Host Marriott Reports Third Quarter Funds From Operations Of $.28 Per Diluted Share
10/18/2001
BETHESDA, Md., Oct. 18 /PRNewswire/ -- Host Marriott Corporation (NYSE: HMT) today reported results of operations for the third quarter ended September 7, 2001, noting that Comparative Funds From Operations ("FFO") was $.28 per diluted share. For the thirty-six weeks ended September 7, 2001, FFO was $1.24 per diluted share. The prior year FFO was $.42 and $1.37 per diluted share for the quarter and year-to-date, respectively. The company also reported that Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization and other non-cash items ("EBITDA") was $190 million for the 2001 third quarter and $732 million year-to-date. EBITDA for the comparable periods in 2000 was $236 million and $749 million for the quarter and year-to-date, respectively. Diluted earnings (loss) per share was $(.06) and $.21 for the third quarter and year-to-date 2001, respectively, versus $(.10) and $(.62) for the prior year periods. RevPAR for comparable properties was down 11.9% for the quarter due to a decline in occupancy of 5.9 percentage points and a decline of nearly five percent in room rate. For the thirty-six weeks RevPAR was down 6.1% with a decline in occupancy of 5 percentage points offset by a slight increase in room rates of 0.3 percent.
Mr. Christopher J. Nassetta, president and chief executive officer, stated, "The results of our third quarter, which ended September 7th, reflected the already weakening economic conditions throughout the country, which were further affected by the terrorist attacks of September 11th. The downturn in the economy and, especially, the travel industry has been dramatic. In the weeks following the attacks we experienced significant declines in occupancy from cancellation of both group and transient business. We have responded by working with our operators to reduce costs in order to lower the breakeven level of operations at our hotels."
Mr. Nassetta continued, "We believe we have seen the worst of the decline and have begun to see a recovery with weekly occupancy rates improving in recent weeks to the mid 60s level, although both room rate and occupancy levels continue to be below prior year levels. Although the timing of a full recovery is unclear, we expect that as the economy strengthens and travel returns, the combination of limited new supply and a reduced cost structure will provide us a foundation for solid future growth."
Hotel sales for the third quarter 2001 were $829 million with $19 million of rental income recognized for hotels still leased to third parties. Total sales for all of the company's hotels were $907 million for the 2001 third quarter versus total sales of $985 million in the same quarter of 2000.
The net loss available to common shareholders for the quarter ended September 7, 2001 was $16 million compared to a net loss available to common shareholders of $22 million for the quarter ended September 8, 2000. For the thirty-six weeks ended September 7, 2001, the net income (loss) available to common shareholders increased to $51 million compared to $(138) million for the thirty-six weeks ended September 8, 2000.
Host Marriott is a lodging real estate company which currently owns or holds controlling interests in 125 upscale and luxury hotel properties primarily operated under premium brands, such as Marriott, Ritz-Carlton, Hyatt, Four Seasons, and Hilton. For further information, please visit the company's website at http://www.hostmarriott.com .
This press release includes various references to Comparative FFO and EBITDA. Comparative FFO represents Funds From Operations, as defined by the National Association of Real Estate Investment Trusts, adjusted for contingent rental revenues and substantial non-recurring items. We consider Comparative FFO and EBITDA to be indicative measures of our operating performance, due to the significance of our long-lived assets and because such data is considered useful by the investment community to better understand our results, and can be used to measure our ability to service debt, fund capital expenditures, and expand our business. However, such information should not be considered as an alternative to net income, operating profit, cash from operations, or any other operating or liquidity performance measure prescribed by accounting principles generally accepted in the United States. Cash expenditures for various long-term assets, interest expense (for EBITDA purposes only) and income taxes that have been, and will be, incurred are not reflected in the Comparative FFO and EBITDA presentations. Although FFO and EBITDA are considered standard benchmarks utilized by the investment community, our Comparative FFO and EBITDA may not be comparable to similarly titled measures reported by other companies.
Certain matters discussed in this press release are forward-looking statements within the meaning of federal securities regulations. All forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual transactions, results, performance or achievements to be materially different from any future transactions, results, performance or achievements expressed or implied by such forward-looking statements. General economic conditions, including the duration and severity of the current downturn as a result of the September 11, 2001 terrorist attack, competition, and governmental actions will affect future transactions, results, performance, and achievements. These risks are presented in detail in our filings with the Securities and Exchange Commission. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that any deviations will not be material. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.
HOST MARRIOTT CORPORATION
Introduction
The following financial data is presented in order to help our investors understand the financial position and operations of the company as of September 7, 2001. The financial data has not been adjusted to reflect the significant changes in the operating environment of the Company and the hospitality industry as a result of the terrorist attacks on September 11th. Since September 11, 2001, the Company has experienced significant declines in occupancy and has begun to have room rate pressure, which has led to decreases in operating profit in most markets. While we believe that lodging demand will gradually return to normal levels, our 2001 fourth quarter and year-to-date results will likely not be comparable to fiscal year 2000. Accordingly, certain operating data including RevPAR, FFO, EBITDA and other financial measures presented herein will not be representative of our full year results. Additionally, our New York Marriott World Trade Center hotel was destroyed, while our New York Marriott Financial Center sustained damage and has been closed while the hotel is repaired. The surrounding area, Ground Zero, has been restricted from public access for an undetermined period of time. The impact of this damage has not been reflected in this financial information.
In this press release we present certain information regarding Comparative FFO and EBITDA (defined below) wherein Host Marriott Corporation ("Host REIT") and Host Marriott, L.P. ("Host LP") are separate entities with distinct reconciling items between them. Throughout this press release you will see references to Host LP, the operating partnership which owns all of our hotels. We own approximately 92% of Host LP as of September 7, 2001. When distinguishing between Host REIT and Host LP, the primary difference is the 8% ownership of Host LP by outside partners, which is reflected as minority interest in our balance sheet and minority interest expense in our income statement. We have included below a brief discussion of these entities and their relationship to one another. Readers are encouraged to find further detail regarding our corporate structure in our annual report on Form 10-K for the fiscal year ended December 31, 2000.
