Host Hotels & Resorts, Inc. Reports Strong Growth in Operating Results for the Third Quarter 2007
Host Hotels & Resorts, Inc. Reports Strong Growth in Operating Results for the Third Quarter 2007
10/10/2007
10/10/2007
BETHESDA, Md., Oct. 10 /PRNewswire-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 third quarter ended September 7, 2007.
- Total revenue increased $96 million, or 8.6%, to $1,206 million for the third quarter and $518 million, or 16.6%, to $3,634 million for year-to-date 2007. Excluding the revenues for the Starwood portfolio, which was purchased in April 2006, revenues increased 8.3% for year-to-date 2007.
- Net income increased $57 million to $97 million for the third quarter
and decreased $109 million to $433 million for year-to-date 2007.
Earnings per diluted share increased $.11 to $.18 and decreased $.33 to
$.79 for the third quarter and year-to-date 2007, respectively.
Net income included a net gain of $90 million, or $.16 per diluted share, for year-to-date 2007 associated with gains on hotel dispositions, partially offset by debt repayment or refinancing costs. By comparison, net income for year-to-date 2006 included a net gain of approximately $347 million, or $.74 per diluted share associated with similar transactions, as well as preferred stock redemptions and non- recurring costs associated with the Starwood acquisition. For further detail, refer to the "Schedule of Significant Transactions Affecting Earnings per Share and Funds From Operations per Diluted Share" attached to this press release. - Funds from Operations (FFO) per diluted share increased 35.7% from $.28 to $.38 for the third quarter and 23.4% from $.94 to $1.16 for year-to-date 2007. FFO was reduced by $.08 per diluted share for costs associated with debt repayments or refinancings for year-to-date 2007. By comparison, FFO per diluted share was reduced by $.05 for year-to-date 2006 for similar transactions, as well as costs associated with preferred stock redemptions and the Starwood acquisition. For further detail, refer to the "Schedule of Significant Transactions Affecting Earnings per Share and Funds From Operations per Diluted Share" attached to this press release.
The Company also announced the following third quarter results for Host Hotels & Resorts, L.P., through which it conducts all of its operations and holds approximately 97% of the partnership interests:
- Net income increased $60 million to $101 million for the third quarter and decreased $116 million to $449 million for year-to-date 2007. Net income of Host LP was also affected by certain transactions-See "Schedule of Significant Transactions Affecting Earnings per Share and Funds From Operations per Diluted Share."
- Adjusted EBITDA, which is Earnings before Interest Expense, Income Taxes, Depreciation, Amortization and other items, increased 15.4% to $292 million for the third quarter and 19.3% to $969 million for year-to-date 2007.
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
The Company presents RevPAR for its comparable hotels plus the Starwood portfolio acquired in April of 2006 due to the significant contribution of these hotels to the Company's operations. RevPAR for the comparable hotels plus the Starwood portfolio, which includes the 24 hotels acquired from Starwood in 2006 that we own as of September 7, 2007, increased 7.2% for the quarter and 7.0% year-to-date. The comparable hotel plus the Starwood portfolio RevPAR gains were driven by an increase in average room rates of 5.1% for the quarter and 5.7% year-to-date and increases in occupancy of 1.5 percentage points and .8 percentage points for the quarter and year-to-date periods, respectively. Comparable hotel RevPAR for the third quarter of 2007 (not including the Starwood portfolio) increased 6.7% and year-to-date comparable hotel RevPAR increased 6.1% over results for the same periods of 2006. Comparable hotel adjusted operating profit margins increased 1.4 percentage points and .7 percentage points for the third quarter and year-to- date 2007, respectively. For further detail, see "Notes to the Financial Information."
European Joint Venture
On July 20, 2007, the Company's joint venture based in Europe, in which the Company holds a 32.1% interest, purchased the 262-room Renaissance Brussels Hotel, the 218-room Brussels Marriott and the Marriott Executive Apartments comprised of 57 apartments.
Balance Sheet
As of September 7, 2007, the Company had approximately $559 million of cash and cash equivalents. Excluding amounts necessary for working capital, the Company intends to use its remaining available funds to further invest in its portfolio, acquire new properties or make further debt repayments.
In October 2007, the Company intends to repay a $190 million mortgage secured by four of its properties. The Company currently has $600 million available under its line of credit.
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 2007 guidance, the Company expects that the fourth quarter special dividend would be in the range of $.15 to $.25.
2007 Outlook
The Company expects RevPAR for the comparable hotels plus the Starwood portfolio to increase approximately 6.5% to 7.5% for the full year. The Company expects its operating profit margins under GAAP to increase approximately 50 basis points to 90 basis points and its comparable hotel adjusted operating profit margins to increase approximately 75 basis points to 100 basis points. Based upon these estimates, the Company estimates that full year 2007 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 $1.33 to $1.37;
- net income should be approximately $725 million to $747 million; and
- FFO per diluted share should be approximately $1.81 to $1.85 (including a charge of approximately $.08 per diluted share for debt prepayment costs).
Host Hotels & Resorts, L.P.
- net income should be approximately $751 million to $774 million; and
- Adjusted EBITDA should be approximately $1,460 million to $1,480 million.
2008 Outlook
The Company is in the preliminary stages of its budget process for 2008. Accordingly, certain key items, including detailed property-level operating budgets, have not been determined which could significantly affect forecast results of operations. However, based on preliminary discussions with the Company's operators and hotel general managers, as well as a review of booking pace and other metrics, the Company believes that comparable hotel RevPAR for 2008, which will include the Starwood portfolio, will increase approximately 5% to 7%.
