hst-8k_20200930.htm
false 0001070750 0001070750 2020-09-30 2020-09-30

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 30, 2020

 

HOST HOTELS & RESORTS, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

Maryland

 

001-14625

 

53-0085950

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

4747 Bethesda Avenue, Suite 1300

Bethesda, Maryland

 

20814

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (240744-1000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

  

Trading Symbol

  

Name of Each Exchange on

Which Registered

Common Stock, $.01 par value

  

HST

  

Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On November 4, 2020, Host Hotels & Resorts, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2020. The press release referred to supplemental financial information for the quarter that is available on the Company’s website at www.hosthotels.com. A copy of the press release and the supplemental financial information are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Report.

The information in this Report, including the exhibits, is provided under Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Furthermore, the information in this Report, including the exhibits, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933 regardless of any general incorporation language in such filings.

 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.

  

Description

99.1

  

Host Hotels & Resorts, Inc.’s earnings release for the third quarter 2020.

99.2

 

Host Hotels & Resorts, Inc. Third Quarter 2020 Supplemental Financial Information.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

HOST HOTELS & RESORTS, INC.

 

 

 

 

 

 

 

Date: November 4, 2020

 

 

 

By:

 

/S/ BRIAN G. MACNAMARA

 

 

 

 

Name:

 

Brian G. Macnamara

 

 

 

 

Title:

 

Senior Vice President and

Corporate Controller

 

hst-ex991_7.htm

 

 

 

 

Exhibit 99.1

SOURAV GHOSH
Chief Financial Officer
(240) 744-5267

TEJAL ENGMAN
Investor Relations
(240) 744-5116
ir@hosthotels.com

 

Host Hotels & Resorts, Inc. Reports Results for Third Quarter 2020

BETHESDA, MD; November 4, 2020 – Host Hotels & Resorts, Inc. (NASDAQ: HST) (the “Company”), the nation’s largest lodging real estate investment trust (“REIT”), today announced results for the third quarter of 2020.

James F. Risoleo, President and Chief Executive Officer, said, “During the third quarter, we achieved a meaningful sequential increase in revenue and reduced our net loss and hotel-level operating losses from second-quarter levels, despite a year-over-year decrease in travel due to COVID-19. We reopened 20 hotels during the quarter, and consistently improved RevPAR each month as our operators increased average hotel occupancy by 680 basis points from July to September. In addition, we took important steps with our hotel operators towards achieving our goal of permanent cost savings as we continue to redefine our operating model and strengthen our business for the long term.”

Risoleo continued, “Subsequent to quarter end, we sold the 532-key Newport Beach Marriott Hotel & Spa for approximately $216 million after retaining FF&E reserves, and 29 acres of land adjacent to The Phoenician hotel for approximately $66 million. We are pleased to capitalize on these opportunistic sales at attractive prices that enhance our liquidity and reduce our near-term capital spending requirements. We ended the quarter with $2.4 billion of cash, having drawn the remaining capacity on our credit facility, issued $750 million of senior notes and used $390 million to repay existing debt. These actions further augmented our already solid cash position while extending our weighted average debt maturity and maintaining our weighted average interest rate. We continue to maximize our liquidity and maintain the strength of our investment-grade balance sheet, with no near-term debt maturities and a best-in-class ability to withstand prolonged business disruption.”

Operating Results 1

(unaudited, in millions, except per share and hotel statistics)  

 

Quarter ended September 30,

 

 

Percent

 

 

Year-to-date ended September 30,

 

 

Percent

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

Revenues

$

198

 

 

$

1,262

 

 

 

(84.3

)%

 

$

1,353

 

 

$

4,135

 

 

 

(67.3

)%

All owned hotel revenues
      (pro forma) (1)

 

198

 

 

 

1,212

 

 

 

(83.7

)%

 

 

1,353

 

 

 

3,924

 

 

 

(65.5

)%

Net income (loss)

 

(316

)

 

 

372

 

 

N/M

 

 

 

(675

)

 

 

851

 

 

N/M

 

EBITDAre (1)

 

(154

)

 

 

316

 

 

N/M

 

 

 

(180

)

 

 

1,183

 

 

N/M

 

Adjusted EBITDAre (1)

 

(111

)

 

 

312

 

 

N/M

 

 

