UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the quarterly period ended SeptemberJune 30, 20172023
OR
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☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission File Number: 001-14625 (Host Hotels & Resorts, Inc.)
0-25087 (Host Hotels & Resorts, L.P.)
HOST HOTELS & RESORTS, INC.
HOST HOTELS & RESORTS, L.P.
(Exact name of registrant as specified in its charter)
Maryland (Host Hotels & Resorts, Inc.) Delaware (Host Hotels & Resorts, L.P.) (State or Other Jurisdiction of Incorporation or Organization) |
52-2095412 (I.R.S. Employer Identification No.) | |
Bethesda, Maryland (Address of Principal Executive Offices) |
(Zip Code) |
(240) (240) 744-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of Each Exchange on Which Registered | ||||
Host Hotels & Resorts, Inc. | Common Stock, $0.01 par value | HST | The Nasdaq Stock Market LLC | |||
Host Hotels & Resorts, L.P. | None | None | None |
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Host Hotels & Resorts, Inc. | Yes☑ | No ☐ | |||||
Host Hotels & Resorts, L.P. | Yes☑ | No ☐ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Host Hotels & Resorts, Inc. | Yes☑ | No ☐ | |||||
Host Hotels & Resorts, L.P. | Yes☑ | No ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Host Hotels & Resorts, Inc. | |
Large accelerated filer☑ | Accelerated filer ☐ |
Non-accelerated filer | Smaller reporting company ☐ |
Emerging growth company ☐ | |
Host Hotels & Resorts, L.P. | |
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer | Smaller reporting company ☐ |
Emerging growth company ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Host Hotels & Resorts, Inc. | Yes ☐ | No ☑ | |||||
Host Hotels & Resorts, L.P. | Yes ☐ | No ☑ |
As of October 31, 2017August 2, 2023, there were 740,088,192711,604,872 shares of Host Hotels & Resorts, Inc.’s common stock, $.01$0.01 par value per share, outstanding.
This report combines the quarterly reports on Form 10-Q of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. Unless stated otherwise or the context requires otherwise, references to “Host Inc.” mean Host Hotels & Resorts, Inc., a Maryland corporation, and references to “Host L.P.” mean Host Hotels & Resorts, L.P., a Delaware limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between Host Inc. and Host L.P. We use the terms “we” or“we,” “our” or “the company” to refer to Host Inc. and Host L.P. together, unless the context indicates otherwise.
Host Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). Host Inc. owns properties and conducts operations through Host L.P., of which Host Inc. is the sole general partner and of which it holds approximately 99% of the partnership interests (“OP units”). The remaining OP units are owned by various unaffiliated limited partners. As the sole general partner of Host L.P., Host Inc. has the exclusive and complete responsibility for Host L.P.’s day-to-day management and control. Management operates Host Inc. and Host L.P. as one enterprise. The management of Host Inc. consists of the same persons who direct the management of Host L.P. As general partner with control of Host L.P., Host Inc. consolidates Host L.P. for financial reporting purposes, and Host Inc. does not have significant assets other than its investment in Host L.P. Therefore, the assets and liabilities of Host Inc. and Host L.P. are substantially the same on their respective condensed consolidated financial statements and the disclosures of Host Inc. and Host L.P. also are substantially similar. For these reasons, we believe that the combination into a single report of the quarterly reports on Form 10-Q of Host Inc. and Host L.P. results in benefits to management and investors.
The substantive difference between the filings of Host Inc.’s and Host L.P.’s filings is the fact that Host Inc. is a REIT with public stock, while Host L.P. is a partnership with no publicly traded equity. In the condensed consolidated financial statements, this difference primarily is reflected in the equity (or partners’ capital for Host L.P.) section of the consolidated balance sheets and in the consolidated statements of equity (or partners’ capital for Host L.P.). Apart from the different equity treatment, the condensed consolidated financial statements of Host Inc. and Host L.P. are nearly are identical.
This combined Form 10-Q for Host Inc. and Host L.P. includes, for each entity, separate interim financial statements (but combined footnotes), separate reports on disclosure controls and procedures and internal control over financial reporting and separate CEO/CFO certifications. In addition, with respect to any other financial and non-financial disclosure items required by Form 10-Q, any material differences between Host Inc. and Host L.P. are discussed separately herein. For a more detailed discussion of the substantive differences between Host Inc. and Host L.P. and why we believe the combined filing results in benefits to investors, see the discussion in the combined Annual Report on Form 10-K for the year ended December 31, 20162022 under the heading “Explanatory Note.”
i
HOST HOTELS & RESORTS, INC. AND HOST HOTELS & RESORTS, L.P.
INDEX
PART I. FINANCIAL INFORMATION
ii
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SeptemberJune 30, 20172023 and December 31, 20162022
(in millions, except share and per share amounts)
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| June 30, 2023 |
|
| December 31, 2022 |
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|
| (unaudited) |
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|
| unaudited |
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ASSETS | ASSETS |
| ASSETS |
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Property and equipment, net |
| $ | 10,014 |
|
| $ | 10,145 |
|
| $ | 9,717 |
|
| $ | 9,748 |
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Assets held for sale |
|
| 67 |
|
|
| 150 |
| ||||||||
Right-of-use assets |
|
| 555 |
|
|
| 556 |
| ||||||||
Due from managers |
|
| 116 |
|
|
| 55 |
|
|
| 87 |
|
|
| 94 |
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Advances to and investments in affiliates |
|
| 319 |
|
|
| 286 |
|
|
| 144 |
|
|
| 132 |
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Furniture, fixtures and equipment replacement fund |
|
| 183 |
|
|
| 173 |
|
|
| 213 |
|
|
| 200 |
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Notes receivable |
|
| 485 |
|
|
| 413 |
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Other |
|
| 283 |
|
|
| 225 |
|
|
| 362 |
|
|
| 459 |
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Restricted cash |
|
| — |
|
|
| 2 |
| ||||||||
Cash and cash equivalents |
|
| 789 |
|
|
| 372 |
|
|
| 802 |
|
|
| 667 |
|
Total assets |
| $ | 11,771 |
|
| $ | 11,408 |
|
| $ | 12,365 |
|
| $ | 12,269 |
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LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY | LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY |
| LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY |
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Debt |
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|
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Senior notes |
| $ | 2,777 |
|
| $ | 2,380 |
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| $ | 3,117 |
|
| $ | 3,115 |
|
Credit facility, including term loans of $996 million and $997 million, respectively |
|
| 1,184 |
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|
| 1,206 |
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Mortgage debt and other |
|
| — |
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|
| 63 |
| ||||||||
Credit facility, including the term loans of $997 and $998, respectively |
|
| 987 |
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|
| 994 |
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Mortgage and other debt |
|
| 106 |
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|
| 106 |
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Total debt |
|
| 3,961 |
|
|
| 3,649 |
|
|
| 4,210 |
|
|
| 4,215 |
|
Lease liabilities |
|
| 567 |
|
|
| 568 |
| ||||||||
Accounts payable and accrued expenses |
|
| 250 |
|
|
| 278 |
|
|
| 209 |
|
|
| 372 |
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Due to managers |
|
| 67 |
|
|
| 67 |
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Other |
|
| 295 |
|
|
| 283 |
|
|
| 167 |
|
|
| 168 |
|
Total liabilities |
|
| 4,506 |
|
|
| 4,210 |
|
|
| 5,220 |
|
|
| 5,390 |
|
|
|
|
|
|
|
|
|
|
|
|
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Non-controlling interests - Host Hotels & Resorts, L.P. |
|
| 157 |
|
|
| 165 |
| ||||||||
Redeemable non-controlling interests - Host Hotels & Resorts, L.P. |
|
| 168 |
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|
| 164 |
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Host Hotels & Resorts, Inc. stockholders’ equity: |
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|
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Common stock, par value $.01, 1,050 million shares authorized, 738.9 million shares and 737.8 million shares issued and outstanding, respectively |
|
| 7 |
|
|
| 7 |
| ||||||||
Common stock, par value $.01, 1,050 million shares authorized, 711.4 million |
|
| 7 |
|
|
| 7 |
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Additional paid-in capital |
|
| 8,103 |
|
|
| 8,077 |
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|
| 7,671 |
|
|
| 7,717 |
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Accumulated other comprehensive loss |
|
| (57 | ) |
|
| (83 | ) |
|
| (70 | ) |
|
| (75 | ) |
Deficit |
|
| (974 | ) |
|
| (1,007 | ) |
|
| (636 | ) |
|
| (939 | ) |
Total equity of Host Hotels & Resorts, Inc. stockholders |
|
| 7,079 |
|
|
| 6,994 |
|
|
| 6,972 |
|
|
| 6,710 |
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Non-controlling interests—other consolidated partnerships |
|
| 29 |
|
|
| 39 |
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Non-redeemable non-controlling interests—other consolidated partnerships |
|
| 5 |
|
|
| 5 |
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Total equity |
|
| 7,108 |
|
|
| 7,033 |
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|
| 6,977 |
|
|
| 6,715 |
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Total liabilities, non-controlling interests and equity |
| $ | 11,771 |
|
| $ | 11,408 |
|
| $ | 12,365 |
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| $ | 12,269 |
|
|
|
|
|
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|
See notes to condensed consolidated financial statements.
