second quarter results for Host Hotels & Resorts, L.P., (Host LP) through which it conducts all of its operations and holds approximately 96% of the partnership interests: -- Net income increased $45 million to $199 million for the second quarter and decreased $86 million to $262 million for year-to-date 2008. -- Adjusted EBITDA, which is Earnings before Interest Expense, Income Taxes, Depreciation, Amortization and other items, decreased $3 million to $419 million for the second quarter and was $681 million for both year-to-date 2008 and 2007. For further detail of certain transactions affecting net income of the Company and Host LP, earnings per diluted share and FFO per diluted share, refer to the "Schedule of Significant Transactions Affecting Earnings per Share and Funds From Operations per Diluted Share" attached to this press release. 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 2008 increased 1.7% when compared to the second quarter of 2007. Year-to-date 2008 comparable hotel RevPAR increased 2.0% when compared to year-to-date 2007. Comparable hotel adjusted operating profit margins decreased 20 basis points and 30 basis points for the second quarter and year-to-date 2008, respectively. For further detail, see "Notes to the Financial Information." Balance Sheet As of June 13, 2008, the Company had approximately $505 million of cash and cash equivalents and $600 million of available capacity under its credit facility. Excluding amounts necessary for working capital, the Company intends to use its available funds for dividend payments, stock repurchases, investments in its portfolio, to acquire new properties or to make debt repayments. Financing Transactions During the second quarter, the Company entered into a $210 million term loan under its credit facility. The proceeds from the term loan, which is an expansion of the Company's existing $600 million credit facility, were used to repay $100 million outstanding under the revolver portion of the credit facility and for general corporate purposes. The term loan was completed in two phases, with $165 million closing in April 2008 (as previously announced) and an additional $45 million, with the same terms, closing in May 2008. The term loan has a maturity date of September 9, 2011 which the Company can extend for one year, subject to certain conditions. The term loan is prepayable without penalty after October 2009 and may be repaid prior to that date for a fee. The term loan bears interest at LIBOR plus 175 basis points (approximately 4.2% at June 13, 2008). During the quarter, the Company also refinanced the $208 million, 7.48% mortgage on the Orlando World Center Marriott with a non-amortizing $300 million mortgage that bears interest at a rate of LIBOR plus 350 basis points (approximately 5.96% at June 13, 2008). The loan has an initial maturity in 2011, plus two, one-year extensions subject to certain conditions. The additional loan proceeds will be used for general corporate purposes. Stock Repurchase Program Under its previously announced stock repurchase program, the Company repurchased 2.2 million shares of its common stock valued at approximately $37 million during the second quarter. Year-to-date, the Company has repurchased 4.35 million shares valued at approximately $72 million. As of June 13, 2008, the Company has approximately 518.6 million shares of common stock outstanding. Capital Expenditures The Company continued to make significant enhancements to its portfolio through an extensive capital expenditure program which included approximately $160 million and $310 million of investments for the second quarter and year- to-date 2008, respectively. The Company recently completed the $81 million repositioning project of the Atlanta Marriott Marquis with the opening of the new 26,000 square foot Atrium Ballroom and the $4 million construction of an 8,300 square foot meeting space addition at the San Francisco Marriott. Dispositions During the second quarter the Company sold the Sheraton Suites Tampa Airport for approximately $24 million and recorded a gain of approximately $10 million on the sale. European Joint Venture In April 2008, the Company's joint venture in Europe, in which the Company owns a 32.1% interest and serves as the general partner, purchased the 270- room Crowne Plaza Amsterdam City Centre for approximately 72 million euros. Dividend As previously announced, the Company expects to declare a fixed $.20 per share common dividend each quarter, as well as a special dividend in the fourth quarter of each year, the amount of which will be based on the Company's taxable income. Based on the Company's current guidance for 2008, the Company expects that the fourth quarter special dividend will be in the range of $.15 to $.20, which would result in a full year dividend of $.95 to $1.00. 2008 Outlook The Company expects comparable hotel RevPAR to decline approximately 4% to 2% for the third quarter, and range from a decrease of 1% to an increase of 1% for the full year. For full year 2008, the Company expects its operating profit margins under GAAP to decrease approximately 300 basis points to 230 basis points and its comparable hotel adjusted operating profit margins to decrease approximately 125 basis points to 75 basis points. Based upon this guidance, the Company estimates that full year 2008 guidance for Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. would be as follows: Host Hotels & Resorts, Inc. -- earnings per diluted share should be approximately $.07 to $.09 for the third quarter and $.84 to $.94 for the full year; -- net income should be approximately $41 million to $51 million for the third quarter and $455 million to $507 million for the full year; and -- FFO per diluted share should be approximately $.27 to $.29 for the third quarter and $1.75 to $1.85 for the full year. Host Hotels & Resorts, L.P. -- net income for 2008 should be approximately $477 million to $529 million; and -- Adjusted EBITDA for 2008 should be approximately $1,375 million to $1,425 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 118