 

(136

)

 

 

1,179

 

 

N/M

 

All owned hotel Total RevPAR –

     Constant US$

 

45.27

 

 

 

280.93

 

 

 

(83.9

)%

 

 

104.51

 

 

 

306.21

 

 

 

(65.9

)%

All owned hotel RevPAR –

     Constant US$

 

29.36

 

 

 

185.03

 

 

 

(84.1

)%

 

 

63.53

 

 

 

193.71

 

 

 

(67.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common

     share

 

(0.44

)

 

 

0.51

 

 

N/M

 

 

 

(0.95

)

 

 

1.14

 

 

N/M

 

NAREIT FFO per diluted share (1)

 

(0.21

)

 

 

0.35

 

 

N/M

 

 

 

(0.25

)

 

 

1.36

 

 

N/M

 

Adjusted FFO per diluted share (1)

 

(0.11

)

 

 

0.35

 

 

N/M

 

 

 

(0.14

)

 

 

1.37

 

 

N/M

 

 

 

(1)

NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and all owned hotel results (pro forma) are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). Beginning in the third quarter of 2020, the Company changed its definition of Adjusted EBITDAre and Adjusted FFO to exclude non-ordinary course severance costs, which management believes provides useful supplemental information that is beneficial to an investor’s understanding of ongoing operating performance. Furlough costs, which are viewed as a replacement to wages, will continue to be included in these metrics. Including these severance costs, Adjusted EBITDAre and Adjusted FFO would have been $(154) million and $(123) million, respectively, for the third quarter 2020 and $(180) million and $(146) million year-to-date, respectively. See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.

N/M = Not meaningful

 


HOST HOTELS & RESORTS, INC. NEWS RELEASE

NOVEMBER 4, 2020

 

*Additional detail on the Company’s results, including data for 22 domestic markets and top 40 hotels by Total RevPAR, is available in the Third Quarter 2020 Supplemental Financial Information available on the Company’s website at www.hosthotels.com.

Portfolio Highlights:

 

As of November 4, 2020, re-opened 31 of the 35 hotels that had suspended operations, and had open a total of 75 of its 79 consolidated hotels, representing 94% of the Company’s room count.

 

Improved average monthly occupancy by 680 basis points, from 12.9% in July to 19.7% in September 2020.

 

Achieved break-even or positive hotel-level operating profit at 22% of its hotels, representing 18% of rooms, for the month of September 2020, excluding severance costs and the Employee Retention Credit (“ERC”) that, under the CARES Act, partially offset the costs for the operator’s furloughed hotel employees.

 

Subsequent to quarter end, completed the sale of the Newport Beach Marriott Hotel & Spa for $216 million and sold three parcels of land at The Phoenician hotel for $66 million.

Update on COVID-19 Response and Positioning for Recovery

In response to the COVID-19 pandemic, the Company and its hotel operators have prioritized preserving financial liquidity and ensuring that the Company’s hotels are well positioned for recovery.

Preserving financial liquidity:2

Compared to second quarter 2020, cash used in operating activities improved by $23 million in the third quarter and cash burn improved by approximately $132 million, as a result of month to month improvement in average occupancy and, for cash burn, lower levels of capital expenditures and recording of the ERC. Significant expenditures included in the Company’s total cash burn are (in millions):

 

Quarter ended
September 30, 2020

 

 

Quarter ended

June 30, 2020

 

Net loss

$

(316

)

 

$

(356

)

GAAP net cash used in operating activities

 

(149

)

 

 

(172

)

Cash burn (2)

 

(267

)

 

 

(399

)

 

 

 

 

 

 

 

 

Components of cash burn:

 

 

 

 

 

 

 

Hotel-level operating loss (2)

 

(97

)

 

 

(162

)

Interest payments (3)

 

(27

)

 

 

(46

)

Cash corporate and other expenses

 

(16

)

 

 

(21

)

Capital expenditures

 

(84

)

 

 

(169

)

Severance at hotel properties

 

(43

)

 

 

(1

)

The Company’s liquidity can be estimated based on the average monthly GAAP cash used in operating activities and cash burn using the third quarter performance as well as forecasted interest expense and capital expenditures. Monthly cash burn for the fourth quarter is expected to exceed the third quarter average primarily due to the timing and amount of payments of capital expenditures, interest payments, and the ERC. In a scenario in which fourth quarter hotel operations are commensurate with the third quarter but exclude the $23 million ERC, the Company estimates that:

 

(i)

the average monthly GAAP cash used in operating activities would be approximately $66 million at the midpoint, which includes estimated interest, corporate-level expenses, and cash timing adjustments, and

 

(ii)

monthly cash burn would be approximately $95 million to $105 million(2), which also includes estimated monthly capital expenditures.