Host REIT operates as a self-managed and self-administered real estate investment trust with operations conducted solely through the operating partnership, Host LP. Partners holding operating partnership units-which we refer to as OP Units-other than Host REIT, have the right to exchange their OP Units for cash, or, at Host REIT's option, shares of Host REIT common stock. For purposes of determining diluted earnings per share, diluted Comparative FFO per share and EBITDA we consider all of the outstanding OP Units not held by Host REIT to have been exchanged for common stock.
Comparative FFO represents Funds From Operations, as defined by the National Association of Real Estate Investment Trusts, adjusted for contingent rental revenues and significant non-recurring items. We consider Comparative FFO and our consolidated earnings before interest expense, income taxes, depreciation, amortization, and other non-cash items (including contingent rental revenue) ("EBITDA") to be indicative measures of our operating performance due to the significance of our long-lived assets, and because such data is considered useful by the investment community to better understand our results, and can be used to measure our ability to service debt, fund capital expenditures and expand our business. However, such information should not be considered as an alternative to net income, operating profit, cash from operations, or any other operating or liquidity performance measure prescribed by accounting principles generally accepted in the United States. Cash expenditures for various long-term assets and income taxes have been, and will be incurred, which are not reflected in the Comparative FFO and EBITDA presentations. In addition, Comparative FFO and EBITDA as presented may not be comparable to amounts calculated by other companies.
HOST MARRIOTT CORPORATION
Consolidated Balance Sheets (a)
(unaudited, in millions)
September 7, December 31,
2001 2000
ASSETS
Property and equipment, net $7,177 $7,110
Notes and other receivables (including amounts
due from affiliates of $9 million and
$164 million, respectively) 56 211
Due from Manager 143 --
Investments in affiliates 147 128
Other assets 432 509
Restricted cash 124 125
Cash and cash equivalents 182 313
$8,261 $8,396
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt
Senior notes $2,782 $2,790
Mortgage debt 2,292 2,275
Other 317 257
5,391 5,322
Accounts payable and accrued expenses 225 381
Other liabilities 303 312
Total liabilities 5,919 6,015
Minority interest 219 485
Company-obligated mandatorily redeemable
convertible preferred securities of a
subsidiary whose sole assets are the
convertible subordinated debentures due
2026 ("Convertible Preferred Securities") 475 475
Shareholders' equity
Cumulative redeemable preferred stock
(liquidation preference $354 million),
50 million shares authorized; 14.2
million shares issued and outstanding 339 196
Common stock, 750 million shares authorized;
262.6 million shares and 221.3 million
shares issued and outstanding, respectively 3 2
Additional paid-in capital 2,059 1,824
Accumulated other comprehensive income (loss) 3 (1)
Retained deficit (756) (600)
Total shareholders' equity 1,648 1,421
$8,261 $8,396
(a) Our consolidated balance sheets have been prepared without audit.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with accounting
principles generally accepted in the United States have been omitted.
The unaudited consolidated balance sheets should be read in
conjunction with the consolidated financial statements and notes
thereto included in the annual report on Form 10-K for the fiscal year
ended December 31, 2000.
HOST MARRIOTT CORPORATION
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Twelve weeks ended
September 7, September 8,
2001 2000
Revenues
Hotel sales
Rooms $528 $--
Food and beverage 234 --
Other 67 --
Total hotel sales 829 --
Rental income (b) 19 227
Total revenues 848 227
Expenses
Hotel operating expenses
Rooms 133 --
Food and beverage 188 --
Hotel departmental costs and deductions 229 --
Management fees and other 37 --
Other property-level expenses 66 66
Depreciation and amortization 87 75
Total hotel operating costs and expenses 740 141
Corporate expenses 7 7
Other expense 3 --
Operating profit 98 79
Minority interest (expense) benefit (b) -- 4
Interest income 5 9
Interest expense (104) (100)
Net gains on property transactions 3 1
Equity in earnings of affiliates (1) 2
Dividends on convertible preferred securities
of subsidiary trust (7) (8)
Loss before income taxes (6) (13)
Provision for income taxes -- (4)
Loss before extraordinary items (6) (17)
Extraordinary loss (1) --
Net loss $(7) $(17)
Less: preferred dividends (9) (5)
Net loss available to common shareholders $(16) $(22)
Basic loss per common share $(.06) $(.10)
Diluted loss per common share $(.06) $(.10)
HOST MARRIOTT CORPORATION
Consolidated Statements of Operations (a)
(unaudited, in millions, except per share amounts)
Thirty-six weeks ended
September 7, September 8,
2001 2000
Revenues
Hotel sales
Rooms $1,638 $--
Food and beverage 782 --
Other 204 --
Total hotel sales 2,624 --
Rental income (b) 81 588
Total revenues 2,705 588
Expenses
Hotel operating expenses
Rooms 389 --
Food and beverage 587 --
Hotel departmental costs and deductions 669 --
Management fees and other 143 --
Other property-level expenses 194 191
Depreciation and amortization 266 224
Total hotel operating costs and expenses 2,248 415
Corporate expenses 24 27
Lease repurchase expense 5 --
Other expense 11 9
Operating profit 417 137
Minority interest (expense) benefit (b) (26) 26
Interest income 25 26
Interest expense (311) (293)
Net gains on property transactions 4 4
Equity in earnings of affiliates 3 5
Dividends on convertible preferred securities
of subsidiary trust (22) (22)
Income (loss) before income taxes 90 (117)
Provision for income taxes (15) (7)
Income (loss) before extraordinary items 75 (124)
Extraordinary loss (1) (3)
Net income (loss) $74 $(127)
Less: preferred dividends (23) (15)
Add: gain on repurchase of
Convertible Preferred Securities -- 4
Net income (loss) available to
common shareholders $51 $(138)
Basic earnings (loss) per common share $.21 $(.62)
Diluted earnings (loss) per common share $.21 $(.62)
(a) Our consolidated statements of operations have been prepared without
audit. Certain information and footnote disclosures normally included
in financial statements presented in accordance with accounting
principles generally accepted in the United States have been omitted.