1
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited, in millions, except per share amounts)
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
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|
| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
|
| 2023 |
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| 2022 |
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| 2023 |
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| 2022 |
| ||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Rooms |
| $ | 860 |
|
| $ | 879 |
|
| $ | 2,643 |
|
| $ | 2,655 |
|
| $ | 850 |
|
| $ | 850 |
|
| $ | 1,670 |
|
| $ | 1,505 |
|
Food and beverage |
|
| 314 |
|
|
| 336 |
|
|
| 1,152 |
|
|
| 1,183 |
|
|
| 415 |
|
|
| 405 |
|
|
| 846 |
|
|
| 702 |
|
Other |
|
| 80 |
|
|
| 80 |
|
|
| 248 |
|
|
| 255 |
|
|
| 128 |
|
|
| 126 |
|
|
| 258 |
|
|
| 248 |
|
Total revenues |
|
| 1,254 |
|
|
| 1,295 |
|
|
| 4,043 |
|
|
| 4,093 |
|
|
| 1,393 |
|
|
| 1,381 |
|
|
| 2,774 |
|
|
| 2,455 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rooms |
|
| 227 |
|
|
| 225 |
|
|
| 676 |
|
|
| 674 |
|
|
| 201 |
|
|
| 189 |
|
|
| 394 |
|
|
| 349 |
|
Food and beverage |
|
| 242 |
|
|
| 257 |
|
|
| 794 |
|
|
| 830 |
|
|
| 263 |
|
|
| 245 |
|
|
| 532 |
|
|
| 445 |
|
Other departmental and support expenses |
|
| 309 |
|
|
| 321 |
|
|
| 952 |
|
|
| 981 |
|
|
| 323 |
|
|
| 300 |
|
|
| 638 |
|
|
| 573 |
|
Management fees |
|
| 53 |
|
|
| 54 |
|
|
| 178 |
|
|
| 177 |
|
|
| 69 |
|
|
| 62 |
|
|
| 134 |
|
|
| 102 |
|
Other property-level expenses |
|
| 97 |
|
|
| 96 |
|
|
| 294 |
|
|
| 289 |
|
|
| 93 |
|
|
| 78 |
|
|
| 184 |
|
|
| 162 |
|
Depreciation and amortization |
|
| 176 |
|
|
| 182 |
|
|
| 534 |
|
|
| 541 |
|
|
| 168 |
|
|
| 162 |
|
|
| 337 |
|
|
| 334 |
|
Corporate and other expenses |
|
| 24 |
|
|
| 28 |
|
|
| 79 |
|
|
| 82 |
|
|
| 30 |
|
|
| 25 |
|
|
| 61 |
|
|
| 48 |
|
Gain on insurance and business interruption settlements |
|
| (1 | ) |
|
| (12 | ) |
|
| (6 | ) |
|
| (15 | ) |
|
| (3 | ) |
|
| (7 | ) |
|
| (3 | ) |
|
| (7 | ) |
Total operating costs and expenses |
|
| 1,127 |
|
|
| 1,151 |
|
|
| 3,501 |
|
|
| 3,559 |
|
|
| 1,144 |
|
|
| 1,054 |
|
|
| 2,277 |
|
|
| 2,006 |
|
OPERATING PROFIT |
|
| 127 |
|
|
| 144 |
|
|
| 542 |
|
|
| 534 |
|
|
| 249 |
|
|
| 327 |
|
|
| 497 |
|
|
| 449 |
|
Interest income |
|
| 2 |
|
|
| — |
|
|
| 4 |
|
|
| 2 |
|
|
| 20 |
|
|
| 6 |
|
|
| 34 |
|
|
| 7 |
|
Interest expense |
|
| (43 | ) |
|
| (38 | ) |
|
| (125 | ) |
|
| (116 | ) |
|
| (45 | ) |
|
| (37 | ) |
|
| (94 | ) |
|
| (73 | ) |
Gain on sale of assets |
|
| 59 |
|
|
| 14 |
|
|
| 105 |
|
|
| 245 |
| ||||||||||||||||
Gain (loss) on foreign currency transactions and derivatives |
|
| (2 | ) |
|
| (1 | ) |
|
| (4 | ) |
|
| 1 |
| ||||||||||||||||
Other gains |
|
| — |
|
|
| 1 |
|
|
| 69 |
|
|
| 14 |
| ||||||||||||||||
Equity in earnings of affiliates |
|
| 4 |
|
|
| 8 |
|
|
| 19 |
|
|
| 19 |
|
|
| 4 |
|
|
| 2 |
|
|
| 11 |
|
|
| 4 |
|
INCOME BEFORE INCOME TAXES |
|
| 147 |
|
|
| 127 |
|
|
| 541 |
|
|
| 685 |
|
|
| 228 |
|
|
| 299 |
|
|
| 517 |
|
|
| 401 |
|
Provision for income taxes |
|
| (42 | ) |
|
| (19 | ) |
|
| (63 | ) |
|
| (42 | ) |
|
| (14 | ) |
|
| (39 | ) |
|
| (12 | ) |
|
| (23 | ) |
NET INCOME |
|
| 105 |
|
|
| 108 |
|
|
| 478 |
|
|
| 643 |
|
|
| 214 |
|
|
| 260 |
|
|
| 505 |
|
|
| 378 |
|
Less: Net income attributable to non-controlling interests |
|
| (1 | ) |
|
| (1 | ) |
|
| (6 | ) |
|
| (7 | ) |
|
| (4 | ) |
|
| (4 | ) |
|
| (8 | ) |
|
| (6 | ) |
NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC. |
| $ | 104 |
|
| $ | 107 |
|
| $ | 472 |
|
| $ | 636 |
|
| $ | 210 |
|
| $ | 256 |
|
| $ | 497 |
|
| $ | 372 |
|
Basic earnings per common share |
| $ | .14 |
|
| $ | .14 |
|
| $ | .64 |
|
| $ | .85 |
|
| $ | 0.30 |
|
| $ | 0.36 |
|
| $ | 0.70 |
|
| $ | 0.52 |
|
Diluted earnings per common share |
| $ | .14 |
|
| $ | .14 |
|
| $ | .64 |
|
| $ | .85 |
|
| $ | 0.29 |
|
| $ | 0.36 |
|
| $ | 0.70 |
|
| $ | 0.52 |
|
See notes to condensed consolidated financial statements.