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 121 properties with approximately 64,000 rooms, and also holds a minority interest in a joint venture that owns ten hotels in Europe with approximately 3,200 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," "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 October 9, 2007, 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.
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 3% of the partnership interests in Host LP held by outside partners as of September 7, 2007, 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)
September 7, December 31,
2007 2006
(unaudited)
ASSETS
Property and equipment, net $10,532 $10,584
Assets held for sale -- 96
Due from managers 57 51
Investments in affiliates 185 160
Deferred financing costs, net 54 60
Furniture, fixtures and equipment replacement fund 131 100
Other 196 199
Restricted cash 130 194
Cash and cash equivalents 559 364
Total assets $11,844 $11,808
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt
Senior notes, including $1,087 million and
$495 million, respectively, net of discount,
of exchangeable senior debentures $4,113 $3,526
Mortgage debt 1,612 2,014
Credit facility -- 250
Other 88 88
Total debt 5,813 5,878
Accounts payable and accrued expenses 135 243
Other 225 252
Total liabilities 6,173 6,373
Interest of minority partners of Host
Hotels & Resorts, L.P. 189 185
Interest of minority partners of other
consolidated partnerships 28 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 per share,
750 million shares authorized; 522.3 million
shares and 521.1 million shares issued and
outstanding, respectively 5 5
Additional paid-in capital 5,671 5,680
Accumulated other comprehensive income 38 25
Deficit (357) (585)
Total stockholders' equity 5,454 5,222
Total liabilities and stockholders' equity $11,844 $11,808
(a) Our consolidated balance sheet as of September 7, 2007 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.
HOST HOTELS & RESORTS, INC.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Quarter ended Year-to-date ended
September 7, September 8, September 7, September 8,
2007 2006 2007 2006
Revenues
Rooms $775 $717 $2,235 $1,918
Food and beverage 325 298 1,077 925
Other 84 72 244 195
Total hotel sales 1,184 1,087 3,556 3,038
Rental income (b) 22 23 78 78
Total revenues 1,206 1,110 3,634 3,116
Expenses
Rooms 191 178 537 460
Food and beverage 262 244 796 694
Hotel departmental
expenses 310 290 877 757
Management fees 56 50 173 140
Other property-level
expenses (b) 94 90 270 238
Depreciation and
amortization 119 116 354 307
Corporate and other
expenses 14 21 49 62
Gain on insurance
settlement (5) -- (5) --
Total operating
costs and expenses 1,041 989 3,051 2,658
Operating profit 165 121 583 458
Interest income 9 8 27 22
Interest expense (82) (100) (312) (298)
Net gains on property
transactions 3 1 5 3
Minority interest expense (5) (1) (21) (30)
Equity in earnings
(losses) of affiliates -- (3) 5 (8)
Income before income taxes 90 26 287 147
Benefit (provision) for
income taxes 3 4 (3) (14)
Income from continuing
operations 93 30 284 133
Income from discontinued
operations (c) 4 10 149 409
Net income 97 40 433 542
Less: Dividends on
preferred stock (2) (2) (6) (12)
Issuance costs of
redeemed preferred
stock (d) -- -- -- (6)
Net income available to
common stockholders $95 $38 $427 $524
Basic earnings per
common share:
Continuing operations $.17 $.05 $.53 $.25
Discontinued operations .01 .02 .29 .88
Basic earnings per
common share $.18 $.07 $.82 $1.13
Diluted earnings per
common share
Continuing operations $.17 $.05 $.52 $.24
Discontinued operations .01 .02 .27 .88
Diluted earnings per
common share $.18 $.07 $.79 $1.12
(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. 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) Rental income and expense are as follows:
Quarter ended Year-to-date ended
September 7, September 8, September 7, September 8,
2007 2006 2007 2006
Rental income
Full-service $3 $5 $22 $24
Select service and
office buildings 19 18 56 54
$22 $23 $78 $78
Rental and other expenses
(included in other
property level expenses)
Full-service $2 $2 $6 $5
Select service and
office buildings 19 19 57 56
$21 $21 $63 $61
(c) Reflects the results of operations (including $4 million and $7
million for the third quarter and year-to-date 2007, respectively, of
gains on insurance settlements) and gains on sale, net of the related
income tax, for seven properties sold in 2007 and seven properties
sold in 2006.
(d) Represents the original issuance cost associated with the redemption
of the Class C preferred stock in 2006.
HOST HOTELS & RESORTS, INC.
