Filed Pursuant to Rule 424(b)(2)
Registration No. 333-278572
P R O S P E C T U S S U P P L E M E N T
(To prospectus dated April 17, 2024)
$600,000,000
Host Hotels & Resorts, L.P.
5.700% Series K Senior Notes due 2034
We are offering $600 million aggregate principal amount of 5.700% Series K senior notes due 2034. We will pay interest on the Series K senior notes semi-annually in arrears on January 1 and July 1 of each year, commencing January 1, 2025. The Series K senior notes will mature on July 1, 2034. We have the option to redeem the Series K senior notes in whole or in part at the applicable redemption price described under the caption “Description of Series K Senior Notes—Optional Redemption” in this prospectus supplement.
The Series K senior notes will be our senior unsecured obligations and will rank equally in right of payment with all of our existing and future senior unsecured indebtedness. The Series K senior notes and the Existing Senior Notes (as defined herein) will be effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness, and to the indebtedness of our subsidiaries. See “Description of Series K Senior Notes—Ranking” in this prospectus supplement.
As described under “Use of Proceeds,” we intend to allocate an amount equal to the net proceeds from the sale of the Series K senior notes to finance and/or refinance one or more Eligible Green Projects (as defined herein), including the April 2024 acquisition of the 1 Hotel Nashville and Embassy Suites by Nashville Downtown, each of which has received LEED Silver certification (together, the “Nashville Hotels”).
The Series K senior notes are a new issue of securities with no established trading market. We do not intend to apply for listing of the Series K senior notes on any securities exchange or for inclusion of the Series K senior notes in any automated quotation system.
Investing in our Series K senior notes involves risks. See “Risk Factors” beginning on page S-4 of this prospectus supplement.
Per Note | Total | ||||||||||
Public offering price (1) | 98.318 | % | $ | 589,908,000 | |||||||
Underwriting discount | 0.650 | % | $ | 3,900,000 | |||||||
Proceeds, before expenses, to us (1) | 97.668 | % | $ | 586,008,000 | |||||||
__________________
(1)Plus accrued interest from May 10, 2024, if settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The Series K senior notes will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company for the accounts of its participants, including Euroclear Bank S.A./N.V., as operator of the Euroclear System, and Clearstream Banking, société anonyme, on or about May 10, 2024, which is the third business day following the date of this prospectus supplement.
Joint Book-Running Managers
J.P. Morgan | BofA Securities | Wells Fargo Securities | ||||||
Goldman Sachs & Co. LLC | Morgan Stanley | Scotiabank | ||||||
Co-Managers
| PNC Capital Markets LLC | Truist Securities | TD Securities | ||||||
| Credit Agricole CIB | SMBC Nikko | BNY Mellon Capital Markets, LLC | Ramirez & Co., Inc. | |||||||||||||||||
The date of this prospectus supplement is May 7, 2024
TABLE OF CONTENTS
Prospectus Supplement
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Prospectus
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You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any applicable free writing prospectus. We have not, and the underwriters have not, authorized any other person to provide you with additional or different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus, any applicable free writing prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates. For the avoidance of doubt, neither the Second-Party Opinion (as defined herein) nor the Green Bond Framework (as defined herein) is incorporated into, or forms a part of, this prospectus supplement.
This prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein contain registered trademarks, service marks and brand names that are the exclusive property of their respective owners, which are companies other than us, including 1 Hotels®, Alila®, Andaz®, Fairmont®, Four Seasons®, Grand Hyatt®, JW Marriott®, Ritz-Carlton®, St. Regis®, The Don Cesar®, The Luxury Collection®, W®, Autograph Collection®, Curio – A Collection by Hilton®, Embassy Suites by Hilton®, Hilton®, Hyatt Regency®,
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Marriott®, Marriott Marquis®, Sheraton®, Swissôtel®, Tribute Portfolio® and Westin®. None of the owners of these trademarks, service marks or brand names, their affiliates or any of their respective officers, directors, agents or employees, is an issuer or underwriter of the debt securities being offered hereby. In addition, none of such persons has or will have any responsibility or liability for any information contained in this prospectus supplement, the accompanying prospectus or the documents incorporated by reference herein and therein.
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ABOUT THIS PROSPECTUS SUPPLEMENT
You should read this prospectus supplement along with the accompanying prospectus, as well as the information incorporated by reference herein and therein, carefully before you invest in our Series K senior notes. These documents contain important information you should consider before making your investment decision. This prospectus supplement describes the terms of the offer and sale of the Series K senior notes. The accompanying prospectus contains information about our debt securities generally. This prospectus supplement may add, update or change information contained in or incorporated by reference in the accompanying prospectus. If the information in this prospectus supplement is inconsistent with any information contained in or incorporated by reference in the accompanying prospectus, the information in this prospectus supplement will apply and will supersede the inconsistent information contained in or incorporated by reference in the accompanying prospectus.
Unless this prospectus supplement otherwise indicates or the context otherwise requires, references to “Host Inc.” mean Host Hotels & Resorts, Inc. and references to “Host L.P.” mean Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. We use the terms “we,” “our” or “the company” to refer to Host Inc. and Host L.P. together, along with Host L.P.’s consolidated subsidiaries, unless the context indicates otherwise. Host Inc. and Host L.P. file combined periodic reports with the Securities and Exchange Commission (the “Commission” or “SEC”), certain of which are incorporated by reference herein. When we refer to “you,” we mean the potential holders of the Series K senior notes. References to “Existing Senior Notes” herein include our Series E, Series F, Series H, Series I and Series J senior notes currently outstanding and exclude our Series G senior notes that were outstanding as of March 31, 2024, but were repaid on April 1, 2024. The Series K senior notes offered hereby will be issued pursuant to an indenture dated as of May 15, 2015 (the “Indenture”). References to “senior notes” herein include the Existing Senior Notes, the Series K senior notes offered hereby and any future senior notes that we may issue under the Indenture.
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FORWARD-LOOKING STATEMENTS
Information included and incorporated by reference in this prospectus supplement and the accompanying prospectus contains forward-looking statements that relate to our future performance and plans, results of operations, capital expenditures, acquisitions, dispositions and operating costs. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “expect,” “may,” “intend,” “predict,” “project,” “plan,” “will,” “estimate” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are based on management’s current expectations and assumptions and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results to differ materially from those anticipated at the time the forward-looking statements are made.
The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•the effect on lodging demand of (i) changes in national and local economic and business conditions, including concerns about U.S. economic growth and the potential for an economic recession in the United States or globally, the recent high level of inflation, rising interest rates, global economic prospects, consumer confidence and the value of the U.S. dollar, and (ii) factors that may shape public perception of travel to a particular location, including natural disasters, such as the Maui wildfires in 2023, weather events, such as Hurricane Ian in 2022, pandemics and other public health crises, such as the COVID-19 pandemic, and the occurrence or potential occurrence of terrorist attacks, all of which will affect occupancy rates at our hotels and the demand for hotel products and services;
•the impact of geopolitical developments outside the United States, such as large-scale wars or international conflicts, slowing global growth, or trade tensions and tariffs between the United States and its trading partners such as China, all of which could affect global travel and lodging demand within the United States;
•risks that U.S. immigration policies and border closings, travel restrictions or advisories, changes in energy prices or changes in foreign exchange rates will suppress international travel to the United States generally or decrease the labor pool;
•volatility in global financial and credit markets, which could materially adversely affect U.S. and global economic conditions, business activity and lodging demand as well as negatively impact our ability to obtain financing and increase our borrowing costs;
•future U.S. governmental action to address budget deficits through reductions in spending and similar austerity measures, as well as the impact of potential U.S. government shutdowns, all of which could materially adversely affect U.S. economic conditions, business activity, credit availability and borrowing costs;
•operating risks associated with the hotel business, including the effect of labor stoppages or strikes, increasing operating or labor costs, including increased labor costs in the current inflationary environment, the ability of our managers to adequately staff our hotels as a result of shortages in labor, severance and furlough payments to hotel employees or changes in workplace rules that affect labor costs;
•the effect of rating agency downgrades of our debt securities on the cost and availability of new debt financings;
•the reduction in our operating flexibility and the limitation on our ability to incur debt, pay dividends and make distributions resulting from restrictive covenants in our debt agreements and other risks associated with the amount of our indebtedness or related to restrictive covenants in our debt agreements, including the risk that a default could occur;
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•our ability to maintain our hotels in a first-class manner, including meeting capital expenditures requirements, and the effect of renovations, including temporary closures, on our hotel occupancy and financial results;
•the ability of our hotels to compete effectively against other lodging businesses in the highly competitive markets in which we operate in areas such as access, location, quality of accommodations and room rate structures;
•our ability to acquire or develop additional hotels and the risk that potential acquisitions or developments may not perform in accordance with our expectations;
•the ability to complete hotel renovations on schedule and on, or under, budget and the potential for increased costs and construction delays due to shortages of supplies as a result of supply chain disruptions;
•relationships with property managers and joint venture partners and our ability to realize the expected benefits of our joint ventures and other strategic relationships;
•risks associated with a single manager, Marriott International, managing a significant percentage of our hotels;
•changes in the desirability of the geographic regions of the hotels in our portfolio or in the travel patterns of hotel customers;
•the growth of third-party internet and other travel intermediaries in attracting and retaining customers which compete with our hotels;
•our ability to recover fully under our existing insurance policies for terrorist acts and natural disasters and our ability to maintain adequate or full replacement cost “all-risk” property insurance policies on our hotels on commercially reasonable terms;
•the effect of a data breach or significant disruption of hotel operator information technology networks as a result of cyber-attacks;
•the effects of tax legislative action and other changes in laws and regulations, or the interpretation thereof, including the need for compliance with new environmental and safety requirements;
•the ability of Host Inc. and each of the real estate investment trusts (“REITs”) acquired, established or to be established by Host Inc. to continue to satisfy complex rules in order to qualify as REITs for U.S. federal income tax purposes and Host Inc.’s and Host L.P.’s ability and the ability of our subsidiaries, and similar entities to be acquired or established by us, to operate effectively within the limitations imposed by these rules; and
•risks associated with our ability to execute our dividend policy, including factors such as investment activity, operating results and the economic outlook, any or all of which may influence the decision of Host Inc.’s board of directors as to whether to pay future dividends at levels previously disclosed or to use available cash to pay special dividends.
Our success also depends upon economic trends generally, various market conditions and fluctuations and those other risk factors discussed under the heading “Risk Factors” herein and in the accompanying prospectus and under the heading “Risk Factors” in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and in our other filings with the SEC that are incorporated by reference in this prospectus supplement and the accompanying prospectus. We caution you not to place undue reliance on forward-looking statements, which reflect our analysis only and speak as of the date of this prospectus supplement or the accompanying prospectus, as applicable, or as of the dates indicated in the statements. All of our forward-looking statements, including those included and incorporated by reference in this prospectus supplement and the accompanying prospectus, such as our outlook for 2024, are qualified in their entirety by this statement. We undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.
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PROSPECTUS SUPPLEMENT SUMMARY
The Company
Host L.P. is a Delaware limited partnership operating through an umbrella partnership structure with Host Inc., a Maryland corporation, as its sole general partner. Host Inc. operates as a self-managed and self-administered REIT. In addition to being the sole general partner, Host Inc. holds approximately 99% of the partnership interests in Host L.P. as of May 1, 2024.
Host Inc. is the largest publicly traded lodging REIT, with a geographically diverse portfolio of luxury and upper upscale hotels, and conducts its operations through Host L.P. Host Inc. has the exclusive and complete responsibility for Host L.P.’s day-to-day management and control. As of May 1, 2024, our consolidated lodging portfolio consists of 79 primarily luxury and upper-upscale hotels containing approximately 42,700 rooms, with substantially all located in the United States (five of the hotels are located outside of the U.S. in Brazil and Canada). In addition, we own non-controlling interests in seven domestic and one international joint ventures that focus on the lodging industry.
The address of our principal executive office is 4747 Bethesda Avenue, Suite 1300, Bethesda, Maryland 20814. Our phone number is (240) 744-1000. Our Internet website address is www.hosthotels.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this prospectus supplement or the accompanying prospectus.
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The Offering
The summary below describes the principal terms of the Series K senior notes. Many of the terms and conditions described below are subject to important limitations and exceptions. For a more detailed description of the terms and conditions of the Series K senior notes, see the section entitled “Description of Series K Senior Notes” in this prospectus supplement and the section entitled “Description of Debt Securities” in the accompanying prospectus. For purposes of this section, references to “we,” “our” or “us” refer only to Host Hotels & Resorts, L.P. and its successors and not to our subsidiaries.
| Issuer | Host Hotels & Resorts, L.P., a Delaware limited partnership. | |||||||
| Securities Offered | $600 million aggregate principal amount of 5.700% Series K senior notes due 2034. | |||||||
| Maturity | July 1, 2034. | |||||||
| Interest | Interest on the Series K senior notes will accrue at an annual rate of 5.700%. We will pay interest on the Series K senior notes semi-annually in arrears on January 1 and July 1 of each year, commencing January 1, 2025. | |||||||
| Ranking | The Series K senior notes will be senior unsecured obligations, will rank senior to all of our future subordinated indebtedness and will rank equally in right of payment with all of our existing and future senior unsecured indebtedness, including our Credit Facility (as defined below) and our Existing Senior Notes. | |||||||
| The Series K senior notes and the Existing Senior Notes will be effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness, and to the indebtedness of our subsidiaries. For further information on ranking, see “Risk Factors—The Series K senior notes are effectively subordinated to our secured debt and to the liabilities of our subsidiaries,” “Description of Other Indebtedness” and “Description of Series K Senior Notes—Ranking” in this prospectus supplement. | ||||||||
As of March 31, 2024, as adjusted to give effect to the offering of the Series K senior notes and the application of the estimated net proceeds from this offering as described under “Use of Proceeds,” we and our subsidiaries would have had approximately $4.4 billion of total debt. See “Capitalization.” As of March 31, 2024, we had no subordinated indebtedness. | ||||||||
| Optional Redemption | We have the option to redeem the Series K senior notes in whole or in part, at any time and from time to time, at the applicable redemption price specified herein. If the Series K senior notes are redeemed on or after April 2, 2034 (90 days prior to their maturity date), the redemption price will be equal to 100% of the principal amount of the Series K senior notes to be redeemed, plus accrued and unpaid interest to, but not including, the date of redemption. | |||||||
| For more details, see the section entitled “Description of Series K Senior Notes—Optional Redemption.” | ||||||||
| Certain Covenants | The Indenture governing the Series K senior notes, among other things, restricts our ability and the ability of our subsidiaries to: •incur additional secured and unsecured indebtedness without satisfying certain financial metrics; and •sell all or substantially all of our assets or merge with or into other companies. | |||||||
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| These limitations are subject to important exceptions and qualifications. See “Description of Series K Senior Notes” in this prospectus supplement. | ||||||||
| No Limitation on Incurrence of Indebtedness | Subject to compliance with covenants relating to our aggregate debt, maintenance of total unencumbered assets, debt service and aggregate secured debt, the Indenture does not limit the amount of debt that we may issue under the Indenture or otherwise. | |||||||
| Guarantees | The Series K senior notes will not be guaranteed by Host Inc. or by any of our direct or indirect subsidiaries. Under certain circumstances, certain of our direct and indirect subsidiaries, in the future, may be required to guarantee the Series K senior notes, as well as certain of our other outstanding indebtedness, including the Existing Senior Notes and the Credit Facility. This covenant will no longer apply following the elimination of the future guarantees covenant from all of the outstanding Existing Senior Notes (including upon redemption or repayment in full) and from the Credit Facility. Even if we are required to provide for subsidiary guarantors in the future, those subsidiaries may be released without the consent of holders under certain circumstances. See “Description of Series K Senior Notes—Certain Covenants—Future Guarantees” in this prospectus supplement. | |||||||
| Security | The Series K senior notes will not be secured by any of our assets or the assets of our subsidiaries. | |||||||
| Use of Proceeds | We estimate the net proceeds from the sale of the Series K senior notes will be approximately $584 million, after deducting the underwriting discount, de minimis original issue discount, fees and expenses payable by us. We intend to allocate an amount equal to the net proceeds from the sale of the Series K senior notes to finance and/or refinance one or more Eligible Green Projects, including the April 2024 acquisition of the Nashville Hotels. Following the allocation to Eligible Green Projects, we intend to use the net proceeds from this offering to repay the remaining $215 million of borrowings outstanding under the revolver portion of our Credit Facility. Pending full allocation of an amount equal to the net proceeds from this offering to Eligible Green Projects, we intend to hold or invest an amount equal to the balance of the net proceeds not yet allocated to Eligible Green Projects in cash, cash equivalents, treasury securities and/or to repay existing borrowings in line with our treasury management policies. See “Use of Proceeds” in this prospectus supplement. | |||||||
| Absence of Public Market | The Series K senior notes are a new issue of securities with no established trading market. We cannot assure you that any active or liquid market will develop for the Series K senior notes. See “Underwriting—New Issue of Notes” in this prospectus supplement. | |||||||
| Other Relationships | Certain of the underwriters or their affiliates participate in, or are lenders under, our Credit Facility and, as a result of the repayment of our outstanding borrowings under the revolver portion of our Credit Facility as set forth under the heading “Use of Proceeds” in this prospectus supplement, will receive a portion of the net proceeds from this offering. See “Underwriting—Other Relationships.” | |||||||
| Risk Factors | You should read carefully the “Risk Factors” beginning on page S-4 of this prospectus supplement and set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated herein by reference, as well as the risk factors discussed in the periodic reports and other documents we file from time to time with the Commission and which we incorporate into this prospectus supplement by reference. | |||||||
| Trustee | The Bank of New York Mellon. | |||||||
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RISK FACTORS
Your investment in our Series K senior notes involves certain risks. In consultation with your own financial and legal advisers, you should carefully consider, among other matters, the factors set forth below as well as the risk factors discussed in the accompanying prospectus, our Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequently filed periodic reports which are incorporated by reference into this prospectus supplement and the accompanying prospectus, before deciding whether an investment in our Series K senior notes is suitable for you.
The Series K senior notes are effectively subordinated to our secured debt and to the liabilities of our subsidiaries.
The Series K senior notes will be our senior unsecured obligations and will rank equally in right of payment with all of our other senior unsecured indebtedness, which currently includes our Existing Senior Notes and indebtedness under our Credit Facility. However, the Series K senior notes will be effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness. The Indenture governing the Series K senior notes places limitations on our ability to incur secured indebtedness but does not prohibit us from incurring secured indebtedness in the future. Consequently, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to us, the holders of any secured indebtedness will be entitled to proceed directly against the collateral that secures such indebtedness. Therefore, such collateral will not be available for satisfaction of any amounts owed under our unsecured indebtedness, including the Series K senior notes, until such secured indebtedness is satisfied in full.
The Series K senior notes will also be effectively subordinated to all existing and future unsecured and secured liabilities of our subsidiaries. Therefore, holders of our debt, including the Series K senior notes, will be subject to the prior claims of each of such subsidiary’s creditors, including trade creditors. As of March 31, 2024, our subsidiaries had outstanding approximately $87 million of cash liabilities and future obligations under operating leases of approximately $564 million that are effectively senior to the Series K senior notes offered hereby.
The terms of our debt place restrictions on us and on our subsidiaries, reducing our operational flexibility and creating default risks.
The Indenture governing the Series K senior notes contains covenants that place restrictions on us and on our subsidiaries, and will, among other things, restrict our ability and the ability of our subsidiaries to:
•incur additional secured and unsecured indebtedness without satisfying certain financial metrics; and
•conduct acquisitions, mergers or consolidations unless the successor entity in such transaction assumes our indebtedness.
In addition to the above listed covenants, certain covenants in our Credit Facility place restrictions on our ability and the ability of our subsidiaries to:
•make distributions or stock repurchases, acquisitions, dispositions or incur secured or unsecured debt, in each case without satisfying certain financial metrics; and
•conduct transactions with affiliates other than on an arm’s-length basis.