2
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited, in millions)
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
NET INCOME |
| $ | 105 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 643 |
|
| $ | 214 |
|
| $ | 260 |
|
| $ | 505 |
|
| $ | 378 |
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Foreign currency translation and other comprehensive income of unconsolidated affiliates |
|
| 11 |
|
|
| (1 | ) |
|
| 26 |
|
|
| 13 |
|
|
| 4 |
|
|
| (6 | ) |
|
| 6 |
|
|
| 1 |
|
Change in fair value of derivative instruments |
|
| (4 | ) |
|
| — |
|
|
| (14 | ) |
|
| (2 | ) |
|
| (1 | ) |
|
| 1 |
|
|
| (1 | ) |
|
| 1 |
|
Amounts reclassified from other comprehensive income (loss) |
|
| 13 |
|
|
| (7 | ) |
|
| 14 |
|
|
| 17 |
| ||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX |
|
| 20 |
|
|
| (8 | ) |
|
| 26 |
|
|
| 28 |
|
|
| 3 |
|
|
| (5 | ) |
|
| 5 |
|
|
| 2 |
|
COMPREHENSIVE INCOME |
|
| 125 |
|
|
| 100 |
|
|
| 504 |
|
|
| 671 |
|
|
| 217 |
|
|
| 255 |
|
|
| 510 |
|
|
| 380 |
|
Less: Comprehensive income attributable to non-controlling interests |
|
| (1 | ) |
|
| (1 | ) |
|
| (7 | ) |
|
| (7 | ) |
|
| (4 | ) |
|
| (4 | ) |
|
| (8 | ) |
|
| (6 | ) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC. |
| $ | 124 |
|
| $ | 99 |
|
| $ | 497 |
|
| $ | 664 |
|
| $ | 213 |
|
| $ | 251 |
|
| $ | 502 |
|
| $ | 374 |
|
See notes to condensed consolidated financial statements.
3
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited, in millions)
|
| Year-to-date ended September 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
| ||||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income |
| $ | 478 |
|
| $ | 643 |
|
| $ | 505 |
|
| $ | 378 |
|
Adjustments to reconcile to cash provided by operations: |
|
|
|
|
|
|
|
| ||||||||
Adjustments to reconcile net income to net cash provided by operations: |
|
|
|
|
| |||||||||||
Depreciation and amortization |
|
| 534 |
|
|
| 541 |
|
|
| 337 |
|
|
| 334 |
|
Amortization of finance costs, discounts and premiums, net |
|
| 5 |
|
|
| 4 |
|
|
| 5 |
|
|
| 5 |
|
Loss on extinguishment of debt |
|
| 4 |
|
|
| — |
| ||||||||
Stock compensation expense |
|
| 8 |
|
|
| 8 |
|
|
| 13 |
|
|
| 10 |
|
Deferred income taxes |
|
| 37 |
|
|
| 29 |
| ||||||||
Gain on sale of assets |
|
| (105 | ) |
|
| (245 | ) | ||||||||
(Gain) loss on foreign currency transactions and derivatives |
|
| 4 |
|
|
| (1 | ) | ||||||||
Other gains |
|
| (69 | ) |
|
| (14 | ) | ||||||||
Gain on property insurance settlement |
|
| (1 | ) |
|
| (1 | ) |
|
| — |
|
|
| (6 | ) |
Equity in earnings of affiliates |
|
| (19 | ) |
|
| (19 | ) |
|
| (11 | ) |
|
| (4 | ) |
Change in due from managers |
|
| (60 | ) |
|
| (63 | ) | ||||||||
Change in due from/to managers |
|
| 3 |
|
|
| (53 | ) | ||||||||
Distributions from investments in affiliates |
|
| 14 |
|
|
| 20 |
|
|
| 18 |
|
|
| 20 |
|
Property insurance proceeds - remediation costs |
|
| 83 |
|
|
| — |
| ||||||||
Changes in other assets |
|
| (17 | ) |
|
| (1 | ) |
|
| 16 |
|
|
| 43 |
|
Changes in other liabilities |
|
| (14 | ) |
|
| — |
|
|
| (84 | ) |
|
| (5 | ) |
Cash provided by operating activities |
|
| 864 |
|
|
| 915 |
| ||||||||
Net cash provided by operating activities |
|
| 820 |
|
|
| 708 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Proceeds from sales of assets, net |
|
| 472 |
|
|
| 464 |
|
|
| 34 |
|
|
| 217 |
|
Return of investments in affiliates |
|
| 4 |
|
|
| 23 |
| ||||||||
Advances to and investments in affiliates |
|
| (1 | ) |
|
| (4 | ) |
|
| (20 | ) |
|
| (44 | ) |
Acquisitions |
|
| (467 | ) |
|
| (54 | ) | ||||||||
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Renewals and replacements |
|
| (155 | ) |
|
| (222 | ) |
|
| (226 | ) |
|
| (78 | ) |
Redevelopment and acquisition-related investments |
|
| (53 | ) |
|
| (192 | ) | ||||||||
Cash provided by (used in) investing activities |
|
| (200 | ) |
|
| 15 |
| ||||||||
Return on investment |
|
| (97 | ) |
|
| (162 | ) | ||||||||
Property insurance proceeds |
|
| 34 |
|
|
| 7 |
| ||||||||
Net cash used in investing activities |
|
| (275 | ) |
|
| (60 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Financing costs |
|
| (9 | ) |
|
| — |
|
|
| (10 | ) |
|
| — |
|
Issuances of debt |
|
| 398 |
|
|
| — |
| ||||||||
Draws on credit facility |
|
| 340 |
|
|
| 598 |
| ||||||||
Repayment of credit facility |
|
| (379 | ) |
|
| (590 | ) |
|
| — |
|
|
| (683 | ) |
Mortgage debt and other prepayments and scheduled maturities |
|
| (69 | ) |
|
| (137 | ) |
|
| (1 | ) |
|
| (1 | ) |
Common stock repurchase |
|
| — |
|
|
| (206 | ) | ||||||||
Debt extinguishment costs |
|
| (3 | ) |
|
| — |
| ||||||||
Common stock repurchases |
|
| (50 | ) |
|
| — |
| ||||||||
Dividends on common stock |
|
| (480 | ) |
|
| (448 | ) |
|
| (313 | ) |
|
| (21 | ) |
Distributions and payments to non-controlling interests |
|
| (47 | ) |
|
| (6 | ) |
|
| (6 | ) |
|
| — |
|
Other financing activities |
|
| 2 |
|
|
| — |
|
|
| (13 | ) |
|
| (10 | ) |
Cash used in financing activities |
|
| (244 | ) |
|
| (789 | ) | ||||||||
Net cash used in financing activities |
|
| (396 | ) |
|
| (715 | ) | ||||||||
Effects of exchange rate changes on cash held |
|
| 5 |
|
|
| 6 |
|
|
| 2 |
|
|
| (1 | ) |
INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 425 |
|
|
| 147 |
| ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 151 |
|
|
| (68 | ) | ||||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD |
|
| 547 |
|
|
| 377 |
|
|
| 874 |
|
|
| 953 |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
| $ | 972 |
|
| $ | 524 |
|
| $ | 1,025 |
|
| $ | 885 |
|
See notes to condensed consolidated financial statements.