Earnings per Common Share
(unaudited, in millions, except per share amounts)
Quarter ended Quarter ended
September 7, 2007 September 8, 2006
Income Shares Per Income Shares Per
(Numer (Denomi Share (Numer (Denomi Share
ator) nator) Amount ator) nator) Amount
Net income $97 522.3 $.19 $40 520.5 $.08
Dividends on preferred stock (2) -- (.01) (2) -- (.01)
Basic earnings available to
common stockholders (b)(c) 95 522.3 .18 38 520.5 .07
Assuming distribution of common
shares granted under the
comprehensive stock plan less
shares assumed purchased at
average market price -- .8 -- -- 1.8 --
Assuming conversion of minority
OP units issuable -- 1.2 -- -- 2.3 --
Assuming conversion of 2004
Exchangeable Senior Debentures 4 29.5 -- -- -- --
Diluted earnings available to
common stockholders (b)(c) $99 553.8 $.18 $38 524.6 $.07
Year-to-date ended Year-to-date ended
September 7, 2007 September 8, 2006
Income Shares Per Income Shares Per
(Numer (Denomi Share (Numer (Denomi Share
ator) nator) Amount ator) nator) Amount
Net income $433 522.0 $.83 $542 464.1 $1.17
Dividends on preferred stock (6) -- (.01) (12) -- (.03)
Issuance costs of redeemed
preferred stock (a) -- -- -- (6) -- (.01)
Basic earnings available to
common stockholders (b)(c) 427 522.0 .82 524 464.1 1.13
Assuming distribution of
common shares granted under
the comprehensive stock plan
less shares assumed purchased
at average market price -- .9 -- -- 1.8 (.01)
Assuming conversion of
minority OP units issuable -- 1.2 -- -- -- --
Assuming conversion of 2004
Exchangeable Senior Debentures 13 29.5 (.03) -- -- --
Diluted earnings available to
common stockholders (b)(c) $440 553.6 $.79 $524 465.9 $1.12
(a) Represents the original issuance costs associated with the redemption
of the Company's Class C preferred stock in 2006.
(b) 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, convertible 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.
(c) 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 September 7, Quarter ended September 7, 2007
2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Pacific 22 12,016 $211.71 81.7% $172.90
Florida 9 5,663 161.15 68.5 110.46
Mid-Atlantic 8 5,870 229.61 85.3 195.91
DC Metro 12 5,399 174.34 76.9 133.99
North Central 12 4,907 162.40 77.1 125.27
South Central 7 4,126 140.35 66.6 93.48
Atlanta 7 2,625 184.37 66.1 121.91
New England 6 3,032 180.56 86.4 156.02
Mountain 6 2,210 112.78 69.6 78.50
International 5 1,953 166.76 67.6 112.81
All Regions 94 47,801 184.66 76.5 141.34
Quarter ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Pacific $202.57 79.3% $160.56 7.7%
Florida 159.06 68.0 108.21 2.1
Mid-Atlantic 208.66 81.1 169.17 15.8
DC Metro 174.15 74.9 130.36 2.8
North Central 155.29 77.7 120.64 3.8
South Central 132.06 67.3 88.85 5.2
Atlanta 184.15 66.8 123.10 (1.0)
New England 175.83 83.0 146.02 6.8
Mountain 104.06 68.9 71.74 9.4
International 153.27 71.5 109.61 2.9
All Regions 176.12 75.2 132.45 6.7
As of September 7, Year-to-date ended September 7,
2007 2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Pacific 22 12,016 $211.83 76.5% $162.02
Florida 9 5,663 214.38 73.7 158.03
Mid-Atlantic 8 5,870 232.83 81.1 188.89
DC Metro 12 5,399 192.12 77.1 148.19
North Central 12 4,907 152.81 71.5 109.22
South Central 7 4,126 153.15 72.5 111.01
Atlanta 7 2,625 193.47 69.1 133.70
New England 6 3,032 174.86 77.3 135.14
Mountain 6 2,210 141.64 67.0 94.86
International 5 1,953 159.38 68.2 108.68
All Regions 94 47,801 193.71 74.8 144.92
Year-to-date ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Pacific $200.27 76.2% $152.66 6.1%
Florida 207.57 73.2 152.00 4.0
Mid-Atlantic 213.03 78.8 167.87 12.5
DC Metro 189.06 74.3 140.44 5.5
North Central 145.57 73.0 106.28 2.8
South Central 142.03 72.2 102.58 8.2
Atlanta 186.89 71.3 133.23 0.4
New England 168.18 77.1 129.70 4.2
Mountain 131.66 65.9 86.77 9.3
International 150.17 71.8 107.77 0.8
All Regions 183.51 74.4 136.57 6.1
Comparable Hotels by Property Type (a)
As of September 7, Quarter ended September 7, 2007
2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Urban 40 23,518 $195.46 80.1% $156.64
Suburban 28 10,901 154.34 70.5 108.79
Airport 15 6,557 136.00 75.9 103.20
Resort/Conference 11 6,825 236.10 74.4 175.72
All Types 94 47,801 184.66 76.5 141.34
Quarter ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Urban $184.94 78.7% $145.62 7.6%
Suburban 146.81 69.8 102.54 6.1
Airport 130.80 73.8 96.58 6.9
Resort/Conference 230.30 72.9 167.82 4.7
All Types 176.12 75.2 132.45 6.7
As of September 7, Year-to-date ended September 7,
2007 2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Urban 40 23,518 $202.87 78.1% $158.41
Suburban 28 10,901 155.96 68.6 106.95
Airport 15 6,557 140.71 74.3 104.57
Resort/Conference 11 6,825 267.40 74.0 197.84
All Types 94 47,801 193.71 74.8 144.92
Year-to-date ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Urban $190.25 77.5% $147.47 7.4%
Suburban 147.58 68.2 100.68 6.2
Airport 134.90 73.0 98.53 6.1
Resort/Conference 257.19 75.0 192.92 2.5
All Types 183.51 74.4 136.57 6.1
(a) See the notes to financial information for a discussion of reporting
periods and comparable hotel results.
HOST HOTELS & RESORTS, INC.