The unaudited consolidated statements of operations should be read in
conjunction with the consolidated financial statements and notes
thereto included in our annual report on Form 10-K for the year ended
December 31, 2000.
As a result of acquiring certain leases from Crestline Capital
Corporation, effective January 1, 2001, Host LP leases 116 of its
full-service hotels to its taxable REIT subsidiary. Subsequently, we
acquired the leases of four additional hotels, which are included in
our third quarter gross hotel sales and expenses. Therefore, our
consolidated results of operations for the thirty-six weeks ended
September 7, 2001 represent the gross hotel sales and expenses from
our properties rather than rental income from third party lessees that
we previously reported as revenues. No adjustment has been made to
these financial statements to reflect the effect of the terrorist
attack on September 11.
(b) The staff of the Securities & Exchange Commission issued Staff
Accounting Bulletin 101 "Revenue Recognition" (SAB 101) in December
1999. SAB 101 discusses factors to consider in determining when
contingent revenue should be recognized during interim periods. As a
result of the adoption of SAB 101, contingent rental income of $3
million and $75 million, respectively, for the twelve weeks ended, and
$18 million and $366 million, respectively, for the thirty-six weeks
ended September 7, 2001 and September 8, 2000 was deferred because it
is contingent upon achieving annual thresholds of hotel sales. The
deferral of contingent rent also caused a reduction in minority
interest expense, which ultimately resulted in a minority interest
benefit in 2000, reflecting the minority owners' share in the net
loss.
HOST MARRIOTT CORPORATION
Reconciliation of Earnings per Share (a)
(unaudited, in millions, except per share amounts)
Twelve weeks ended September 7, 2001
Income Shares Per Share
(Numerator) (Denominator) Amount
Net loss $(7) 262.5 $(.03)
Dividends on preferred stock (9) -- (.03)
Basic loss available to
common shareholders per share (16) 262.5 (.06)
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- -- --
Assuming conversion of minority
OP Units outstanding (b) (2) 22.1 --
Assuming conversion of preferred
OP Units (c) -- -- --
Assuming conversion of minority
OP Units issuable (c) -- -- --
Assuming conversion of
Convertible Preferred
Securities -- -- --
Diluted loss per share $(18) 284.6 $(.06)
Twelve weeks ended September 8, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Net loss $(17) 220.5 $(.08)
Dividends on preferred stock (5) -- (.02)
Basic loss available to
common shareholders per share (22) 220.5 (.10)
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- -- --
Assuming conversion of minority
OP Units outstanding (b) (5) 63.3 --
Assuming conversion of preferred
OP Units (c) -- 0.6 --
Assuming conversion of minority
OP Units issuable (c) -- -- --
Assuming conversion of
Convertible Preferred
Securities -- -- --
Diluted loss per share $(27) 284.4 $(.10)
Thirty-six weeks ended September 7, 2001
Income Shares Per Share
(Numerator) (Denominator) Amount
Net income (loss) $74 244.3 $.30
Dividends on preferred stock (23) -- (.09)
Gain on repurchase of
Convertible Preferred Securities -- -- --
Basic earnings (loss) available
to common shareholders per share 51 244.3 .21
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 4.2 --
Assuming conversion of minority
OP Units outstanding (b) 8 39.8 --
Assuming conversion of preferred
OP Units (c) -- -- --
Assuming conversion of minority
OP Units issuable (c) -- -- --
Assuming conversion of
Convertible Preferred
Securities -- -- --
Diluted earnings (loss) per share $59 288.3 $.21
Thirty-six weeks ended September 8, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Net income (loss) $(127) 220.7 $(.57)
Dividends on preferred stock (15) -- (.07)
Gain on repurchase of
Convertible Preferred Securities 4 -- .02
Basic earnings (loss) available
to common shareholders per share (138) 220.7 (.62)
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- -- --
Assuming conversion of minority
OP Units outstanding (b) (38) 63.5 --
Assuming conversion of preferred
OP Units (c) -- 0.6 --
Assuming conversion of minority
OP Units issuable (c) -- -- --
Assuming conversion of
Convertible Preferred
Securities -- -- --
Diluted earnings (loss)
per share $(176) 284.8 $(.62)
(a) Basic earnings per common share is computed by dividing net income
(loss) adjusted for dividends on preferred stock and gain on
repurchases of Convertible Preferred Securities by the weighted
average number of shares of common stock outstanding. Diluted
earnings per share is computed by dividing net income (loss) adjusted
for dividends on preferred stock, gain on repurchases of Convertible
Preferred Securities, and potentially dilutive securities, by the
weighted average number of shares of common stock outstanding plus
other potentially dilutive securities. Dilutive securities may
include shares granted under comprehensive stock plans and the
Convertible Preferred Securities. Dilutive securities also include
those common and preferred OP Units issuable or outstanding that are
held by minority partners which are assumed to be converted.
(b) In connection with the conversion to a REIT, we formed Host LP, whose
OP Units are convertible to common stock, or cash at the option of
Host REIT, based on certain conditions, including the passage of time.
(c) Includes those minority partners that have the option to convert their
limited partnership interest or preferred OP Units to common OP Units.