Additionally, certain covenants in our Credit Facility require us and our subsidiaries to meet financial performance tests. The restrictive covenants in our Indenture, our Credit Facility and the documents governing our other debt (including any future mortgage debt) will reduce our flexibility in conducting our operations and will limit our ability to engage in activities that may be in our long-term best interest. Failure to comply with these restrictive covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all or a substantial portion of our debt. For a detailed description of the covenants and restrictions imposed by the documents governing our indebtedness, see “Description of Other Indebtedness” and “Description of Series K Senior Notes.”
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Certain of the covenants applicable to our Series K senior notes will no longer apply at any time that certain of our existing indebtedness is no longer outstanding or does not otherwise contain comparable restrictions; as a result, if and when these covenants no longer apply, under certain circumstances our Series K senior notes may be effectively subordinated to other senior indebtedness of the Company that we may incur and secure in the future and may not have the benefit of certain subsidiary guarantees after our Credit Facility no longer requires such springing guarantees.
Our Existing Senior Notes prohibit, and our Series K senior notes will prohibit, us from securing indebtedness under our Credit Facility or the Existing Senior Notes unless effective provision is made to secure our Existing Senior Notes and the Series K senior notes on an equal and ratable basis. In addition, our subsidiaries will be required to guarantee our Existing Senior Notes and our Series K senior notes in the event that they guarantee any of our indebtedness. However, these covenants will no longer apply to our Series K senior notes at any time that our Existing Senior Notes and, in the case of the future guarantees covenant, our Credit Facility, are either no longer outstanding or do not otherwise contain comparable requirements. As a result, in certain cases, in the event we in the future secure other senior indebtedness or provide certain subsidiary guarantees at a time when such covenants no longer apply to our Series K senior notes, our Series K senior notes would effectively be subordinated to such other indebtedness, to the extent of the value of the collateral securing such indebtedness, and not have the benefit of such subsidiary guarantees. See “Risk Factors—The Series K senior notes are effectively subordinated to our secured debt and to the liabilities of our subsidiaries.” For a more detailed description of the covenants that will no longer apply in the event that our Existing Senior Notes and Credit Facility are no longer outstanding or do not otherwise contain comparable requirements, see “Description of Series K Senior Notes—Certain Covenants—Limitations on Liens” and “Description of Series K Senior Notes—Certain Covenants—Future Guarantees.”
Changes in the ratings of the Series K senior notes, our credit ratings or the debt markets could adversely affect the price of the Series K senior notes.
The price of the Series K senior notes depends on many factors, including:
•our credit ratings with major credit rating agencies;
•the prevailing interest rates being paid by, or the market price for notes issued by, other companies similar to us;
•our financial condition, financial performance and future prospects; and
•the overall condition of the financial markets.
The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. In general, as market interest rates rise, notes bearing interest at a fixed rate generally decline in value. Consequently, if you purchase the Series K senior notes and market interest rates increase, the market value of your Series K senior notes may decline.
In addition, credit rating agencies periodically review and update their ratings for the companies that they follow, including us, and we cannot assure you that any rating will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. The credit rating agencies also evaluate our industry as a whole and may change their credit rating for us based on their overall view of our industry. Moreover, such credit ratings are not recommendations to buy, sell or hold the notes or any other securities. If any credit rating agency downgrades our credit ratings or otherwise indicates that its outlook for that rating is negative, it could have a material adverse effect on the market price of the Series K senior notes and our costs and availability of capital, which could in turn have a material adverse effect on our financial condition, liquidity and results of operations and our ability to satisfy our debt service obligations (including payments on the notes).
The Series K senior notes or a future guarantee thereof may be deemed a fraudulent transfer.
Our obligations under the Series K senior notes may be subject to review under federal bankruptcy laws and comparable provisions of state fraudulent transfer laws in the event of our bankruptcy or other financial difficulty.
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Our Series K senior notes could be voided or claims under the Series K senior notes could be subordinated to all our other debts if, among other things, we, at the time we incurred the indebtedness:
(1)received less than reasonably equivalent value or fair consideration for the incurrence of such indebtedness; and
(2)either:
(a)were insolvent or rendered insolvent by reason of such incurrence;
(b)were engaged in a business or transaction for which our remaining assets constituted unreasonably small capital; or
(c)intended to incur, or believed that we would incur, debts beyond our ability to pay such debts as they mature.
Although the Series K senior notes are not guaranteed by any of our direct or indirect subsidiaries, pursuant to the terms of the Indenture governing the Series K senior notes, a guarantee of our indebtedness by any of our subsidiaries in the future would, under certain circumstances, trigger the requirement that the Series K senior notes be guaranteed on a pro rata basis. The guarantees under the Series K senior notes may be subject to review under the same laws as the Series K senior notes in the event of a guarantor’s bankruptcy or other financial difficulty. In that event, if a court were to find that when the guarantee was issued by such guarantor, the factors in clauses (1) and (2) above applied to such guarantor, or that the guarantee was issued with actual intent to hinder, delay or defraud creditors, the court could cause any payment by that guarantor pursuant to its guarantee to be voided and returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor. In such event, the Series K senior notes would be structurally subordinated to the indebtedness and other liabilities of such subsidiary.
The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, Host L.P. or a guarantor would be considered insolvent if:
•the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets; or
•the present fair value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or
•it could not pay its debts as they become due.
We can offer no assurance as to what standard a court would apply in making such determinations or that a court would agree with our conclusions in this regard.
There is no established trading market for the Series K senior notes and there may be limited trading of the Series K senior notes.
The Series K senior notes are a new issue of securities with no established trading market. We do not intend to have the Series K senior notes listed on any securities exchange or to arrange for quotation on any automated dealer quotation systems. We have been informed by the underwriters that they intend to make a market in the Series K senior notes after this offering is completed. However, the underwriters are not obligated to do so and may cease their market-making at any time without notice. The liquidity of the trading market in the Series K senior notes and the market price quoted for the Series K senior notes may be adversely affected by:
•changes in the overall market for investment grade securities;
•changes in our financial performance or prospects;
•prospects for companies in our industry generally;
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•the number of holders of the Series K senior notes;
•the interest of securities dealers in making a market for the Series K senior notes;
•prevailing interest rates; and
•the credit rating of our indebtedness, including the Series K senior notes.
As a result, we cannot assure you that an active trading market will develop for the Series K senior notes. If there is limited trading of the Series K senior notes, this may adversely affect the price at which you can sell your Series K senior notes and your ability to sell at the time you want to sell.
We and our subsidiaries may incur substantially more debt. This could further exacerbate the risks to our financial condition described above.
We and our subsidiaries may incur significant additional indebtedness (which may be secured) in the future, and the Series K senior notes would be structurally subordinated to any indebtedness incurred by our subsidiaries and effectively subordinated to any such secured indebtedness. Although the Credit Facility imposes certain financial covenants and in certain circumstances, the Indenture governing our Existing Senior Notes and the Series K senior notes limits our ability to incur additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. We continually evaluate market conditions and may take advantage of the opportunity to issue additional indebtedness, including in the form of additional debt securities, in the near future or at later times, the proceeds of which may include repaying certain of our outstanding indebtedness. The holders of our debt that ranks equally with the Series K senior notes will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company, and any holders of our secured debt, if any, will rank effectively senior in right of payment with the Series K senior notes to the extent of the value of the assets securing such indebtedness in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company. This may have the effect of reducing the amount of proceeds paid to you. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. If new debt is added to our current debt levels, the related risks that we now face could intensify. See “Description of Other Indebtedness” and “Description of Series K Senior Notes.”
The Indenture will not require that we allocate the net proceeds from this offering to Eligible Green Projects or take the other actions as described under “Use of Proceeds,” and our failure to do so could adversely impact the value of the Series K senior notes.
The market price of the Series K senior notes may be impacted by any failure by us to allocate the net proceeds from this offering to Eligible Green Projects, take the other actions as described under “Use of Proceeds” or to otherwise meet or continue to meet the investment requirements of certain environmentally focused investors with respect to the Series K senior notes. In addition, none of the terms of the Series K senior notes nor the Indenture require us to use an amount equal to the net proceeds as described under “Use of Proceeds” or to satisfy the tracking, reporting and other undertakings described thereunder. Although we intend to allocate all of the net proceeds from this offering to Eligible Green Projects and take the other actions as described under “Use of Proceeds,” it will not be an event of default under the Indenture governing the Series K senior notes nor will we be required to repurchase or redeem the Series K senior notes if we fail to do so. None of the underwriters are responsible for assessing or verifying whether or not the Eligible Green Projects to which we allocate an amount equal to the net proceeds meet the criteria described in “Use of Proceeds” or for the monitoring of the use of such funds generally.
We may use or allocate the net proceeds from this offering in ways with which you may not agree and there can be no assurance that the use of proceeds of the Series K senior notes to finance and/or refinance Eligible Green Projects will be suitable for the investment criteria of an investor.
Although we believe that the Green Bond Framework we adopted in 2024 (as may be amended from time to time, the “Green Bond Framework”) aligns with the Green Bond Principles of June 2021 (with June 2022 Appendix 1) administered by the International Capital Market Association (the “Green Bond Principles”), the Green Bond
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Principles do not provide clear definitions as to what constitutes a “green,” “environmental,” “sustainable” or an equivalently-labeled project or investment, and there is currently no market consensus as to what precise attributes are required for a particular project or investment to be defined as “green,” “environmental,” “sustainable” or such other equivalent label, nor can any assurance be given that a consensus will develop over time. Accordingly, no assurance is or can be given to investors that our Green Bond Framework and/or any Eligible Green Projects selected to receive an allocation of funds equal to the net proceeds of this offering, each as described under “Use of Proceeds,” will satisfy, or continue to satisfy, investor criteria and expectations, third-party standards or regulatory requirements regarding such “green,” “environmental,” “sustainable” or other equivalently-labeled performance objectives.
We intend to allocate an amount equal to the net proceeds from the sale of the Series K senior notes to finance and/or refinance one or more Eligible Green Projects, including the April 2024 acquisition of the Nashville Hotels. Pending full allocation of an amount equal to the net proceeds from this offering to Eligible Green Projects, we intend to hold or invest an amount equal to the balance of the net proceeds not yet allocated to Eligible Green Projects in cash, cash equivalents, treasury securities and/or to repay existing borrowings in line with our treasury management policies.
No assurance or representation is or can be given by us, any of the underwriters or any other person as to whether (i) sufficient funds will be available to us to allocate an amount equal to the net proceeds from the sale of the Series K senior notes to one or more suitable Eligible Green Projects, (ii) any such Eligible Green Projects will be successfully implemented or will be capable of being implemented in accordance with any timing schedule or (iii) such Eligible Green Projects will have the results or outcome (whether or not related to the environment) as are originally expected or anticipated. Additionally, our Green Bond Framework may be amended from time to time, and the criteria used to identify Eligible Green Projects may differ in the future. We have significant flexibility in allocating an amount equal to the net proceeds from the Series K senior notes, including re-allocating the net proceeds in the event we no longer own the Nashville Hotels or if the Nashville Hotels no longer meet the criteria for an Eligible Green Project, and we may allocate such amount in a way that does not align with any particular investor’s or other stakeholder’s perception of sustainable green activities. No assurance or representation is being given by us, any of the underwriters or any other person that funds in an amount equal to such net proceeds will be completely or partially disbursed for any such Eligible Green Projects and our failure to do so will not be an event of default or require us to repurchase or redeem the Series K senior notes.
Prospective investors should carefully review the information set out in this prospectus supplement regarding our intended use of an amount equal to the net proceeds of the issuance of the Series K senior notes and must determine for themselves the relevance of such information for the purpose of any investment in the Series K senior notes, together with any other investigation such investor deems necessary. Any failure by us to allocate an amount equal to the net proceeds from the sale of the Series K senior notes to one or more Eligible Green Projects or the failure of those investments or financings to satisfy investor expectations or requirements could materially and adversely affect the trading price of the Series K senior notes or result in adverse consequences for certain investors with mandates to invest in securities to be used for a particular purpose.
In addition, perception by investors of the suitability of the Series K senior notes as “green” bonds could be negatively affected by dissatisfaction with the criteria for determining Eligible Green Projects described under “Use of Proceeds,” the ongoing performance of the Eligible Green Projects to which an amount equal to the net proceeds are allocated, controversies involving any adverse environmental, sustainability or social impacts of the Eligible Green Projects and/or the business or industry of the Eligible Green Projects, evolving standards or market consensus as to what constitutes a “green” bond or the desirability of investing in “green” bonds. In addition, such Eligible Green Projects may become controversial or criticized by activist groups or other stakeholders and/or subject to “greenwashing” allegations or claims that result in additional cost or risks that we have not planned for. In addition, although we intend to allocate an amount equal to the net proceeds from this offering to Eligible Green Projects, there can be no assurance that one or more development, redevelopment and/or improvement projects that has or that we expect will receive a LEED, BREEAM or Green Globes certification will retain or receive such certification. The trading price of the Series K senior notes may be negatively affected to the extent investors are required or choose to sell their holdings due to deterioration in the perception by the investor or the market in general as to the suitability of this offering as “green” bonds and/or sustainable financing. The trading price of the
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Series K senior notes may be also negatively affected to the extent demand for sustainability-themed investment products diminishes due to evolving investor preferences, increased regulatory or market scrutiny on funds and strategies dedicated to sustainability or environmental, social or governance (“ESG”)-themed investing or for other reasons. We intend to report on our allocations of an amount equal to the net proceeds of this offering as described under “Use of Proceeds—Reporting” and may not report on any environmental, sustainability or social impact of such allocations.
The Green Bond Principles recommend that issuers obtain external assurance to confirm alignment of their Green Bond Framework with the core components of the Green Bond Principles. Accordingly, in connection with the adoption of our Green Bond Framework in 2024, we engaged Moody’s Investors Service (“Moody’s”) to provide an independent second-party opinion (the “Second-Party Opinion”) regarding the alignment of the Green Bond Framework with the core components of the Green Bond Principles (as they existed on the date of the Second-Party Opinion). Although Moody’s has certified in the Second-Party Opinion that the Green Bond Framework aligns with the four core components of the Green Bond Principles, no assurance can be made that the Green Bond Framework will, in fact, align with the core components of the Green Bond Principles. Neither the Green Bond Framework nor the Second-Party Opinion is incorporated into, or forms a part of, this prospectus supplement. The Second-Party Opinion may not reflect the potential impact of all risks related to the Series K senior notes, including the risk factors included and incorporated by reference in this prospectus supplement and the accompanying prospectus. The Second-Party Opinion is not a recommendation to buy, sell or hold securities and such opinion would only be current as of the date it was initially issued.
Noteholders have no recourse against us, the underwriters or any other person (including any provider of an opinion, evaluation, report, validation or certification) for the contents of any such opinion, report, evaluation, validation or certification. Prospective investors must determine for themselves the relevance of any such opinion, evaluation or certification and/or the information contained therein for the purpose of investing in the Series K senior notes. Currently, the providers of such opinions, evaluations and certifications are not subject to any specific regulatory or other regime or oversight. There is no assurance that any such opinion, evaluation or certification will remain in effect for so long as the Series K senior notes remain outstanding. The failure to receive such opinion or certification, or any withdrawal of any such opinion, evaluation or certification or any other opinion, evaluation, assessment or certification attesting that our Green Bond Framework does not comply, in whole or in part, with the core components of the Green Bond Principles, may have a material adverse effect on the value of the Series K senior notes and/or result in adverse consequences for certain investors with mandates to invest in securities to be used for a particular purpose. A withdrawal of the Second-Party Opinion will not be an event of default or require us to repurchase or redeem the Series K senior notes.
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USE OF PROCEEDS
We estimate the net proceeds from the sale of the Series K senior notes will be approximately $584 million, after deducting the underwriting discount, de minimis original issue discount, fees and expenses payable by us.
We intend to allocate an amount equal to the net proceeds from the sale of the Series K senior notes to finance and/or refinance one or more Eligible Green Projects, including the Nashville Hotels, which we acquired in April 2024 for a purchase price of $530 million. Following the allocation to Eligible Green Projects, we intend to use the net proceeds from this offering to repay $215 million of borrowings outstanding under the revolver portion of our Credit Facility, which has an initial maturity of January 2027. The interest rate on U.S. dollar revolver borrowings under our Credit Facility is currently 6.26% based on our unsecured long-term debt rating as of March 31, 2024. See “Description of Other Indebtedness.”
Certain of the underwriters or their affiliates participate in, or are lenders under, our Credit Facility and, as a result of the repayment of our outstanding borrowings under the revolver portion of our Credit Facility, will receive a portion of the net proceeds from this offering. See “Underwriting—Other Relationships.”
Definition of “Eligible Green Projects”
“Eligible Green Projects” means projects as defined in the following categories:
•Green Buildings: (i) the acquisition of hotel properties; (ii) hotel developments or redevelopments; (iii) renovations in existing hotels; and (iv) improvement projects, in each case, that have received, a LEED Silver, Gold or Platinum certification, BREEAM Very good, Excellent or Outstanding or Green Globes 3 or 4 Globes (or environmentally equivalent successor standards).
•Renewable Energy: investments in or expenditures on the acquisition, development, construction and/or installation of renewable energy production units and storage systems, including, but not limited to, solar panel installations; purchase of Renewable Energy under medium- and long-term (minimum of five years) power purchase agreements, virtual power purchase agreements, green tariff agreements or community solar; and battery storage for excess renewable energy. Renewable Energy includes wind, solar and/or other clean energy sources with lifecycle emissions of less than 100g CO2e/kWh.
•Energy Efficiency: refurbishments to properties in order to improve energy efficiency of more than 30% over baseline, or make other environmentally beneficial improvements to a building, building subsystem or land, including but not limited to investments in: LED and other energy efficient lighting; HVAC equipment such as air source and water source heat pumps, variable frequency drives, EC motors, passive heating and cooling systems, advanced building management systems, sensors and controls, guestroom management and heat recovery systems; cool roof and other sustainability-oriented construction materials; energy storage and energy saving technologies and materials; electric vehicle charging stations; and improvements recognized by sustainability rating systems such as ENERGY STAR or other equivalent market recognized labels.
•Pollution Prevention and Control: investments in or expenditures to properties in order to divert at least 50% of the targeted waste stream from landfill and to prevent pollution, including onsite composting, biodigester and/or technologies supporting waste monitoring and management; technologies, products and services that enable increased recycling and waste diversion to landfills; and procurement of product more than 50% post-consumer renewable content.
•Sustainable Water and Wastewater Management: refurbishments to properties in order to improve water efficiency of more than 30% over baseline, or make other environmentally beneficial improvements to a building, building subsystem or land, including but not limited to investments in water saving technologies and materials such as laundry water recycling systems, low-flow fixtures, advanced meters and leak detection sensors; xeriscaping/drought-tolerant landscaping, advanced meters and irrigation systems; and improvements recognized by sustainability rating systems such as EPA WaterSense.
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•Climate Change Adaptation: investments in or expenditures to properties to harden assets and improve climate resilience, including relocation of critical mechanical, electric and plumbing (MEP) systems and infrastructure; flood gates and flood-protection measures; power resilience measures such as battery storage, generators and/or upgrades to existing electrical infrastructure; nature-based adaptation solutions such as installing shaded fuel breaks; and early warning and detection systems.
In the case of Energy Efficiency and Climate Change Adaptation Eligible Green Project categories, Host does not intend to allocate the net proceeds from this offering towards the direct purchase of new fossil fuel derived equipment and systems. Furthermore, we will not knowingly allocate an amount equal to the net proceeds from this offering to investments which received an allocation of proceeds under any other green bond issuance.