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited)
Supplemental disclosure of cash flow information (in millions):
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the amount shown in the statements of cash flows:
|
| September 30, 2017 |
|
|
|
| September 30, 2016 |
|
| June 30, 2023 |
|
| June 30, 2022 |
| ||||
Cash and cash equivalents |
| $ | 789 |
|
|
| $ | 340 |
|
| $ | 802 |
|
| $ | 699 |
| |
Restricted cash |
|
| — |
|
|
| 2 |
| ||||||||||
Restricted cash (included in other assets) |
|
| 10 |
|
|
| 7 |
| ||||||||||
Cash included in furniture, fixtures and equipment replacement fund |
|
| 183 |
|
|
| 182 |
|
|
| 213 |
|
|
| 179 |
| ||
Total cash and cash equivalents and restricted cash shown in the statements of cash flows |
| $ | 972 |
|
|
| $ | 524 |
|
| $ | 1,025 |
|
| $ | 885 |
|
The following table presents cash paid during the year-to-date(received) for the following:
|
| Year-to-date ended June 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Total interest paid |
| $ | 90 |
|
| $ | 69 |
|
Income taxes paid (refunds received) |
| $ | 2 |
|
| $ | (7 | ) |
|
| Year-to-date ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Total interest paid |
| $ | 108 |
|
| $ | 105 |
|
Income taxes paid |
| $ | 38 |
|
| $ | 14 |
|
Supplemental schedule of noncash investing and financing activities:
In connection with the sales of The Camby, Autograph Collection in March 2023, the Sheraton Boston Hotel in February 2022, and the Sheraton New York Times Square Hotel in April 2022, we issued loans to the buyers for $72 million, $163 million, and $250 million, respectively. The proceeds received from the sales are net of the loans.
On January 20, 2022, we entered into definitive agreements with Noble Investment Group, LLC, and certain other entities and persons related to Noble Investment Group, LLC, pursuant to which we made an investment in a joint venture with Noble Investment Group. In connection with the investment, Host Hotels & Resorts, L.P. issued approximately 3.2 million OP units valued at approximately $56 million.
See notes to condensed consolidated financial statements.
5
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SeptemberJune 30, 20172023 and December 31, 20162022
(in millions)
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| June 30, 2023 |
|
| December 31, 2022 |
| ||||
|
| (unaudited) |
|
|
|
|
|
| unaudited |
|
|
|
| |||
ASSETS | ASSETS |
| ASSETS |
| ||||||||||||
Property and equipment, net |
| $ | 10,014 |
|
| $ | 10,145 |
|
| $ | 9,717 |
|
| $ | 9,748 |
|
Assets held for sale |
|
| 67 |
|
|
| 150 |
| ||||||||
Right-of-use assets |
|
| 555 |
|
|
| 556 |
| ||||||||
Due from managers |
|
| 116 |
|
|
| 55 |
|
|
| 87 |
|
|
| 94 |
|
Advances to and investments in affiliates |
|
| 319 |
|
|
| 286 |
|
|
| 144 |
|
|
| 132 |
|
Furniture, fixtures and equipment replacement fund |
|
| 183 |
|
|
| 173 |
|
|
| 213 |
|
|
| 200 |
|
Notes receivable |
|
| 485 |
|
|
| 413 |
| ||||||||
Other |
|
| 283 |
|
|
| 225 |
|
|
| 362 |
|
|
| 459 |
|
Restricted cash |
|
| — |
|
|
| 2 |
| ||||||||
Cash and cash equivalents |
|
| 789 |
|
|
| 372 |
|
|
| 802 |
|
|
| 667 |
|
Total assets |
| $ | 11,771 |
|
| $ | 11,408 |
|
| $ | 12,365 |
|
| $ | 12,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL | LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL |
| LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL |
| ||||||||||||
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Senior notes |
| $ | 2,777 |
|
| $ | 2,380 |
|
| $ | 3,117 |
|
| $ | 3,115 |
|
Credit facility, including term loans of $996 million and $997 million, respectively |
|
| 1,184 |
|
|
| 1,206 |
| ||||||||
Mortgage debt and other |
|
| — |
|
|
| 63 |
| ||||||||
Credit facility, including the term loans of $997 and $998, respectively |
|
| 987 |
|
|
| 994 |
| ||||||||
Mortgage and other debt |
|
| 106 |
|
|
| 106 |
| ||||||||
Total debt |
|
| 3,961 |
|
|
| 3,649 |
|
|
| 4,210 |
|
|
| 4,215 |
|
Lease liabilities |
|
| 567 |
|
|
| 568 |
| ||||||||
Accounts payable and accrued expenses |
|
| 250 |
|
|
| 278 |
|
|
| 209 |
|
|
| 372 |
|
Due to managers |
|
| 67 |
|
|
| 67 |
| ||||||||
Other |
|
| 295 |
|
|
| 283 |
|
|
| 167 |
|
|
| 168 |
|
Total liabilities |
|
| 4,506 |
|
|
| 4,210 |
|
|
| 5,220 |
|
|
| 5,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Limited partnership interests of third parties |
|
| 157 |
|
|
| 165 |
|
|
| 168 |
|
|
| 164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Host Hotels & Resorts, L.P. capital: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General partner |
|
| 1 |
|
|
| 1 |
|
|
| 1 |
|
|
| 1 |
|
Limited partner |
|
| 7,135 |
|
|
| 7,076 |
|
|
| 7,041 |
|
|
| 6,784 |
|
Accumulated other comprehensive loss |
|
| (57 | ) |
|
| (83 | ) |
|
| (70 | ) |
|
| (75 | ) |
Total Host Hotels & Resorts, L.P. capital |
|
| 7,079 |
|
|
| 6,994 |
|
|
| 6,972 |
|
|
| 6,710 |
|
Non-controlling interests—consolidated partnerships |
|
| 29 |
|
|
| 39 |
|
|
| 5 |
|
|
| 5 |
|
Total capital |
|
| 7,108 |
|
|
| 7,033 |
|
|
| 6,977 |
|
|
| 6,715 |
|
Total liabilities, limited partnership interest of third parties and capital |
| $ | 11,771 |
|
| $ | 11,408 |
| ||||||||
Total liabilities, limited partnership interests of third parties and capital |
| $ | 12,365 |
|
| $ | 12,269 |
|
See notes to condensed consolidated financial statements.