properties with approximately 64,000 rooms, and also holds a minority
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 http://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," "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 potential for 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 qualify as 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 15, 2008, 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. For each share of our common
stock, Host LP has issued to us one unit of operating partnership interest,
or OP Unit. When distinguishing between Host and Host LP, the primary
difference is approximately 4% of the partnership interests in Host LP held
by outside partners as of July 15, 2008, which is reflected as minority
interest in our consolidated balance sheets and minority interest expense
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 13, December 31,
2008 2007
(unaudited)
ASSETS
Property and equipment, net $10,718 $10,588
Due from managers 134 106
Investments in affiliates 203 194
Deferred financing costs, net 54 51
Furniture, fixtures and equipment replacement fund 143 122
Other 227 198
Restricted cash 61 65
Cash and cash equivalents 505 488
Total assets $12,045 $11,812
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt
Senior notes, including $1,090 million and
$1,088 million, respectively, net of discount,
of Exchangeable Senior Debentures $4,116 $4,114
Mortgage debt 1,499 1,423
Credit facility, including the $210 million
term loan 210 -
Other 87 88
Total debt 5,912 5,625
Accounts payable and accrued expenses (b) 84 315
Other 215 215
Total liabilities 6,211 6,155
Interest of minority partners of Host Hotels &
Resorts, L.P. 250 188
Interest of minority partners of other
consolidated partnerships 29 28
Stockholders' equity
Cumulative redeemable preferred stock (liquidation
preference $100 million) 50 million shares
authorized; 4.0 million shares issued and
outstanding 97 97
Common stock, par value $.01, 750 million shares
authorized; 518.6 million shares and 522.6 million
shares issued and outstanding, respectively 5 5
Additional paid-in capital 5,640 5,673
Accumulated other comprehensive income 49 45
Deficit (236) (379)
Total stockholders' equity 5,555 5,441
Total liabilities and stockholders' equity $12,045 $11,812
(a) Our consolidated balance sheet as of June 13, 2008 has been
prepared without audit. Certain information and footnote disclosures
normally included in financial statements presented in accordance with GAAP
have been omitted. The consolidated balance sheets should be read in
conjunction with the consolidated financial statements and notes thereto
included in our most recent Annual Report on Form 10-K.
(b) Amount includes $209 million at year end 2007 for the accrual of
the year end 2007 dividend of $.40 per common share. The second quarter
2008 dividend of $.20 per common share was not declared until June 15,
2008, which is after June 13, the end of the second quarter.
HOST HOTELS & RESORTS, INC.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Revenues
Rooms $856 $839 $1,480 $1,447
Food and beverage 440 427 774 748
Other 92 90 162 159
Total hotel sales 1,388 1,356 2,416 2,354
Rental income 27 25 57 56
Total revenues 1,415 1,381 2,473 2,410
Expenses
Rooms 199 193 356 343
Food and beverage 301 295 544 531
Hotel departmental expenses 325 314 583 563
Management fees 73 71 125 116
Other property-level expenses 96 94 177 175
Depreciation and amortization 131 118 255 233
Corporate and other expenses 14 15 31 37
Gain on insurance settlement (b) - - (7) -
Total operating costs and expenses 1,139 1,100 2,064 1,998
Operating profit 276 281 409 412
Interest income 5 12 9 18
Interest expense (81) (136) (157) (230)
Net gains on property transactions 1 1 2 2
Minority interest expense (10) (5) (19) (16)
Equity in earnings of affiliates 2 3 2 5
Income before income taxes 193 156 246 191
Provision for income taxes (14) (11) (7) (5)
Income from continuing operations 179 145 239 186
Income from discontinued operations (c) 11 4 12 150
Net income 190 149 251 336
Less: Dividends on preferred stock (2) (2) (4) (4)
Net income available to common
stockholders $188 $147 $247 $332
Basic earnings per common share:
Continuing operations $.34 $.27 $.45 $.35
Discontinued operations .02 .01 .02 .29
Basic earnings per common share $.36 $.28 $.47 $.64
Diluted earnings per common share
Continuing operations $.33 $.26 $.44 $.35
Discontinued operations .02 .01 .02 .27
Diluted earnings per common share $.35 $.27 $.46 $.62
(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) The gain on insurance settlement reflects business interruption
insurance proceeds from damages incurred from Hurricane Katrina in 2005 and
excludes the $2 million of management fees due to the manager of the hotel
for the first quarter of 2008 related to the proceeds.
(c) Reflects the results of operations and gains on sale, net of the
related income tax, for one property held-for-sale at June 13, 2008, one
property sold in 2008 and nine properties sold in 2007.
HOST HOTELS & RESORTS, INC.