HOST MARRIOTT CORPORATION
COMPARATIVE FUNDS FROM OPERATIONS
(unaudited, in millions, except per share amounts)
Twelve weeks ended Thirty-six weeks ended
September 7, September 8, September 7, September 8,
2001 2000 2001 2000
Funds from Operations
Income (loss) before
extraordinary items $(6) $(17) $75 $(124)
Depreciation and
amortization 86 74 262 220
Other real estate
activities (1) (1) -- (2)
Partnership adjustments 3 2 35 (26)
Funds from operations
of Host LP 82 58 372 68
Effect on funds from
operations of SAB 101 (a) 3 75 18 366
Effective impact of
lease repurchase (e) 5 -- 8 --
Comparative funds from
operations of Host LP 90 133 398 434
Dividends on preferred
stock (9) (5) (23) (15)
Comparative funds from
operations of Host LP
available to common
unitholders 81 128 375 419
Comparative funds from
operations of minority
partners of Host LP (b) (6) (29) (53) (95)
Comparative funds from
operations available to
common shareholders of
Host REIT $75 $99 $322 $324
Comparative funds from
operations of Host REIT
per basic common
share (c) $0.28 $0.45 $1.32 $1.47
Comparative funds from
operations of Host REIT
per diluted common
share (d) $0.28 $0.42 $1.24 $1.37
(a) Results are adjusted to include contingent rent which is deferred
under SAB 101. This adjustment reflects revenues based on payment
amounts calculated under our hotel leases.
(b) Host REIT holds approximately 92% and 78% of the outstanding OP Units
of Host LP at September 7, 2001 and September 8, 2000, respectively.
Comparative funds from operations of minority partners of Host LP
represent the Comparative FFO attributable to the interests in Host LP
held by the minority partners. For additional detail regarding the
operating structure and OP Units, investors should read our annual
report on Form 10-K for the fiscal year ended December 31, 2000.
(c) Comparative FFO per basic share is computed by dividing comparative
funds from operations available to common shareholders by the weighted
average number of shares of common stock outstanding.
(d) Diluted shares include a provision for the assumed conversion of the
minority limited partners' interest and preferred OP Units in Host LP
to our common shares. Additionally, the calculation includes shares
from the assumed conversion of those minority partners of subsidiary
partnerships of Host LP that have the option to convert their limited
partnership interests to OP units and a corresponding conversion of
those OP Units to common stock. Should the conversions of these
minority interests occur, we would then receive the additional cash
flow and the equity value from the acquired limited partnership
interests.
(e) The thirty-six weeks ended September 7, 2001 results have been
adjusted to reflect the non-recurring loss of $5 million and the
related $2 million benefit for income taxes associated with the
repurchase of an additional lease. Additionally, as the amortization
of the tax benefit related to the lease repurchases in December 2000
effectively reduces the current taxes paid, the twelve and thirty-six
weeks ended September 7, 2001 results are adjusted to include the
amortization of the tax benefit related to the lease repurchase.
HOST MARRIOTT CORPORATION
RECONCILIATION OF COMPARATIVE FUNDS FROM OPERATIONS ON A PER SHARE BASIS (a)
(unaudited, in millions, except per share basis)
Twelve weeks ended September 7, 2001
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds from
Operations available to
common shareholders $75 262.5 $0.28
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 3.6 --
Assuming conversion of minority
OP Units outstanding (b) 6 22.1 --
Assuming conversion of preferred
OP Units (c) -- -- --
Assuming conversion of minority
OP units issuable (c) -- -- --
Assuming conversion of
Convertible Preferred
Securities 7 30.9 --
Diluted Comparative Funds
from Operations $88 319.1 $0.28
Twelve weeks ended September 8, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds from
Operations available to
common shareholders $99 220.5 $0.45
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 4.3 (.01)
Assuming conversion of minority
OP Units outstanding (b) 29 63.3 --
Assuming conversion of preferred
OP Units (c) -- 0.6 --
Assuming conversion of minority
OP units issuable (c) 4 9.4 --
Assuming conversion of
Convertible Preferred
Securities 7 31.1 (.02)
Diluted Comparative Funds
from Operations $139 329.2 $0.42
Thirty-six weeks ended September 7, 2001
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds from
Operations available to
common shareholders $322 244.3 $1.32
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 4.2 (.02)
Assuming conversion of minority
OP Units outstanding (b) 53 39.8 --
Assuming conversion of preferred
OP Units (c) -- -- --
Assuming conversion of minority
OP Units issuable (c) 10 7.9 --
Assuming conversion of
Convertible Preferred
Securities 22 30.9 (.06)
Diluted Comparative Funds
from Operations $407 327.1 $1.24
Thirty-six weeks ended September 8, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds from
Operations available to
common shareholders $324 220.7 $1.47
Assuming distribution of
common shares granted under
the comprehensive stock plan,
less shares assumed purchased
at average market price -- 4.3 (.03)
Assuming conversion of minority
OP Units outstanding (b) 95 63.5 --
Assuming conversion of preferred
OP Units (c) -- 0.6 --
Assuming conversion of minority
OP Units issuable (c) 12 9.4 (.01)
Assuming conversion of
Convertible Preferred
Securities 21 31.1 (.06)
Diluted Comparative Funds
from Operations $452 329.6 $1.37
(a) Comparative FFO per basic share is computed by dividing Comparative
FFO available to common shareholders by the weighted average number of
shares of common stock outstanding. Comparative FFO per diluted share
is computed by dividing Comparative FFO available to common
shareholders, as adjusted for potentially dilutive securities, by the
weighted average number of shares of common stock outstanding plus
other potentially dilutive securities. Dilutive securities may
include shares granted under comprehensive stock plans and the
Convertible Preferred Securities. Dilutive securities also includes
those common and preferred OP Units issuable or outstanding that are
held by minority partners which are assumed to be converted.