 

(2)

Hotel-level operating loss and cash burn are non-GAAP financial measures within the meaning of the rules of the SEC. Beginning in the third quarter of 2020, the Company removes severance costs incurred outside the ordinary course of business from All Owned Hotel Pro Forma EBITDA, a major component of hotel-level operating loss, as management believes this provides useful supplemental information that is beneficial to an investor’s understanding of ongoing operating performance. Furlough costs, which are viewed as a replacement to wages, and the $23 million in ERC are included in this metric. Severance and furlough costs are included in determining quarterly cash burn. See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.

(3)

Interest payments for the third quarter do not include cash debt extinguishment costs of $26 million, which are considered a financing activity on the Company’s statement of cash flows.

 

PAGE 2 OF 22


HOST HOTELS & RESORTS, INC. NEWS RELEASE

NOVEMBER 4, 2020

 

Based on the above, the Company anticipates the total available liquidity at the end of 2020 would be approximately $2.4 billion to $2.5 billion, including cash and FF&E reserves, and proceeds from the sales referenced above that occurred subsequent to quarter end, but not including any potential debt paydowns or other transactions. At this current cash burn level, the Company anticipates it would have ample liquidity until November of 2022, subject to obtaining continued covenant waivers from the lenders under the credit facility.

Actions by the Company’s hotel operators and the Company to preserve financial liquidity and position itself for the recovery include:

Reducing Operating Costs

 

Reduction of portfolio-wide hotel operating costs by over 65%, excluding severance, in the third quarter compared to the prior year, by continuing to suspend or scale back operations at hotels and furlough hotel employees. Furloughed employees received healthcare benefits of $31 million in the third quarter and approximately $85 million year-to-date. In addition, the Company’s hotel operators recorded a $23 million credit related to the ERC in the third quarter, which reduced hotel-level operating expenses.

 

Re-evaluation of the workforce structure and implementation of changes that are expected to lead to a more efficient operating model in the long term. As a result, the Company recorded severance costs of approximately $43 million in the third quarter. Full year severance costs for 2020 are expected to be $60 million to $70 million.

 

Reduction of year-to-date corporate expenses by nearly 15% compared to the prior year.

Strengthening the Balance Sheet

 

Draw of $746 million of the remaining capacity on the revolver portion of the Company’s credit facility in the third quarter as a precautionary measure in order to preserve financial flexibility.

 

Issuance of $750 million of 3.5% Series I Senior Notes due 2030 in the third quarter. A portion of the proceeds were used to repurchase approximately 81% of the outstanding 4.75% Series C Senior Notes due 2023 for $390 million, including $26 million of prepayment costs, extending the Company’s weighted average debt maturity, while maintaining its average interest rate.

 

Continued suspension of the quarterly dividend and stock repurchases.

Positioning for recovery

 

Continued completion of the Marriott transformational capital program and other ROI projects to take advantage of reduced demand. The Company believes the renovations will position these hotels to capture additional revenue during the economic recovery.

 

Continued review of operating costs with hotel managers at varying levels of occupancy with a focus on modernizing brand standards, streamlining operating departments and accelerating the adoption of cost-saving technology.

Operating Results

The Company’s prior year presentation of comparable hotel performance is no longer relevant given the impact of COVID-19. Hotel operating results, including RevPAR, are instead being reported on an All Owned Hotel pro forma basis, which includes all consolidated properties owned as of September 30, 2020, but does not include the results of operations for properties sold in 2019 or through the reporting date. Additionally, operating results for acquisitions in the prior year are reflected for the full 2019 calendar year, to include results for periods prior to the Company’s ownership. See the Notes to Financial Information – All Owned Hotel Operating Statistics and Results for further information on these pro forma statistics.