Leadership in Energy and Environmental Design (“LEED”) is a voluntary, third-party building certification process developed by the U.S. Green Building Council (“USGBC”), a non-profit organization. The USGBC developed the LEED certification process to create better buildings that (i) reduce contribution to global climate change, (ii) protect and restore water resources, (iii) promote sustainable and regenerative material cycles, (iv) enhance individual human health, (v) protect and enhance biodiversity and ecosystem services and (vi) enhance community quality of life.
Building Research Establishment Environmental Assessment Methodology (“BREEAM”) is a voluntary, third-party building certification process developed by the U.K. Building Research Establishment. A BREEAM assessment uses recognized measures of performance set against established benchmarks for (i) energy, (ii) water, (iii) health & well-being, (iv) pollution, (v) transport, (vi) resources, (vii) resilience, (viii) land use & ecology and (ix) management processes.
Green Globes is a voluntary, third-party building certification process administered by the U.S. Green Building Initiative. The Green Globes certification is a science-based, three-in-one whole building certification system that evaluates the environmental sustainability, health & wellness and resilience of all types of commercial real estate.
Process for Project Evaluation and Selection
An amount equal to the net proceeds from this offering will be allocated to finance and/or refinance one or more Eligible Green Projects, including the April 2024 acquisition of the Nashville Hotels. Our Corporate Responsibility Team will make recommendations to our senior management, and our senior management will make the final determination as to which Eligible Green Projects an amount equal to the net proceeds from this offering will be allocated or re-allocated to. Our Corporate Responsibility Team is responsible for the day-to-day management of our corporate responsibility strategy and program, including driving progress toward our ESG goals, investments, reporting and engagement with stakeholders.
Our ESG Executive Steering Committee, comprised of senior and executive vice presidents, provides oversight of our corporate responsibility strategy and stakeholder engagement activities. Eligible Green Projects are approved by the Executive Vice President, Development, Design & Construction, the executive champion of our Corporate Responsibility team and the ESG Executive Steering Committee lead. A review with the full ESG Executive Steering Committee may be completed at quarterly ESG Governance meetings. Relevant members of the Corporate Responsibility Advisory Committee, including members of our Legal, Treasury and Financial Reporting teams, also review Eligible Green Projects on at least an annual basis when selecting and evaluating Eligible Green Projects.
The Corporate Responsibility Team will be responsible for the following until the maturity of the Series K senior notes offered hereby:
•Monitoring the list of Eligible Green Projects previously selected for allocation on at least an annual basis throughout the term of the Senior K senior notes. In the event of divestment or if a project no longer meets our criteria for eligibility, the Corporate Responsibility Team will use their best efforts to reallocate proceeds to a replacement Eligible Green Project.
•Maintaining an internal tracker, along with additional supporting documents such as ESG Steering Committee meeting minutes, our annual Green Bond Allocation Statements (as defined below) and
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documentation supporting external verification of the allocation of proceeds to Eligible Green Projects under our Green Bond Framework.
Management of Proceeds
We may also allocate or re-allocate net proceeds from this offering to other Eligible Green Projects following their initial allocation. As long as the Series K senior notes are outstanding, our internal records will track the allocation of an amount equal to the net proceeds from this offering to Eligible Green Projects.
Pending full allocation of an amount equal to the net proceeds from this offering to Eligible Green Projects, we intend to hold or invest an amount equal to the balance of the net proceeds not yet allocated to Eligible Green Projects in cash, cash equivalents, treasury securities and/or to repay existing borrowings in line with our treasury management policies. We intend to allocate an amount equal to the net proceeds within 36 months of the issue date. Payment of principal and interest on the Series K senior notes will be made from our general account and will not be linked to the performance of the Eligible Green Projects.
Reporting
During the term of the Series K senior notes, until such time as an amount equal to net proceeds from this offering have been fully allocated to Eligible Green Projects, we will publish annual updates in a publicly available report on our website (a “Green Bond Allocation Statement”) detailing, at a minimum, the allocation of an amount equal to the net proceeds from this offering to specific Eligible Green Projects, together with the list of eligible project categories with a selection of brief descriptions, which may include the achieved level of LEED, BREEAM or Green Globes certification, relevant quantitative impact metrics, if applicable, and the outstanding amount of net proceeds from this offering yet to be allocated to Eligible Green Projects at the end of the reporting period. Relevant impact metrics may be included in any Green Bond Allocation Statement we publish. In the event of re-allocation or divestment of an Eligible Green Project, or if a project no longer meets our criteria for eligibility, an updated Green Bond Allocation Statement will be published within the next calendar year until the maturity of the Senior K senior notes.
Please note that the information and materials found on, or that can be accessed through, our website, except for our SEC filings expressly incorporated by reference as described under “Where You Can Find More Information; Incorporation by Reference” in the accompanying prospectus, are not part of this prospectus supplement or the accompanying prospectus and are not incorporated by reference herein or therein.
External Verification
Second-Party Opinion
The Green Bond Framework has been reviewed by Moody’s, which has issued a Second-Party Opinion on the alignment of the Green Bond Framework with the core components of the Green Bond Principles. For the avoidance of doubt, neither the Second-Party Opinion nor the Green Bond Framework is incorporated into, or forms a part of, this prospectus supplement.
Verification
Third-party verifiers will confirm the use of proceeds from the Series K notes on an annual basis or until fully allocated. Furthermore, the Green Bond Allocation Statement, which will include a presentation on the use of proceeds of the Series K senior notes, will be made publicly available annually on our website. Our updates will be accompanied by (i) an assertion by management on proceeds from this offering allocated to Eligible Green Projects and the remaining balance of unallocated proceeds and (ii) a report from an independent third-party environmental consultant or an independent accountant in respect of the independent accountant’s examination of management’s assertion conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants.
No underwriter has undertaken, or is responsible for, any verification of whether or not the Series K senior notes constitute green bonds.
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CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2024, on an actual basis and on an as adjusted basis to give effect to (i) the estimated $584 million of net proceeds from this offering and use of proceeds therefrom for the repayment of the remaining outstanding borrowings of $215 million under the revolver portion of our Credit Facility, following a net $85 million repayment which occurred after quarter end, (ii) the repayment of all of the $400 million aggregate principal amount outstanding of our Series G senior notes at maturity on April 1, 2024, including approximately $6 million in accrued and unpaid interest, (iii) the acquisition of the Nashville Hotels and (iv) the payment of our first quarter 2024 dividend to common stockholders on April 15, 2024.
As of March 31, 2024 | |||||||||||
Actual | As Adjusted | ||||||||||
| (in millions) | |||||||||||
Cash and cash equivalents (1) | $ | 1,349 | $ | 556 | |||||||
4% Series E senior notes due June 2025 | 499 | 499 | |||||||||
4½% Series F senior notes due February 2026 | 399 | 399 | |||||||||
3⅞% Series G senior notes due April 2024 (2) | 400 | — | |||||||||
3⅜% Series H senior notes due December 2029 | 643 | 643 | |||||||||
3½% Series I senior notes due September 2030 | 738 | 738 | |||||||||
| 2.9% Series J senior notes due December 2031 | 442 | 442 | |||||||||
5.7% Series K senior notes due 2034 offered hereby (3) | — | 584 | |||||||||
Total senior notes | 3,121 | 3,305 | |||||||||
Credit facility revolver (4) | 293 | (7) | |||||||||
Term loans | 997 | 997 | |||||||||
Other debt | 99 | 99 | |||||||||
Total debt (5) | 4,510 | 4,394 | |||||||||
Limited partnership interest of third parties | 200 | 200 | |||||||||
Host L.P. capital: | |||||||||||
General partner | 1 | 1 | |||||||||
Limited partner | 6,808 | 6,808 | |||||||||
Accumulated other comprehensive loss | (73) | (73) | |||||||||
Total of Host L.P. capital | 6,736 | 6,736 | |||||||||
Non-controlling interests- consolidated partnerships | 4 | 4 | |||||||||
Total capital | 6,740 | 6,740 | |||||||||
Total capitalization | $ | 11,450 | $ | 11,334 | |||||||
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(1)As adjusted cash and cash equivalents reflects the following:
Balance at March 31, 2024 | $ | 1,349 | |||
Net repayment of Credit Facility revolver after March 31, 2024 | (85) | ||||
Acquisition of the Nashville Hotels | (530) | ||||
Repayment of Series G senior notes, including accrued interest of approximately $6 million, at maturity on April 1, 2024 | (406) | ||||
April 15, 2024 dividend payment | (141) | ||||
Issuance of Series K senior notes offered hereby | 584 | ||||
Anticipated repayment on Credit Facility revolver with proceeds from the Series K senior notes offered hereby | (215) | ||||
As adjusted balance at March 31, 2024 | $ | 556 | |||
(2)As adjusted reflects the repayment of our Series G senior notes at maturity on April 1, 2024.
(3)Reflects the issuance of $600 million of 5.700% Series K senior notes due 2034 offered hereby. The cash proceeds are net of $16 million of expected offering expenses, including the underwriting discount, de minimis original issue discount and other offering expenses.
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(4)Following the anticipated repayment on the Credit Facility revolver, there will be no outstanding Credit Facility revolver borrowings. Amount shown represents deferred financing costs related to the Credit Facility revolver.
(5)Total debt excludes approximately $564 million of operating lease liabilities, $37 million due to managers, other liabilities of $176 million, and $237 million of accounts payable and accrued expenses, which was reduced to $90 million of accounts payable and accrued expenses following the transactions noted above.
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DESCRIPTION OF OTHER INDEBTEDNESS
Credit Facility
On January 4, 2023, we entered into the sixth amended and restated senior revolving credit and term loan facility, with Bank of America, N.A., as administrative agent, and certain other agents and lenders (the “Credit Facility”). The Credit Facility allows for revolver borrowings in an aggregate principal amount of up to $1.5 billion and a term loan facility of $1 billion (which is fully utilized). The Credit Facility also provides, among other things, for:
•an interest rate on all U.S. dollar borrowings based on SOFR (plus a credit spread adjustment of 10 basis points) or a base rate plus, in each case, a margin that varies according to our unsecured long-term debt rating, with such margin being (1) in the case of revolver borrowings, a margin ranging from 72.5 to 140 basis points for SOFR borrowings or from zero to 40 basis points for base rate borrowings and (2) in the case of the term loan borrowings, a margin ranging from 80 to 160 basis points for SOFR borrowings or from zero to 60 basis points for base rate borrowings;
•in the case of the revolver portion of our Credit Facility, a facility fee payable on the total amount of the revolving credit facility commitment at a rate ranging from 12.5 to 30 basis points, with the actual rate determined according to our unsecured long-term debt rating;
•implementation of a sustainability pricing adjustment that (1) in the case of borrowings under the revolver portion of our Credit Facility, can result in an increase or decrease of the interest rate applicable to revolving loans of up to 4 basis points and an increase or decrease of the facility fee of up to 1.0 basis point and (2) in the case of the term loan borrowings, can result in an increase or decrease of the interest rate applicable to term loans of up to 5 basis points, in each case, with the amount of such adjustment to be determined annually on the basis of an annual audited report of Host L.P.’s performance against targets established in the Credit Facility for (i) the percentage of our consolidated portfolio with green building certifications and (ii) the percentage of electricity used at all our consolidated properties that is generated by renewable resources;
•a maturity date of (1) in the case of the revolver portion of our Credit Facility, January 4, 2027, which date may be extended by up to a year by the exercise of either (i) a 1-year extension option or (ii) up to two 6-month extension options, in each case, subject to certain customary conditions, including the payment of an extension fee; (2) in the case of one term loan tranche, January 4, 2027, which date may be extended up to a year by the exercise of one 1-year extension option, which is subject to certain customary conditions, including the payment of an extension fee; and (3) in the case of the second term loan tranche, January 4, 2028, which date may not be extended;
•a foreign currency subfacility for Canadian dollars, Australian dollars, Euros, British pounds sterling and, if available to the lenders, Mexican pesos of up to the foreign currency equivalent of $500 million, subject to a lower amount in the case of Mexican pesos borrowings;
•an option for Host L.P. to add in the future $500 million of commitments which may be used for additional borrowings under the revolver portion of our Credit Facility and/or term loans, subject to obtaining additional loan commitments (which we have not currently obtained) and the satisfaction of certain conditions specified in the Credit Facility;
•a subfacility of up to $100 million for swingline borrowings and a subfacility of up to $100 million for issuances of letters of credit;
•no required scheduled amortization payments prior to the maturity date of the revolver portion of our Credit Facility or either term loan tranche; and
•financial covenants (including covenants concerning leverage, fixed charge coverage and unsecured interest coverage), including that (1) our fixed charge coverage ratio may not be less than 1.25:1.00; (2) our
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leverage ratio may not exceed 7.25:1.00 and (3) our unsecured interest coverage ratio may not be less than (x) 1.75:1.00 if our leverage ratio is less than 7.00:1.00 or (y) 1.50:1.00 if our leverage ratio is equal to or greater than 7.00:1.00. The calculations for these financial covenants are performed based on pro forma results for the prior four fiscal quarters, giving effect to transactions such as acquisitions, dispositions and financings as if they had occurred at the beginning of the period. Under the terms of the Credit Facility, interest expense excludes items such as the gains and losses on the extinguishment of debt, deferred financing charges related to the Existing Senior Notes or the Credit Facility and non-cash interest expense, all of which are included in interest expense on our consolidated statements of operations. Additionally, total debt used in the calculation of our leverage ratio is based on a “net debt” concept, under which cash and cash equivalents in excess of $100 million are deducted from our total debt balance.
Borrowings under the Credit Facility may be used for working capital, repayment of debt and other general corporate purposes, including for the consummation of acquisitions. As of March 31, 2024, we had $1.2 billion of available capacity under the revolver portion of the Credit Facility, along with the $1.0 billion in term loans outstanding.
Prepayments. Voluntary prepayments of the loans under the Credit Facility are permitted in whole or in part without premium or penalty.
Financial Covenants. The following table summarizes the results of the financial tests required by the Credit Facility and our actual credit ratios as of March 31, 2024:
Actual Ratio | Covenant Requirement | ||||||||||
Leverage ratio | 2.0x | Maximum ratio of 7.25x | |||||||||
Fixed charge coverage ratio | 6.7x | Minimum ratio of 1.25x | |||||||||
Unsecured interest coverage ratio (a) | 8.8x | Minimum ratio of 1.75x | |||||||||
__________________
(a)If at any time our leverage ratio is above 7.0x, our minimum unsecured interest coverage ratio requirement will decrease to 1.50x.
Other Covenants and Events of Default. The Credit Facility imposes restrictions on customary matters. Certain covenants are less restrictive at any time that our leverage ratio is below 6.0x. At any time that our leverage ratio is below 6.0x, acquisitions, investments, dividends and distributions generally are permitted except where they would result in a breach of the financial covenants, calculated on a pro forma basis. The Credit Facility also includes financial covenant tests applicable to the incurrence of debt generally that are consistent with the limitations applicable under our senior notes indenture (as described below).
The Credit Facility also includes usual and customary events of default for facilities of this nature, and provides that, upon the occurrence and continuance of an event of default, payment of all amounts due under the Credit Facility may be accelerated and the lenders’ commitments may be terminated. In addition, upon the occurrence of certain insolvency or bankruptcy related events of default, all amounts due under the Credit Facility will automatically become due and payable and the lenders’ commitments will automatically terminate.
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Senior Notes
As of March 31, 2024, we had the following series of Existing Senior Notes outstanding:
Principal Amount (in millions) | |||||
4% Series E senior notes due June 2025 | 499 | ||||
4½% Series F senior notes due February 2026 | 399 | ||||
3⅞% Series G senior notes due April 2024 (1) | 400 | ||||
3⅜% Series H senior notes due December 2029 | 643 | ||||
3½% Series I senior notes due September 2030 | 738 | ||||
2.9% Series J senior notes due December 2031 | 442 | ||||
Total (2) | $ | 3,121 | |||
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(1)Our Series G senior notes were repaid at maturity on April 1, 2024, including approximately $6 million in accrued and unpaid interest.
(2)The face value of the total Existing Senior Notes outstanding, not including the unamortized portion of original issue discounts and deferred financing costs of approximately $29 million, is $3.2 billion as of March 31, 2024.
General. The following summary is a description of the material provisions of the Indenture and the related supplemental indentures governing our Existing Senior Notes, which we refer to collectively as the “senior notes indenture.” We pay interest on each series of our Existing Senior Notes semi-annually in arrears at the respective annual rates indicated on the table above. Under the terms of our senior notes indenture, our Existing Senior Notes are equal in right of payment with all of our senior unsecured indebtedness and senior to all of our subordinated obligations.
Guarantees. Currently there are no guarantees provided with respect to the Existing Senior Notes, but we have agreed under the senior notes indenture that all Host L.P. subsidiaries which guarantee other Host L.P. debt are required to similarly provide guarantees with respect to the Existing Senior Notes. In the event that the guarantees of other indebtedness are released, under the terms of the senior notes indenture, such guarantees will also be released under the Existing Senior Notes without the consent of the holders of the Existing Senior Notes. This covenant will no longer apply to the Series K Senior Notes at any time following the elimination of the future guarantees covenant from our Existing Senior Notes (including upon redemption or repayment in full) and from the Credit Facility. See “Description of Series K Senior Notes.”
Restrictive Covenants for Senior Notes
Our Existing Senior Notes have covenants customary for investment grade debt, substantially the same as the covenants for the Series K senior notes offered hereby, other than (i) the ability to incur permitted Refinancing Indebtedness (as defined herein) under our debt incurrence covenants, which is permitted only under the debt incurrence covenants for the Series J and Series K senior notes and (ii) our Series I and Series J senior notes are both subject to certain interest rate adjustments based on certain ratings events. In addition, certain of the covenants applicable to our Series K senior notes relating to liens and subsidiary guarantees (as noted above) will no longer apply at any time following the elimination of such covenants from our Existing Senior Notes (including upon redemption or repayment in full) and, in the case of the future guarantees covenant, from our Credit Facility. See “Description of Series K Senior Notes.”
Under the terms of the Existing Senior Notes, Host L.P.’s ability to incur indebtedness is subject to restrictions and the satisfaction of various conditions, including the achievement of an EBITDA-to-interest coverage ratio of at least 1.5x by Host L.P. As calculated, this ratio excludes from interest expense items such as call premiums and deferred financing charges that are included in interest expense on Host L.P.’s consolidated statements of operations. In addition, the calculation is based on Host L.P.’s pro forma results for the four prior fiscal quarters, giving effect to certain transactions, such as acquisitions, dispositions and financings, as if they had occurred at the beginning of the period. Other covenants limiting Host L.P.’s ability to incur indebtedness include maintaining total indebtedness of less than 65% of adjusted total assets (using undepreciated real estate book values) and maintaining secured
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indebtedness of less than 40% of adjusted total assets (using undepreciated real estate book values). So long as Host L.P. maintains the required level of interest coverage and satisfies these and other conditions in the senior notes indenture, it may incur additional debt. In addition, Host L.P. must at all times maintain total unencumbered assets of at least 150% of the aggregate principal amount of outstanding unsecured indebtedness of Host L.P. and its subsidiaries.
The following table summarizes our actual credit ratios calculated pursuant to the indenture financial tests for our Existing Senior Notes as of March 31, 2024:
Actual Ratio | Covenant Requirement | ||||||||||
Unencumbered assets to total unsecured indebtedness test | 507 | % | Minimum ratio of 150% | ||||||||
Total indebtedness to adjusted total assets | 20 | % | Maximum ratio of 65% | ||||||||
Secured indebtedness to adjusted total assets | <1% | Maximum ratio of 40% | |||||||||
EBITDA-to-interest coverage ratio | 8.7x | Minimum ratio of 1.5x | |||||||||
We were in compliance with all of the financial ratios applicable to our Existing Senior Notes as of March 31, 2024 in order for us to be able to incur additional indebtedness.