6
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited, in millions, except per unit amounts)
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Rooms |
| $ | 860 |
|
| $ | 879 |
|
| $ | 2,643 |
|
| $ | 2,655 |
|
| $ | 850 |
|
| $ | 850 |
|
| $ | 1,670 |
|
| $ | 1,505 |
|
Food and beverage |
|
| 314 |
|
|
| 336 |
|
|
| 1,152 |
|
|
| 1,183 |
|
|
| 415 |
|
|
| 405 |
|
|
| 846 |
|
|
| 702 |
|
Other |
|
| 80 |
|
|
| 80 |
|
|
| 248 |
|
|
| 255 |
|
|
| 128 |
|
|
| 126 |
|
|
| 258 |
|
|
| 248 |
|
Total revenues |
|
| 1,254 |
|
|
| 1,295 |
|
|
| 4,043 |
|
|
| 4,093 |
|
|
| 1,393 |
|
|
| 1,381 |
|
|
| 2,774 |
|
|
| 2,455 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rooms |
|
| 227 |
|
|
| 225 |
|
|
| 676 |
|
|
| 674 |
|
|
| 201 |
|
|
| 189 |
|
|
| 394 |
|
|
| 349 |
|
Food and beverage |
|
| 242 |
|
|
| 257 |
|
|
| 794 |
|
|
| 830 |
|
|
| 263 |
|
|
| 245 |
|
|
| 532 |
|
|
| 445 |
|
Other departmental and support expenses |
|
| 309 |
|
|
| 321 |
|
|
| 952 |
|
|
| 981 |
|
|
| 323 |
|
|
| 300 |
|
|
| 638 |
|
|
| 573 |
|
Management fees |
|
| 53 |
|
|
| 54 |
|
|
| 178 |
|
|
| 177 |
|
|
| 69 |
|
|
| 62 |
|
|
| 134 |
|
|
| 102 |
|
Other property-level expenses |
|
| 97 |
|
|
| 96 |
|
|
| 294 |
|
|
| 289 |
|
|
| 93 |
|
|
| 78 |
|
|
| 184 |
|
|
| 162 |
|
Depreciation and amortization |
|
| 176 |
|
|
| 182 |
|
|
| 534 |
|
|
| 541 |
|
|
| 168 |
|
|
| 162 |
|
|
| 337 |
|
|
| 334 |
|
Corporate and other expenses |
|
| 24 |
|
|
| 28 |
|
|
| 79 |
|
|
| 82 |
|
|
| 30 |
|
|
| 25 |
|
|
| 61 |
|
|
| 48 |
|
Gain on insurance and business interruption settlements |
|
| (1 | ) |
|
| (12 | ) |
|
| (6 | ) |
|
| (15 | ) |
|
| (3 | ) |
|
| (7 | ) |
|
| (3 | ) |
|
| (7 | ) |
Total operating costs and expenses |
|
| 1,127 |
|
|
| 1,151 |
|
|
| 3,501 |
|
|
| 3,559 |
|
|
| 1,144 |
|
|
| 1,054 |
|
|
| 2,277 |
|
|
| 2,006 |
|
OPERATING PROFIT |
|
| 127 |
|
|
| 144 |
|
|
| 542 |
|
|
| 534 |
|
|
| 249 |
|
|
| 327 |
|
|
| 497 |
|
|
| 449 |
|
Interest income |
|
| 2 |
|
|
| — |
|
|
| 4 |
|
|
| 2 |
|
|
| 20 |
|
|
| 6 |
|
|
| 34 |
|
|
| 7 |
|
Interest expense |
|
| (43 | ) |
|
| (38 | ) |
|
| (125 | ) |
|
| (116 | ) |
|
| (45 | ) |
|
| (37 | ) |
|
| (94 | ) |
|
| (73 | ) |
Gain on sale of assets |
|
| 59 |
|
|
| 14 |
|
|
| 105 |
|
|
| 245 |
| ||||||||||||||||
Gain (loss) on foreign currency transactions and derivatives |
|
| (2 | ) |
|
| (1 | ) |
|
| (4 | ) |
|
| 1 |
| ||||||||||||||||
Other gains |
|
| — |
|
|
| 1 |
|
|
| 69 |
|
|
| 14 |
| ||||||||||||||||
Equity in earnings of affiliates |
|
| 4 |
|
|
| 8 |
|
|
| 19 |
|
|
| 19 |
|
|
| 4 |
|
|
| 2 |
|
|
| 11 |
|
|
| 4 |
|
INCOME BEFORE INCOME TAXES |
|
| 147 |
|
|
| 127 |
|
|
| 541 |
|
|
| 685 |
|
|
| 228 |
|
|
| 299 |
|
|
| 517 |
|
|
| 401 |
|
Provision for income taxes |
|
| (42 | ) |
|
| (19 | ) |
|
| (63 | ) |
|
| (42 | ) |
|
| (14 | ) |
|
| (39 | ) |
|
| (12 | ) |
|
| (23 | ) |
NET INCOME |
|
| 105 |
|
|
| 108 |
|
|
| 478 |
|
|
| 643 |
|
|
| 214 |
|
|
| 260 |
|
|
| 505 |
|
|
| 378 |
|
Less: Net loss attributable to non-controlling interests |
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| 1 |
| ||||||||||||||||
Less: Net (income) loss attributable to non-controlling interests |
|
| (1 | ) |
|
| 1 |
|
|
| (1 | ) |
|
| — |
| ||||||||||||||||
NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P. |
| $ | 106 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 644 |
|
| $ | 213 |
|
| $ | 261 |
|
| $ | 504 |
|
| $ | 378 |
|
Basic earnings per common unit |
| $ | .14 |
|
| $ | .15 |
|
| $ | .65 |
|
| $ | .87 |
|
| $ | 0.30 |
|
| $ | 0.37 |
|
| $ | 0.71 |
|
| $ | 0.53 |
|
Diluted earnings per common unit |
| $ | .14 |
|
| $ | .15 |
|
| $ | .65 |
|
| $ | .87 |
|
| $ | 0.30 |
|
| $ | 0.37 |
|
| $ | 0.71 |
|
| $ | 0.53 |
|
See notes to condensed consolidated financial statements.
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited, in millions)
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
NET INCOME |
| $ | 105 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 643 |
|
| $ | 214 |
|
| $ | 260 |
|
| $ | 505 |
|
| $ | 378 |
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Foreign currency translation and other comprehensive income of unconsolidated affiliates |
|
| 11 |
|
|
| (1 | ) |
|
| 26 |
|
|
| 13 |
|
|
| 4 |
|
|
| (6 | ) |
|
| 6 |
|
|
| 1 |
|
Change in fair value of derivative instruments |
|
| (4 | ) |
|
| — |
|
|
| (14 | ) |
|
| (2 | ) |
|
| (1 | ) |
|
| 1 |
|
|
| (1 | ) |
|
| 1 |
|
Amounts reclassified from other comprehensive income (loss) |
|
| 13 |
|
|
| (7 | ) |
|
| 14 |
|
|
| 17 |
| ||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX |
|
| 20 |
|
|
| (8 | ) |
|
| 26 |
|
|
| 28 |
|
|
| 3 |
|
|
| (5 | ) |
|
| 5 |
|
|
| 2 |
|
COMPREHENSIVE INCOME |
|
| 125 |
|
|
| 100 |
|
|
| 504 |
|
|
| 671 |
|
|
| 217 |
|
|
| 255 |
|
|
| 510 |
|
|
| 380 |
|
Less: Comprehensive (income) loss attributable to non- controlling interests |
|
| 1 |
|
|
| — |
|
|
| (1 | ) |
|
| 1 |
| ||||||||||||||||
Less: Comprehensive (income) loss attributable to non-controlling interests |
|
| (1 | ) |
|
| 1 |
|
|
| (1 | ) |
|
| — |
| ||||||||||||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P. |
| $ | 126 |
|
| $ | 100 |
|
| $ | 503 |
|
| $ | 672 |
|
| $ | 216 |
|
| $ | 256 |
|
| $ | 509 |
|
| $ | 380 |
|
See notes to condensed consolidated financial statements.