Due to low occupancy levels and/or state mandates, operations remain suspended at four hotels in the Company’s portfolio as of November 4, 2020. The Company has provided a complete list of these suspended hotels on page 35 of its Third Quarter 2020 Supplemental Financial Information available on the Company’s website at www.hosthotels.com.

The following presents the monthly hotel operating results for the full portfolio during the periods presented:

 

 

July

2020

 

 

July

2019

 

 

Change

 

 

August

2020

 

 

August

2019

 

 

Change

 

 

September 2020

 

 

September 2019

 

 

Change

 

Number of hotels

 

 

80

 

 

 

80

 

 

 

 

 

 

 

80

 

 

 

80

 

 

 

 

 

 

 

80

 

 

 

80

 

 

 

 

 

Number of rooms

 

 

46,670

 

 

 

46,670

 

 

 

 

 

 

 

46,674

 

 

 

46,674

 

 

 

 

 

 

 

46,674

 

 

 

46,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Occupancy Percentage

 

 

12.9

%

 

 

82.5

%

 

 

(69.6

pts)

 

 

18.9

%

 

 

80.6

%

 

 

(61.8

pts)

 

 

19.7

%

 

 

78.4

%

 

 

(58.7

pts)

Average Room Rate

 

$

177.76

 

 

$

229.15

 

 

 

(22.4

)%

 

$

162.50

 

 

$

218.11

 

 

 

(25.5

)%

 

$

175.78

 

 

$

242.82

 

 

 

(27.6

)%

RevPAR

 

$

22.94

 

 

$

189.00

 

 

 

(87.9

)%

 

$

30.67

 

 

$

175.86

 

 

 

(82.6

)%

 

$

34.64

 

 

$

190.40

 

 

 

(81.8

)%

PAGE 3 OF 22


HOST HOTELS & RESORTS, INC. NEWS RELEASE

NOVEMBER 4, 2020

 

The following presents the monthly hotel operating results for the hotels without suspended operations during the periods presented:3

 

 

July

2020

 

 

August

2020

 

 

September

2020

 

Number of hotels (4)

 

 

57

 

 

 

66

 

 

 

70

 

Number of rooms

 

 

32,478

 

 

 

38,146

 

 

 

41,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Occupancy Percentage

 

 

17.9

%

 

 

22.0

%

 

 

22.1

%

Average Room Rate

 

$

178.56

 

 

$

163.41

 

 

$

174.93

 

RevPAR

 

$

32.02

 

 

$

35.88

 

 

$

38.74

 

Hotel Business Mix Update

The Company’s customers fall into three broad groups: transient, group and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its 2019 room sales.

During the third quarter, demand continued to be primarily driven by drive-to and resort destinations. The following are the sequential results of the Company’s consolidated portfolio transient, group and contract business:

 

Quarter ended September 30, 2020

 

 

Quarter ended June 30, 2020

 

 

Transient

 

 

Group

 

 

Contract

 

 

Transient

 

 

Group

 

 

Contract

 

Room nights (in thousands)

 

536

 

 

127

 

 

 

74

 

 

 

198

 

 

134

 

 

 

43

 

Percentage change in room nights

     vs. same period in 2019

 

(75.1

)%

 

 

(88.8

)%

 

 

(57.7

)%

 

 

(90.0

)%

 

 

(90.0

)%

 

 

(74.1

)%

Room Revenues (in millions)

$

98

 

 

$

17

 

 

$

11

 

 

$

37

 

 

$

18

 

 

$

6

 

Percentage change in revenues

     vs. same period in 2019

 

(80.9

)%

 

 

(93.0

)%

 

 

(69.3

)%

 

 

(92.8

)%

 

 

(94.3

)%

 

 

(83.3

)%

The Company and its operators have focused on rebooking future business with its customers and have rebooked approximately 16% of group business that was cancelled in 2020 into future years.