(b) In connection with our conversion to a REIT, we formed Host LP, whose
OP Units are convertible to common stock, or cash, at the option of
Host REIT, based on certain conditions, including the passage of time.
(c) Includes those minority partners that have the option to convert their
limited partnership interest or preferred OP Units to common OP Units.
Whether any of these actually occur depends on a number of conditions,
including, in some cases, the passage of time.
HOST MARRIOTT CORPORATION
EBITDA
(unaudited, in millions)
Twelve weeks ended Thirty-six weeks ended
September 7, September 8, September 7, September 8,
2001 2000 2001 2000
EBITDA
Hotels $192 $157 $718 $390
Office buildings and
other investments 2 2 11 5
Interest income 5 9 25 26
Corporate and other
expenses (12) (7) (40) (38)
Effect on revenue
of SAB 101 3 75 18 366
EBITDA of Host LP 190 236 732 749
Distributions to minority
interest partners of
Host LP (a) (5) (13) (35) (40)
EBITDA of Host REIT $185 $223 $697 $709
Twelve weeks ended Thirty-six weeks ended
September 7, September 8, September 7, September 8,
2001 2000 2001 2000
EBITDA $185 $223 $697 $709
Effect on revenue
of SAB 101 (3) (75) (18) (366)
Interest expense (104) (100) (311) (293)
Dividends on Convertible
Preferred Securities (7) (8) (22) (22)
Depreciation and
amortization (87) (75) (266) (224)
Minority interest
(expense) benefit -- 4 (26) 26
Income taxes -- (4) (15) (7)
Distributions to minority
interest partners of
Host Marriott, L.P. 5 13 35 40
Lease repurchase expense -- -- (5) --
Other non-cash changes,
net 5 5 6 13
Income (loss) from
operations before
extraordinary items $(6) $(17) $75 $(124)
(a) Host REIT holds approximately 92% and 78% of the outstanding OP Units
of Host LP at September 7, 2001 and September 8, 2000, respectively.
The distributions to minority interest partners of Host LP reflect
distributions to minority holders of OP Units and holders of certain
preferred OP Units. These units are convertible into cash or common
stock of Host REIT at Host REIT's option. Quarterly distributions of
$0.26 per OP Unit were declared on March 19, 2001, June 18, 2001 and
September 19, 2001. Quarterly distributions of $0.21 per OP Unit were
declared on March 23, 2000 and June 21, 2000 and $0.23 per OP Unit
were declared on September 19, 2000.
HOST MARRIOTT CORPORATION
EBITDA to Funds From Operations Reconciliation
(unaudited, in millions)
Twelve weeks ended Thirty-six weeks ended
September 7, September 8, September 7, September 8,
2001 2000 2001 2000
EBITDA of Host REIT $185 $223 $697 $709
Interest expense (104) (100) (311) (293)
Dividends on convertible
preferred securities (7) (8) (22) (22)
Dividends on preferred
stock (9) (5) (23) (15)
Income tax expense -- (4) (15) (7)
Distributions to minority
interest partners of
Host LP (a) 5 13 35 40
Partnership adjustments
and other 11 9 14 7
Comparative Funds From
Operations of Host LP
available to common
unitholders 81 128 375 419
Comparative Funds From
Operations of minority
partners of Host LP (b) (6) (29) (53) (95)
Comparative Funds From
Operations available
to common shareholders
of Host REIT $75 $99 $322 $324
(a) Host REIT holds approximately 92% and 78% of the outstanding OP Units
of Host LP at September 7, 2001 and September 8, 2000, respectively.
The distributions to minority interest partners of Host LP reflect
distributions to minority holders of OP Units and holders of certain
preferred OP Units. These units are convertible into cash or common
stock of Host REIT at Host REIT's option.
(b) Comparative funds from operations of minority partners of Host LP
represent the Comparative FFO attributable to the interests in Host LP
held by the minority partners. For additional detail regarding the
operating structure and OP Units, investors should read our annual
report on Form 10-K for the fiscal year ended December 31, 2000.
HOST MARRIOTT CORPORATION
Other Financial Data (a)
(unaudited, in millions, except per share and ratio data)
September 7, December 31,
2001 2000
Capitalization
Diluted common shares outstanding, excluding
Convertible Preferred Securities (b) 297 297
Security pricing:
Share price-common (c) $12.15 $12.94
Share price-Class A Preferred stock (c) $26.75 $25.50
Share price-Class B Preferred stock (c) $26.98 $24.44
Share price-Class C Preferred stock (c) $26.30 $--
Share price-Convertible Preferred
Securities (c) $39.94 $43.66
Total enterprise value (d) $9,753 $9,462
Equity
Common shares outstanding 262.6 221.3
Common OP Units outstanding 284.7 284.9
Preferred OP Units outstanding .02 .02
Class A Preferred shares outstanding 4.2 4.2
Class B Preferred shares outstanding 4.0 4.0
Class C Preferred shares outstanding 6.0 --
Dividends (per share)
Common (e) $.78 $.91
Common dividend yield (f) n/a 8%
Comparative FFO payout ratio (Common
dividends/Comparative FFO) (g) 59% 42%
Class A Preferred (h) $1.88 $2.50
Class B Preferred (h) $1.88 $2.50
Class C Preferred (h) $1.28 $--
Debt
Percentage fixed rate (i) 96% 95%
Weighted average rate 8% 8.2%
Weighted average maturity 6.3 years 7.0 years
Line of Credit, available balance (j) $565 $625
Line of Credit, outstanding balance (j) $210 $150
Financial Ratios
Interest coverage ratio (EBITDA/cash interest
expense) (k) (l) 2.4x 2.6x
Ratio of Earnings to Fixed Charges 1.3x 1.2x
Debt service coverage ratio (EBITDA/
(interest + principal payments)) (k) 2.1x 2.4x
Debt as a percentage of total enterprise value 55% 56%
(a) Due to the significant impact of the terrorist attacks of September
11th on our operations and our stock price subsequent to the balance
sheet date, the financial data reported here, which is based on
historical information, may be significantly affected.