Comparable Hotels plus the Starwood Portfolio Hotel Operating Data
(unaudited)
Comparable Hotels plus the Starwood Portfolio by Region (a)
As of September 7, Quarter ended September 7, 2007
2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Pacific 28 16,019 $198.97 82.6% $164.36
Florida 10 5,922 158.92 68.2 108.33
Mid-Atlantic 11 8,681 240.98 85.8 206.70
DC Metro 13 5,662 175.09 77.5 135.63
North Central 15 6,496 155.96 75.6 117.88
South Central 8 4,358 146.60 65.8 96.53
Atlanta 7 2,625 184.37 66.1 121.91
New England 11 5,663 171.34 84.7 145.14
Mountain 8 2,856 123.31 71.3 87.95
International 7 2,471 155.41 66.6 103.50
All Regions 118 60,753 184.12 77.5 142.78
Quarter ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Pacific $191.12 80.6% $154.08 6.7%
Florida 155.74 68.2 106.26 1.9
Mid-Atlantic 216.47 82.7 179.01 15.5
DC Metro 175.26 75.1 131.56 3.1
North Central 148.37 76.4 113.28 4.1
South Central 137.36 66.7 91.61 5.4
Atlanta 184.15 66.8 123.10 (1.0)
New England 171.32 79.4 135.95 6.8
Mountain 112.16 71.6 80.32 9.5
International 145.82 65.7 95.84 8.0
All Regions 175.26 76.0 133.21 7.2
As of September 7, Year-to-date ended September 7,
2007 2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Pacific 28 16,019 $201.57 77.6% $156.33
Florida 10 5,922 210.44 73.7 155.02
Mid-Atlantic 11 8,681 241.03 82.4 198.69
DC Metro 13 5,662 193.00 77.6 149.72
North Central 15 6,496 148.63 70.4 104.62
South Central 8 4,358 158.83 72.0 114.30
Atlanta 7 2,625 193.47 69.1 133.70
New England 11 5,663 168.33 74.4 125.30
Mountain 8 2,856 144.78 69.0 99.85
International 7 2,471 151.35 67.5 102.11
All Regions 118 60,753 191.88 75.2 144.37
Year-to-date ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Pacific $191.49 77.2% $147.75 5.8%
Florida 202.97 73.4 148.91 4.1
Mid-Atlantic 218.87 78.9 172.69 15.1
DC Metro 189.74 74.6 141.58 5.7
North Central 141.84 71.1 100.91 3.7
South Central 146.82 71.8 105.46 8.4
Atlanta 186.89 71.3 133.23 0.4
New England 165.81 72.5 120.18 4.3
Mountain 133.40 68.5 91.40 9.2
International 142.20 69.7 99.18 3.0
All Regions 181.48 74.4 134.98 7.0
Comparable Hotels plus the Starwood Portfolio by Property Type (a)
As of September 7, Quarter ended September 7, 2007
2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Urban 55 33,016 $197.08 81.0% $159.73
Suburban 34 12,844 151.91 71.1 108.00
Airport 17 7,556 131.68 76.9 101.28
Resort/Conference 12 7,337 228.50 73.6 168.10
All Types 118 60,753 184.12 77.5 142.78
Quarter ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Urban $186.44 79.3% $147.81 8.1%
Suburban 144.63 70.3 101.62 6.3
Airport 126.15 75.6 95.36 6.2
Resort/Conference 223.28 71.6 159.96 5.1
All Types 175.26 76.0 133.21 7.2
As of September 7, Year-to-date ended September 7,
2007 2007
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages RevPAR
Urban 55 33,016 $202.31 78.0% $157.73
Suburban 34 12,844 154.41 68.7 106.07
Airport 17 7,556 136.66 75.6 103.35
Resort/Conference 12 7,337 261.42 74.1 193.64
All Types 118 60,753 191.88 75.2 144.37
Year-to-date ended September 8, 2006
Average Percent
Average Occupancy Change in
Daily Rate Percentages RevPAR RevPAR
Urban $189.77 76.7% $145.46 8.4%
Suburban 146.18 68.2 99.64 6.5
Airport 130.48 74.6 97.36 6.2
Resort/Conference 251.99 74.8 188.51 2.7
All Types 181.48 74.4 134.98 7.0
(a) Reflects our comparable hotels plus the 24 hotels acquired from
Starwood in April 2006 that we own as of September 7, 2007. For
further detail, see the notes to the financial information for a
discussion of reporting periods and comparable hotel plus the Starwood
portfolio RevPAR. The 2006 results and percentage change statistics
include results prior to our ownership for the Starwood portfolio.
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
Sept. 7, Sept. 8, Sept. 7, Sept. 8,
2007 2006 2007 2006
Number of hotels 94 94 94 94
Number of rooms 47,801 47,801 47,801 47,801
Percent change in Comparable Hotel
RevPAR 6.7% -- 6.1% --
Operating profit margin under GAAP (b) 13.7% 10.9% 16.0% 14.7%
Comparable hotel adjusted operating
profit margin (c) 24.9% 23.5% 27.4% 26.7%
Food and beverage profit margin under
GAAP (d) 19.4% 18.1% 26.1% 25.0%
Comparable food and beverage adjusted
profit margin (e) 20.1% 18.1% 26.8% 25.6%
Comparable hotel sales
Room $581 $545 $1,730 $1,631
Food and beverage (g) 249 237 851 818
Other 64 59 189 176
Comparable hotel sales (f) 894 841 2,770 2,625
Comparable hotel expenses
Room 140 133 406 388
Food and beverage (i) 199 194 623 609
Other 37 36 107 104
Management fees, ground rent
and other costs 295 280 876 824
Comparable hotel expenses (h) 671 643 2,012 1,925
Comparable hotel adjusted operating
profit 223 198 758 700
Non-comparable hotel results, net (j) 70 61 224 129
Office buildings and select service
properties, net (k) -- (1) (1) (2)
Depreciation and amortization (119) (116) (354) (307)
Corporate and other expenses (14) (21) (49) (62)
Gain on property insurance settlements 5 -- 5 --
Operating profit $165 $121 $583 $458
(a) See the notes to the financial information for discussion of non-GAAP
measures, reporting periods and comparable hotel results.