There are no restrictions on our ability to pay dividends.
Mortgage Debt, Including Unconsolidated Joint Ventures
We have structured our debt profile to maintain a balanced maturity schedule and to minimize the number of assets that are encumbered by mortgage debt. At March 31, 2024, we own one consolidated property that is encumbered by mortgage debt. All of our mortgage debt is recourse solely to specific assets, except in instances of fraud, misapplication of funds and other customary recourse provisions. As of March 31, 2024, our mortgage debt has an interest rate of 4.67% and matures in 2027, with principal and interest payments due monthly. We also own non-controlling interests in joint ventures that are not consolidated and that are accounted for under the equity method. The portion of the mortgage and other debt of these joint ventures attributable to us, based on our ownership percentage thereof, was $238 million at March 31, 2024. The debt of our unconsolidated joint ventures is non-recourse to us.
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DESCRIPTION OF SERIES K SENIOR NOTES
The following description of the terms of the Series K senior notes (referred to in the accompanying prospectus as the “debt securities”) supplements, and to the extent inconsistent, replaces the description of the general terms and provisions of the debt securities set forth in the accompanying prospectus. For purposes of this section, references to “Host L.P.,” “we,” “our,” or “us” refer only to Host Hotels & Resorts, L.P. and its successors in accordance with the terms of the Indenture (as hereinafter defined) and not to our subsidiaries.
We will issue the Series K senior notes pursuant to an indenture, dated as of May 15, 2015, by and between Host Hotels & Resorts, L.P. and The Bank of New York Mellon, as trustee (the “Trustee”), as amended or supplemented from time to time (the “Indenture”). The terms of the Indenture include those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended. The following description is a summary of the material provisions of the Indenture and is not complete. The Indenture has been incorporated by reference as an exhibit to the registration statement, of which this prospectus supplement forms a part. You should read the Indenture for provisions that may be important to you. Capitalized terms used in the summary have the meanings specified in the accompanying prospectus or the Indenture.
Principal, Maturity and Interest
We will initially issue $600 million aggregate principal amount of Series K senior notes. The Indenture will provide that, in addition to the $600 million aggregate principal amount of Series K senior notes being issued on the Series Issue Date, we may also issue additional Series K senior notes having identical terms and conditions to the Series K senior notes offered hereby from time to time after this offering (the “Additional Notes”). Any issuance of Additional Notes is subject to compliance with the terms of the Indenture, including the covenant described below under “—Certain Covenants—Limitation on Incurrence of Indebtedness.” The aggregate principal amount of Series K senior notes and Additional Notes will be unlimited in aggregate principal amount outstanding. Any such Additional Notes would be issued on the same terms as the Series K senior notes, would constitute part of the same series of securities as the Series K senior notes and would vote together as one series on all matters with respect to the Series K senior notes (although they may have a different CUSIP number). All references to the Series K senior notes herein include the Additional Notes, except as stated otherwise.
The Series K senior notes will mature on July 1, 2034. Interest on the Series K senior notes will accrue at the rate of 5.700% per annum and will be payable every six months in arrears on January 1 and July 1, commencing on January 1, 2025. We will make each interest payment to the holders of record of the Series K senior notes on the immediately preceding December 15 and June 15.
Interest on the Series K senior notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The Series K senior notes will be issued only in fully registered form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. Principal of, premium, if any, and interest on the Series K senior notes will be payable at the office or agency maintained by us for such purpose, in the Borough of Manhattan, The City of New York.
Except as provided below under “—Same Day Settlement and Payment,” at our option, payment of interest may be made by check mailed to the holders of any Series K senior notes at the addresses set forth upon our registry books; provided, however, that holders of certificated Series K senior notes will be entitled to receive interest payments (other than at maturity) by wire transfer of immediately available funds, if appropriate wire transfer instructions have been received in writing by the Trustee not less than 15 days prior to the applicable interest payment date. Such wire instructions, upon receipt by the Trustee, will remain in effect until revoked by such holder. No service charge will be made for any registration of transfer or exchange of Series K senior notes, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Until we designate otherwise, our office or agency will be the corporate trust office of the Trustee presently located at 240 Greenwich, New York, New York 10286.
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Optional Redemption
Prior to April 2, 2034 (90 days prior to their maturity date) (the “Par Call Date”), we may redeem the Series K senior notes at our option, at any time in whole or from time to time in part, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:
•100% of the principal amount of the Series K senior notes to be redeemed; and
•(a) the sum of the present values of the remaining scheduled payments of principal and interest on the Series K senior notes to be redeemed, in each case discounted to the redemption date (assuming the Series K senior notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 25 basis points, less (b) interest accrued thereon to the date of redemption,
plus, in either case, accrued and unpaid interest thereon to, but not including, the redemption date.
At any time on or after the Par Call Date, the Series K senior notes will be redeemable as a whole or in part, at any time and from time to time, at our option, at a redemption price equal to 100% of the principal amount of the Series K senior notes to be redeemed plus accrued and unpaid interest on the Series K senior notes to be redeemed to, but not including, the date of redemption.
“Treasury Rate” means, with respect to any redemption date, the yield determined by us in accordance with the following two paragraphs.
The Treasury Rate shall be determined by us after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily)—H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities-Treasury constant maturities-Nominal” (or any successor caption or heading) (“H.15 TCM”). In determining the Treasury Rate, we shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the Par Call Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields—one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life—and shall interpolate to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.
If on the third business day preceding the redemption date H.15 TCM is no longer published, we shall calculate the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the Par Call Date, as applicable. If there is no United States Treasury security maturing on the Par Call Date but there are two or more United States Treasury securities with a maturity date equally distant from the Par Call Date, one with a maturity date preceding the Par Call Date and one with a maturity date following the Par Call Date, we shall select the United States Treasury security with a maturity date preceding the Par Call Date. If there are two or more United States Treasury securities maturing on the Par Call Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, we shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average
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of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of such United States Treasury security, and rounded to three decimal places.
Our actions and determinations in determining the redemption price shall be conclusive and binding for all purposes, absent manifest error.
The calculation or determination of the redemption price shall be made by us or on our behalf by such person as we shall designate. For the avoidance of doubt, the calculation or determination of the redemption price shall not be the obligation or responsibility of the Trustee or paying agent.
Notice of redemption will be mailed or sent electronically pursuant to applicable DTC procedures at least 10 but not more than 60 days before the redemption date to each holder of record of the Series K senior notes to be redeemed at its registered address (with a copy to the Trustee); provided, however, that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a satisfaction and discharge of the Indenture with respect to the Series K senior notes or, in the case of a redemption that is subject to one or more conditions precedent, if the redemption date is extended as described below.
In connection with any redemption of the Series K senior notes, any such redemption may, in our discretion, be subject to one or more conditions precedent. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice shall state that, in our discretion, the redemption date may be delayed beyond such 60-day period until such time as any or all such conditions shall be satisfied (or waived by us in our sole discretion), or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed. In addition, we may provide in such notice that payment of the redemption price and performance of our obligations with respect to such redemption may be performed by another person.
We are not prohibited from acquiring the Series K senior notes offered hereby by means other than a redemption, whether pursuant to an issuer tender offer, in open market transactions, or otherwise, assuming such acquisition does not otherwise violate the terms of the Indenture.
No sinking fund or other mandatory redemption is provided for the Series K senior notes.
Ranking
The Series K senior notes will be senior unsecured obligations, will rank senior to all of our future subordinated indebtedness and will rank equally in right of payment with all of our existing and future senior unsecured indebtedness, including our Credit Facility and the Existing Senior Notes.
The Series K senior notes and the Existing Senior Notes will be effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness, and to the indebtedness of our subsidiaries. For further information on ranking, see “Risk Factors—The Series K senior notes are effectively subordinated to our secured debt and to the liabilities of our subsidiaries” and “Risk Factors—Certain of the covenants applicable to our Series K senior notes will no longer apply at any time that certain of our existing indebtedness is no longer outstanding or does not otherwise contain comparable restrictions; as a result, if and when these covenants no longer apply, under certain circumstances our Series K senior notes may be effectively subordinated to other senior indebtedness of the Company that we may incur and secure in the future and may not have the benefit of certain subsidiary guarantees after our Credit Facility no longer requires such springing guarantees” in this prospectus supplement and “Description of Debt Securities—General” in the accompanying prospectus.
Certain Covenants
The Indenture governing the Series K senior notes contains, among other things, the covenants set forth below.
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Limitation on Incurrence of Indebtedness
Aggregate Debt Test. We will not, and will not cause or permit any of our Subsidiaries to, incur any Indebtedness, including, without limitation, Acquired Indebtedness, if, immediately after giving effect to the incurrence of that Indebtedness and the application of the proceeds therefrom on a pro forma basis, the aggregate principal amount of all of our outstanding Indebtedness and all of the outstanding Indebtedness of our Subsidiaries, determined on a consolidated basis in accordance with GAAP, is greater than 65% of the sum of, without duplication:
•the Total Assets of us and our Subsidiaries as of the last day of the then most recently ended fiscal quarter; and
•the aggregate purchase price of any real estate assets or mortgages receivable acquired, and the aggregate amount of any securities offering proceeds received, to the extent the proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Indebtedness, by us or any of our Subsidiaries since the end of that fiscal quarter, including the proceeds obtained from the incurrence of that additional Indebtedness, determined on a consolidated basis in accordance with GAAP.
Debt Service Test. We will not, and will not cause or permit any of our Subsidiaries to, incur any Indebtedness, including, without limitation, Acquired Indebtedness, if the ratio of Consolidated EBITDA to the Interest Expense for the period consisting of the four consecutive fiscal quarters most recently ended for which financial statements have been filed by Host L.P. with the Securities and Exchange Commission prior to the date on which the additional Indebtedness is to be incurred shall have been less than 1.5:1 on a pro forma basis after giving effect to the incurrence of that Indebtedness and the application of the proceeds therefrom (determined on a consolidated basis in accordance with GAAP), and calculated on the assumption that:
•the Indebtedness and any other Indebtedness, including, without limitation, Acquired Indebtedness, incurred by us or any of our Subsidiaries since the first day of the relevant four-quarter period had been incurred, and the application of the proceeds therefrom, including to repay or retire other Indebtedness, had occurred, on the first day of the period;
•the repayment or retirement of any of our other Indebtedness (other than Indebtedness repaid or retired with the proceeds of any other Indebtedness, which repayment or retirement shall be calculated pursuant to the preceding bullet and not this bullet) or any other Indebtedness of our Subsidiaries since the first day of the relevant four-quarter period had occurred on the first day of the period; and
•in the case of any acquisition or disposition by us or any of our Subsidiaries of any asset or group of assets, in any such case with a fair market value in excess of $1 million, since the first day of the relevant four-quarter period, whether by merger, stock purchase or sale or asset purchase or sale or otherwise, that acquisition or disposition had occurred as of the first day of the period with the appropriate adjustments with respect to the acquisition or disposition being included in the pro forma calculation.
If the Indebtedness giving rise to the need to make the calculation listed above or any other Indebtedness incurred after the first day of the relevant four-quarter period bears interest at a floating rate then, for purposes of calculating the Interest Expense, the interest rate on that Indebtedness shall be computed on a pro forma basis as if the average rate which would have been in effect during the entire relevant four-quarter period had been the applicable rate for the entire period.
Secured Debt Test. We will not, and will not cause or permit any of our Subsidiaries to, incur Secured Indebtedness, if, immediately after giving effect to the incurrence of the Secured Indebtedness and the application of the proceeds from the Secured Indebtedness on a pro forma basis, the aggregate principal amount, determined on a consolidated basis in accordance with GAAP, of all of our outstanding Secured Indebtedness and all outstanding Secured Indebtedness of our Subsidiaries is greater than 40% of the sum of, without duplication:
•the Total Assets of us and our Subsidiaries as of the last day of the then most recently ended fiscal quarter; and
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•the aggregate purchase price of any real estate assets or mortgages receivable acquired, and the aggregate amount of any securities offering proceeds received, to the extent those proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Indebtedness, by us or any of our Subsidiaries since the end of the relevant fiscal quarter, including the proceeds obtained from the incurrence of that additional Indebtedness, determined on a consolidated basis in accordance with GAAP.
Notwithstanding the foregoing, in the event that Indebtedness incurred is Refinancing Indebtedness, then we will not be required to satisfy any of the foregoing tests in order to incur such Refinancing Indebtedness.
Maintenance of Total Unencumbered Assets
We will have at all times Total Unencumbered Assets of not less than 150% of the aggregate principal amount of all of our outstanding Unsecured Debt and the outstanding Unsecured Debt of our Subsidiaries, determined on a consolidated basis in accordance with GAAP.
The calculation of the ratios set forth in the Limitation on Incurrence of Indebtedness covenant and the Maintenance of Total Unencumbered Assets covenant shall be undertaken by us.
Limitation on Liens
Neither we nor any Subsidiary shall secure any Indebtedness under the Credit Facility or the Existing Senior Notes by a Lien or suffer to exist any Lien on their respective properties or assets securing Indebtedness under the Credit Facility or the Existing Senior Notes unless effective provision is made to secure the Series K senior notes equally and ratably with the Lien securing such Indebtedness for so long as Indebtedness under the Credit Facility or the Existing Senior Notes is secured by such Lien; provided that this covenant shall no longer apply upon the earlier of (i) the redemption or repayment of all of the outstanding Existing Senior Notes or (ii) the elimination of this liens covenant from all of the outstanding Existing Senior Notes.
Future Guarantees
Each of our Subsidiaries that guarantees any of our Indebtedness (the “Guaranteed Indebtedness”) in the future will be required to guarantee the Series K senior notes offered hereby; provided that this covenant shall no longer apply upon the elimination of the future guarantees covenant from all of the outstanding Existing Senior Notes (including upon redemption or repayment in full) and from the Credit Facility. To the extent this covenant is applicable, if the Guaranteed Indebtedness is (A) pari passu in right of payment with the Series K senior notes, then the guarantee of such Guaranteed Indebtedness shall be pari passu in right of payment with, or subordinated in right of payment to, the future guarantee of the Series K senior note required hereby or (B) subordinated in right of payment to the Series K senior notes, then the guarantee of such Guaranteed Indebtedness shall be subordinated in right of payment to the future guarantee of the Series K senior notes required hereby at least to the extent that the Guaranteed Indebtedness is subordinated in right of payment to the Series K senior notes. The Series K senior notes offered hereby will not initially be guaranteed by Host Hotels & Resorts, Inc. or any of our direct or indirect subsidiaries.
SEC Reports
To the extent any Series K senior notes are outstanding, we shall deliver to the Trustee and to each holder, within 15 days after we are or would have been required to file such with the Commission, annual and quarterly financial statements substantially equivalent to financial statements that would have been included in reports filed with the Commission if we were subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by our certified independent public accountants, as such would be required in such reports to the Commission, and, in each case, together with a management’s discussion and analysis of financial condition and results of operations which would be so required.
Delivery of reports, information and documents to the Trustee under this covenant is for informational purposes only, and the Trustee’s receipt of the foregoing shall not constitute constructive or actual notice of any information contained therein or determinable from information contained therein, including our compliance with any of the
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covenants hereunder (as to which the Trustee is entitled to rely exclusively on officer’s certificates). All such reports, information or documents referred to in this covenant that we file with the Commission via the Commission’s EDGAR system shall be deemed to be filed with the Trustee and transmitted to holders at the time such reports, information or documents are filed via the EDGAR system (or any successor system).
Notwithstanding the foregoing, to the extent we do not file reports with the Commission’s EDGAR system, we shall make the reports required by this covenant available to the holders of the Series K senior notes, beneficial owners of the Series K senior notes, bona fide prospective investors in the Series K senior notes, bona fide market makers in the Series K senior notes and bona fide securities analysts (to the extent providing analysis of investment in the Series K senior notes) by posting to our website or on a non-public, password-protected website maintained by us or a third party, in each case, within 15 days after the time we would be required to provide such information pursuant to this covenant.
Events of Default
For purposes of the “Events of Default” provision set forth in the accompanying prospectus, the first paragraph will be superseded by the following:
“Event of Default” means with respect to the Series K senior notes, any of the following:
•default in the payment of any interest upon the Series K senior notes when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of the payment is deposited by us with the Trustee or with a paying agent prior to the expiration of the 30-day period);
•default in the payment of principal of the Series K senior notes at its maturity;
•a default in (a) Secured Indebtedness of Host L.P. or any of Host L.P.’s Subsidiaries with an aggregate principal amount in excess of 5% of Total Assets, or (b) other Indebtedness of Host L.P. or any of Host L.P.’s Subsidiaries with an aggregate principal amount in excess of $150 million, in either case, (A) resulting from the failure to pay principal or interest when due (after giving effect to any applicable extensions or grace or cure periods) or (B) as a result of which the maturity of such Indebtedness has been accelerated prior to its final stated maturity;
•default in the performance or breach of any other covenant or warranty by us in the Indenture (other than a covenant or warranty that has been included in the Indenture solely for the benefit of a series of debt securities other than that series), which default continues uncured for a period of 60 days after we receive written notice from the Trustee, or Host L.P. and the Trustee receive written notice from the holders of not less than 25% in principal amount of the outstanding debt securities of that series as provided in the Indenture; or
•certain voluntary or involuntary events of bankruptcy, insolvency or reorganization of Host L.P.
Certain Definitions
Set forth below are certain defined terms used in this prospectus supplement and the supplemental indenture to the Indenture. We refer you to the Indenture and the supplemental indenture to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used in this prospectus supplement for which no definition is provided.
“Acquired Indebtedness” means Indebtedness of a person (1) existing at the time such person is merged or consolidated with or into, or becomes a Subsidiary of us or (2) assumed by us or any of our Subsidiaries in connection with the acquisition of assets from that person; provided that Indebtedness of such person which is redeemed, defeased (including the deposit of funds in a valid trust for the exclusive benefit of holders and the trustee thereof, sufficient to repay such Indebtedness in accordance with its terms), retired or otherwise repaid at the time of or immediately upon consummation of the transactions by which such person is acquired shall not be included as Acquired Indebtedness. Acquired Indebtedness shall be deemed to be incurred on the date the acquired person is
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merged or consolidated with or into, or becomes a Subsidiary of, us or the date of the related acquisition, as the case may be.
“Average Life” means at any date of determination with respect to any debt security, the quotient obtained by dividing (i) the sum of the products of (a) the number of years (calculated to the nearest one-twelfth) from such date of determination to the date of each successive scheduled principal (or redemption) payment of such debt security and (b) the amount of such principal (or redemption) payment by (ii) the sum of all such principal (or redemption) payments.
“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated), including, without limitation, of corporate stock and partnership interests.
“Capitalized Lease” means, as applied to any person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such person as lessee, in conformity with GAAP, is required to be capitalized on the balance sheet of such person.
“Capitalized Lease Obligations” means the discounted present value of the rental obligations under a Capitalized Lease as reflected on the balance sheet of such person in accordance with GAAP.
“Consolidated EBITDA” for any period means our Consolidated Net Income and the Consolidated Net Income of our Subsidiaries for such period, plus amounts which have been deducted and minus amounts which have been added for, without duplication: (1) interest expense on Indebtedness; (2) provision for taxes based on income; (3) amortization of debt discount, premium and deferred financing costs; (4) gains and losses on sales or other dispositions of depreciable properties and other investments; (5) property depreciation and amortization, including any impairment charges; (6) the effect of any non-cash items; and (7) amortization of deferred charges, all determined on a consolidated basis in accordance with GAAP.
“Consolidated Net Income” for any period means the amount of net income, or loss, for us and our Subsidiaries for such period, excluding, without duplication, (1) extraordinary, non-recurring or other unusual items, as determined by us in good faith (including, without limitation, all prepayment penalties and all costs or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed)), (2) the portion of net income for us and our Subsidiaries allocable to non-controlling interests in unconsolidated persons to the extent that cumulative cash dividends or distributions have not actually been received by us or one of our Subsidiaries and (3) the portion of net losses for us and our Subsidiaries allocable to non-controlling interests in unconsolidated persons, all determined on a consolidated basis in accordance with GAAP.