Earnings per Common Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
June 13, 2008 June 15, 2007
Per Per
Share Share
Income Shares Amount Income Shares Amount
Net income $190 520.5 $.36 $149 522.1 $.29
Dividends on preferred stock (2) - - (2) - (.01)
Basic earnings available to
common stockholders (a)(b) 188 520.5 .36 147 522.1 .28
Assuming distribution of
common shares granted under
the comprehensive stock
plan less shares assumed
purchased at average market
price - .3 - - .7 -
Assuming conversion of
minority OP units issuable - - - - 1.2 -
Assuming conversion of 2004
Exchangeable Senior
Debentures 4 30.9 (.01) 4 29.0 (.01)
Diluted earnings available to
common stockholders (a)(b) $192 551.7 $.35 $151 553.0 $.27
Year-to-date ended Year-to-date ended
June 13, 2008 June 15, 2007
Per Per
Share Share
Income Shares Amount Income Shares Amount
Net income $251 521.5 $.48 $336 521.8 $.65
Dividends on preferred
stock (4) - (.01) (4) - (.01)
Basic earnings available to
common stockholders (a)(b) 247 521.5 .47 332 521.8 .64
Assuming distribution of
common shares granted under
the comprehensive stock
plan less shares assumed
purchased at average market
price - .3 - - .8 -
Assuming conversion of
minority OP units issuable - - - - 1.2 -
Assuming conversion of 2004
Exchangeable Senior
Debentures 9 30.9 (.01) 9 29.0 (.02)
Diluted earnings available to
common stockholders (a)(b) $256 552.7 $.46 $341 552.8 $.62
(a) 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. Dilutive
securities may include shares granted under comprehensive stock plans,
preferred OP Units held by minority partners, exchangeable debt securities
and other minority 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.
(b) Our results for both periods presented were significantly affected by
certain transactions. For further detail see "Schedule of Significant
Transactions Affecting Earnings per Share and Funds From Operations per
Diluted Share."
HOST HOTELS & RESORTS, INC.
Comparable Hotel Operating Data
(unaudited)
Comparable Hotels by Region (a)
As of June 13, 2008 Quarter ended June 13, 2008
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Pacific 27 15,936 $206.12 76.5% $157.60
Mid-Atlantic 11 8,684 265.87 81.9 217.73
North Central 14 6,175 158.64 70.7 112.15
Florida 9 5,676 236.85 78.3 185.51
DC Metro 13 5,666 214.09 83.8 179.31
New England 11 5,663 185.14 77.5 143.52
South Central 8 4,358 172.07 71.8 123.62
Mountain 8 3,372 182.61 69.8 127.49
Atlanta 7 2,589 196.56 70.5 138.66
International 7 2,471 181.20 74.0 134.00
All Regions 115 60,590 207.62 76.5 158.91
Quarter ended June 15, 2007
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Pacific $204.17 76.8% $156.89 0.5%
Mid-Atlantic 254.96 85.3 217.38 0.2
North Central 154.80 72.1 111.65 0.4
Florida 231.75 76.7 177.77 4.4
DC Metro 206.99 85.1 176.05 1.8
New England 177.62 76.3 135.45 6.0
South Central 167.42 74.3 124.44 (0.7)
Mountain 183.00 70.1 128.26 (0.6)
Atlanta 204.27 71.9 146.88 (5.6)
International 154.69 70.9 109.69 22.2
All Regions 202.34 77.2 156.28 1.7
As of June 13, 2008 Year-to-date ended
June 13, 2008
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Pacific 27 15,936 $206.10 74.7% $154.01
Mid-Atlantic 11 8,684 253.22 78.1 197.72
North Central 14 6,175 149.20 63.1 94.21
Florida 9 5,676 242.60 79.7 193.29
DC Metro 13 5,666 208.75 74.4 155.40
New England 11 5,663 174.42 70.1 122.25
South Central 8 4,358 169.81 71.8 121.89
Mountain 8 3,372 192.74 67.4 129.99
Atlanta 7 2,589 195.77 70.0 136.98
International 7 2,471 172.90 71.9 124.29
All Regions 115 60,590 204.57 73.1 149.59
Year-to-date ended June 15, 2007
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Pacific $203.13 74.8% $151.96 1.4%
Mid-Atlantic 241.06 80.6 194.39 1.7
North Central 145.50 67.4 98.10 (4.0)
Florida 239.45 76.4 183.01 5.6
DC Metro 202.59 77.6 157.28 (1.2)
New England 166.22 68.6 114.06 7.2
South Central 164.25 75.1 123.28 (1.1)
Mountain 187.75 69.2 129.94 -
Atlanta 198.26 70.8 140.34 (2.4)
International 149.15 68.0 101.35 22.6
All Regions 198.22 74.0 146.72 2.0
HOST HOTELS & RESORTS, INC.