(b) Operating profit margin under GAAP is calculated as the operating
profit divided by the total revenues per the consolidated statements
of operations.
(c) Comparable hotel adjusted operating profit margin is calculated as
comparable hotel adjusted operating profit divided by the comparable
hotel sales per the table above.
(d) Food and beverage profit margin under GAAP is calculated as the food
and beverage profit of $63 million and $54 million for the quarters
ended September 7, 2007 and September 8, 2006, respectively, and
$281 million and $231 million for the year-to-date periods ended
September 7, 2007 and September 8, 2006, respectively, divided by the
total food and beverage revenues per the consolidated statements of
operations.
(e) Comparable food and beverage adjusted profit margin is calculated as
the comparable food and beverage adjusted profit of $50 million and
$43 million for the quarters ended September 7, 2007 and September 8,
2006, respectively, and $228 million and $209 million for the
year-to-date periods ended September 7, 2007 and September 8, 2006,
respectively, divided by the comparable food and beverage sales per
the table above.
(f) 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
Sept. 7, Sept. 8, Sept. 7, Sept. 8,
2007 2006 2007 2006
Revenues per the consolidated
statements of operations $1,206 $1,110 $3,634 $3,116
Non-comparable hotel sales (303) (262) (859) (481)
Hotel sales for the property for
which we record rental income,
net 10 11 37 37
Rental income for office
buildings and select service
hotels (19) (18) (56) (54)
Adjustment for hotel sales for
comparable hotels to reflect
Marriott's fiscal year for
Marriott-managed hotels -- -- 14 7
Comparable hotel sales $894 $841 $2,770 $2,625
(g) 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
Sept. 7, Sept. 8, Sept. 7, Sept. 8,
2007 2006 2007 2006
Food and beverage sales per the
consolidated statements of
operations $325 $298 $1,077 $925
Non-comparable food and beverage
sales (80) (66) (250) (129)
Food and beverage sales for the
property for which we record
rental income 4 5 20 20
Adjustment for food and beverage
sales for comparable hotels to
reflect Marriott's fiscal year
for Marriott-managed hotels -- -- 4 2
Comparable food and beverage
sales $249 $237 $851 $818
(h) 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
Sept. 7, Sept. 8, Sept. 7, Sept. 8,
2007 2006 2007 2006
Operating costs and expenses per
the consolidated statements of
operations $1,041 $989 $3,051 $2,658
Non-comparable hotel expenses (232) (199) (632) (351)
Hotel expenses for the property
for which we record rental
income 9 9 38 38
Rent expense for office buildings
and select service hotels (19) (19) (57) (56)
Adjustment for hotel expenses for
comparable hotels to reflect
Marriott's fiscal year for
Marriott-managed hotels -- -- 10 5
Depreciation and amortization (119) (116) (354) (307)
Corporate and other expenses (14) (21) (49) (62)
Gain on property insurance
settlements 5 -- 5 --
Comparable hotel expenses $671 $643 $2,012 $1,925
(i) 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
Sept. 7, Sept. 8, Sept. 7, Sept. 8,
2007 2006 2007 2006
Food and beverage expenses per
the consolidated statements of
operations $262 $244 $796 $694
Non-comparable food and beverage
expense (66) (54) (188) (99)
Food and beverage expenses for
the property for which we record
rental income 3 4 12 12
Adjustment for food and beverage
expenses for comparable hotels
to reflect Marriott's fiscal
year for Marriott-managed hotels -- -- 3 2
Comparable food and beverage
expenses $199 $194 $623 $609
(j) 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.
(k) 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)
September 7, December 31,
2007 2006
Equity
Common shares outstanding 522.3 521.1
Common shares and minority held common
OP Units outstanding 540.7 539.9
Preferred OP Units outstanding .02 .02
Class E Preferred shares outstanding 4.0 4.0
Security pricing (per share price)
Common (a) $21.41 $24.55
Class E Preferred (a) $25.41 $26.59
3-1/4% Exchangeable Senior Debentures (b) $1,327.50 $1,473.30
2-5/8% Exchangeable Senior Debentures (b) $878.72 $--
Dividends declared per share for calendar
year
Common (c) $.60 $.76
Class E Preferred (c) $1.67 $2.22
Class C Preferred (d) $-- $.86
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 497 496
$500 million Exchangeable Senior Debentures,
with a rate of 3-1/4% due April 2024 495 495
$600 million Exchangeable Senior Debentures,
with a rate of 2-5/8% due April 2027 592 --
Senior notes, with an average interest rate
of 10.0% and 9.7% at September 7, 2007 and
December 31, 2006, respectively, maturing
through May 2012 7 13
Total senior notes 4,113 3,526
Mortgage debt (non-recourse) secured by
$2.4 billion of real estate assets, with
an average interest rate of 6.8% and 7.5%
at September 7, 2007 and December 31, 2006,
respectively, maturing through December
2023 (e) 1,612 2,014
Credit facility (f) -- 250
Other 88 88
Total debt $5,813 $5,878
Percentage of fixed rate debt 100% 94%
Weighted average interest rate 6.1% 6.8%
Weighted average debt maturity 6.0 years 5.9 years
Quarter ended Year-to-date ended
September September September September
7, 2007 8, 2006 7, 2007 8, 2006
Hotel Operating Statistics for All
Properties (g)
Average daily rate $181.71 $171.26 $190.20 $178.81
Average occupancy 76.5% 74.9% 74.6% 74.2%
RevPAR $138.97 $128.31 $141.81 $132.72
(a) Share prices are the closing price as reported by the New York Stock
Exchange.