“Credit Facility” means the credit facility established pursuant to the Sixth Amended and Restated Credit Agreement, dated as of January 4, 2023, among the Company, Bank of America, N.A., as Administrative Agent, and other agents and lenders party thereto, together with all other agreements, instruments and documents executed or delivered pursuant thereto or in connection therewith, in each case as such agreements, instruments or documents may be amended, supplemented, extended, renewed, replaced or otherwise modified or restructured from time to time (including by way of adding Subsidiaries of the Company as additional borrowers or guarantors thereof), whether by the same or any other agent, lender or group of lenders (including by means of sales of debt securities).
“Existing Senior Notes” means amounts outstanding from time to time of (i) the 4% Series E senior notes due 2025; (ii) the 4½% Series F senior notes due 2026; (iii) the 3⅜% Series H senior notes due 2029; (iv) the 3½% Series I senior notes due 2030 and (v) the 2.9% Series J senior notes due 2031.
“Indebtedness” means, with respect to any person, any indebtedness of that person, whether or not contingent, in respect of: (1) borrowed money or evidenced by bonds, notes, debentures or similar instruments; (2) indebtedness secured by any Lien on any property or asset owned by such person, but only to the extent of the lesser of: (a) the amount of indebtedness so secured; and (b) the fair market value of the property subject to such Lien; (3) reimbursement obligations, contingent or otherwise, in connection with any letters of credit actually issued and called (other than letters of credit issued to provide credit enhancement or support with respect to other indebtedness of a person or any of its subsidiaries otherwise reflected as Indebtedness hereunder) or amounts representing the
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balance deferred and unpaid of the purchase price of any property except any such balance that constitutes an accrued expense or trade payable; or (4) any lease of property by such person as lessee which is required to be reflected on such person’s balance sheet as a capitalized lease in accordance with GAAP; provided that, in the case of clauses (1) through (3) above, items shall only constitute Indebtedness to the extent that those items (other than letters of credit) would appear as a liability on our consolidated balance sheet in accordance with GAAP. Indebtedness also includes, to the extent not otherwise included, any obligation of that person to be liable for, or to pay, as obligor, guarantor or otherwise, other than for purposes of collection in the ordinary course of business, Indebtedness of the types referred to above of another person (excluding guarantees, indemnities and obligations relating to usual and customary exceptions to non-recourse debt financings, such as environmental indemnities and recourse carve-outs consistent with customary industry practice, as determined by us in good faith, until such time as they become primary obligations of that person, and payments are due and required to be made thereunder), it being understood that Indebtedness shall be deemed to be incurred by such person whenever such person shall create, assume, guarantee or otherwise become liable in respect thereof.
“Interest Expense” means, for any period, our interest expense and the interest expense of our Subsidiaries for such period, including, without duplication, (1) all amortization of debt discount, but excluding the amortization of fees or expenses incurred in order to consummate the sale of debt securities or to establish the Credit Facility, (2) all accrued interest, (3) all capitalized interest, and (4) the interest component of Capitalized Lease Obligations, all determined on a consolidated basis in accordance with GAAP, but excluding debt extinguishment costs and prepayment penalties.
“Lien” means any mortgage, deed of trust, lien, charge, pledge, security interest, security agreement, or other encumbrance of any kind other than a Permitted Lien.
“Permitted Lien” means any of the following: (1) Liens imposed by governmental authorities for taxes, assessments or other charges where nonpayment thereof is not subject to penalty or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on our books in accordance with GAAP; (2) statutory liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or other like Liens arising by operation of law in the ordinary course of business, provided that (a) the underlying obligations are not overdue for a period of more than 30 days, and (b) such Liens are being contested in good faith and by appropriate proceedings and adequate reserves with respect thereto are maintained on our books in accordance with GAAP; (3) Liens securing the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (4) easements, rights-of-way, zoning, similar restrictions and other similar encumbrances or title defects which, singly or in the aggregate, do not in any case materially detract from the value of the property, subject thereto (as such property is used by us or any of our Subsidiaries) or interfere with the ordinary conduct of our business or that of any of our Subsidiaries; (5) Liens arising by operation of law in connection with judgments, only to the extent, for an amount and for a period not resulting in an Event of Default with respect thereto; (6) pledges or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security legislation; and (7) Liens securing on an equal and ratable basis the debt securities and any other Indebtedness.
“Refinancing Indebtedness” means Indebtedness: (i) issued in exchange for, or the proceeds from the issuance and sale of which are used substantially concurrently to repay, redeem, defease, refund, refinance, discharge or otherwise retire for value, in whole or in part; or (ii) constituting an amendment, modification or supplement to, or a deferral or renewal of ((i) and (ii) above are, collectively, a “Refinancing”), any Indebtedness in a principal amount (or accreted value, if applicable) not to exceed: (a) the principal amount (or accreted value, if applicable) of the Indebtedness so refinanced; plus (b) all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith; provided that Refinancing Indebtedness (other than a revolving line of credit from a commercial lender or other Indebtedness whose proceeds are used to repay a revolving line of credit from a commercial lender to the extent such revolving line of credit or other Indebtedness was not put in place for purposes of evading the limitations described in this definition) shall: (w) not have an Average Life shorter than the Indebtedness to be so refinanced at the time of such Refinancing; (x) be subordinated in right of payment to the rights of holders of the Series K senior notes if the Indebtedness to be refinanced was so subordinated; (y) be subordinated or pari passu in right of payment to the rights of holders of the Series K senior notes if the
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Indebtedness to be refinanced was pari passu in right of payment to the rights of holders of the Series K senior notes; and (z) be unsecured if the Indebtedness to be refinanced was unsecured. For the avoidance of doubt, the issuance of a notice of redemption or other prepayment notice after the closing of such Refinancing Indebtedness (with payment made pursuant to terms set forth in such notice) would be deemed to be substantially concurrently for the purposes of this definition.
“Secured Indebtedness” means any Indebtedness, including, without limitation, Acquired Indebtedness, secured by any Lien on any of our property or assets or any of the property or assets of our Subsidiaries, whether owned on the Series Issue Date or thereafter acquired.
“Series Issue Date” means May 10, 2024.
“Subsidiary” means, with respect to any person, at any date, any corporation, limited liability company, partnership, association or other entity (but excluding an individual), the accounts of which would be consolidated with those of such person in such person’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as in effect from time to time.
“Total Assets” means, the sum of, without duplication, Undepreciated Real Estate Assets and all other assets, excluding intangibles, of ours and our Subsidiaries, all determined on a consolidated basis in accordance with GAAP.
“Total Unencumbered Assets” means, the sum of, without duplication, those Undepreciated Real Estate Assets which are not subject to a Lien securing Indebtedness and all other assets, excluding intangibles, of ours and our Subsidiaries not subject to a Lien securing Indebtedness, all determined on a consolidated basis in accordance with GAAP; provided, however, that, in determining Total Unencumbered Assets as a percentage of outstanding Unsecured Debt for purposes of the covenant set forth above in “—Certain Covenants—Limitation on Incurrence of Indebtedness—Maintenance of Total Unencumbered Assets,” all investments by us and our Subsidiaries in unconsolidated joint ventures, unconsolidated limited partnerships, unconsolidated limited liability companies and other unconsolidated entities shall be excluded from Total Unencumbered Assets to the extent that such investments would have otherwise been included.
“Undepreciated Real Estate Assets” means, as of any date, the cost (being the original cost plus capital improvements) of our real estate assets and the real estate assets of our Subsidiaries on such date, before depreciation and amortization and impairments, all determined on a consolidated basis in accordance with GAAP.
“Unsecured Debt” means, Indebtedness of ours or any of our Subsidiaries which is not secured by a Lien on any property or assets of ours or any of our Subsidiaries.
Book-Entry; Delivery; Form and Transfer
The Series K senior notes will be represented by one or more notes in registered, global form without interest coupons (collectively, the “Global Notes”). The Global Notes will be deposited upon issuance with the Trustee as custodian for The Depository Trust Company (“DTC”), in New York, New York, and registered in the name of DTC or its nominee, in each case, for credit to an account of a direct or indirect participant in DTC as described below.
The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its participating organizations, called the “direct participants,” and to facilitate the clearance and settlement of transactions in those securities between direct participants through electronic book-entry changes in accounts of participants. The direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access to DTC’s system is also available to other entities that clear through or maintain a direct or indirect custodial relationship with a direct participant, called the “indirect participants.” DTC may hold
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securities beneficially owned by other persons only through the direct participants or indirect participants and such other person’s ownership interest and transfer of ownership interest will be recorded only on the records of the direct participant and/or indirect participant and not on the records maintained by DTC.
DTC has also advised us that, pursuant to DTC’s procedures, (1) upon issuance of the Global Notes, DTC will credit the accounts of the direct participants with portions of the principal amount of the Global Notes, and (2) DTC will maintain records of the ownership interests of such direct participants in the Global Notes and the transfer of ownership interests by and between direct participants, DTC will not maintain records of the ownership interests of, or the transfer of ownership interest by and between, indirect participants or other owners of beneficial interests in the Global Notes. Direct participants and indirect participants must maintain their own records of the ownership interests of, and the transfer of ownership interests by and between, indirect participants and other owners of beneficial interests in the Global Notes.
Clearstream. Clearstream Banking, société anonyme (“Clearstream”) is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations (“Clearstream Participants”) and facilitates the clearance and settlement of securities transactions between Clearstream Participants through electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates. Clearstream provides Clearstream Participants with, among other things, services for safekeeping, administration, clearance and establishment of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg Monetary Institute. Clearstream Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, and may include the underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream Participant either directly or indirectly.
Distributions with respect to notes held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and procedures to the extent received by DTC for Clearstream.
Euroclear. Euroclear Bank S.A./N.V. (“Euroclear”) was created in 1968 to hold securities for participants of Euroclear (“Euroclear Participants”) and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V. (the “Euroclear Operator”), under contract with Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the “Cooperative”). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is regulated and examined by the Belgian Banking Commission.
Links have been established among DTC, Clearstream and Euroclear to facilitate the initial issuance of the Series K senior notes sold outside of the United States and cross-market transfers of the Series K senior notes associated with secondary market trading.
Although DTC, Clearstream and Euroclear have agreed to the procedures provided below in order to facilitate transfers, they are under no obligation to perform these procedures, and these procedures may be modified or discontinued at any time. Neither we, nor the Trustee nor any of our or their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
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Clearstream and Euroclear will record the ownership interests of their participants in much the same way as DTC, and DTC will record the total ownership of each of the U.S. agents of Clearstream and Euroclear, as participants in DTC. When Series K senior notes are to be transferred from the account of a DTC participant to the account of a Clearstream Participant or a Euroclear Participant, the purchaser must send instructions to Clearstream or Euroclear through a participant at least one day prior to settlement. Clearstream or Euroclear, as the case may be, will instruct its U.S. agent to receive Series K senior notes against payment. After settlement, Clearstream or Euroclear will credit its participant’s account. Credit for the Series K senior notes will appear on the next day (European time).
Because settlement is taking place during New York business hours, DTC participants will be able to employ their usual procedures for sending notes to the relevant U.S. agent acting for the benefit of Clearstream Participants or Euroclear Participants. The sale proceeds will be available to DTC seller on the settlement date. As a result, to a DTC participant, a cross-market transaction will settle no differently than a trade between two DTC participants.
When a Clearstream Participant or Euroclear Participant wishes to transfer Series K senior notes to a DTC participant, the seller will be required to send instructions to Clearstream or Euroclear through a participant at least one business day prior to settlement. In these cases, Clearstream or Euroclear will instruct its U.S. agent to transfer these Series K senior notes against payment for them. The payment will then be reflected in the account of the Clearstream Participant or Euroclear Participant the following day, with the proceeds back valued to the value date, which would be the preceding day, when settlement occurs in New York, if settlement is not completed on the intended value date, that is, the trade fails, proceeds credited to the Clearstream Participant’s or Euroclear Participant’s account will instead be valued as of the actual settlement date.
You should be aware that you will only be able to make and receive deliveries, payments and other communications involving the Series K senior notes through Clearstream and Euroclear on the days when those clearing systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States. In addition, because of time zone differences there may be problems with completing transactions involving Clearstream and Euroclear on the same business day as in the United States.
Except as described below, owners of beneficial interests in the Global Notes will not have notes registered in their names, will not receive physical delivery of Series K senior notes in certificated form and will not be considered the registered owners or holders thereof under the Indenture for any purpose.
Under the terms of the Indenture, we and the Trustee will treat the persons in whose names the Series K senior notes are registered (including Series K senior notes represented by Global Notes) as the owners thereof for the purpose of receiving payments and for any and all other purposes whatsoever. Payments in respect of the principal, premium, liquidated damages, if any, and interest on global notes registered in the name of DTC or its nominee will be payable by the Trustee to DTC or its nominee as the registered holder under the Indenture. Consequently, neither of us or the Trustee nor any agent of ours or the Trustee has or will have any responsibility or liability for (1) any aspect of DTC’s records or any direct participant’s or indirect participant’s records relating to or payments made on account of beneficial ownership interests in the global notes or for maintaining, supervising or reviewing any of DTC’s records or any direct participant’s or indirect participant’s records relating to the beneficial ownership interests in any Global Note or (2) any other matter relating to the actions and practices of DTC or any of its direct participants or indirect participants. Transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.
DTC has advised us that its current payment practice (for payments of principal, interest and the like) with respect to securities such as the Series K senior notes is to credit the accounts of the relevant direct participants with such payment on the payment date in amounts proportionate to such direct participant’s respective ownership interests in the Global Notes as shown on DTC’s records. Payments by direct participants and indirect participants to the beneficial owners of the Series K senior notes will be governed by standing instructions and customary practices between them and will not be the responsibility of DTC, the Trustee or us. Neither of us or the Trustee will be liable for any delay by DTC or its direct participants or indirect participants in identifying the beneficial owners of the
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Series K senior notes, and we and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee as the registered owner of the Series K senior notes for all purposes.
The Global Notes will trade in DTC’s “Same-Day Funds Settlement System” and, therefore, transfers between direct participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in immediately available funds. Transfers between indirect participants who hold an interest through a direct participant will be effected in accordance with the procedures of such direct participant but generally will settle in immediately available funds.
DTC has advised that it will take any action permitted to be taken by a holder of Series K senior notes only at the direction of one or more direct participants to whose account interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the Series K senior notes as to which such direct participant or direct participants has or have given direction. However, if there is an Event of Default under the Series K senior notes, DTC reserves the right to exchange Global Notes (without the direction of one or more of its direct participants) for legended Series K senior notes in certificated form, and to distribute such certificated forms of Series K senior notes to its direct participants. See “—Transfers of Interests in Global Notes for Certificated Notes.”
The information in this section concerning DTC and its book-entry system and Euroclear and Clearstream has been obtained from sources that we believe to be reliable, but we take no responsibility for its accuracy.
Transfers of Interests in Global Notes for Certificated Notes
An entire Global Note may be exchanged for definitive notes in registered, certificated form without interest coupons if (1) DTC (x) notifies us that it is unwilling or unable to continue as Depositary for the Global Notes and we thereupon fail to appoint a successor Depositary within 90 days or (y) has ceased to be a clearing agency registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we thereupon fail to appoint a successor Depositary, (2) we, at our option, notify the Trustee in writing that we elect to cause the issuance of certificated notes or (3) upon the request of the Trustee or holders of a majority of the outstanding principal amount of Series K senior notes, if there shall have occurred and be continuing a Default or an Event of Default with respect to the Series K senior notes. In any such case, we will notify the Trustee in writing that, upon surrender by the direct participants and indirect participants of their interest in such Global Note, certificated notes will be issued to each person that such direct participants and indirect participants and DTC identify as being the beneficial owner of the related Series K senior notes.
Beneficial interests in Global Notes held by any direct participant or indirect participant may be exchanged for certificated notes upon request to DTC, by such direct participant (for itself or on behalf of an indirect participant), and to the Trustee in accordance with customary DTC procedures, certificated notes delivered in exchange for any beneficial interest in any Global Notes will be registered in the names, and issued in any approved denominations, requested by DTC on behalf of such direct participants or indirect participants (in accordance with DTC’s customary procedures).
Neither of us nor the Trustee will be liable for any delay by the holder of any Global Notes or DTC in identifying the beneficial owners of Series K senior notes, and we and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the holder of the Global Note or DTC for all purposes.
Same Day Settlement and Payment
The Indenture requires that payments in respect of the Series K senior notes represented by the Global Notes (including principal, premium, if any, interest and liquidated damages, if any) be made by wire transfer of immediately available same day funds to the accounts specified by the holder of interests in such Global Note. With respect to certificated notes, we will make all payments of principal, premium, if any, interest and liquidated damages, if any, by wire transfer of immediately available same day funds to the accounts specified by the holders thereof or, if no such account is specified, by mailing a check to each such holder’s registered address. The Series K senior notes represented by the Global Notes are expected to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Series K senior notes will, therefore, be required by
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DTC to be settled in immediately available funds. We expect that secondary trading in the certificated notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear Participant or Clearstream Participant purchasing an interest in a Global Note from a direct participant will be credited, and any such crediting will be reported to the relevant Euroclear Participant or Clearstream Participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear Participant or Clearstream Participant to a direct participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain United States federal income tax consequences relevant to the purchase, ownership and disposition of the Series K senior notes issued pursuant to this offering, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or foreign tax laws are not discussed. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a holder of the Series K senior notes. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the purchase, ownership and disposition of the Series K senior notes.
This discussion is limited to holders who hold the Series K senior notes as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). In addition, this discussion is limited to persons purchasing the Series K senior notes for cash at original issue and at their original “issue price” within the meaning of Section 1273 of the Code (i.e., the first price at which a substantial amount of the Series K senior notes is sold to the public for cash). This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to holders subject to special rules, including, without limitation:
•U.S. expatriates and former citizens or long-term residents of the United States;
•persons subject to the alternative minimum tax;
•U.S. Holders (as defined below) whose functional currency is not the U.S. dollar;
•persons holding the Series K senior notes as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
•banks, insurance companies and other financial institutions;
•real estate investment trusts or regulated investment companies;
•brokers, dealers or traders in securities;
•“controlled foreign corporations,” “passive foreign investment companies” and corporations that accumulate earnings to avoid U.S. federal income tax;
•S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
•tax-exempt organizations or governmental organizations;
•persons deemed to sell the Series K senior notes under the constructive sale provisions of the Code; and
•persons subject to special tax accounting rules as a result of any item of gross income with respect to the Series K senior notes being taken into account in an applicable financial statement.
If an entity treated as a partnership for U.S. federal income tax purposes holds the Series K senior notes, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding the Series K senior notes and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
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THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES K SENIOR NOTES ARISING UNDER OTHER U.S. FEDERAL TAX LAWS (INCLUDING ESTATE AND GIFT TAX LAWS), UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
Tax Consequences Applicable to U.S. Holders
Definition of a U.S. Holder
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of a Series K senior note that, for U.S. federal income tax purposes, is or is treated as:
•an individual who is a citizen or resident of the United States;
•a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;
•an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
•a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
Interest
Interest on a Series K senior note generally will be taxable to a U.S. Holder as ordinary income at the time such interest is received or accrued, in accordance with such U.S. Holder’s method of tax accounting for U.S. federal income tax purposes.