Capital Expenditures

The Company’s capital expenditures spending is expected to range from $475 million to $510 million for full year 2020:

 

 

 

Year-to-date ended
September 30, 2020

 

 

2020 Full Year Forecast

 

 

 

Actuals

 

 

Low-end of range

 

 

High-end of range

 

ROI - Marriott transformational capital program

 

$

141

 

 

$

175

 

 

$

180

 

ROI - All other ROI projects

 

 

121

 

 

 

150

 

 

 

160

 

Total ROI project spend

 

 

262

 

 

 

325

 

 

 

340

 

Renewals and Replacements

 

 

122

 

 

 

150

 

 

 

170

 

Total Capital Expenditures

 

$

384

 

 

$

475

 

 

$

510

 

Through the third quarter of 2020, the Company completed approximately 78% of the total capital expenditure projects planned for the year. The full year forecast ROI capital expenditures includes $175 million to $180 million for the Marriott transformational capital program, which is reduced by approximately $20 million compared to the prior forecast as a result of savings on completed projects and construction timing. The Company expects to receive operating profit guarantees of approximately $20 million in 2020, including $5 million that was received in the third quarter of 2020 and $7 million expected in the fourth quarter.

The Company has prioritized major capital projects in assets and markets that are expected to recover faster, such as leisure and drive-to destinations, as well as previously announced major return on investment projects. The Company is utilizing the low occupancy environment to accelerate certain projects and minimize future disruption.

Dispositions

On October 30, 2020, the Company sold 29 acres of land adjacent to The Phoenician hotel for approximately $66 million. The buyer plans for residential development on the land, including a mix of single family, villas and condominium units.

 

(4)

Represents the hotels that were accepting reservations during the entirety of the month. Excludes the 23, 14, and 10 hotels with suspended operations in the months of July, August and September, respectively.

 

PAGE 4 OF 22


HOST HOTELS & RESORTS, INC. NEWS RELEASE

NOVEMBER 4, 2020

 

Additionally, residents of these new homes will be provided the option of purchasing membership to an amenity program with The Phoenician to access resort amenities and other services. On November 2, 2020, the Company sold the Newport Beach Marriott Hotel & Spa for $216 million and expects to record a gain of approximately $200 million in the fourth quarter for the combined sales.

Balance Sheet

The Company maintains a robust balance sheet with the following balances at September 30, 2020:

 

Total assets of $13.1 billion.

 

Cash balance of approximately $2.4 billion and FF&E escrow reserves of $138 million. The revolver and term loan portions of its credit facility are fully utilized.

 

Debt balance of $5.6 billion, with an average maturity of 5.2 years, an average interest rate of 3.0%, and no maturities until 2023.

The Company’s quarterly-tested financial covenants in its credit facility were waived beginning July 1, 2020 through the second quarter of 2021, with testing resuming for the third quarter of 2021. The Company’s credit facility requires that net proceeds from debt issuances and asset sales in excess of $350 million be used first to repay borrowings under the revolver and, in excess of $700 million in proceeds, to repay the revolver and term loans on a pro rata basis, subject to certain exceptions. As a result of restrictions under the waiver, proceeds from the issuance of Series I senior notes, the Newport Beach Marriott sale and the land sale at The Phoenician, the Company may be required to use a portion of the combined sale proceeds to repay the revolving credit facility to the extent the Series I senior notes proceeds are not used to repay other debt. As of September 30, 2020, the Company was below the financial covenant levels under its senior notes indentures necessary to incur debt and, as a result, it will not be able to incur additional debt while below these levels.

2020 Outlook

Given the global economic uncertainty COVID-19 has created for the travel, airline, lodging and tourism and event industries, among others, the Company cannot provide guidance for its operations or fully estimate the effect of COVID-19 on operations. The Company does not expect to see a material improvement in operations until government restrictions have been lifted and business and leisure travelers are comfortable that the risks associated with traveling and contracting COVID-19 are significantly reduced. The Company does not intend to provide further updates unless deemed appropriate.

About Host Hotels & Resorts

Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 74 properties in the United States and five properties internationally totaling approximately 46,100 rooms. The Company also holds non-controlling interests in six domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, The Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Swissôtel®, ibis® and Novotel®, as well as independent brands. For additional information, please visit the Company’s website at www.hosthotels.com.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements include forecast results and are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,” “predict,” “project,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the duration and scope of the COVID-19 pandemic and its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; actions governments, businesses and individuals take in response to the pandemic, including limiting or banning travel; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies, travel, and economic activity, including the duration and magnitude of its impact on unemployment rates, business investment and consumer discretionary spending; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in U.S. markets where we own hotels and a worsening of economic conditions or low levels of economic growth in these markets; the effects of steps we and our hotel managers take to reduce operating costs in response to the COVID-19 pandemic; other changes (apart from the COVID-19 pandemic) in national and local economic and business conditions and other factors such as natural disasters and weather that will affect occupancy rates at our hotels and the demand for hotel products and services; the impact of geopolitical developments outside the U.S. on lodging demand; volatility in global financial and credit markets; operating risks associated with the hotel business; risks and limitations in our operating flexibility associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; risks associated with our relationships with property managers and joint venture partners; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; the effects of hotel renovations on our hotel occupancy and financial results; our ability to