Comparable Hotel Operating Data
(unaudited)
Comparable Hotels by Property Type (a)
As of June 13, 2008 Quarter ended June 13, 2008
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Urban 55 32,989 $220.48 78.3% $172.65
Suburban 32 12,311 161.83 69.1 111.81
Resort/Convention 13 8,082 274.55 78.5 215.40
Airport 15 7,208 140.59 78.9 110.94
All Types 115 60,590 207.62 76.5 158.91
Quarter ended June 15, 2007
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Urban $212.39 79.9% $169.75 1.7%
Suburban 158.38 69.8 110.52 1.2
Resort/Convention 275.92 76.6 211.23 2.0
Airport 139.29 78.3 109.03 1.8
All Types 202.34 77.2 156.28 1.7
As of June 13, 2008 Year-to-date ended
June 13, 2008
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Urban 55 32,989 $213.78 74.5% $159.30
Suburban 32 12,311 162.28 65.7 106.68
Resort/Convention 13 8,082 279.07 77.4 216.04
Airport 15 7,208 142.11 74.7 106.14
All Types 115 60,590 204.57 73.1 149.59
Year-to-date ended June 15, 2007
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Urban $205.35 76.3% $156.64 1.7%
Suburban 157.44 67.2 105.73 0.9
Resort/Convention 278.99 74.7 208.39 3.7
Airport 139.78 74.8 104.54 1.5
All Types 198.22 74.0 146.72 2.0
(a) See the notes to financial information for a discussion of
reporting periods and comparable hotel results.
HOST HOTELS & RESORTS, INC.
Comparable Hotel Operating Data
Schedule of Comparable Hotel Results (a)
(unaudited, in millions, except hotel statistics)
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Number of hotels 115 115 115 115
Number of rooms 60,590 60,590 60,590 60,590
Percent change in comparable
hotel RevPAR 1.7% - 2.0% -
Operating profit margin under GAAP (b) 19.5% 20.3% 16.5% 17.1%
Comparable hotel adjusted operating
profit margin (b) 30.1% 30.3% 28.0% 28.3%
Food and beverage profit margin under
GAAP (b) 31.6% 30.9% 29.7% 29.0%
Comparable food and beverage adjusted
profit margin (b) 31.7% 31.1% 29.9% 29.3%
Comparable hotel sales
Room $841 $827 $1,463 $1,431
Food and beverage (c) 436 425 772 748
Other 93 92 165 163
Comparable hotel sales (d) 1,370 1,344 2,400 2,342
Comparable hotel expenses
Room 195 189 350 338
Food and beverage (e) 298 293 541 529
Other 49 49 87 87
Management fees, ground rent and
other costs 415 406 750 725
Comparable hotel expenses (f) 957 937 1,728 1,679
Comparable hotel adjusted operating
profit 413 407 672 663
Non-comparable hotel results, net (g) 9 8 17 20
Office buildings and select service
properties, net (h) (1) (1) (1) (1)
Depreciation and amortization (131) (118) (255) (233)
Corporate and other expenses (14) (15) (31) (37)
Gain on insurance settlement - - 7 -
Operating profit $276 $281 $409 $412
(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 food and beverage sales per the
consolidated statements of operations to the comparable food and beverage
sales is as follows:
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Food and beverage sales per the
consolidated statements of operations $440 $427 $774 $748
Non-comparable food and beverage sales (11) (9) (25) (20)
Food and beverage sales for the property
for which we record rental income 7 7 16 16
Adjustment for food and beverage sales
for comparable hotels to reflect
Marriott's fiscal year for
Marriott-managed hotels - - 7 4
Comparable food and beverage sales $436 $425 $772 $748
(d) The reconciliation of total revenues per the consolidated
statements of operations to the comparable hotel sales is as follows:
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Revenues per the consolidated
statements of operations $1,415 $1,381 $2,473 $2,410
Non-comparable hotel sales (40) (33) (83) (72)
Hotel sales for the property for
which we record rental income, net 14 14 27 27
Rental income for office buildings
and select service hotels (19) (18) (38) (37)
Adjustment for hotel sales for
comparable hotels to reflect
Marriott's fiscal year for
Marriott-managed hotels - - 21 14
Comparable hotel sales $1,370 $1,344 $2,400 $2,342
(e) The reconciliation of total food and beverage expenses per the
consolidated statements of operations to the comparable food and beverage
expenses is as follows:
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Food and beverage expenses per the
consolidated statements of operations $301 $295 $544 $531
Non-comparable food and beverage
expense (8) (6) (18) (14)
Food and beverage expenses for the
property for which we record rental
income 5 4 10 9
Adjustment for food and beverage expenses
for comparable hotels to reflect
Marriott's fiscal year for
Marriott-managed hotels - - 5 3
Comparable food and beverage expenses $298 $293 $541 $529
(f) The reconciliation of operating costs per the consolidated
statements of operations to the comparable hotel expenses is as follows:
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Operating costs and expenses per
the consolidated statements of
operations $1,139 $1,100 $2,064 $1,998
Non-comparable hotel expenses (30) (24) (61) (50)
Hotel expenses for the property
for which we record rental income 13 13 28 29
Rent expense for office buildings
and select service hotels (20) (19) (39) (38)
Adjustment for hotel expenses for
comparable hotels to reflect
Marriott's fiscal year for
Marriott-managed hotels - - 15 10
Depreciation and amortization (131) (118) (255) (233)
Corporate and other expenses (14) (15) (31) (37)
Gain on insurance settlement - - 7 -
Comparable hotel expenses $957 $937 $1,728 $1,679
(g) Non-comparable hotel results, net, includes the following items:
(i) the results of operations of our non-comparable hotels whose operations
are included in our consolidated statement of operations as continuing
operations and (ii) 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.