Sale or Other Taxable Disposition
A U.S. Holder will recognize gain or loss on the sale, exchange, redemption, retirement or other taxable disposition of a Series K senior note. The amount of such gain or loss will generally equal the difference between the amount received for the Series K senior note in cash or other property valued at fair market value (less amounts attributable to any accrued but unpaid interest, which will be taxable as interest to the extent not previously included in income) and the U.S. Holder’s adjusted tax basis in the Series K senior note. A U.S. Holder’s adjusted tax basis in a Series K senior note generally will be equal to the amount the U.S. Holder paid for the Series K senior note. Any gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder has held the Series K senior note for more than one year at the time of sale or other taxable disposition. Otherwise, such gain or loss will be short-term capital gain or loss. Long-term capital gains recognized by certain non-corporate U.S. Holders, including individuals, generally will be taxable at a reduced rate. The deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding
A U.S. Holder may be subject to information reporting and backup withholding when such holder receives payments on a Series K senior note or receives proceeds from the sale or other taxable disposition of a Series K senior note (including a redemption or retirement of a Series K senior note). Certain U.S. Holders are exempt from backup withholding, including corporations and certain tax-exempt organizations. A U.S. Holder will be subject to backup withholding if such holder is not otherwise exempt and:
•the holder fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number;
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•the holder furnishes an incorrect taxpayer identification number;
•the applicable withholding agent is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or
•the holder fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS. U.S. Holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
Tax Consequences Applicable to Non-U.S. Holders
Definition of a Non-U.S. Holder
For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner of a Series K senior note that is neither a U.S. Holder nor an entity treated as a partnership for U.S. federal income tax purposes.
Interest
Interest paid or accrued on a Series K senior note to a Non-U.S. Holder that is not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States generally will not be subject to U.S. federal income tax or withholding tax, provided that:
•the Non-U.S. Holder does not, actually or constructively, own 10% or more of our capital or profits;
•the Non-U.S. Holder is not a controlled foreign corporation related to us through actual or constructive stock ownership; and
•either (1) the Non-U.S. Holder certifies in a statement provided to the applicable withholding agent under penalties of perjury that it is not a United States person and provides its name and address; (2) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds the Series K senior note on behalf of the Non-U.S. Holder certifies to the applicable withholding agent under penalties of perjury that it, or the financial institution between it and the Non-U.S. Holder, has received from the Non-U.S. Holder a statement under penalties of perjury that such holder is not a United States person and provides a copy of such statement to the applicable withholding agent; or (3) the Non-U.S. Holder holds its note directly through a “qualified intermediary” (within the meaning of applicable Treasury Regulations) and certain conditions are satisfied.
If a non-U.S. Holder does not satisfy the requirements above, interest paid on a Series K senior note will generally be subject to withholding tax of 30% (or such lower rate specified by an applicable income tax treaty). To claim a reduction in or exemption from withholding under an applicable tax treaty, the Non-U.S. Holder must provide the applicable withholding agent with a properly executed IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) claiming a reduction in or exemption from withholding tax under the benefit of an income tax treaty between the United States and the country in which the Non-U.S. Holder resides or is established.
If interest paid to a Non-U.S. Holder is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such interest is attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that interest paid on a Series K senior note is not subject to withholding tax because it is effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States.
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Any such effectively connected interest generally will be subject to U.S. federal income tax at the regular rates applicable to U.S. persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected interest, as adjusted for certain items.
The certifications described above must be provided to the applicable withholding agent prior to the payment of interest and must be updated periodically. Non-U.S. Holders that do not timely provide the applicable withholding agent with the required certification, but that qualify for a reduced rate under an applicable income tax treaty, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.
Sale or Other Taxable Disposition
A Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale, exchange, redemption, retirement or other taxable disposition of a Series K senior note (such amount excludes any amount allocable to accrued and unpaid interest, which generally will be treated as interest and may be subject to the rules discussed above in “—Tax Consequences Applicable to Non-U.S. Holders—Interest”) unless:
•the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable); or
•the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met.
Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates applicable to U.S. persons. A Non-U.S. Holder that is a foreign corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.
Gain described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.
Non-U.S. Holders should consult their tax advisors regarding any applicable income tax treaties that may provide for different rules.
Information Reporting and Backup Withholding
Payments of interest generally will not be subject to backup withholding, provided the applicable withholding agent does not have actual knowledge or reason to know the holder is a United States person and the holder certifies its non-U.S. status as described above under “—Tax Consequences Applicable to Non-U.S. Holders—Interest.” However, information returns are required to be filed with the IRS in connection with any interest paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of a Series K senior note (including a retirement or redemption of the Series K senior note) within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting, if the applicable withholding agent receives the statement described above and does not have actual knowledge or reason to know that such holder is a United States person or the holder otherwise establishes an exemption. Proceeds of a disposition of a Series K senior note paid outside the United States and conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.
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Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Additional Withholding Tax on Payments Made to Foreign Accounts
Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act, or “FATCA”) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on payments of interest on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, a Series K senior note paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of interest on a Series K senior note. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of a Series K senior note, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.
Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in the Series K senior notes.
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UNDERWRITING
J.P. Morgan Securities LLC, BofA Securities, Inc. and Wells Fargo Securities, LLC are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in a firm commitment underwriting agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the principal amount of Series K senior notes set forth opposite its name below at the public offering price less the underwriting discount set forth on the cover page of this prospectus supplement.
Underwriter | Principal Amount of Notes | |||||||
J.P. Morgan Securities LLC | $ | 84,000,000 | ||||||
BofA Securities, Inc. | 84,000,000 | |||||||
Wells Fargo Securities, LLC | 84,000,000 | |||||||
Goldman Sachs & Co. LLC | 48,000,000 | |||||||
Morgan Stanley & Co. LLC | 48,000,000 | |||||||
Scotia Capital (USA) Inc. | 48,000,000 | |||||||
PNC Capital Markets LLC | 36,000,000 | |||||||
Truist Securities, Inc. | 36,000,000 | |||||||
| TD Securities (USA) LLC | 36,000,000 | |||||||
| Credit Agricole Securities (USA) Inc. | 30,000,000 | |||||||
| SMBC Nikko Securities America, Inc. | 30,000,000 | |||||||
| BNY Mellon Capital Markets, LLC | 24,000,000 | |||||||
| Samuel A. Ramirez & Company, Inc. | 12,000,000 | |||||||
Total | $ | 600,000,000 | ||||||
Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the Series K senior notes sold under the underwriting agreement if any of these Series K senior notes are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the underwriting agreement may be terminated. The offering of the Series K senior notes by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
We have agreed to indemnify the several underwriters and their controlling persons against certain liabilities in connection with this offering, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.
The underwriters are offering the Series K senior notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the Series K senior notes, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
The representatives have advised us that the underwriters propose initially to offer the Series K senior notes to the public at the public offering price set forth on the cover page of this prospectus supplement and may offer the Series K senior notes to certain dealers at a price that represents a concession not in excess of 0.40% of the principal amount of the Series K senior notes. The underwriters may allow, and such dealers may re-allow, a concession not in excess of 0.25% of the principal amount of the Series K senior notes to certain other dealers After the initial offering, the public offering price or any other term of the offering may be changed.
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The following table shows the underwriting discount that we are to pay to the underwriters in connection with this offering.
Underwriters | Paid by Host L.P. | |||||||
Per Series K senior note | 0.650 | % | ||||||
Total | $ | 3,900,000 | ||||||
The expenses of the offering, not including the underwriting discount, are estimated at $1,700,000 and are payable by us.
New Issue of Notes
The Series K senior notes are a new issue of securities with no established trading market. We do not intend to apply for listing of the Series K senior notes on any securities exchange or for inclusion of the Series K senior notes on any automated dealer quotation system. We have been advised by the underwriters that they presently intend to make a market in the Series K senior notes after completion of the offering. However, they are under no obligation to do so and may discontinue any market-making activities at any time without any notice. We cannot assure the liquidity of the trading market for the Series K senior notes or that an active public market for the Series K senior notes will develop. If an active public trading market for the Series K senior notes does not develop, the market price and liquidity of the Series K senior notes may be adversely affected. If the Series K senior notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our operating performance and financial condition, general economic conditions and other factors.
Settlement
We expect that delivery of the Series K senior notes will be made to investors on or about May 10, 2024, which will be the third business day following the date of this prospectus supplement (such settlement being referred to as “T+3”). Under Rule 15c6-1 under the Exchange Act, trades in the secondary market are required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Series K senior notes on any date that is more than two business days prior to the date of delivery of the Series K senior notes will be required, by virtue of the fact that the Series K senior notes initially settle in T+3, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the Series K senior notes who wish to trade the Series K senior notes on any date that is more than two business days prior to the date of delivery of the Series K senior notes should consult their advisors.
No Sales of Similar Securities
We have agreed that we will not, from the date of this prospectus supplement through the settlement date, without first obtaining the prior written consent of the representatives, directly or indirectly, offer, sell, contract to sell or otherwise transfer or dispose of any debt securities or any warrants, rights or options to purchase or otherwise acquire debt securities substantially similar to the Series K senior notes, except for the Series K senior notes sold to the underwriters pursuant to the underwriting agreement and commercial paper issued in the ordinary course of business.
Short Positions
In connection with the offering, the underwriters may purchase and sell the Series K senior notes in the open market. These transactions may include short sales and purchases on the open market to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater principal amount of Series K senior notes than they are required to purchase in the offering. The underwriters must close out any short position by purchasing Series K senior notes in the open market. A short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Series K senior notes in the open market after pricing that could adversely affect investors who purchase in the offering.
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Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the Series K senior notes or preventing or slowing a decline in the market price of the Series K senior notes. As a result, the price of the Series K senior notes may be higher than the price that might otherwise exist in the open market.
Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Series K senior notes. In addition, neither we nor any of the underwriters make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
Other Relationships
The underwriters and their respective affiliates are full service financial institutions and have in the past and may in the future engage in various activities, which may include securities trading, investment banking, commercial banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities or other transactions of a financial nature with us or our affiliates, including the provision of advisory services and the making of loans to us and our affiliates, for which they would receive customary fees. In particular, JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities LLC, is a co-syndication agent and a lender, Bank of America, N.A., an affiliate of BofA Securities, Inc., is the administrative agent and a lender, Wells Fargo Bank, N.A., an affiliate of Wells Fargo Securities, LLC, is a co-syndication agent and a lender, Goldman Sachs Bank USA, an affiliate of Goldman, Sachs & Co., is a documentation agent and a lender, Morgan Stanley Senior Funding, Inc., an affiliate of Morgan Stanley & Co. LLC, is a documentation agent and a lender, Morgan Stanley Bank, N.A., an affiliate of Morgan Stanley & Co. LLC, is a lender and the Bank of Nova Scotia, an affiliate of Scotia Capital (USA) Inc., is a documentation agent and a lender under our Credit Facility (as amended to the date of this prospectus supplement). The Bank of New York Mellon, an affiliate of BNY Capital Markets, LLC, acts as trustee under the Indenture for our senior notes and as a documentation agent and a lender under our Credit Facility. Affiliates of the other underwriters may also act as a documentation agent and/or a lender under our Credit Facility.
As a result of the repayment of our outstanding borrowings under the revolver portion of our Credit Facility, as set forth under the heading “Use of Proceeds” in this prospectus supplement, these underwriters or their affiliates will receive a portion of the net proceeds from this offering. In addition, some of the underwriters or their affiliates that have a lending relationship with us routinely hedge, are likely to hedge, or may, in the future, hedge, their credit exposure to us consistent with their customary risk management policies. Typically, these underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the Series K senior notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the Series K senior notes offered hereby.
In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments, including serving as counterparties to certain derivative and hedging arrangements, and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and such investment and securities activities may involve our securities and/or other of our financial instruments. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Selling Restrictions
Notice to Prospective Investors in the European Economic Area
The Series K senior notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these
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purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended, the “Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Series K senior notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Series K senior notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPS Regulation. This prospectus supplement and the accompanying prospectus have been prepared on the basis that any offer of Series K senior notes in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of notes. This prospectus supplement and the accompanying prospectus are not a prospectus for the purposes of the Prospectus Regulation.
The above selling restriction is in addition to any other selling restrictions set forth below.
Notice to Prospective Investors in the United Kingdom
The Series K senior notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (the “UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law in the UK by virtue of the European Union (Withdrawal) Act 2018 (the “EUWA”); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (as amended, the “FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law in the UK by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law in the UK by virtue of the EUWA (as amended, the “UK Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law in the UK by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Series K senior notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Series K senior notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation. This prospectus supplement and the accompanying prospectus have been prepared on the basis that any offer of Series K senior notes in the UK will be made pursuant to an exemption under the UK Prospectus Regulation and the FSMA from the requirement to publish a prospectus for offers of notes. This prospectus supplement and the accompanying prospectus are not a prospectus for the purposes of the UK Prospectus Regulation or the FSMA.
In the UK, this document is for distribution only to persons who: (i) have professional experience in matters relating to investments and who qualify as investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”); (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order; (iii) are outside the UK; or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This document is directed only at relevant persons and must not be acted on or relied on in the UK by persons who are not relevant persons. In the UK, any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.
Notice to Prospective Investors in Switzerland
None of this prospectus supplement, the accompanying prospectus nor any other offering or marketing material relating to the offering, the Company or the Series K senior notes is intended to constitute an offer or solicitation to purchase or invest in the Series K senior notes. The Series K senior notes may not be publicly offered, directly or
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indirectly, in Switzerland within the meaning of the Swiss Financial Services Act (“FinSA”) and no application has or will be made to admit the Series K senior notes to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither this prospectus supplement, the accompanying prospectus nor any other offering or marketing material relating to the offering, the Company or the Series K senior notes constitutes a prospectus pursuant to the FinSA, and neither this prospectus supplement, the accompanying prospectus nor any other offering or marketing material relating to the offering, the Company or the Series K senior notes may be publicly distributed or otherwise made publicly available in Switzerland.
Notice to Prospective Investors in the Dubai International Financial Centre
This prospectus supplement relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no responsibility for the prospectus supplement. The Series K senior notes to which this prospectus supplement relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Series K senior notes offered should conduct their own due diligence on the Series K senior notes. If you do not understand the contents of this prospectus supplement you should consult an authorized financial advisor.
Notice to Prospective Investors in Hong Kong
The Series K senior notes may not be offered or sold in Hong Kong by means of any document other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap.571 of the Laws of Hong Kong) (the “SFO”) and any rules made thereunder or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32 of the Laws of Hong Kong) (the “CO”) or which do not constitute an offer to the public within the meaning of the CO. No advertisement, invitation or document relating to the Series K senior notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Series K senior notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made thereunder.
Notice to Prospective Investors in Singapore
This prospectus supplement and the accompanying prospectus have not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus supplement, the accompanying prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Series K senior notes may not be circulated or distributed, nor may the Series K senior notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than: (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”), an “Institutional Investor”) pursuant to Section 274 of the SFA; (ii) to a relevant person (as defined in Section 275(2) of the SFA, a “Relevant Person”) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA; or (iii) otherwise pursuant to, and in accordance with, the conditions of, any other applicable provision of the SFA.
It is a condition of the offer that where the Series K senior notes are subscribed for or acquired pursuant to an offer made in reliance on Section 275 of the SFA by a Relevant Person which is:
(a)a corporation (which is not an accredited investor (as defined in Section 4A of the SFA, an “Accredited Investor”)), the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an Accredited Investor; or
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(b)a trust (where the trustee is not an Accredited Investor), the sole purpose of which is to hold investments and each beneficiary of the trust is an individual who is an Accredited Investor,
the securities or securities-based derivatives contracts (each as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust, shall not be transferred within six months after that corporation or that trust has subscribed for or acquired the Series K senior notes except:
(1)to an Institutional Investor, an Accredited Investor, a Relevant Person, or which arises from an offer referred to in Section 275(1A) of the SFA (in the case of that corporation) or Section 276(4)(i)(B) of the SFA (in the case of that trust);
(2)where no consideration is or will be given for the transfer;
(3)where the transfer is by operation of law;
(4)as specified in Section 276(7) of the SFA; or
(5)as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.
Singapore SFA Product Classification—In connection with Section 309B of the SFA and the CMP Regulations 2018, unless otherwise specified before an offer of Series K senior notes, we have determined, and hereby notify all relevant persons (as defined in Section 309A(1) of the SFA) that the Series K senior notes are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
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LEGAL MATTERS
Latham & Watkins LLP, Washington, District of Columbia will issue an opinion with respect to the validity of the Series K senior notes offered by this prospectus supplement and the accompanying prospectus for us. Certain legal matters relating to this offering will be passed on for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
EXPERTS
The (i) consolidated financial statements of Host Hotels & Resorts, Inc. as of December 31, 2023 and 2022, and for each of the years in the three-year period ended December 31, 2023, and management’s assessment of the effectiveness of Host Hotels & Resorts, Inc.’s internal control over financial reporting as of December 31, 2023, and (ii) consolidated financial statements of Host Hotels & Resorts, L.P. as of December 31, 2023 and 2022, and for each of the years in the three-year period ended December 31, 2023, have been incorporated by reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
INCORPORATION BY REFERENCE
The SEC’s rules allow us to “incorporate by reference” information into this prospectus supplement, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus supplement, and subsequent information that we file with the SEC prior to the termination of this offering will automatically update and supersede that information. Any statement contained in this prospectus supplement or a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or a subsequently filed document incorporated by reference modifies or replaces that statement. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the future, that are not deemed “filed” with the SEC. We incorporate by reference the documents listed below and any filings made by us with the SEC pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this prospectus supplement and prior to the termination of this offering (in each case, other than information in such documents that is deemed not to be filed):
•the Combined Annual Report of Host Inc. and Host L.P. on Form 10-K for the fiscal year ended December 31, 2023 filed on February 28, 2024 (including information specifically to be incorporated by reference therein from Host Inc.’s Proxy Statement for its 2024 Annual Meeting); and
•the Combined Quarterly Report of Host Inc. and Host L.P. on Form 10-Q for the quarter ended March 31, 2024, filed on May 3, 2024.
The accompanying prospectus is part of a registration statement on Form S-3 we have filed with the SEC under the Securities Act. Neither this prospectus supplement nor the accompanying prospectus contains all of the information in the registration statement. We have omitted certain parts of the registration statement, as permitted by the rules and regulations of the SEC. You may inspect and copy the registration statement, including exhibits, at the SEC’s Public Reference Room or on our website at http://www.hosthotels.com. Information found on, or otherwise accessible through, our website is not incorporated into and should not be deemed a part of this prospectus supplement, the accompanying prospectus or any other report or filing filed with the SEC. Our statements in this prospectus supplement concerning the contents of any contract or other document are not necessarily complete. You should refer to the copy of each contract or other document we have filed as an exhibit to the registration statement for complete information.
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You may request a free copy of any of the documents incorporated by reference in this prospectus by writing or telephoning us at the following address:
HOST HOTELS & RESORTS, INC.
4747 BETHESDA AVE, SUITE 1300
BETHESDA, MARYLAND, 20814
ATTN: SECRETARY
TELEPHONE: (240) 744-1000
Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus supplement or the accompanying prospectus.
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PROSPECTUS
Host Hotels & Resorts, L.P.
$2,000,000,000
Debt Securities
We may offer and sell up to $2,000,000,000 in the aggregate of the securities identified above from time to time in one or more offerings. We will determine when we sell securities, the amounts of securities we will sell and the prices and other terms on which we will sell them. This prospectus provides you with a general description of the securities.
Each time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the offering and the amounts, prices and terms of the securities. The supplement may also add, update or change information contained in this prospectus with respect to that offering. You should carefully read this prospectus and the applicable prospectus supplement before you invest in any of our securities.
We may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters, dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus supplement. See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution” for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms of the offering of such securities.
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE THE “RISK FACTORS” ON PAGE 4 OF THIS PROSPECTUS AND ANY SIMILAR SECTION CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is April 17, 2024.