(b) Market price as quoted by Bloomberg L.P. Amount reflects the price of
a single $1,000 debenture, which is exchangeable for common stock upon
the occurrence of certain events.
(c) On September 17, 2007, the Company declared a third quarter common
dividend of $.20 per share and a third quarter preferred dividend of
$.5546875 per share for its Class E cumulative redeemable preferred
stock.
(d) On May 19, 2006, the Company redeemed, at par, all of the shares of
its 10% Class C cumulative redeemable preferred stock for
approximately $151 million, including accrued dividends.
(e) The Company intends to repay a $190 million mortgage secured by four
of its properties in October 2007.
(f) Currently, the Company has $600 million of available capacity under
its credit facility.
(g) The operating statistics reflect all consolidated properties as of
September 7, 2007 and September 8, 2006, respectively, including the
results of operations for seven properties sold as of September 7,
2007 and seven properties sold in 2006 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 Quarter ended
September 7, 2007 September 8, 2006
Per Per
Share Share
Income Shares Amount Income Shares Amount
Net income available to common
stockholders $95 522.3 $.18 $38 520.5 $.07
Adjustments:
Gains on dispositions, net of
taxes -- -- -- (5) -- (.01)
Gain on insurance settlement (a) (6) -- (.01) -- -- --
Amortization of deferred gains
and other property transactions,
net of taxes (3) -- (.01) (1) -- --
Depreciation and amortization 120 -- .23 119 -- .23
Partnership adjustments 7 -- .01 2 -- --
FFO of minority partners of
Host LP (b) (7) -- (.01) (5) -- (.01)
Adjustments for dilutive securities:
Assuming distribution of common
shares granted under the
comprehensive stock plan less
shares assumed purchased at
average market price -- .8 -- -- 1.8 --
Assuming conversion of 2004
Exchangeable Senior Debentures 4 29.5 (.01) 4 28.5 --
FFO per diluted share (c)(d) $210 552.6 $.38 $152 550.8 $.28
Year-to-date ended Year-to-date ended
September 7, 2007 September 8, 2006
Per Per
Share Share
Income Shares Amount Income Shares Amount
Net income available to common
stockholders $427 522.0 $.82 $524 464.1 $1.13
Adjustments:
Gains on dispositions, net
of taxes (139) -- (.27) (390) -- (.84)
Gain on insurance settlement (a) (6) -- (.01) -- -- --
Amortization of deferred
gains and other property
transactions, net of taxes (5) -- (.01) (3) -- (.01)
Depreciation and amortization 354 -- .68 314 -- .68
Partnership adjustments 20 -- .04 24 -- .05
FFO of minority partners of
Host LP (b) (22) -- (.04) (18) -- (.04)
Adjustments for dilutive
securities:
Assuming distribution of common
shares granted under the
comprehensive stock plan less
shares assumed purchased at
average market price -- .9 -- -- 1.8 --
Assuming conversion of 2004
Exchangeable Senior Debentures 13 29.5 (.05) 13 28.5 (.03)
Assuming conversion of
Convertible Subordinated
Debentures -- -- -- 2 2.7 --
FFO per diluted share (c)(d) $642 552.4 $1.16 $466 497.1 $.94
(a) Represents the gain during the period for the settlement of property
insurance claims, including the gains that are included in
discontinued operations related to hotels that we have sold.
(b) Represents FFO attributable to the minority interests in Host LP.
(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
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
(d) 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
Sept. 7, 2007 Sept. 8, 2006
Net Income Net Income
(Loss) FFO (Loss) FFO
Non-recurring Starwood
acquisition costs (a) $-- $-- $(4) $(4)
Gain on hotel dispositions, net of taxes -- -- 5 --
Total $-- $-- $1 $(4)
Diluted shares -- -- 524.6 550.8
Per diluted share $-- $-- $-- $--
Year-to-date ended Year-to-date ended
Sept. 7, 2007 Sept. 8, 2006
Net Income Net Income
(Loss) FFO (Loss) FFO
Non-recurring Starwood
acquisition costs (a) $-- $-- $(17) $(17)
Senior notes redemptions and
debt prepayments (b) (46) (46) (4) (4)
Preferred stock redemptions (c) -- -- (8) (8)
Gain on hotel dispositions,
net of taxes 139 -- 390 --
Minority interest income (expense) (d) (3) 2 (14) 1
Total $90 $(44) $347 $(28)
Diluted shares 553.6 552.4 465.9 497.1
Per diluted share $.16 $(.08) $.74 $(.05)
(a) Represents non-recurring costs incurred in conjunction with the
acquisition of the Starwood portfolio that are required to be
expensed under GAAP, including start-up costs, bridge loan fees and
expenses and the Company's portion of a foreign currency hedge loss
incurred by the European joint venture as the venture hedged a
portion of its initial investment for the acquisition of six European
hotels.
(b) 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 debt prepayments or
refinancings during certain periods presented.
(c) Represents the original issuance costs of $6 million and the
incremental dividends of $2 million during the redemption notice
period associated with the redemption of the Class C preferred stock
in 2006.