(h) Represents rental income less rental expense for select service
properties and office buildings.
HOST HOTELS & RESORTS, INC.
Other Financial and Operating Data
(unaudited, in millions, except per share amounts)
June 13, December 31,
2008 2007
Equity
Common shares outstanding 518.6 522.6
Common shares and minority held common OP
Units outstanding 542.3 540.9
Preferred OP Units outstanding .02 .02
Class E Preferred shares outstanding 4.0 4.0
Security pricing
Common (a) $15.55 $17.04
Class E Preferred (a) $24.80 $25.05
3-1/4% Exchangeable Senior Debentures (b) $1,073.75 $1,153.19
2-5/8% Exchangeable Senior Debentures (b) $855.00 $855.44
Dividends declared per share for calendar year
Common (c) $.40 $1.00
Class E Preferred (c) $1.11 $2.22
Debt
Series K senior notes, with a rate of 7-1/8% due
November 2013 $725 $725
Series M senior notes, with a rate of 7% due
August 2012 347 347
Series O senior notes, with a rate of 6-3/8% due
March 2015 650 650
Series Q senior notes, with a rate of 6-3/4% due
June 2016 800 800
Series S senior notes, with a rate of 6-7/8% due
November 2014 497 497
$500 million Exchangeable Senior Debentures, with
a rate of 3-1/4% due April 2024 497 496
$600 million Exchangeable Senior Debentures, with
a rate of 2-5/8% due April 2027 593 592
Senior notes, with rate of 10.0% due May 2012 7 7
Total senior notes 4,116 4,114
Mortgage debt (non-recourse) secured by $2.2 billion
of real estate assets, with an average interest
rate of 6.3% and 6.6% at June 13, 2008 and
December 31, 2007, respectively, maturing through
December 2023 1,499 1,423
Credit facility (d) 210 -
Other 87 88
Total debt (e)(f) $5,912 $5,625
Percentage of fixed rate debt 91.4% 100%
Weighted average interest rate 5.9% 6.0%
Weighted average debt maturity 5.2 years 5.7 years
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Hotel Operating Statistics
for All Properties (g)
Average daily rate $205.10 $199.50 $201.99 $194.93
Average occupancy 76.2% 76.4% 73.0% 73.5%
RevPAR $156.20 $152.49 $147.46 $143.33
(a) Share prices are the closing price as reported by the New York
Stock Exchange.
(b) Amount reflects market price of a single $1,000 debenture as quoted
by Bloomberg L.P.
(c) On June 16, 2008, the Company declared a second quarter common
dividend of $0.20 per share and a second quarter preferred dividend of
$0.5546875 per share for its Class E cumulative redeemable preferred stock.
(d) During the second quarter, the Company entered into a $210 million
term loan, which is an expansion of the Company's existing $600 million
credit facility. The term loan was completed in two phases, with $165
million closing in April 2008 (as previously announced) and an additional
$45 million, with the same terms, closing in May 2008. The term loan has a
maturity date of September 9, 2011 which the Company can extend for one
year, subject to certain conditions. The term loan is prepayable without
penalty after October 2009 and may be repaid prior to that date for a fee.
The term loan bears interest at LIBOR plus 175 basis points, with a LIBOR
floor of 2.25%. The proceeds from the term loan were used to repay the $100
million draw under the Credit Facility and for general corporate purposes.
As a result of this transaction, the Company has $600 million available
under the revolver feature of the Credit Facility.
(e) 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 minority ownership
interest and record our investment therein under the equity method of
accounting. As of June 13, 2008, our minority partners' share of
consolidated debt is $68.3 million and our share of debt in unconsolidated
investments is $391.4 million.
(f) Total debt as of June 13, 2008 and December 31, 2007 includes net
discounts of $12 million and $13 million, respectively.
(g) The operating statistics reflect all consolidated properties as of
June 13, 2008 and June 15, 2007, respectively. The operating statistics
include the results of operations for nine properties sold as of June 15,
2008 prior to their disposition.
HOST HOTELS & RESORTS, INC.