8
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited, in millions)
|
| Year-to-date ended September 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
| ||||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income |
| $ | 478 |
|
| $ | 643 |
|
| $ | 505 |
|
| $ | 378 |
|
Adjustments to reconcile to cash provided by operations: |
|
|
|
|
|
|
|
| ||||||||
Adjustments to reconcile net income to net cash provided by operations: |
|
|
|
|
| |||||||||||
Depreciation and amortization |
|
| 534 |
|
|
| 541 |
|
|
| 337 |
|
|
| 334 |
|
Amortization of finance costs, discounts and premiums, net |
|
| 5 |
|
|
| 4 |
|
|
| 5 |
|
|
| 5 |
|
Loss on extinguishment of debt |
|
| 4 |
|
|
| — |
| ||||||||
Stock compensation expense |
|
| 8 |
|
|
| 8 |
|
|
| 13 |
|
|
| 10 |
|
Deferred income taxes |
|
| 37 |
|
|
| 29 |
| ||||||||
Gain on sale of assets |
|
| (105 | ) |
|
| (245 | ) | ||||||||
(Gain) loss on foreign currency transactions and derivatives |
|
| 4 |
|
|
| (1 | ) | ||||||||
Other gains |
|
| (69 | ) |
|
| (14 | ) | ||||||||
Gain on property insurance settlement |
|
| (1 | ) |
|
| (1 | ) |
|
| — |
|
|
| (6 | ) |
Equity in earnings of affiliates |
|
| (19 | ) |
|
| (19 | ) |
|
| (11 | ) |
|
| (4 | ) |
Change in due from managers |
|
| (60 | ) |
|
| (63 | ) | ||||||||
Change in due from/to managers |
|
| 3 |
|
|
| (53 | ) | ||||||||
Distributions from investments in affiliates |
|
| 14 |
|
|
| 20 |
|
|
| 18 |
|
|
| 20 |
|
Property insurance proceeds - remediation costs |
|
| 83 |
|
|
| — |
| ||||||||
Changes in other assets |
|
| (17 | ) |
|
| (1 | ) |
|
| 16 |
|
|
| 43 |
|
Changes in other liabilities |
|
| (14 | ) |
|
| — |
|
|
| (84 | ) |
|
| (5 | ) |
Cash provided by operating activities |
|
| 864 |
|
|
| 915 |
| ||||||||
Net cash provided by operating activities |
|
| 820 |
|
|
| 708 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Proceeds from sales of assets, net |
|
| 472 |
|
|
| 464 |
|
|
| 34 |
|
|
| 217 |
|
Return of investments in affiliates |
|
| 4 |
|
|
| 23 |
| ||||||||
Advances to and investments in affiliates |
|
| (1 | ) |
|
| (4 | ) |
|
| (20 | ) |
|
| (44 | ) |
Acquisitions |
|
| (467 | ) |
|
| (54 | ) | ||||||||
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Renewals and replacements |
|
| (155 | ) |
|
| (222 | ) |
|
| (226 | ) |
|
| (78 | ) |
Redevelopment and acquisition-related investments |
|
| (53 | ) |
|
| (192 | ) | ||||||||
Cash provided by (used in) investing activities |
|
| (200 | ) |
|
| 15 |
| ||||||||
Return on investment |
|
| (97 | ) |
|
| (162 | ) | ||||||||
Property insurance proceeds |
|
| 34 |
|
|
| 7 |
| ||||||||
Net cash used in investing activities |
|
| (275 | ) |
|
| (60 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Financing costs |
|
| (9 | ) |
|
| — |
|
|
| (10 | ) |
|
| — |
|
Issuances of debt |
|
| 398 |
|
|
| — |
| ||||||||
Draws on credit facility |
|
| 340 |
|
|
| 598 |
| ||||||||
Repayment of credit facility |
|
| (379 | ) |
|
| (590 | ) |
|
| — |
|
|
| (683 | ) |
Mortgage debt and other prepayments and scheduled maturities |
|
| (69 | ) |
|
| (137 | ) |
|
| (1 | ) |
|
| (1 | ) |
Debt extinguishment costs |
|
| (3 | ) |
|
| — |
| ||||||||
Repurchase of common OP units |
|
| — |
|
|
| (206 | ) |
|
| (50 | ) |
|
| — |
|
Distributions on common OP units |
|
| (486 | ) |
|
| (453 | ) |
|
| (318 | ) |
|
| (21 | ) |
Distributions and payments to non-controlling interests |
|
| (41 | ) |
|
| (1 | ) |
|
| (1 | ) |
|
| — |
|
Other financing activities |
|
| 2 |
|
|
| — |
|
|
| (13 | ) |
|
| (10 | ) |
Cash used in financing activities |
|
| (244 | ) |
|
| (789 | ) | ||||||||
Net cash used in financing activities |
|
| (396 | ) |
|
| (715 | ) | ||||||||
Effects of exchange rate changes on cash held |
|
| 5 |
|
|
| 6 |
|
|
| 2 |
|
|
| (1 | ) |
INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 425 |
|
|
| 147 |
| ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 151 |
|
|
| (68 | ) | ||||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD |
|
| 547 |
|
|
| 377 |
|
|
| 874 |
|
|
| 953 |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
| $ | 972 |
|
| $ | 524 |
|
| $ | 1,025 |
|
| $ | 885 |
|
See notes to condensed consolidated financial statements.
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
Year-to-date ended SeptemberJune 30, 20172023 and 20162022
(unaudited)
Supplemental disclosure of cash flow information (in millions):
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the amount shown in the statements of cash flows:
|
| September 30, 2017 |
|
|
|
| September 30, 2016 |
|
| June 30, 2023 |
|
| June 30, 2022 |
| ||||
Cash and cash equivalents |
| $ | 789 |
|
|
| $ | 340 |
|
| $ | 802 |
|
| $ | 699 |
| |
Restricted cash |
|
| — |
|
|
| 2 |
| ||||||||||
Restricted cash (included in other assets) |
|
| 10 |
|
|
| 7 |
| ||||||||||
Cash included in furniture, fixtures and equipment replacement fund |
|
| 183 |
|
|
| 182 |
|
|
| 213 |
|
|
| 179 |
| ||
Total cash and cash equivalents and restricted cash shown in the statements of cash flows |
| $ | 972 |
|
|
| $ | 524 |
|
| $ | 1,025 |
|
| $ | 885 |
|
The following table presents cash paid during the year-to-date(received) for the following:
|
| Year-to-date ended June 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Total interest paid |
| $ | 90 |
|
| $ | 69 |
|
Income taxes paid (refunds received) |
| $ | 2 |
|
| $ | (7 | ) |
|
| Year-to-date ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Total interest paid |
| $ | 108 |
|
| $ | 105 |
|
Income taxes paid |
| $ | 38 |
|
| $ | 14 |
|
Supplemental schedule of noncash investing and financing activities:
In connection with the sales of The Camby, Autograph Collection in March 2023, the Sheraton Boston Hotel in February 2022, and the Sheraton New York Times Square Hotel in April 2022, we issued loans to the buyers for $72 million, $163 million, and $250 million, respectively. The proceeds received from the sales are net of the loans.
On January 20, 2022, we entered into definitive agreements with Noble Investment Group, LLC, and certain other entities and persons related to Noble Investment Group, LLC, pursuant to which we made an investment in a joint venture with Noble Investment Group. In connection with the investment, Host Hotels & Resorts, L.P. issued approximately 3.2 million OP units valued at approximately $56 million.
See notes to condensed consolidated financial statements.