PAGE 5 OF 22


HOST HOTELS & RESORTS, INC. NEWS RELEASE

NOVEMBER 4, 2020

 

compete effectively in areas such as access, location, quality of accommodations and room rate structures; risks associated with our ability to complete acquisitions and dispositions and develop new properties and the risks that acquisitions and new developments may not perform in accordance with our expectations; our ability to continue to satisfy complex rules in order for us to remain a REIT for federal income tax purposes; risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to make special dividends; and other risks and uncertainties associated with our business described in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of November 4, 2020 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 ***


PAGE 6 OF 22


HOST HOTELS & RESORTS, INC. NEWS RELEASE

NOVEMBER 4, 2020

 

Host Hotels & Resorts, Inc., herein referred to as “we,” “Host Inc.,” or the “Company,” is a self-managed and self-administered real estate investment trust that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. (“Host LP”), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1% of the partnership interests in Host LP held by outside partners as of September 30, 2020, which is non-controlling interests in Host LP in our consolidated balance sheets and is included in net (income) loss attributable to non-controlling interests in our consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.

2020 OPERATING RESULTS

  

PAGE NO.

 

Condensed Consolidated Balance Sheets (unaudited)

     September 30, 2020 and December 31, 2019

  

8

 

Condensed Consolidated Statements of Operations (unaudited)

     Quarter and Year-to-date Ended September 30, 2020 and 2019

  

9

 

Earnings (Loss) per Common Share (unaudited)

     Quarter and Year-to-date Ended September 30, 2020 and 2019

  

10

 

Hotel Operating Data

  

 

     Hotel Operating Data for Consolidated Hotels (by Location)

  

11

 

 

 

Schedule of All Owned Hotel Pro Forma Results

 

13

 

Reconciliation of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre

  

15

 

Reconciliation of Diluted Earnings (Loss) per Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share

  

16

 

Notes to Financial Information

  

17

 

 

 

 

 

 

 


PAGE 7 OF 22


HOST HOTELS & RESORTS, INC.

Condensed Consolidated Balance Sheets

(unaudited, in millions, except shares and per share amounts)

    

 

 

September 30, 2020

 

 

December 31, 2019

 

ASSETS

 

Property and equipment, net

 

$

9,487

 

 

$

9,671

 

Right-of-use assets

 

 

600

 

 

 

595

 

Assets held for sale

 

 

53

 

 

 

 

Due from managers

 

 

19

 

 

 

63

 

Advances to and investments in affiliates

 

 

33

 

 

 

56

 

Furniture, fixtures and equipment replacement fund

 

 

138

 

 

 

176

 

Other

 

 

311

 

 

 

171

 

Cash and cash equivalents

 

 

2,430

 

 

 

1,573

 

Total assets

 

$

13,071

 

 

$

12,305

 

 

 

 

 

 

 

 

 

 

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY

 

Debt (1)

 

 

 

 

 

 

 

 

Senior notes

 

$

3,150

 

 

$

2,776

 

Credit facility, including the term loans of $997

 

 

2,482

 

 

 

989

 

Other debt

 

 

6

 

 

 

29

 

Total debt

 

 

5,638

 

 

 

3,794

 

Lease liabilities

 

 

612

 

 

 

606

 

Accounts payable and accrued expenses

 

 

78

 

 

 

263

 

Due to managers

 

 

90

 

 

 

 

Other

 

 

166

 

 

 

175

 

Total liabilities

 

 

6,584

 

 

 

4,838

 

 

 

 

 

 

 

 

 

 

Redeemable non-controlling interests - Host Hotels & Resorts, L.P.