Reconciliation of Net Income Available to Common Stockholders
to Funds From Operations per Common Share
(unaudited, in millions, except per share amounts)
Quarter ended June 13, 2008 Quarter ended June 15, 2007
Per Share Per Share
Income Shares Amount Income Shares Amount
Net income available
to common
stockholders $188 520.5 $.36 $147 522.1 $.28
Adjustments:
Gains on dispositions,
net of taxes (10) - (.02) 2 - -
Amortization of
deferred gains and
other property
transactions, net of
taxes (1) - - (1) - -
Depreciation and
amortization 130 - .25 117 - .23
Partnership
adjustments 12 - .02 6 - .01
FFO of minority
partners of Host
LP (a) (14) - (.03) (9) - (.02)
Adjustments for
dilutive securities:
Assuming distribution
of common shares
granted under the
comprehensive stock
plan less shares
assumed purchased at
average market price - .3 - - .7 -
Assuming conversion of
2004 Exchangeable
Senior Debentures 4 30.9 (.02) 4 29.0 (.02)
FFO per diluted
share (b)(c) $309 551.7 $.56 $266 551.8 $.48
Year-to-date ended Year-to-date ended
June 13, 2008 June 15, 2007
Per Share Per Share
Income Shares Amount Income Shares Amount
Net income available
to common
stockholders $247 521.5 $.47 $332 521.8 $.64
Adjustments:
Gains on dispositions,
net of taxes (10) - (.02) (139) - (.27)
Amortization of
deferred gains and
other property
transactions, net of
taxes (2) - - (2) - -
Depreciation and
amortization 254 - .49 234 - .45
Partnership
adjustments 16 - .03 13 - .02
FFO of minority
partners of Host
LP (a) (21) - (.04) (15) - (.03)
Adjustments for
dilutive securities:
Assuming distribution
of common shares
granted under the
comprehensive stock
plan less shares
assumed purchased at
average market price - .3 - - .8 -
Assuming conversion of
2004 Exchangeable
Senior Debentures 9 30.9 (.04) 9 29.0 (.03)
FFO per diluted
share (b)(c) $493 552.7 $.89 $432 551.6 $.78
(a) Represents FFO attributable to the minority interests in Host LP.
(b) 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
minority partners, exchangeable debt securities and other minority
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.
(c) FFO per diluted share was significantly affected by certain
transactions. For further detail see "Schedule of Significant Transactions
Affecting Earnings per Diluted Share and Funds From Operations per Diluted
Share."
HOST HOTELS & RESORTS, INC.
Schedule of Significant Transactions Affecting Earnings per Share
and Funds From Operations per Diluted Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
June 13, 2008 June 15, 2007
Net Income Net Income
(Loss) FFO (Loss) FFO
Senior notes redemptions and debt
prepayments (a) $- $- $(46) $(46)
Gain/(loss) on hotel dispositions,
net of taxes 10 - (2) -
Assuming conversion of minority OP
Units issuable - - - (1)
Minority interest income
(expense) (b) - - 2 2
Total (c) $10 $- $(46) $(45)
Diluted shares 551.7 - 553.0 553.0
Per diluted share $.02 $- $(.08) $(.08)
Year-to-date ended Year-to-date ended
June 13, 2008 June 15, 2007
Net Income Net Income
(Loss) FFO (Loss) FFO
Senior notes redemptions and debt
prepayments (a) $- $- $(46) $(46)
Gain on hotel dispositions, net
of taxes 10 - 139 -
Minority interest income
(expense) (b) - - (3) 2
Total (c) $10 $- $90 $(44)
Diluted shares 552.7 - 552.8 551.6
Per diluted share $.02 $- $.16 $(.08)
(a) Represents call premiums and the acceleration of original issue
discounts and deferred financing costs, as well as incremental interest
during the call or prepayment notice period, included in interest expense
in the consolidated statements of operations. We recognized these costs in
conjunction with the prepayment or refinancing of senior notes and
mortgages during the periods presented.
(b) Represents the portion of the significant transactions attributable
to minority partners in Host LP.
(c) Net income of Host LP was also affected by the transactions
discussed above, with the exception of the minority interest income
(expense) item discussed in footnote (b). Accordingly, the total
adjustments to the net income of Host LP were approximately $10 million for
the second quarter and year-to-date 2008 and $(48) million and $93 million
for the second quarter and year-to-date 2007, respectively.