(d) Represents the portion of the significant transactions attributable
to minority partners in Host LP.
(e) 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 (d). Accordingly, the total adjustments on
the net income of Host LP were approximately $93 million and
$361 million for year-to-date 2007 and 2006, respectively.
HOST HOTELS & RESORTS, L.P.
Consolidated Statements of Operations (a)
(unaudited, in millions, except per unit amounts)
Quarter ended Year-to-date ended
Sept. 7, Sept. 8, Sept. 7, Sept. 8,
2007 2006 2007 2006
Revenues
Rooms $775 $717 $2,235 $1,918
Food and beverage 325 298 1,077 925
Other 84 72 244 195
Total hotel sales 1,184 1,087 3,556 3,038
Rental income 22 23 78 78
Total revenues 1,206 1,110 3,634 3,116
Expenses
Rooms 191 178 537 460
Food and beverage 262 244 796 694
Hotel departmental expenses 310 290 877 757
Management fees 56 50 173 140
Other property-level expenses 94 90 270 238
Depreciation and amortization 119 116 354 307
Corporate and other expenses 14 21 49 62
Gain on insurance settlement (5) -- (5) --
Total operating costs and
expenses 1,041 989 3,051 2,658
Operating profit 165 121 583 458
Interest income 9 8 27 22
Interest expense (82) (100) (312) (298)
Net gains on property transactions 3 1 5 3
Minority interest expense (1) -- (5) (7)
Equity in earnings (losses) of
affiliates -- (3) 5 (8)
Income before income taxes 94 27 303 170
Provision for income taxes 3 4 (3) (14)
Income from continuing operations 97 31 300 156
Income from discontinued
operations (b) 4 10 149 409
Net income 101 41 449 565
Less: Distributions on preferred
units (c) (2) (2) (6) (12)
Issuance costs of redeemed preferred
units -- -- -- (6)
Net income available to common
unitholders $99 $39 $443 $547
Basic earnings per common unit:
Continuing operations $.18 $.06 $.54 $.28
Discontinued operations .01 .01 .28 .85
Basic earnings per common unit $.19 $.07 $.82 $1.13
Diluted earnings per common unit:
Continuing operations $.17 $.06 $.54 $.28
Discontinued operations .01 .01 .26 .84
Diluted earnings per common unit $.18 $.07 $.80 $1.12
(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 our consolidated balance sheets and minority interest expense in
our 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 (including $4 million and
$7 million for the third quarter and year-to-date 2007, respectively,
of gains on insurance settlements) and gains on sale, net of the
related income tax, for seven properties sold in 2007 and seven
properties sold in 2006.
(c) Represents the original issuance cost associated with the redemption
of the class C preferred units in 2006.
HOST HOTELS & RESORTS, L.P.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(unaudited, in millions)
Quarter ended Year-to-date ended
Sept. 7, Sept. 8, Sept. 7, Sept. 8,
2007 2006 2007 2006
Net income $101 $41 $449 $565
Interest expense 82 100 312 298
Depreciation and amortization 119 116 354 307
Income taxes (3) (4) 3 14
Discontinued operations (a) -- 2 2 9
EBITDA 299 255 1,120 1,193
(Gains)/losses on dispositions -- (5) (139) (392)
Amortization of deferred gains (3) (1) (5) (3)
Property insurance gains (6) -- (6) --
Consolidated partnership
adjustments:
Minority interest expense 1 -- 5 7
Distributions to minority
partners -- -- (5) (4)
Equity investment adjustments:
Equity in earnings of affiliates -- 3 (5) 8
Distributions received from
equity investments 1 1 4 3
Adjusted EBITDA of Host LP $292 $253 $969 $812
(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 Full Year 2007 Forecasts (a)
(unaudited, in millions, except per share amounts)
Low-end of Range
Full Year 2007 Forecast
Income Per Share
Shares Amount
Forecast net income available to
common stockholders $716 522.2 $1.37
Adjustments:
Depreciation and amortization 523 -- 1.00
Gain on dispositions, net of taxes (247) -- (.47)
Partnership adjustments 33 -- .06
Gain on insurance settlement (b) (6) -- (.01)
FFO of minority partners of
Host LP (c) (35) -- (.07)
Adjustment for dilutive securities:
Assuming distribution of common
shares granted under the
comprehensive stock plan less
shares assumed purchased at average
market price -- 1.0 --
Assuming conversion of 2004
Exchangeable Senior Debentures 19 29.5 (.07)
FFO per diluted share $1,003 552.7 $1.81
High-end of Range
Full Year 2007 Forecast
Income Per Share
Shares Amount
Forecast net income available to
common stockholders $738 522.2 $1.41
Adjustments:
Depreciation and amortization 523 -- 1.00
Gain on dispositions, net of taxes (247) -- (.47)
Partnership adjustments 33 -- .06
Gain on insurance settlement (b) (6) -- (.01)
FFO of minority partners of
Host LP (c) (35) -- (.07)
Adjustment for dilutive securities:
Assuming distribution of common
shares granted under the
comprehensive stock plan less
shares assumed purchased at
average market price -- 1.0 --
Assuming conversion of 2004
Exchangeable Senior Debentures 19 29.5 (.07)
FFO per diluted share $1,025 552.7 $1.85
(a) The full year 2007 forecasts were based on the following assumptions:
-- Comparable hotel plus the Starwood Portfolio RevPAR will increase
6.5% and 7.5% for the full year for the low and high ends of the
forecasted range, respectively.
-- Comparable hotel RevPAR will increase 6% and 7% for the full year
for the low and high ends of the forecasted range, respectively.