 

 

80

 

 

 

142

 

 

 

 

 

 

 

 

 

 

Host Hotels & Resorts, Inc. stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01, 1,050 million shares authorized,

     705.3 million shares and 713.4 million shares issued and outstanding,

     respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

7,589

 

 

 

7,675

 

Accumulated other comprehensive loss

 

 

(79

)

 

 

(56

)

Deficit

 

 

(1,115

)

 

 

(307

)

Total equity of Host Hotels & Resorts, Inc. stockholders

 

 

6,402

 

 

 

7,319

 

Non-redeemable non-controlling interests—other consolidated partnerships

 

 

5

 

 

 

6

 

Total equity

 

 

6,407

 

 

 

7,325

 

Total liabilities, non-controlling interests and equity

 

$

13,071

 

 

$

12,305

 

___________

 

 

 

 

 

 

 

 

(1)

Please see our Third Quarter 2020 Supplemental Financial Information for more detail on our debt balances and financial covenant ratios under our credit facility and senior notes indentures.   

 

PAGE 8 OF 22


HOST HOTELS & RESORTS, INC.

Condensed Consolidated Statements of Operations

(unaudited, in millions, except per share amounts)

 

 

Quarter ended

September 30,

 

 

Year-to-date ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

126

 

 

$

830

 

 

$

813

 

 

$

2,618

 

Food and beverage

 

 

31

 

 

 

341

 

 

 

372

 

 

 

1,223

 

Other

 

 

41

 

 

 

91

 

 

 

168

 

 

 

294

 

Total revenues

 

 

198

 

 

 

1,262

 

 

 

1,353

 

 

 

4,135

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

69

 

 

 

221

 

 

 

299

 

 

 

664

 

Food and beverage

 

 

72

 

 

 

260

 

 

 

356

 

 

 

835

 

Other departmental and support expenses

 

 

109

 

 

 

320

 

 

 

541

 

 

 

981

 

Management fees

 

 

5

 

 

 

52

 

 

 

33

 

 

 

177

 

Other property-level expenses

 

 

77

 

 

 

85

 

 

 

240

 

 

 

268

 

Depreciation and amortization

 

 

166

 

 

 

165

 

 

 

498

 

 

 

501

 

Corporate and other expenses(1)

 

 

18

 

 

 

26

 

 

 

68

 

 

 

80

 

Gain on insurance and business interruption settlements

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Total operating costs and expenses

 

 

516

 

 

 

1,125

 

 

 

2,035

 

 

 

3,502

 

Operating profit (loss)

 

 

(318

)

 

 

137

 

 

 

(682

)

 

 

633

 

Interest income

 

 

 

 

 

8

 

 

 

7

 

 

 

23

 

Interest expense

 

 

(66

)

 

 

(46

)

 

 

(143

)

 

 

(132

)

Other gains/(losses)

 

 

1

 

 

 

274

 

 

 

13

 

 

 

336

 

Loss on foreign currency transactions and derivatives

 

 

(1

)

 

 

(1

)

 

 

 

 

 

 

Equity in earnings (losses) of affiliates

 

 

(5

)

 

 

4

 

 

 

(26

)

 

 

13

 

Income (loss) before income taxes

 

 

(389

)

 

 

376

 

 

 

(831

)

 

 

873

 

Benefit (provision) for income taxes

 

 

73

 

 

 

(4

)

 

 

156

 

 

 

(22

)

Net income (loss)

 

 

(316

)

 

 

372

 

 

 

(675

)

 

 

851

 

Less: Net (income) loss attributable to

     non-controlling interests

 

 

3

 

 

 

(4

)

 

 

7

 

 

 

(11

)

Net income (loss) attributable to Host Inc.

 

$

(313

)

 

$

368

 

 

$

(668

)

 

$

840

 

Basic and diluted earnings (loss) per common share

 

$

(.44

)

 

$

.51

 

 

$

(.95

)

 

$

1.14

 

___________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Corporate and other expenses include the following items:

 

 

Quarter ended

September 30,

 

 

Year-to-date ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

General and administrative costs

 

$

14

 

 

$

22

 

 

$

57

 

 

$

69

 

Non-cash stock-based compensation expense

 

 

4

 

 

 

4

 

 

 

11

 

 

 

11

 

       Total

 

$

18

 

 

$

26

 

 

$

68

 

 

$

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          


PAGE 9 OF 22


HOST HOTELS & RESORTS, INC.