(b) Includes the number of shares of common stock outstanding plus shares
granted under comprehensive stock plans and those common and preferred
OP Units issuable or outstanding that are held by minority partners
which potentially could be converted. Excludes potential shares of
30.9 million and 31.0 million in 2001 and 2000, respectively, from the
potential conversion of Convertible Preferred Securities.
(c) Share prices are the closing price on the balance sheet date, as
reported by the New York Stock Exchange for the common and preferred
stock. The shares of Convertible Preferred Securities are not traded
on an exchange. The per share price is the higher of the buy or sell
price as provided by the trading desk for Goldman Sachs in New York,
New York.
(d) Total enterprise value is calculated as the fair value of our debt,
plus outstanding shares of our preferred stock, diluted common shares
outstanding excluding Convertible Preferred Securities as computed in
footnote (b), and the Convertible Preferred Securities multiplied by
the closing stock prices on the balance sheet date. Total enterprise
value is based on a market price as of the balance sheet date and
should not be deemed to represent the fair market value of the
company.
(e) On March 19, 2001, June 18, 2001 and September 19, 2001, we declared
quarterly dividends of $.26 per share. We declared total dividends of
$.91 per share in 2000 which reflects an increase in the quarterly
dividend per share during the third quarter to $.23 per share from
$.21 per share in the first two quarters, and a further increase to
$.26 per share for the fourth quarter. The responsibility to declare
dividends is the sole responsibility of our board of directors.
(f) The dividend yield ratio for 2000 is calculated using the fourth
quarter dividend to common shareholders of $.26 per share, annualized,
divided by the closing stock price for common shares as of December
31, 2000.
(g) The Comparative FFO payout ratio has been calculated using year-to-
date Comparative FFO available to common shareholders, per basic
share. The ratio would have been 48% for year end 2000, if it had
been computed based on the fourth quarter 2000 dividend of $.26,
annualized.
(h) 2001 and 2000 dividends reflect quarterly cash dividends of $.625 per
share, or an annual dividend of $2.50 per share, for both Class A and
Class B Preferred Stock. 2001 dividends reflect the pro rata dividend,
based on the stated rate of 10% per annum on a liquidation value of
$25 per share for the Class C Preferred Stock, from the date of
issuance. On an annualized basis, the Class C Preferred Stock will
earn $2.50 per share.
(i) On September 18th, we borrowed an additional $250 million under the
revolver portion of our bank credit facility. This draw on the
revolver, which is a variable rate loan based on LIBOR, affects the
percentage of fixed rate debt by decreasing it from 96% to 92%.
(j) In June 2000, we renegotiated our bank credit facility, which allowed
us to obtain more favorable terms. As modified, the total line has
been permanently reduced from $1.025 billion to $775 million,
consisting of a $150 million term loan and a $625 million revolver.
In addition, the original term was extended for two additional years,
through August 2003. On June 28, 2001 and September 18, 2001, we
borrowed an additional $60 million and $250 million, respectively,
under the revolver portion of the loan, reducing the available
capacity under the line of credit to $315 million.
(k) These coverage ratios have been calculated using EBITDA of Host LP.
These ratios are intended to provide an investor with an understanding
of our ability to make interest and principal payments on our current
debt structure. The financial ratios are not calculated in the same
manner as required by the indentures for the senior notes and the line
of credit. Calculation of these ratios consistent with those
indentures would require, among other items, presentation of certain
pro forma financial information which has not been provided.
(l) Cash interest is calculated as interest expense under accounting
principles generally accepted in the United States, less amortization
of deferred costs and other non-cash interest expense, plus
capitalized interest.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Property Statistics (a)
(unaudited)
Comparable by Region
As of September 7, 2001 Twelve weeks ended
September 7, 2001
Average
No. of No. of Average Occupancy
Properties(b) Rooms Daily Rate Percentages REVPAR(c)
Atlanta 15 6,547 $144.88 65.6% $95.04
DC Metro 13 4,995 143.26 72.7 104.21
Florida 11 4,878 128.59 70.9 91.19
International 4 1,636 105.40 78.6 82.84
Mid-Atlantic 10 6,623 176.47 80.8 142.57
Mountain 8 3,310 93.55 69.6 65.09
New England 6 2,279 146.91 73.2 107.56
North Central 15 5,390 132.47 74.9 99.25
Pacific 23 11,812 152.22 74.7 113.65
South Central 12 6,514 115.91 76.8 88.96
All Regions 117 53,984 140.17 73.8 103.45
Twelve weeks ended September 8, 2000
Average Percent
Average Occupancy Change in
Daily Rate Percentages REVPAR(c) REVPAR
Atlanta $143.75 72.5% $104.19 (8.8)%
DC Metro 149.49 79.0 118.13 (11.8)
Florida 122.40 73.1 89.45 1.9
International 110.85 82.7 91.65 (9.6)
Mid-Atlantic 192.89 82.3 158.79 (10.2)
Mountain 98.01 76.3 74.78 (13.0)
New England 162.31 83.9 136.19 (21.0)
North Central 140.08 82.2 115.08 (13.8)
Pacific 165.82 84.5 140.10 (18.9)
South Central 117.01 78.6 91.95 (3.3)
All Regions 147.41 79.7 117.45 (11.9)
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Property Statistics (a) (cont.)