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the “Commission” or “SEC”), using a “shelf” registration process. By using a shelf registration statement, we may sell securities from time to time and in one or more offerings up to a total dollar amount of $2,000,000,000 as described in this prospectus. Each time that we offer and sell securities, we will provide a prospectus supplement to this prospectus that contains specific information about the securities being offered and sold and the specific terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. The prospectus supplement may also add, update or change information contained in this prospectus with respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement or free writing prospectus, you should rely on the prospectus supplement or free writing prospectus, as applicable. Before purchasing any securities, you should carefully read both this prospectus and the applicable prospectus supplement (and any applicable free writing prospectuses), together with the additional information described under the heading “Where You Can Find More Information; Incorporation by Reference.”
We have not authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus, any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We will not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the applicable prospectus supplement to this prospectus is accurate only as of the date on its respective cover, that the information appearing in any applicable free writing prospectus is accurate only as of the date of that free writing prospectus and that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates. This prospectus incorporates by reference, and any prospectus supplement or free writing prospectus may contain and incorporate by reference, market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not independently verified this information. In addition, the market and industry data and forecasts that may be included or incorporated by reference in this prospectus, any prospectus supplement or any applicable free writing prospectus may involve estimates, assumptions and other risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” contained in this prospectus, the applicable prospectus supplement and any applicable free writing prospectus, and under similar headings in other documents that are incorporated by reference into this prospectus. Accordingly, investors should not place undue reliance on this information.
Unless otherwise specified or the context otherwise requires, references to “Host Inc.” mean Host Hotels & Resorts, Inc. and references to “Host L.P.” mean Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. We use the terms “we,” “our” or “the company” to refer to Host Inc. and Host L.P. together, along with Host L.P.’s consolidated subsidiaries, unless the context indicates otherwise. Host Inc. and Host L.P. file combined periodic reports with the SEC, certain of which are incorporated by reference herein. When we refer to “you,” we mean the potential holders of the applicable series of securities.
This prospectus and the documents incorporated by reference herein contain registered trademarks, service marks and brand names that are the exclusive property of their respective owners, which are companies other than us, including 1 Hotels®, Alila®, Andaz®, Fairmont®, Four Seasons®, Grand Hyatt®, JW Marriott®, Ritz-Carlton®, St. Regis®, The Don Cesar®, The Luxury Collection®, W®, Autograph Collection®, Curio – A Collection by Hilton®, Embassy Suites by Hilton®, Hilton®, Hyatt Regency®, Marriott®, Marriott Marquis®, Sheraton®, Swissôtel®, Tribute Portfolio® and Westin®. None of the owners of these trademarks, service marks or brand names, their affiliates or any of their respective officers, directors, agents or employees, is an issuer or underwriter of the debt securities being offered hereby. In addition, none of such persons has or will have any responsibility or liability for any information contained in this prospectus or the documents incorporated by reference herein.
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WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
Available Information
We file reports and other information with the SEC. The SEC maintains a website that contains reports and information statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov.
Our website address is http://www.hosthotels.com. The information on our website, however, is not, and should not be deemed to be, a part of this prospectus.
This prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Forms of the indenture and other documents establishing the terms of the offered securities are or may be filed as exhibits to the registration statement or documents incorporated by reference in the registration statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant matters. You may inspect a copy of the registration statement through the SEC’s website, as provided above.
Incorporation by Reference
The SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically update and supersede that information. Any statement contained in this prospectus or a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or a subsequently filed document incorporated by reference modifies or replaces that statement.
This prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been filed with the SEC:
•The Combined Annual Report of Host Inc. and Host L.P. on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024.
•The information specifically incorporated by reference into the Combined Annual Report of Host Inc. and Host L.P. on Form 10-K from the Definitive Proxy Statement of Host Inc. on Schedule 14A, filed with the SEC on April 5, 2024.
All reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), prior to the termination of this offering, including all such documents we may file with the SEC after the date of the initial registration statement and prior to the effectiveness of the registration statement, but excluding any information furnished to, rather than filed with, the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from the date of the filing of such reports and documents.
You may request a free copy of any of the documents incorporated by reference in this prospectus by writing or telephoning us at the following address:
HOST HOTELS & RESORTS, INC.
4747 BETHESDA AVE, SUITE 1300
BETHESDA, MARYLAND, 20814
ATTN: SECRETARY
TELEPHONE: (240) 744-1000
Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus or any accompanying prospectus supplement.
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THE COMPANY
Host Hotels & Resorts, L.P. (“Host L.P.”) is a Delaware limited partnership operating through an umbrella partnership structure with Host Hotels & Resorts, Inc., a Maryland corporation (“Host Inc.”), as its sole general partner. Host Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). In addition to being the sole general partner, Host Inc. holds approximately 99% of the partnership interests in Host L.P. as of March 31, 2024.
Host Inc. is the largest publicly traded lodging REIT, with a geographically diverse portfolio of luxury and upper upscale hotels, and conducts its operations through Host L.P. Host Inc. has the exclusive and complete responsibility for Host L.P.’s day-to-day management and control. As of March 31, 2024, our consolidated lodging portfolio consists of 77 primarily luxury and upper-upscale hotels containing approximately 42,000 rooms, with substantially all located in the United States (five of the hotels are located outside of the U.S. in Brazil and Canada). In addition, we own non-controlling interests in seven domestic and one international joint ventures that focus on the lodging industry.
The address of our principal executive office is 4747 Bethesda Ave, Suite 1300, Bethesda, Maryland 20814. Our phone number is (240) 744-1000. Our Internet website address is www.hosthotels.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this prospectus or the accompanying prospectus supplement.
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RISK FACTORS
Investment in any securities offered pursuant to this prospectus and the applicable prospectus supplement involves risks. Before deciding whether to invest in our securities, you should carefully consider the risk factors incorporated by reference in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, and all other information contained or incorporated by reference into this prospectus, as updated by our subsequent filings under the Exchange Act, and the risk factors and other information contained in the applicable prospectus supplement and any applicable free writing prospectus. The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities. For more information, see the section entitled “Where You Can Find More Information” in this prospectus. There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on our future results. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be seriously harmed. This could cause the trading price of our securities to decline, resulting in a loss of all or part of your investment. Please also carefully read the section entitled “Forward Looking Statements” included in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities as set forth in the applicable prospectus supplement.
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DESCRIPTION OF DEBT SECURITIES
The following description, together with the additional information we include in any applicable prospectus supplement or free writing prospectus, summarizes certain general terms and provisions of the debt securities that we may offer under this prospectus. When we offer to sell a particular series of debt securities, we will describe the specific terms of such series in a supplement to this prospectus. We will also indicate in the supplement to what extent the general terms and provisions described in this prospectus apply to a particular series of debt securities.
The debt securities offered under this prospectus may be our senior, senior subordinated or subordinated obligations and, unless otherwise specified in a supplement to this prospectus, the debt securities will be our direct, unsecured obligations and may be issued in one or more series.
The debt securities will be issued pursuant to an indenture dated as of May 15, 2015 between us and The Bank of New York Mellon, as trustee as amended or supplemented from time to time. We have summarized select portions of the indenture below. The summary is not complete. The indenture has been previously filed and is incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part and you should read the indenture for provisions that may be important to you. In the summary below, we have included references to the section numbers of the indenture so that you can easily locate these provisions. Capitalized terms used in the summary and not defined herein have the meanings specified in the indenture.
As used in this section only, “Host L.P.,” “we,” “our” or “us” refer to Host Hotels & Resorts, L.P. and its successors, but excluding our subsidiaries, unless expressly stated or the context otherwise requires.
General
The terms of each series of debt securities will be established by or pursuant to a resolution of our board of directors and set forth or determined in the manner provided in a resolution of our board of directors, in an officer’s certificate or by a supplemental indenture. (Section 2.2) The particular terms of each series of debt securities will be described in a prospectus supplement relating to such series (including any free writing prospectus, pricing supplement or term sheet).
We can issue an unlimited amount of debt securities under the indenture that may be in one or more series with the same or various maturities, at par, at a premium, or at a discount. (Section 2.1) We will set forth in a prospectus supplement (including any pricing supplement or term sheet) relating to any series of debt securities being offered, the aggregate principal amount and the following terms of the debt securities, if applicable:
•the title and ranking of the debt securities (including the terms of any subordination provisions);
•the price or prices (expressed as a percentage of the principal amount) at which we will sell the debt securities;
•any limit on the aggregate principal amount of the debt securities;
•the date or dates on which the principal of the debt securities of the series is payable;
•the rate or rates (which may be fixed or variable) per annum or the method used to determine the rate or rates (including any commodity, commodity index, stock exchange index or financial index) at which the debt securities will bear interest, if any, the date or dates from which interest will accrue, if any, the date or dates on which interest will commence and be payable and any regular record date for the interest payable on any interest payment date;
•the place or places where principal of, and interest, if any, on the debt securities will be payable (and the method of such payment), where the securities of such series may be surrendered for registration of transfer or exchange, and where notices and demands to us in respect of the debt securities may be delivered;
•the period or periods within which, the price or prices at which and the terms and conditions upon which we may redeem the debt securities;
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•any obligation we have to redeem or purchase the debt securities pursuant to any sinking fund or analogous provisions or at the option of a holder of debt securities and the period or periods within which, the price or prices at which and in the terms and conditions upon which debt securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
•the dates, if any, on which and the price or prices at which we will repurchase debt securities at the option of the holders of debt securities and other detailed terms and provisions of these repurchase obligations;
•the denominations in which the debt securities will be issued, if other than denominations of $2,000 and any integral multiple on $1,000 in excess thereof;
•whether the debt securities will be issued in the form of certificated debt securities or global debt securities;
•the portion of principal amount of the debt securities payable upon declaration of acceleration of the maturity date, if other than the principal amount;
•the currency of denomination of the debt securities, which may be United States Dollars or any foreign currency, and if such currency of denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;
•the designation of the currency, currencies or currency units in which payment of principal of, premium and interest on the debt securities will be made;
•if payments of principal of, premium or interest on the debt securities will be made in one or more currencies or currency units other than that or those in which the debt securities are denominated, the manner in which the exchange rate with respect to these payments will be determined;
•the manner in which the amounts of payment of principal of, premium, if any, or interest on the debt securities will be determined, if these amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index;
•any provisions relating to any security provided for the debt securities;
•any addition to, deletion of or change in the Events of Default described in this prospectus or in the indenture with respect to the debt securities and any change in the acceleration provisions described in this prospectus or in the indenture with respect to the debt securities;
•any addition to, deletion of or change in the covenants described in this prospectus or in the indenture with respect to the debt securities;
•any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to the debt securities;
•the provisions, if any, relating to conversion or exchange of any debt securities of such series, including if applicable, the conversion or exchange price and period, provisions as to whether conversion or exchange will be mandatory, the events requiring an adjustment of the conversion or exchange price and provisions affecting conversion or exchange if the debt securities of such series are redeemed;
•any other terms of the debt securities, which may supplement, modify or delete any provision of the indenture as it applies to that series, including any terms that may be required under applicable law or regulations or advisable in connection with the marketing of the debt securities, including with respect to covenants and events of default; and
•whether any of our direct or indirect subsidiaries will guarantee the debt securities of that series, including the terms of subordination, if any, of such guarantees. (Section 2.2)
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We may issue debt securities that provide for an amount less than their stated principal amount to be due and payable upon declaration of acceleration of their maturity pursuant to the terms of the indenture. We will provide you with information on the federal income tax considerations and other special considerations applicable to any of these debt securities in the applicable prospectus supplement.
If we denominate the purchase price of any of the debt securities in a foreign currency or currencies or a foreign currency unit or units, or if the principal of and any premium and interest on any series of debt securities is payable in a foreign currency or currencies or a foreign currency unit or units, we will provide you with information on the restrictions, elections, general tax considerations, specific terms and other information with respect to that issue of debt securities and such foreign currency or currencies or foreign currency unit or units in the applicable prospectus supplement.
Transfer and Exchange
Each debt security will be represented by either one or more global securities registered in the name of The Depository Trust Company (the “Depositary”), or a nominee of the Depositary (we will refer to any debt security represented by a global debt security as a “book-entry debt security”), or a certificate issued in definitive registered form (we will refer to any debt security represented by a certificated security as a “certificated debt security”) as set forth in the applicable prospectus supplement. Except as set forth under the heading “Global Debt Securities and Book-Entry System” below, book-entry debt securities will not be issuable in certificated form.
Certificated Debt Securities. You may transfer or exchange certificated debt securities at any office we maintain for this purpose in accordance with the terms of the indenture. (Section 2.4) No service charge will be made for any transfer or exchange of certificated debt securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with a transfer or exchange. (Section 2.7)
You may effect the transfer of certificated debt securities and the right to receive the principal of, premium and interest on certificated debt securities only by surrendering the certificate representing those certificated debt securities and either reissuance by us or the trustee of the certificate to the new holder or the issuance by us or the trustee of a new certificate to the new holder.
Global Debt Securities and Book-Entry System
Each global debt security representing book-entry debt securities will be deposited with, or on behalf of, the Depositary, and registered in the name of the Depositary or a nominee of the Depositary. Please see “Global Securities.”
Covenants
We will set forth in the applicable prospectus supplement any restrictive covenants applicable to any issue of debt securities. (Article IV)
No Protection in the Event of a Change of Control
Unless we state otherwise in the applicable prospectus supplement, except as described below with respect to the consolidation, merger and sale of our assets, the debt securities will not contain any provisions which may afford holders of the debt securities protection in the event we have a change in control or in the event of a highly leveraged transaction (whether or not such transaction results in a change in control) which could adversely affect holders of debt securities.
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Consolidation, Merger and Sale of Assets
We may not consolidate with or merge with or into another person, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of our properties and assets, in one or more related transactions, to any person (in each case, a “successor person”) unless:
•we are the surviving limited partnership or the successor person (if other than Host L.P.) is an entity organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes our obligations on the debt securities and under the indenture by a supplemental indenture executed and delivered to the trustee; and
•immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing.
Notwithstanding the above, any of our subsidiaries may consolidate with, merge into or transfer all or part of its properties to us. (Section 5.1)
Reports
The indenture provides that whether or not we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, we shall deliver to the Trustee and to each holder, within 15 days after we are or would have been required to file such with the Commission, annual and quarterly financial statements substantially equivalent to financial statements that would have been included in reports filed with the Commission if we were subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by our certified independent public accountants, as such would be required in such reports to the Commission, and, in each case, together with a management’s discussion and analysis of financial condition and results of operations which would be so required. Whether or not required by the rules and regulations of the Commission, we will file a copy of all such information and reports with the Commission for public availability and will make such information available to securities analysts and prospective investors upon request. (Section 4.2)
Events of Default
“Event of Default” means with respect to any series of debt securities, any of the following:
•default in the payment of any interest upon any debt security of that series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of the payment is deposited by us with the trustee or with a paying agent prior to the expiration of the 30-day period);
•default in the payment of principal of any debt security of that series at its maturity;
•default in the performance or breach of any other covenant or warranty by us in the indenture (other than a covenant or warranty that has been included in the indenture solely for the benefit of a series of debt securities other than that series), which default continues uncured for a period of 60 days after we receive written notice from the trustee, or Host L.P. and the trustee receive written notice from the holders of not less than 25% in principal amount of the outstanding debt securities of that series as provided in the indenture;
•certain voluntary or involuntary events of bankruptcy, insolvency or reorganization of Host L.P.;
•any other Event of Default provided with respect to debt securities of that series that is described in the applicable prospectus supplement. (Section 6.1)
No Event of Default with respect to a particular series of debt securities (except as to certain events of bankruptcy, insolvency or reorganization) necessarily constitutes an Event of Default with respect to any other series of debt securities. (Section 6.1) The occurrence of certain Events of Default or an acceleration under the indenture may constitute an event of default under certain indebtedness of ours or our subsidiaries outstanding from time to time.
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We will provide the trustee written notice of any Default or Event of Default within 30 days of becoming aware of the occurrence of such Default or Event of Default, which notice will describe in reasonable detail the status of such Default or Event of Default and what action we are taking or propose to take in respect thereof. (Section 6.1)
If an Event of Default with respect to debt securities of any series at the time outstanding occurs and is continuing, then the trustee or the holders of not less than 25% in principal amount of the outstanding debt securities of that series may, by a notice in writing to us (and to the trustee if given by the holders), declare to be due and payable immediately the principal of (or, if the debt securities of that series are discount securities, that portion of the principal amount as may be specified in the terms of that series) and accrued and unpaid interest, if any, on all debt securities of that series. In the case of an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization, the principal (or such specified amount) of and accrued and unpaid interest, if any, on all outstanding debt securities will become and be immediately due and payable without any declaration or other act on the part of the trustee or any holder of outstanding debt securities. At any time after a declaration of acceleration with respect to debt securities of any series has been made, but before a judgment or decree for payment of the money due has been obtained by the trustee, the holders of a majority in principal amount of the outstanding debt securities of that series may rescind and annul the acceleration and its consequences if all Events of Default, other than the non-payment of accelerated principal and interest, if any, with respect to debt securities of that series, have been cured or waived as provided in the indenture. (Section 6.2) We refer you to the prospectus supplement relating to any series of debt securities that are discount securities for the particular provisions relating to acceleration of a portion of the principal amount of such discount securities upon the occurrence of an Event of Default.