Earnings (Loss) per Common Share

(unaudited, in millions, except per share amounts)

 

 

 

Quarter ended
September 30,

 

 

Year-to-date ended
September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income (loss)

 

$

(316

)

 

$

372

 

 

$

(675

)

 

$

851

 

Less: Net (income) loss attributable to non-controlling interests

 

 

3

 

 

 

(4

)

 

 

7

 

 

 

(11

)

Net income (loss) attributable to Host Inc.

 

$

(313

)

 

$

368

 

 

$

(668

)

 

$

840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

705.2

 

 

 

725.5

 

 

 

706.1

 

 

 

735.0

 

Assuming distribution of common shares granted under the

comprehensive stock plans, less shares assumed purchased at market

 

 

 

 

 

.3

 

 

 

 

 

 

.4

 

Diluted weighted average shares outstanding (1)

 

 

705.2

 

 

 

725.8

 

 

 

706.1

 

 

 

735.4

 

Basic and diluted earnings (loss) per common share

 

$

(.44

)

 

$

.51

 

 

$

(.95

)

 

$

1.14

 

___________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units (“OP Units”) held by minority partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.  

 

 

 

 

 

  

 

 

 


PAGE 10 OF 22


HOST HOTELS & RESORTS, INC.

Hotel Operating Data for Consolidated Hotels (1)(2)

All Owned Hotels (pro forma) by Location in Constant US$

 

 

 

As of
September 30, 2020

 

 

Quarter ended September 30, 2020

 

 

Quarter ended September 30, 2019

 

 

 

 

 

 

 

 

 

Location

 

No. of

Properties

 

 

No. of

Rooms

 

 

Average

Room Rate

 

 

Average

Occupancy

Percentage

 

 

RevPAR

 

 

Total
RevPAR

 

 

Average

Room Rate

 

 

Average

Occupancy

Percentage

 

 

RevPAR

 

 

Total
RevPAR

 

 

Percent

Change in

RevPAR

 

 

Percent

Change in

Total
RevPAR

 

Jacksonville

 

 

1

 

 

 

446

 

 

$

419.23

 

 

 

43.3

%

 

$

181.67

 

 

$

383.23

 

 

$

363.69

 

 

 

69.0

%

 

$

251.05

 

 

$

516.90

 

 

 

(27.6

)%

 

 

(25.9

)%

Florida Gulf Coast

 

 

5

 

 

 

1,842

 

 

 

288.56

 

 

 

33.7

 

 

 

97.38

 

 

 

181.81

 

 

 

242.93

 

 

 

61.6

 

 

 

149.63

 

 

 

290.64

 

 

 

(34.9

)

 

 

(37.4

)

Miami

 

 

3

 

 

 

1,276

 

 

 

209.34

 

 

 

26.8

 

 

 

56.08

 

 

 

98.65

 

 

 

235.65

 

 

 

73.9

 

 

 

174.18

 

 

 

294.09

 

 

 

(67.8

)

 

 

(66.5

)

Maui/Oahu

 

 

4

 

 

 

1,987

 

 

 

172.74

 

 

 

11.3

 

 

 

19.47

 

 

 

22.11

 

 

 

385.51

 

 

 

91.5

 

 

 

352.78

 

 

 

543.42

 

 

 

(94.5

)

 

 

(95.9

)

Phoenix

 

 

3

 

 

 

1,654

 

 

 

201.12

 

 

 

22.0

 

 

 

44.33

 

 

 

110.66

 

 

 

197.07

 

 

 

57.9

 

 

 

114.19

 

 

 

287.59

 

 

 

(61.2

)

 

 

(61.5

)

Los Angeles

 

 

4

 

 

 

1,726

 

 

 

193.52

 

 

 

25.8

 

 

 

50.02

 

 

 

65.89

 

 

 

238.54

 

 

 

87.3

 

 

 

208.32

 

 

 

303.73

 

 

 

(76.0

)

 

 

(78.3

)

San Francisco/San Jose

 

 

7

 

 

 

4,528

 

 

 

165.35

 

 

 

13.1

 

 

 

21.59

 

 

 

27.13

 

 

 

266.18

 

 

 

84.2