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Unaudited)
Description of Business
Host Hotels & Resorts, Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”), with its operations conducted solely through Host Hotels & Resorts, L.P. and its subsidiaries. Host Hotels & Resorts, L.P., a Delaware limited partnership, operates through an umbrella partnership structure, with Host Hotels & Resorts, Inc., a Maryland corporation, as its sole general partner. In the notes to these unaudited condensed consolidated financial statements, we use the terms “we” or “our” to refer to Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. together, unless the context indicates otherwise. We also use the term “Host Inc.” specifically to refer to Host Hotels & Resorts, Inc., and the term “Host L.P.” specifically to refer to Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. As of SeptemberJune 30, 2017,2023, Host Inc. holds approximately 99%99% of Host L.P.’s OP units.partnership interests.
Consolidated Portfolio
As of SeptemberJune 30, 2017,2023, our consolidated portfolio, primarily consisting of luxury and upper upscale hotels, is located in the following countries:
| Hotels | |||
United States |
| 72 | ||
Brazil |
| 3 | ||
Canada |
| 2 | ||
|
| |||
|
|
Joint Ventures
We own a non-controlling interest in a joint venture in Europe (“Euro JV”) that owns hotels in two separate funds in seven countries. We own a 32.1% interest in the first fund (“Euro JV Fund I”) (3 hotels) and a 33.4% interest in the second fund (“Euro JV Fund II”) (7 hotels).
We also own non-controlling interests in an additional six joint ventures that own eight hotels.
Omg
2. | Summary of Significant Accounting Policies |
We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles, or GAAP, in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements 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, 2016.2022.
The preparation of financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of SeptemberJune 30, 2017,2023, and the results of our operations for the quarter and year-to-date periods ended SeptemberJune 30, 20172023 and 2016,2022, respectively, and cash flows for the year-to-date periods ended SeptemberJune 30, 20172023 and 2016,2022, respectively. Interim results are not necessarily indicative of full year performance because of the impacteffect of seasonal variations.
ThreeFour of ourthe partnerships in which we own an interest are considered variable interest entities (VIEs)("VIEs"), as the general partner of these partnerships maintains control over the decisions that most significantly impact thesuch partnerships. This includesThese VIEs include the operating partnership, Host L.P.,
11
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
which is consolidated by Host Inc., of which Host Inc. is the sole general partner and holds approximately 99%99% of its partnershipthe limited partner interests; the consolidated partnership that owns the Houston Airport Marriott at George Bush Intercontinental; and thetwo unconsolidated partnershippartnerships that owns the Philadelphia Marriott Downtown.own hotel properties, of which we hold limited partner interests ranging from 11% - 19%. Host Inc.’s sole significant asset is its investment in Host L.P. and, consequently, substantially all of Host Inc.’s assets and liabilities consistconsists of the assets and liabilities of Host L.P. All of Host Inc.’s debt is an obligation of Host L.P. and may be settled only with assets of Host L.P.
Reclassifications
Certain prior year financial statement amounts have been reclassified to conform with the current year presentation.
New Accounting Standards
In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which is intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The standard is effective for annual periods beginning after December 15, 2018, with early adoption permitted. We are evaluating its impact on our consolidated financial statements and the disclosure requirements.
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The standard adopts a two-step approach wherein, if substantially all of the fair value of the gross assets acquired is concentrated in a single (group of similar) identifiable asset(s), then the transaction would be considered an asset purchase. As a result of the standard, we anticipate that the majority of our hotel purchases will be considered asset purchases as opposed to business combinations. We do not expect the determination to materially change the recognition of the assets and liabilities acquired. This standard will be applied on a prospective basis and is effective for annual periods beginning after December 15, 2017, with early adoption permitted.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that, on the statement of cash flows, amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning and ending total amounts thereof. We adopted this standard beginning January 1, 2017. As a result, amounts included in restricted cash and furniture, fixtures and equipment replacement fund on our consolidated balance sheet are included with cash and cash equivalents on the statement of cash flows. We have restated the statement of cash flows for the year-to-date period ended September 30, 2016 to reflect this change. The adoption of this standard did not change our consolidated balance sheet presentation.
In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify accounting for share-based payment transactions and will affect the classification of certain share-based awards and related income tax withholdings. We adopted this standard beginning January 1, 2017. As a result of the standard, the majority of our share-based payment awards granted in 2017 are equity-classified awards, and the excess tax benefits or deficiencies that are generated or incurred based on the difference between the intrinsic value of the award and the grant-date fair value is recognized as income tax benefit or expense on the income statement. The adoption of this standard has not had a material effect on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard sets forth steps to determine the timing and amount of revenue to be recognized to depict the transfer of goods or services in an amount that reflects the consideration that the entity expects in exchange. Beginning in 2015, the FASB has issued a number of ASUs to provide further clarification related to this standard and to defer the effective date to reporting periods beginning after December 15, 2017. Additionally, in February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), which is required to be adopted concurrently, as it provides further guidance on accounting for the derecognition of and partial sales of a non-financial asset. Based on our assessment of this standard, it will not materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales; however, it may allow for earlier gain recognition for certain asset sale transactions pursuant to which we have continuing involvement with the asset. We will adopt this standard on January 1, 2018 and are evaluating new disclosure requirements. Upon adoption, we expect to
1211
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
implement these standards using a modified retrospective approach with a cumulative effect recognized with no restatements of prior period amounts.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which affects aspects of accounting for lease agreements. Under this standard, all leases, including operating leases, will require recognition of the lease assets and lease liabilities by lessees on the balance sheet. However, the net effect on the statement of operations and the statement of cash flows largely is unchanged. The standard is effective for fiscal years beginning after December 15, 2018. The standard requires a modified retrospective approach, with restatement of the periods presented in the year of adoption. The primary impact of the new standard will be to the treatment of our 25 ground leases, which represent approximately 85% of our annual operating lease payments. While we have not completed our analysis, we believe that application of this standard will result in the recording of a right of use asset and the related lease liability of between $400 million and $500 million for the ground leases, although changes in discount rates, ground lease terms or other variables may have a significant effect on this analysis. We expect the adoption of this standard to have minimal impact on our income statement.