HOST HOTELS & RESORTS, L.P.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per unit amounts)
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Revenues
Rooms $856 $839 $1,480 $1,447
Food and beverage 440 427 774 748
Other 92 90 162 159
Total hotel sales 1,388 1,356 2,416 2,354
Rental income 27 25 57 56
Total revenues 1,415 1,381 2,473 2,410
Expenses
Rooms 199 193 356 343
Food and beverage 301 295 544 531
Hotel departmental expenses 325 314 583 563
Management fees 73 71 125 116
Other property-level expenses 96 94 177 175
Depreciation and amortization 131 118 255 233
Corporate and other expenses 14 15 31 37
Gain on insurance settlement - - (7) -
Total operating costs and expenses 1,139 1,100 2,064 1,998
Operating profit 276 281 409 412
Interest income 5 12 9 18
Interest expense (81) (136) (157) (230)
Net gains on property transactions 1 1 2 2
Minority interest expense (1) - (8) (4)
Equity in earnings of affiliates 2 3 2 5
Income before income taxes 202 161 257 203
Provision for income taxes (14) (11) (7) (5)
Income from continuing operations 188 150 250 198
Income from discontinued operations (b) 11 4 12 150
Net income 199 154 262 348
Less: Distributions on preferred units (2) (2) (4) (4)
Net income available to common
unitholders $197 $152 $258 $344
Basic earnings per common unit:
Continuing operations $.34 $.27 $.45 $.36
Discontinued operations .02 .01 .02 .28
Basic earnings per common unit $.36 $.28 $.47 $.64
Diluted earnings per common unit:
Continuing operations $.33 $.26 $.44 $.36
Discontinued operations .02 .01 .02 .26
Diluted earnings per common unit $.35 $.27 $.46 $.62
(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. When distinguishing between Host and Host LP, the
primary difference is the partnership interests in Host LP held by outside
partners, which is reflected as minority interest in Host's consolidated
balance sheets and minority interest expense in Host's consolidated
statements of operations. The consolidated statements of operations should
be read in conjunction with the consolidated financial statements and notes
thereto included in our most recent Annual Report on Form 10-K.
(b) Reflects the results of operations and gain on sale, net of the
related income tax, for one property held-for-sale at June 13, 2008, one
property sold in 2008 and nine properties sold in 2007.
HOST HOTELS & RESORTS, L.P.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(unaudited, in millions)
Quarter ended Year-to-date ended
June 13, June 15, June 13, June 15,
2008 2007 2008 2007
Net income $199 $154 $262 $348
Interest expense 81 136 157 230
Depreciation and amortization 131 118 255 233
Income taxes 14 11 7 5
Discontinued operations (a) - - - 3
EBITDA 425 419 681 819
Gains on dispositions (10) 2 (10) (139)
Amortization of deferred gains (1) (1) (2) (2)
Equity investment adjustments:
Equity in earnings of affiliates (2) (3) (2) (5)
Pro rata EBITDA of equity
investments 11 10 17 15
Consolidated partnership adjustments:
Minority interest expense 1 - 8 4
Pro rata EBITDA of minority partners (5) (5) (11) (11)
Adjusted EBITDA of Host LP $419 $422 $681 $681
(a) Reflects the interest expense, depreciation and amortization and
income taxes included in discontinued operations.
HOST HOTELS & RESORTS, INC.
Reconciliation of Net Income Available to Common Stockholders to Funds
From Operations per Diluted Share for Third Quarter 2008 Forecasts (a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Third Quarter 2008 Forecast
Per Share
Income Shares Amount
Forecast net income available to
common stockholders $39 518.7 $.07
Adjustments:
Depreciation and amortization 123 - .24
Gain on dispositions, net of taxes (15) - (.03)
Partnership adjustments 5 - .01
FFO of minority partners of Host LP (b) (7) - (.01)
Adjustment for dilutive securities:
Assuming distribution of common shares
granted under the comprehensive stock
plan less shares assumed purchased at
average market price - .5 -
Assuming conversion of 2004 Exchangeable
Senior Debentures 4 31.2 (.01)
FFO per diluted share $149 550.4 $.27
High-end of Range
Third Quarter 2008 Forecast
Per Share
Income Shares Amount
Forecast net income available to
common stockholders $49 518.7 $.09
Adjustments:
Depreciation and amortization 123 - .24
Gain on dispositions, net of taxes (15) - (.03)
Partnership adjustments 5 - .01
FFO of minority partners of Host LP (b) (7) - (.01)
Adjustment for dilutive securities:
Assuming distribution of common shares
granted under the comprehensive stock
plan less shares assumed purchased at
average market price - .5 -
Assuming conversion of 2004 Exchangeable
Senior Debentures 4 31.2 (.01)
FFO per diluted share $159 550.4 $.29
Low-end of Range
Full Year 2008 Forecast
Per Share
Income Shares Amount
Forecast net income available to
common stockholders $446 519.2 $.86
Adjustments:
Depreciation and amortization 542 - 1.04
Gain on dispositions, net of taxes (28) - (.05)
Partnership adjustments 31 - .06
FFO of minority partners of Host LP (b) (42) - (.08)
Adjustment for dilutive securities:
Assuming distribution of common shares
granted under the comprehensive stock
plan less shares assumed purchased at
average market price - .4 -
Assuming conversion of 2004 Exchangeable
Senior Debentures 19 32.2 (.08)
FFO per diluted share $968 551.8 $1.75
High-end of Range
Full Year 2008 Forecast
Per Share
Income Shares Amount
Forecast net income available to common
stockholders $498 519.2 $.96
Adjustments:
Depreciation and amortization 542 - 1.04
Gain on dispositions, net of taxes (28) - (.05)
Partnership adjustments 33 - .06
FFO of minority partners of Host LP (b) (44) - (.08)
Adjustment for dilutive securities:
Assuming distribution of common shares
granted under the comprehensive stock
plan less shares assumed purchased at
average market price - .4 -
Assuming conversion of 2004 Exchangeable
Senior Debentures 19 32.2 (.08)
FFO per diluted share $1,020 551.8 $1.85
(a) The third quarter and full year 2008 forecasts were based on the
following assumptions:
-- Comparable hotel RevPAR will decrease between 4% to 2% for the third
quarter and will range from a decrease of 1% to an increase of 1% for the
full year for the low and high ends of the forecasted range, respectively.