The indenture provides that the trustee may refuse to perform any duty or exercise any of its rights or powers under the indenture unless the trustee receives indemnity satisfactory to it against any cost, liability or expense which might be incurred by it in performing such duty or exercising such right or power. (Section 7.1(e)) Subject to certain rights of the trustee, the holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee with respect to the debt securities of that series. (Section 6.12)
No holder of any debt security of any series will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture or for the appointment of a receiver or trustee, or for any remedy under the indenture, unless:
•that holder has previously given to the trustee written notice of a continuing Event of Default with respect to debt securities of that series; and
•the holders of not less than 25% in principal amount of the outstanding debt securities of that series have made written request, and offered indemnity or security satisfactory to the trustee, to the trustee to institute the proceeding as trustee, and the trustee has not received from the holders of not less than a majority in principal amount of the outstanding debt securities of that series a direction inconsistent with that request and has failed to institute the proceeding within 60 days. (Section 6.7)
Notwithstanding any other provision in the indenture, the holder of any debt security will have an absolute and unconditional right to receive payment of the principal of, premium, if any, and any interest on that debt security on or after the due dates expressed in that debt security and to institute suit for the enforcement of payment. (Section 6.8)
The indenture requires us, within 120 days after the end of our fiscal year, to furnish to the trustee a statement as to compliance with the indenture. (Section 4.3) If a Default or Event of Default occurs and is continuing with respect to the securities of any series and if it is known to a responsible officer of the trustee, the trustee shall deliver to each holder of the debt securities of that series notice of a Default or Event of Default within 90 days after it occurs or, if later, after a responsible officer of the trustee has knowledge of such Default or Event of Default. The indenture provides that the trustee may withhold notice to the holders of debt securities of any series of any Default or Event of Default (except in payment on any debt securities of that series) with respect to debt securities of that series if the
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trustee determines in good faith that withholding notice is in the interest of the holders of those debt securities. (Section 7.5)
Modification and Waiver
We and the trustee may modify, amend or supplement the indenture or the debt securities of any series without the consent of any holder of any debt security:
•to cure any ambiguity, defect or inconsistency;
•to comply with covenants in the indenture described above under the heading “Consolidation, Merger and Sale of Assets”;
•to provide for uncertificated securities in addition to or in place of certificated securities;
•to add guarantees with respect to debt securities of any series or secure debt securities of any series;
•to surrender any of our rights or powers under the indenture;
•to add covenants or events of default for the benefit of the holders of debt securities of any series;
•to comply with the applicable procedures of the applicable depositary;
•to make any change that does not adversely affect the rights of any holder of debt securities;
•to provide for the issuance of and establish the form and terms and conditions of debt securities of any series as permitted by the indenture;
•to effect the appointment of a successor trustee with respect to the debt securities of any series and to add to or change any of the provisions of the indenture to provide for or facilitate administration by more than one trustee;
•to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act; or
•to conform the text to the description of debt securities or description of notes sections of any prospectus or prospectus supplement with respect to the debt securities of any series. (Section 9.1)
We may also modify and amend the indenture with the consent of the holders of at least a majority in principal amount of the outstanding debt securities of each series affected by the modifications or amendments. We may not make any amendment or waiver without the consent of the holders of each affected debt security then outstanding if that amendment will:
•reduce the amount of debt securities whose holders must consent to an amendment, supplement or waiver;
•reduce the rate of or extend the time for payment of interest (including default interest) on any debt security;
•reduce the principal of, or premium on, or change the fixed maturity of any debt security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation with respect to any series of debt securities;
•reduce the principal amount of discount securities payable upon acceleration of maturity;
•waive a default or event of default in the payment of the principal of, premium or interest on any debt security (except a rescission of acceleration of the debt securities of any series by the holders of at least a majority in aggregate principal amount of the then outstanding debt securities of that series and a waiver of the payment default that resulted from such acceleration);
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•make the principal of or premium or interest on any debt security payable in currency other than that stated in the debt security;
•make any change to certain provisions of the indenture relating to, among other things, the right of holders of debt securities to receive payment of the principal of, premium and interest on those debt securities, to institute suit for the enforcement of any such payment and to waivers or amendments; or
•waive a redemption payment with respect to any debt security. (Section 9.3)
Except for certain specified provisions, the holders of at least a majority in principal amount of the outstanding debt securities of any series may on behalf of the holders of all debt securities of that series waive our compliance with provisions of the indenture. (Section 9.2) The holders of a majority in principal amount of the outstanding debt securities of any series may on behalf of the holders of all the debt securities of such series waive any past default under the indenture with respect to that series and its consequences, except a default in the payment of the principal of, premium or any interest on any debt security of that series not yet cured; provided, however, that the holders of a majority in principal amount of the outstanding debt securities of any series may rescind an acceleration and its consequences, including any related payment default that resulted from the acceleration. (Section 6.13)
Defeasance of Debt Securities and Certain Covenants in Certain Circumstances
Legal Defeasance. The indenture provides that, unless otherwise provided by the terms of the applicable series of debt securities, we may be discharged from any and all obligations in respect of the debt securities of any series (subject to certain exceptions). We will be so discharged upon the deposit with the trustee, in trust, of money and/or U.S. government obligations or, in the case of debt securities denominated in a single currency other than U.S. Dollars, government obligations of the government that issued or caused to be issued such currency, that, through the payment of interest and principal in accordance with their terms, will provide money or U.S. government obligations in an amount sufficient in the opinion of a nationally recognized firm of independent public accountants or investment bank to pay and discharge each installment of principal, premium and interest on and any mandatory sinking fund payments in respect of the debt securities of that series on the stated maturity of those payments in accordance with the terms of the indenture and those debt securities.
This discharge may occur only if, among other things, we have delivered to the trustee an opinion of counsel stating that we have received from, or there has been published by, the United States Internal Revenue Service a ruling or, since the date of execution of the indenture, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the holders of the debt securities of that series will not recognize income, gain or loss for United States federal income tax purposes as a result of the deposit, defeasance and discharge and will be subject to United States federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the deposit, defeasance and discharge had not occurred. (Section 8.3)
Defeasance of Certain Covenants. The indenture provides that, unless otherwise provided by the terms of the applicable series of debt securities, upon compliance with certain conditions:
•we may omit to comply with the covenant described under the heading “Consolidation, Merger and Sale of Assets” and certain other covenants set forth in the indenture, as well as any additional covenants which may be set forth in the applicable prospectus supplement; and
•any omission to comply with those covenants will not constitute a Default or an Event of Default with respect to the debt securities of that series (“covenant defeasance”).
The conditions include:
•depositing with the trustee money and/or U.S. government obligations or, in the case of debt securities denominated in a single currency other than U.S. Dollars, government obligations of the government that issued or caused to be issued such currency, that, through the payment of interest and principal in accordance with their terms, will provide money in an amount sufficient in the opinion of a nationally
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recognized firm of independent public accountants or investment bank to pay and discharge each installment of principal of, premium and interest on, and any mandatory sinking fund payments in respect of the debt securities of that series on the stated maturity of those payments in accordance with the terms of the indenture and those debt securities; and
•delivering to the trustee an opinion of counsel to the effect that we have received from, or there has been published by, the United States Internal Revenue Service a ruling or, since the date of execution of the indenture, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the holders of the debt securities of that series will not recognize income, gain or loss for United States federal income tax purposes as a result of the deposit and related covenant defeasance and will be subject to United States federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the deposit and related covenant defeasance had not occurred. (Section 8.4)
No Personal Liability of Partners, Directors, Officers, Employees or Stockholders
No recourse for the payment of the principal of, premium, if any, or interest on the debt securities or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of Host L.P. or any subsidiary that becomes a guarantor of the debt securities, if applicable, in the indenture, or in the debt securities or because of the creation of any debt represented thereby, shall be had against any incorporator, partner, stockholder, officer, director, employee or controlling person of Host L.P. or any subsidiary that becomes a guarantor of the debt securities, if applicable, or of any successor person thereof, except as an obligor or guarantor of the debt securities pursuant to the indenture. Each holder, by accepting the debt securities, waives and releases all such liability. This waiver and release is part of the consideration for the issue of the debt securities. However, this waiver and release may not be effective to waive liabilities under U.S. federal securities laws, and it is the view of the SEC that such waiver is against public policy.
U.S. GAAP for Covenant Calculations
Unless amended by prospectus supplement, “GAAP” shall mean generally accepted accounting principles in the United States as in effect from time to time. Notwithstanding the foregoing, for purposes of determining compliance with any financial covenant or covenant contained herein or in any board resolution, a supplemental indenture or an officer’s certificate for any series of debt securities requiring calculations that are determined with reference to GAAP, such compliance shall be determined in accordance with GAAP as in effect on the date of the indenture; provided, however, (1) all computations made under the indenture (whether or not such computations specifically reference GAAP) relating to the notional amount of indebtedness or interest expense associated with such indebtedness shall be made without giving effect to any generally accepted accounting principles requiring that such indebtedness be marked to market, and the effects of the Accounting Standards Codification of the Financial Accounting Standards Board (“FASB ASC”) 825 and FASB ASC 470-20 on financial liabilities will be disregarded, (2) any generally accepted accounting principles requiring (x) any fair value adjustment that would cause any indebtedness or contracts to be marked to market, including capitalized liabilities based on the fair value of contracts, (y) the recording of convertible debt at fair value and (z) acquisition costs that were capitalized prior to the adoption of FASB ASC 805 to be expensed as incurred shall, in each case, be disregarded and (3) the determination of a Subsidiary with respect to any person shall be based in accordance with GAAP as in effect from time to time. As a result, the value of amounts used in the calculation of our covenants such as interest expense, the recorded value of debt acquired or assumed, and total assets will be different from amounts presented in our financial statements.
Governing Law
The indenture and the debt securities, including any claim or controversy arising out of or relating to the indenture or the securities, will be governed by the laws of the State of New York. (Section 10.10)
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Waiver of Jury Trial
The indenture provides that we, the trustee, the paying agent and the registrar irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to the indenture, the debt securities or the transactions contemplated thereby. (Section 10.18)
Jurisdiction
The indenture provides that we, the trustee, the paying agent and the registrar irrevocably submit to the exclusive general jurisdiction of any New York state court sitting in the Borough of Manhattan in the City of New York or any federal court sitting in the Borough of Manhattan in the City of New York in respect of any suit, action or proceeding arising out of or relating to the indenture and the debt securities, and irrevocably accept the jurisdiction of the aforesaid courts. The indenture will further provide that we, the trustee, the paying agent and the registrar irrevocably waive, to the fullest extent permitted by applicable law, any objection to the laying of the venue of any suit, action or proceeding brought in the courts specified above and irrevocably waive and agree not to plead or claim any such suit, action or proceeding has been brought in an inconvenient forum. (Section 10.19)
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GLOBAL SECURITIES
Book-Entry, Delivery and Form
Unless we indicate differently in any applicable prospectus supplement or free writing prospectus, the securities initially will be issued in book-entry form and represented by one or more global notes or global securities (collectively, the “global securities”). The global securities will be deposited with, or on behalf of, The Depository Trust Company, New York, New York, as depositary (“DTC”), and registered in the name of Cede & Co., the nominee of DTC. Unless and until it is exchanged for individual certificates evidencing securities under the limited circumstances described below, a global security may not be transferred except as a whole by the depositary to its nominee or by the nominee to the depositary, or by the depositary or its nominee to a successor depositary or to a nominee of the successor depositary.
DTC has advised us that it is:
•a limited-purpose trust company organized under the New York Banking Law;
•a “banking organization” within the meaning of the New York Banking Law;
•a member of the Federal Reserve System;
•a “clearing corporation” within the meaning of the New York Uniform Commercial Code; and
•a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among its participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. “Direct participants” in DTC include securities brokers and dealers, including underwriters, banks, trust companies, clearing corporations and other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others, which we sometimes refer to as indirect participants that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.
Purchases of securities under the DTC system must be made by or through direct participants, which will receive a credit for the securities on DTC’s records. The ownership interest of the actual purchaser of a security, which we sometimes refer to as a beneficial owner, is in turn recorded on the direct and indirect participants’ records. Beneficial owners of securities will not receive written confirmation from DTC of their purchases. However, beneficial owners are expected to receive written confirmations providing details of their transactions, as well as periodic statements of their holdings, from the direct or indirect participants through which they purchased securities. Transfers of ownership interests in global securities are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in the global securities, except under the limited circumstances described below.
To facilitate subsequent transfers, all global securities deposited by direct participants with DTC will be registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of securities with DTC and their registration in the name of Cede & Co. or such other nominee will not change the beneficial ownership of the securities. DTC has no knowledge of the actual beneficial owners of the securities. DTC’s records reflect only the identity of the direct participants to whose accounts the securities are credited, which may or may not be the beneficial owners. The participants are responsible for keeping account of their holdings on behalf of their customers.
So long as the securities are in book-entry form, you will receive payments and may transfer securities only through the facilities of the depositary and its direct and indirect participants. We will maintain an office or agency in the location specified in the prospectus supplement for the applicable securities, where notices and demands in
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respect of the securities and the indenture may be delivered to us and where certificated securities may be surrendered for payment, registration of transfer or exchange.
Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any legal requirements in effect from time to time.
Redemption notices will be sent to DTC. If less than all of the securities of a particular series are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each direct participant in the securities of such series to be redeemed.
Neither DTC nor Cede & Co. (or such other DTC nominee) will consent or vote with respect to the securities. Under its usual procedures, DTC will mail an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns the consenting or voting rights of Cede & Co. to those direct participants to whose accounts the securities of such series are credited on the record date, identified in a listing attached to the omnibus proxy.
So long as securities are in book-entry form, we will make payments on those securities to the depositary or its nominee, as the registered owner of such securities, by wire transfer of immediately available funds. If securities are issued in definitive certificated form under the limited circumstances described below and unless otherwise provided in the description of the applicable securities herein or in the applicable prospectus supplement, we will have the option of making payments by check mailed to the addresses of the persons entitled to payment or by wire transfer to bank accounts in the United States designated in writing to the applicable trustee or other designated party at least 15 days before the applicable payment date by the persons entitled to payment, unless a shorter period is satisfactory to the applicable trustee or other designated party.
Redemption proceeds, distributions and dividend payments on the securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit direct participants’ accounts upon DTC’s receipt of funds and corresponding detail information from us on the payment date in accordance with their respective holdings shown on DTC records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the account of customers in bearer form or registered in “street name.” Those payments will be the responsibility of participants and not of DTC or us, subject to any statutory or regulatory requirements in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is our responsibility, disbursement of payments to direct participants is the responsibility of DTC, and disbursement of payments to the beneficial owners is the responsibility of direct and indirect participants.
Except under the limited circumstances described below, purchasers of securities will not be entitled to have securities registered in their names and will not receive physical delivery of securities. Accordingly, each beneficial owner must rely on the procedures of DTC and its participants to exercise any rights under the securities and the indenture.
The laws of some jurisdictions may require that some purchasers of securities take physical delivery of securities in definitive form. Those laws may impair the ability to transfer or pledge beneficial interests in securities.
DTC may discontinue providing its services as securities depositary with respect to the securities at any time by giving reasonable notice to us. Under such circumstances, in the event that a successor depositary is not obtained, securities certificates are required to be printed and delivered.
As noted above, beneficial owners of a particular series of securities generally will not receive certificates representing their ownership interests in those securities. However, if:
•DTC notifies us that it is unwilling or unable to continue as a depositary for the global security or securities representing such series of securities or if DTC ceases to be a clearing agency registered under the Exchange Act at a time when it is required to be registered and a successor depositary is not appointed
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within 90 days of the notification to us or of our becoming aware of DTC’s ceasing to be so registered, as the case may be;
•we determine, in our sole discretion, not to have such securities represented by one or more global securities; or
•an Event of Default has occurred and is continuing with respect to such series of securities,
we will prepare and deliver certificates for such securities in exchange for beneficial interests in the global securities. Any beneficial interest in a global security that is exchangeable under the circumstances described in the preceding sentence will be exchangeable for securities in definitive certificated form registered in the names that the depositary directs. It is expected that these directions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global securities.
Euroclear and Clearstream
If so provided in the applicable prospectus supplement, you may hold interests in a global security through Clearstream Banking S.A., which we refer to as “Clearstream,” or Euroclear Bank S.A./N.V., as operator of the Euroclear System, which we refer to as “Euroclear,” either directly if you are a participant in Clearstream or Euroclear or indirectly through organizations which are participants in Clearstream or Euroclear. Clearstream and Euroclear will hold interests on behalf of their respective participants through customers’ securities accounts in the names of Clearstream and Euroclear, respectively, on the books of their respective U.S. depositaries, which in turn will hold such interests in customers’ securities accounts in such depositaries’ names on DTC’s books.
Clearstream and Euroclear are securities clearance systems in Europe. Clearstream and Euroclear hold securities for their respective participating organizations and facilitate the clearance and settlement of securities transactions between those participants through electronic book-entry changes in their accounts, thereby eliminating the need for physical movement of certificates.
Payments, deliveries, transfers, exchanges, notices and other matters relating to beneficial interests in global securities owned through Euroclear or Clearstream must comply with the rules and procedures of those systems. Transactions between participants in Euroclear or Clearstream, on one hand, and other participants in DTC, on the other hand, are also subject to DTC’s rules and procedures.
Investors will be able to make and receive through Euroclear and Clearstream payments, deliveries, transfers and other transactions involving any beneficial interests in global securities held through those systems only on days when those systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States.
Cross-market transfers between participants in DTC, on the one hand, and participants in Euroclear or Clearstream, on the other hand, will be effected through DTC in accordance with the DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by their respective U.S. depositaries; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (European time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the global securities through DTC, and making or receiving payment in accordance with normal procedures for same-day fund settlement. Participants in Euroclear or Clearstream may not deliver instructions directly to their respective U.S. depositaries.
Due to time zone differences, the securities accounts of a participant in Euroclear or Clearstream purchasing an interest in a global security from a direct participant in DTC will be credited, and any such crediting will be reported to the relevant participant in Euroclear or Clearstream, during the securities settlement processing day (which must be a business day for Euroclear or Clearstream) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream as a result of sales of interests in a global security by or through a participant in Euroclear or Clearstream to a direct participant in DTC will be received with value on the settlement date of DTC but will be
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available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.
Other
The information in this section of this prospectus concerning DTC, Clearstream, Euroclear and their respective book-entry systems has been obtained from sources that we believe to be reliable, but we do not take responsibility for this information. This information has been provided solely as a matter of convenience. The rules and procedures of DTC, Clearstream and Euroclear are solely within the control of those organizations and could change at any time. Neither we nor the trustee nor any agent of ours or of the trustee has any control over those entities and none of us takes any responsibility for their activities. You are urged to contact DTC, Clearstream and Euroclear or their respective participants directly to discuss those matters. In addition, although we expect that DTC, Clearstream and Euroclear will perform the foregoing procedures, none of them is under any obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time. Neither we nor any agent of ours will have any responsibility for the performance or nonperformance by DTC, Clearstream and Euroclear or their respective participants of these or any other rules or procedures governing their respective operations.
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PLAN OF DISTRIBUTION
We may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or a combination of these methods or through underwriters or dealers, through agents and/or directly to one or more purchasers. The securities may be distributed from time to time in one or more transactions:
•at a fixed price or prices, which may be changed;
•at market prices prevailing at the time of sale;
•at prices related to such prevailing market prices; or
•at negotiated prices.
Each time that we sell securities covered by this prospectus, we will provide a prospectus supplement or supplements that will describe the method of distribution and set forth the terms and conditions of the offering of such securities, including the offering price of the securities and the proceeds to us, if applicable.
Offers to purchase the securities being offered by this prospectus may be solicited directly. Agents may also be designated to solicit offers to purchase the securities from time to time. Any agent involved in the offer or sale of our securities will be identified in a prospectus supplement.
If a dealer is utilized in the sale of the securities being offered by this prospectus, the securities will be sold to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale.
If an underwriter is utilized in the sale of the securities being offered by this prospectus, an underwriting agreement will be executed with the underwriter at the time of sale and the name of any underwriter will be provided in the prospectus supplement that the underwriter will use to make resales of the securities to the public. In connection with the sale of the securities, we or the purchasers of securities for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter may sell the securities to or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for which they may act as agent. Unless otherwise indicated in a prospectus supplement, an agent will be acting on a best efforts basis and a dealer will purchase securities as a principal, and may then resell the securities at varying prices to be determined by the dealer.
Any compensation paid to underwriters, dealers or agents in connection with the offering of the securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers will be provided in the applicable prospectus supplement. Underwriters, dealers and agents participating in the distribution of the securities may be deemed to be underwriters within the meaning of the Securities Act, and any discounts and commissions received by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions. We may enter into agreements to indemnify underwriters, dealers and agents against civil liabilities, including liabilities under the Securities Act, or to contribute to payments they may be required to make in respect thereof and to reimburse those persons for certain expenses.
Any securities may or may not be listed on a national securities exchange. To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price of the securities. This may include over-allotments or short sales of the securities, which involve the sale by persons participating in the offering of more securities than were sold to them. In these circumstances, these persons would cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment option, if any. In addition, these persons may stabilize or maintain the price of the securities by bidding for or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to stabilize or
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maintain the market price of the securities at a level above that which might otherwise prevail in the open market. These transactions may be discontinued at any time.
We may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement so indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not identified in this prospectus, will be named in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the securities short using this prospectus and an applicable prospectus supplement. Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent offering of other securities.
The specific terms of any lock-up provisions in respect of any given offering will be described in the applicable prospectus supplement.
The underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business for which they receive compensation.
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LEGAL MATTERS
Latham & Watkins LLP will pass upon certain legal matters relating to the issuance and sale of the securities offered hereby on behalf of Host Hotels & Resorts, L.P. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements of Host Hotels & Resorts, L.P. as of December 31, 2023 and 2022, and for each of the years in the three-year period ended December 31, 2023, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
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$600,000,000
Host Hotels & Resorts, L.P.
5.700% Series K Senior Notes due 2034
PROSPECTUS
SUPPLEMENT
Joint Book-Running Managers
J.P. Morgan
BofA Securities
Wells Fargo Securities
Goldman Sachs & Co. LLC
Morgan Stanley
Scotiabank
Co-Managers
PNC Capital Markets LLC
Truist Securities
TD Securities
Credit Agricole CIB
SMBC Nikko
BNY Mellon Capital Markets, LLC
Ramirez & Co., Inc.
May 7, 2024