-- Comparable hotel adjusted operating profit margins will increase
75 basis points and 100 basis points for the full year for the low
and high ends of the forecasted range, respectively.
-- We expect to have hotel dispositions of approximately $300 million
in the fourth quarter; however some of the sales may close in the
first quarter of 2008
-- We expect to spend approximately $610 million on capital
expenditures in 2007, including approximately $290 million for
maintenance capital expenditures. The remainder of the
expenditures will be for return on investment/repositioning
projects.
-- Approximately $1.2 billion of debt has been, or will be,
refinanced or repaid. Charges, net of the minority interest
benefit, totaling approximately $45 million ($.08 of FFO per
diluted share) related to costs associated with the debt
repayments have been incurred during the year. No further
prepayment costs related to debt refinancings or repayments are
expected for the remainder of 2007.
-- Fully diluted weighted average shares for FFO per diluted share
will be 552.7 million and for earnings per diluted share will be
552.7 million for the full year.
The amounts shown in these forecasts are based on these and other
assumptions, as well as management's estimate of operations for 2007.
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 not be materially different. Risks that may affect these
assumptions and forecasts include the following:
-- the level of RevPAR and margin growth 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 (losses) on dispositions;
-- the amount and timing of debt prepayments is an estimate that can
substantially affect the level of interest expense and net income;
-- the level of capital expenditures may change significantly, which
will directly affect the level of depreciation expense and net
income; and
-- other risks and uncertainties associated with our business
described herein and in the Company's filings with the SEC.
(b) Represents the gains from property insurance claims.
(c) 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 2007 Forecasts (a)
(unaudited, in millions, except hotel statistics)
Full Year 2007 Forecast
Low-end High-end
of range of range
Operating profit margin under GAAP (b) 16.4% 16.8%
Comparable hotel adjusted operating
profit margin (c) 27.7% 27.9%
Comparable hotel sales
Room $2,526 $2,550
Other 1,540 1,554
Comparable hotel sales (d) 4,066 4,104
Comparable hotel expenses
Rooms and other departmental costs 1,658 1,670
Management fees, ground rent and other costs 1,284 1,289
Comparable hotel expenses (e) 2,942 2,959
Comparable hotel adjusted operating profit 1,124 1,145
Non-comparable hotel results, net 352 358
Office buildings and select service
properties, net 8 8
Depreciation and amortization (524) (524)
Corporate and other expenses (75) (75)
Gain on property insurance settlement 5 5
Operating profit $890 $917
(a) Forecasted comparable hotel results include assumptions on the number
of hotels that will be included in our comparable hotel set in 2007.
We have assumed that 94 hotels will be classified as comparable as of
December 31, 2007. No assurances can be made as to the hotels that
will be in the comparable hotel set for 2007. 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 2007 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 an increase in margins
of 75 basis points to 100 basis points over the comparable adjusted
operating profit margin of 26.9%.
(d) The reconciliation of forecast total revenues to the forecast
comparable hotel sales is as follows (in millions):
Full Year 2007
Low-end High-end
of range of range
Revenues $5,413 $5,464
Non-comparable hotel sales (1,305) (1,318)
Hotel sales for the property for which
we record rental income, net 51 51
Rental income for office buildings and
select service hotels (93) (93)
Comparable hotel sales $4,066 $4,104
(e) The reconciliation of forecast operating costs and expenses to the
comparable hotel expenses is as follows (in millions):
Full Year 2007
Low-end High-end
of range of range
Operating costs and expenses $4,523 $4,547
Non-comparable hotel expenses (953) (960)
Hotel expenses for the property for
which we record rental income 51 51
Rent expense for office buildings and
select service hotels (85) (85)
Depreciation and amortization (524) (524)
Corporate and other expenses (75) (75)
Gain on property insurance settlement 5 5
Comparable hotel expenses $2,942 $2,959
HOST HOTELS & RESORTS, L.P.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA for Full Year 2007
Forecasts (a)
(unaudited, in millions)
Full Year 2007
Low-end High-end
of range of range
Net income $751 $774
Interest expense 427 427
Depreciation and amortization 524 524
Income taxes 12 9
EBITDA 1,714 1,734
Gains on dispositions (247) (247)
Gain on insurance settlement (b) (6) (6)
Consolidated partnership adjustments:
Minority interest expense 8 8
Distributions to minority partners (8) (8)
Equity investment adjustments:
Equity in earnings of affiliates (11) (11)
Distributions received from equity
investments 10 10
Adjusted EBITDA of Host LP $1,460 $1,480
(a) The amounts shown in these reconciliations are based on management's
estimate of operations for 2007. These tables are forward-looking and
as such contain assumptions by management based on known and unknown
risks, uncertainties and other factors which may cause the actual
transactions, results, performance, or achievements to be materially
different from any future transactions, results, performance or
achievements expressed or implied by this table. General economic
condition, competition and governmental actions will affect future
transactions, results performance and achievements. Although we
believe the expectations in this reconciliation are based upon
reasonable assumptions, we can give no assurance that the expectations
will be attained or that any deviations will not be material. For
purposes of the full year forecasts, we have utilized the same,
previously detailed assumptions as those utilized for the full year
forecasts for Host Hotels & Resorts, Inc.
(b) Represents the gains from the settlement of property insurance claims.
SOURCE Host Hotels & Resorts, Inc.
CONTACT: Gregory J. Larson, Senior Vice President of Host Hotels & Resorts, Inc., +1-240-744-5120