-- Comparable hotel adjusted operating profit margins will range from a
decrease of 125 basis points to 75 basis points for the full year for the
low and high ends of the forecasted range, respectively.
-- We do not anticipate that any acquisitions will be made during 2008.
-- We expect to have additional hotel dispositions of approximately
$100 million during 2008.
-- We expect to spend approximately $650 million on capital
expenditures in 2008.
-- Fully diluted weighted average shares for FFO per diluted share and
earnings per diluted share will be approximately 550.4 and 551.8 million
for the third quarter and the full year, respectively.
The amounts shown in these forecasts are based on these and other
assumptions, as well as management's estimate of operations for 2008. These
forecasts are forward-looking and are not guarantees of future performance
and involve known and unknown risks, uncertainties and other factors which
may cause actual transactions, 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 be materially different. Risks that may
affect these assumptions and forecasts include the following:
-- the level of RevPAR and margin growth or decline may change
significantly;
-- 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 number of shares of the Company's common stock repurchased may
change based on market conditions; and
-- other risks and uncertainties associated with our business described
herein and in the Company's filings with the SEC.
(b) Represents FFO attributable to the minority interests in Host LP.
HOST HOTELS & RESORTS, INC.
Schedule of Comparable Hotel Adjusted Operating Profit Margin
for Full Year 2008 Forecasts (a)
(unaudited, in millions, except hotel statistics)
Full Year 2008
Low-end High-end
of range of range
Operating profit margin under GAAP (b) 14.6% 15.3%
Comparable hotel adjusted operating profit margin (c) 26.3% 26.8%
Comparable hotel sales
Room $3,223 $3,288
Other 1,993 2,033
Comparable hotel sales (d) 5,216 5,321
Comparable hotel expenses
Rooms and other departmental costs 2,174 2,211
Management fees, ground rent and other costs 1,669 1,683
Comparable hotel expenses (e) 3,843 3,894
Comparable hotel adjusted operating profit 1,373 1,427
Non-comparable hotel results, net 18 15
Office buildings and select service properties, net 9 9
Depreciation and amortization (543) (543)
Corporate and other expenses (72) (72)
Operating profit 785 836
(a) Forecasted comparable hotel results include assumptions on the
number of hotels that will be included in our comparable hotel set in 2008.
We have assumed that 115 hotels will be classified as comparable as of
December 31, 2008. No assurances can be made as to the hotels that will be
in the comparable hotel set for 2008. Also, see the notes following the
table reconciling net income available to common shareholders to Funds From
Operations per Diluted Share for assumptions relating to the full year 2008
forecasts.
(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. We forecasted a decrease in margins of 125
basis points to 75 basis points under the 2007 comparable hotel adjusted
operating profit margin of 27.55%.
(d) The reconciliation of forecast total revenues to the forecast
comparable hotel sales is as follows (in millions):
Full Year 2008
Low-end High-end
of range of range
Revenues $5,378 $5,471
Non-comparable hotel sales (122) (110)
Hotel sales for the property for which we record
rental income, net 53 53
Rental income for office buildings and select
service hotels (93) (93)
Comparable hotel sales $5,216 $5,321
(e) The reconciliation of forecast operating costs and expenses to the
comparable hotel expenses is as follows (in millions):
Full Year 2008
Low-end High-end
of range of range
Operating costs and expenses $4,593 $4,635
Non-comparable hotel expenses (104) (95)
Hotel expenses for the property for which we
record rental income 53 53
Rent expense for office buildings and select
service hotels (84) (84)
Depreciation and amortization (543) (543)
Corporate and other expenses (72) (72)
Comparable hotel expenses $3,843 $3,894
HOST HOTELS & RESORTS, L.P.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA for Full Year 2008
Forecasts (a)
(unaudited, in millions)
Full Year 2008
Low-end High-end
of range of range
Net income $477 $529
Interest expense 356 356
Depreciation and amortization 543 543
Income taxes 2 -
EBITDA 1,378 1,428
Gains on dispositions (28) (28)
Equity investment adjustments:
Equity in earnings of affiliates (10) (10)
Pro rata Adjusted EBITDA of equity investments 47 47
Consolidated partnership adjustments:
Minority interest expense 6 6
Pro rata Adjusted EBITDA of minority partners (18) (18)
Adjusted EBITDA of Host LP $1,375 $1,
Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89
Get Unlimited Organic Website Traffic to your Website
TheNFG.com now offers Organic Lead Generation & Traffic Solutions