(unaudited)
Comparable by Region
As of September 7, 2001 Thirty-six weeks ended
September 7, 2001
Average
No. of No. of Average Occupancy
Properties(b) Rooms Daily Rate Percentages REVPAR(c)
Atlanta 15 6,547 $153.84 69.5% $106.89
DC Metro 13 4,995 153.98 71.1 109.54
Florida 11 4,878 169.26 77.1 130.45
International 4 1,636 104.09 75.1 78.17
Mid-Atlantic 10 6,623 186.06 79.2 147.27
Mountain 8 3,310 111.38 71.1 79.24
New England 6 2,279 147.60 69.0 101.90
North Central 15 5,390 133.09 70.2 93.43
Pacific 23 11,812 168.77 74.6 125.84
South Central 12 6,514 134.44 78.4 105.37
All Regions 117 53,984 154.05 74.0 114.02
Thirty-six weeks ended September 8, 2000
Average Percent
Average Occupancy Change in
Daily Rate Percentages REVPAR(c) REVPAR
Atlanta $150.81 74.3% $111.97 (4.5)%
DC Metro 148.84 77.7 115.66 (5.3)
Florida 159.11 79.4 126.38 3.2
International 107.78 75.2 81.00 (3.5)
Mid-Atlantic 195.04 81.2 158.33 (7.0)
Mountain 114.35 75.6 86.41 (8.3)
New England 153.21 78.5 120.19 (15.2)
North Central 133.39 76.8 102.49 (8.8)
Pacific 168.11 82.9 139.42 (9.7)
South Central 131.94 80.0 105.53 (0.2)
All Regions 153.61 79.0 121.38 (6.1)
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Property Statistics (a) (cont.)
(unaudited)
Other Portfolio Statistics
As of September 7, 2001 Twelve weeks ended
September 7, 2001
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages REVPAR(c)
Ritz-Carlton (d) 9 3,539 $223.55 67.3% $150.46
Other Portfolio Statistics
Twelve weeks ended September 8, 2000
Average Percent
Average Occupancy Change in
Daily Rate Percentages REVPAR(c) REVPAR
Ritz-Carlton (d) $213.51 79.9% $170.59 (11.8)%
Other Portfolio Statistics
As of September 7, 2001 Thirty-six weeks ended
September 7, 2001
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages REVPAR(c)
Ritz-Carlton (d) 9 3,539 $254.18 70.7% $179.63
Other Portfolio Statistics
Thirty-six weeks ended September 8, 2000
Average Percent
Average Occupancy Change in
Daily Rate Percentages REVPAR(c) REVPAR
Ritz-Carlton (d) $234.64 79.9% $187.59 (4.2)%
(a) Due to the significant changes in the operating environment as a
result of the terrorist attacks on September 11, these results may not
be reflective of fourth quarter or full year hotel operational data.
(b) Comparable properties consist of the 117 properties owned, directly or
indirectly by us for the same period of time in each period covered,
excluding two properties where significant expansion at the hotels
affected operations, one property that sustained substantial damage
from a fire in the fourth quarter of 2000, the Tampa Waterside
Marriott which opened in February, 2000, three full-service properties
that we now consolidate as a result of our acquisition during April
2001 of the voting interests in a previously non-controlled subsidiary
and one property that suffered catastrophic damage as a result of the
September 11, 2001 terrorist acts.
(c) RevPAR represents room revenue per available room, which measures
daily room revenues generated on a per room basis, excluding food and
beverage revenues or other ancillary revenues generated by the
property.
(d) Includes nine Ritz-Carlton properties currently owned by us for all
periods presented.
HOST MARRIOTT CORPORATION
Selected Hotel Operational Data
Property Statistics by Region (a) (All Properties)
(unaudited)
Twelve weeks ended September 7, 2001
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate(c)
Percentages(c)
REVPAR(c)
Atlanta 15 6,547 $144.88 65.6% $95.04
DC Metro 13 4,995 143.26 72.7 104.21
Florida 13 7,595 126.78 69.5 88.06
International 6 2,548 116.92 75.7 88.51
Mid-Atlantic 12 7,945 180.00 81.3 146.34
Mountain 9 3,659 95.59 69.7 66.65
New England 6 2,279 146.91 73.2 107.56
North Central 15 5,390 132.47 74.9 99.25
Pacific 23 11,812 152.22 74.7 113.65
South Central 13 7,186 115.46 76.7 88.56
All Regions 125 59,956 140.48 73.7 103.50
Thirty-six weeks ended September 7, 2001
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate(c)
Percentages(c)
REVPAR(c)
Atlanta 15 6,547 $153.84 69.5% $106.89
DC Metro 13 4,995 153.98 71.1 109.54
Florida 13 7,595 165.03 74.7 123.24
International 6 2,548 114.49 73.9 84.65
Mid-Atlantic 12 7,945 192.06 79.5 152.59
Mountain 9 3,659 115.48 70.9 81.84
New England 6 2,279 147.60 69.0 101.90
North Central 15 5,390 133.09 70.2 93.43
Pacific 23 11,812 168.77 74.6 125.84
South Central 13 7,186 133.03 78.2 104.00
All Regions 125 59,956 155.44 74.0 114.96
Twelve weeks ended September 8, 2000
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate(b)
Percentages(b)
REVPAR(b)
Atlanta 15 6,547 $143.75 72.5% $104.19
DC Metro 13 4,995 149.49 79.0 118.13
Florida 13 7,595 120.13 71.5 85.92
International 4 1,636 110.85 82.7 91.65
Mid-Atlantic 12 7,945 198.64 84.0 166.93
Mountain 9 3,659 100.69 75.8 76.30
New England 6 2,279 162.31 83.9 136.19
North Central 15 5,390 140.08 82.2 115.08
Pacific 23 11,812 165.82 84.5 140.10
South Central 12 6,514 117.01 78.6 91.95
All Regions 122 58,372 148.03 79.4 117.61
Thirty-six weeks ended September 8, 2000
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate(b)
Percentages(b)
REVPAR(b)
Atlanta 15 6,547 $150.81 74.3% $111.97
DC Metro 13 4,995 148.84 77.7 115.66
Florida 13 7,595 155.07 77.8 120.60
International 4 1,636 107.78 75.2 81.00
Mid-Atlantic 12 7,945 201.34 82.9 166.91
Mountain 9 3,659 119.79 74.6 89.41
New England 6 2,279 153.21 78.5 120.19
North Central 15 5,390 133.39 76.8 102.49
Pacific 23 11,812 168.11 82.9 139.42
South Central 12 6,514 131.94 80.0 105.53
All Regions 122 58,372 155.46 79.0 122.87
(a) Due to the significant changes in the operating environment as a
result of the terrorist attacks on September 11, these results may not
be reflective of fourth quarter or full year hotel operational data.
(b) The operating results include operations for the Tampa Waterside
Marriott, which opened February 19, 2000.
(c) The operating results include operations for the JW Marriott Mexico
City Polanco, the Mexico City Airport Marriott, and the St. Louis
Marriott Pavilion as of March 24, 2001, as a result of our acquisition
of the voting interests in a previously non-controlled subsidiary
HOST MARRIOTT CORPORATION
Selected Hotel Operational Data
Property Statistics for Five Week Period
September 1, 2001 through October 5, 2001(a)
(unaudited)
Rate Occupancy REVPAR
Aggregate (53,577 rooms, 106 properties)
9/1-9/7 $131.42 61.8% $81.24
9/8-9/14 151.33 63.4 95.97
9/15-9/21 127.41 37.5 47.83
9/22-9/28 133.58 48.8 65.16
9/29-10/5 146.84 62.9 92.39
(a) Results exclude the New York Marriott World Trade Center hotel, the
New York Marriott Financial Center hotel as well as 17 additional
hotels operated under franchise agreements or other brands.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Hotels (a)
(unaudited, in millions)
Twelve weeks ended Thirty-six weeks ended
September 7, September 8, September 7, September 8,
2001 2000 2001 2000
Number of hotels (b) 117 117 117 117
Number of rooms 53,984 53,984 53,984 53,984
Revenues (c)
Room $478 $543 $1,537 $1,637
Food and beverage 211 234 734 784
Other 60 60 186 190
Total hotel sales 749 837 2,457 2,611
Expenses (c)
Room 120 132 363 380
Food and beverage 169 186 548 578
Other 32 32 94 96
Management fees, ground
rent and other costs 254 275 795 817
Total operating expenses 575 625 1,800 1,871
Operating profit (d) $174 $212 $657 $740
(a) The schedules of property-level results represent the unaudited
results of operations of our 117 comparable properties without
consideration of whether these properties are leased to outside
parties. In connection with the REIT conversion substantially all of
these properties were leased to Crestline Capital Corporation through
December 31, 2000. Hotel operators conduct the day to day management
of the hotels pursuant to management agreements. Additionally, the
sales and expenses are not subject to our system of internal
accounting controls. We have presented this information because we
feel that it may be useful to investors in determining the unleveraged
economic value of our properties. However, this should not be deemed
to be a method for the calculation of the market value of either Host
REIT or the hotel properties. It also does not represent the value at
which we could sell the properties on the open market. Additionally,
our management and lease agreements restrict our ability to sell
properties without incurring significant fees for termination of these
agreements.
(b) Comparable properties consist of the 117 properties owned, directly or
indirectly by us for the same period of time in each period covered,
excluding two properties where significant expansion at the hotels
affected operations, one property that sustained substantial fire
damage in the fourth quarter of 2000, the Tampa Waterside Marriott
which opened in February, 2000, three full-service properties that we
now consolidate as a result of our acquisition during April 2001 of
the voting interests in a previously non-controlled subsidiary and one
property that suffered catastrophic damage as a result of the
September 11, 2001 terrorist acts.
(c) Hotel sales and expenses represent the unaudited comparable gross
hotel results, which includes room, food and beverage and other hotel
revenues and expenses generated by the properties. Gross hotel sales
and expenses are presented here to provide a means of comparison of
property-level results which investors may find useful. However, these
gross sales and expenses do not represent our reported results of
operations for the twelve and thirty-six weeks ended September 8,
2000. Our rental income under each lease, which represented results
of operation for first, second and third quarters 2000 as well as for
five hotels in first and second quarters 2001 and two hotels in third
quarter 2001, is the greater of base or percentage rent as defined in
the lease agreements. Percentage rent applicable to room, food and
beverage, and other types of hotel revenue varies by lease and is
calculated by multiplying fixed percentages by the total amount of
such revenues over specified threshold amounts. Both the minimum rents
and the revenue thresholds used in computing percentage rents are
subject to annual adjustments based on increases in the United States
Consumer Price Index and the Labor Index, as defined in the lease
agreements.
(d) As stated above, these results represent comparable property-level
results and are not the revenues or operating profit of Host REIT for
all periods presented. Further, certain significant cost items
normally recorded under accounting principles generally accepted in
the United States including interest expense, lease payments,
depreciation and amortization have not been included in the
calculation of property-level profit. Additionally, the property-level
profit does not reflect our EBITDA reported herein or that of our
lessee.
HOST MARRIOTT CORPORATION
Select Capital Expenditure Data
(unaudited, in millions)
Twelve Weeks Ended Twelve Weeks Ended
September 7, 2001 September 8, 2000
Replacement and
renewal cash
expenditures (a) $46 $49
Thirty-six Weeks Ended Thirty-six Weeks Ended
September 7, 2001 September 8, 2000
Replacement and
renewal cash
expenditures (a) $148 $155
September 7, 2001 December 31, 2000
Construction
in progress $118 $135
(a) Represents amounts expended or reserved for routine maintenance
or replacement of furniture, fixtures and equipment at the
properties.
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SOURCE Host Marriott Corporation
CONTACT: Greg Larson of Host Marriott Corporation, +1-301-380-2076/