3. | Earnings Per Common Share (Unit) |
Basic earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders) by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding. Diluted earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders), as adjusted for potentially dilutive securities, by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding plus other potentially dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans or the Host L.P. common OP units distributed to Host Inc. to support such granted shares, granted, and other non-controlling interests that have the option to convert their limited partnershippartner interests to Host L.P. common OP units. No effect is shown for any securities that are anti-dilutive. We have 8.39.8 million Host L.P. common OP units, which are convertible into 8.510.0 million Host Inc. common shares, whichthat are not included in Host Inc.’s calculation of earnings (loss) per share as their effect is not dilutive. The calculation of Host Inc. basic and diluted earnings per common share is shown below (in millions, except per share amounts):
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income |
| $ | 105 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 643 |
|
Less: Net income attributable to non-controlling interests |
|
| (1 | ) |
|
| (1 | ) |
|
| (6 | ) |
|
| (7 | ) |
Net income attributable to Host Inc. |
| $ | 104 |
|
| $ | 107 |
|
| $ | 472 |
|
| $ | 636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
| 738.8 |
|
|
| 740.6 |
|
|
| 738.5 |
|
|
| 744.8 |
|
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market |
|
| 0.2 |
|
|
| 0.5 |
|
|
| 0.2 |
|
|
| 0.4 |
|
Diluted weighted average shares outstanding |
|
| 739.0 |
|
|
| 741.1 |
|
|
| 738.7 |
|
|
| 745.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
| $ | .14 |
|
| $ | .14 |
|
| $ | .64 |
|
| $ | .85 |
|
Diluted earnings per common share |
| $ | .14 |
|
| $ | .14 |
|
| $ | .64 |
|
| $ | .85 |
|
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Net income |
| $ | 214 |
|
| $ | 260 |
|
| $ | 505 |
|
| $ | 378 |
|
Less: Net income attributable to non-controlling interests |
|
| (4 | ) |
|
| (4 | ) |
|
| (8 | ) |
|
| (6 | ) |
Net income attributable to Host Inc. |
| $ | 210 |
|
| $ | 256 |
|
| $ | 497 |
|
| $ | 372 |
|
|
|
|
|
|
|
|
|
| ||||||||
Basic weighted average shares outstanding |
|
| 711.3 |
|
|
| 714.8 |
|
|
| 712.3 |
|
|
| 714.6 |
|
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market |
|
| 1.9 |
|
|
| 2.2 |
|
|
| 1.9 |
|
|
| 2.2 |
|
Diluted weighted average shares outstanding |
|
| 713.2 |
|
|
| 717.0 |
|
|
| 714.2 |
|
|
| 716.8 |
|
Basic earnings per common share |
| $ | 0.30 |
|
| $ | 0.36 |
|
| $ | 0.70 |
|
| $ | 0.52 |
|
Diluted earnings per common share |
| $ | 0.29 |
|
| $ | 0.36 |
|
| $ | 0.70 |
|
| $ | 0.52 |
|
13
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The calculation of Host L.P. basic and diluted earnings per unit is shown below (in millions, except per unit amounts):
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
Net income |
| $ | 105 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 643 |
|
| $ | 214 |
|
| $ | 260 |
|
| $ | 505 |
|
| $ | 378 |
|
Less: Net loss attributable to non-controlling interests |
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| 1 |
| ||||||||||||||||
Less: Net (income) loss attributable to non-controlling interests |
|
| (1 | ) |
|
| 1 |
|
|
| (1 | ) |
|
| — |
| ||||||||||||||||
Net income attributable to Host L.P. |
| $ | 106 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 644 |
|
| $ | 213 |
|
| $ | 261 |
|
| $ | 504 |
|
| $ | 378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic weighted average units outstanding |
|
| 731.6 |
|
|
| 733.8 |
|
|
| 731.4 |
|
|
| 738.1 |
|
|
| 706.3 |
|
|
| 710.0 |
|
|
| 707.3 |
|
|
| 709.5 |
|
Assuming distribution of common units to support shares granted under the comprehensive stock plans, less shares assumed purchased at market |
|
| 0.2 |
|
|
| 0.5 |
|
|
| 0.2 |
|
|
| 0.4 |
| ||||||||||||||||
Assuming distribution of common units granted under the comprehensive stock plans, less units assumed purchased at market |
|
| 1.8 |
|
|
| 2.2 |
|
|
| 1.8 |
|
|
| 2.1 |
| ||||||||||||||||
Diluted weighted average units outstanding |
|
| 731.8 |
|
|
| 734.3 |
|
|
| 731.6 |
|
|
| 738.5 |
|
|
| 708.1 |
|
|
| 712.2 |
|
|
| 709.1 |
|
|
| 711.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Basic earnings per common unit |
| $ | .14 |
|
| $ | .15 |
|
| $ | .65 |
|
| $ | .87 |
|
| $ | 0.30 |
|
| $ | 0.37 |
|
| $ | 0.71 |
|
| $ | 0.53 |
|
Diluted earnings per common unit |
| $ | .14 |
|
| $ | .15 |
|
| $ | .65 |
|
| $ | .87 |
|
| $ | 0.30 |
|
| $ | 0.37 |
|
| $ | 0.71 |
|
| $ | 0.53 |
|
4. |
|
PropertySubstantially all our operating results represent revenues and equipment consists ofexpenses generated by property-level operations. Payments are due from customers when services are provided to them. Due to the following (in millions):
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
Land and land improvements |
| $ | 2,072 |
|
| $ | 2,047 |
|
Buildings and leasehold improvements |
|
| 13,658 |
|
|
| 13,483 |
|
Furniture and equipment |
|
| 2,362 |
|
|
| 2,377 |
|
Construction in progress |
|
| 94 |
|
|
| 86 |
|
|
|
| 18,186 |
|
|
| 17,993 |
|
Less accumulated depreciation and amortization |
|
| (8,172 | ) |
|
| (7,848 | ) |
|
| $ | 10,014 |
|
| $ | 10,145 |
|
n
|
|
Credit Facility. During the quarter, we repaid A$50 million ($39 million) under the revolver portionshort-term nature of our credit facility. Ascontracts and the almost concurrent receipt of September 30, 2017,payment, we had $807 millionhave no material unearned revenue at quarter end. We collect sales, use, occupancy and similar taxes from our customers, which we present on a net basis (excluded from revenues) on our statements of available capacity under the revolver portion of our credit facility.operations.
Mortgage Debt. In connection with the sale of the Hilton Melbourne South Wharf hotel, we repaid the A$86 million ($69 million) mortgage loan secured by the property.
1412
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Disaggregation of Revenues. While we do not consider the following disclosure of hotel revenues by location to consist of reportable segments, we have disaggregated hotel revenues by market location. Our revenues also are presented by country in Note 8 – Geographic Information.
By Location. The following table presents hotel revenues for each of the geographic locations in our consolidated hotel portfolio (in millions):
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
Location |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Orlando |
| $ | 121 |
|
| $ | 129 |
|
| $ | 262 |
|
| $ | 237 |
|
San Diego |
|
| 130 |
|
|
| 118 |
|
|
| 255 |
|
|
| 205 |
|
Maui/Oahu |
|
| 124 |
|
|
| 126 |
|
|
| 250 |
|
|
| 242 |
|
Phoenix |
|
| 92 |
|
|
| 101 |
|
|
| 221 |
|
|
| 212 |
|
San Francisco/San Jose |
|
| 88 |
|
|
| 90 |
|
|
| 188 |
|
|
| 142 |
|
Washington, D.C. (Central Business District) |
|
| 102 |
|
|
| 92 |
|
|
| 178 |
|
|
| 130 |
|
Florida Gulf Coast |
|
| 71 |
|
|
| 100 |
|
|
| 167 |
|
|
| 231 |
|
New York |
|
| 96 |
|
|
| 93 |
|
|
| 166 |
|
|
| 143 |
|
Miami |
|
| 63 |
|
|
| 69 |
|
|
| 146 |
|
|
| 152 |
|
Houston |
|
| 36 |
|
|
| 31 |
|
|
| 73 |
|
|
| 57 |
|
Boston |
|
| 42 |
|
|
| 30 |
|
|
| 71 |
|
|
| 48 |
|
Jacksonville |
|
| 39 |
|
|
| 39 |
|
|
| 70 |
|
|
| 68 |
|
Los Angeles/Orange County |
|
| 34 |
|
|
| 35 |
|
|
| 68 |
|
|
| 60 |
|
San Antonio |
|
| 30 |
|
|
| 29 |
|
|
| 66 |
|
|
| 56 |
|
Chicago |
|
| 43 |
|
|
| 39 |
|
|
| 62 |
|
|
| 53 |
|
New Orleans |
|
| 29 |
|
|
| 29 |
|
|
| 58 |
|
|
| 49 |
|
Austin |
|
| 23 |
|
|
| 26 |
|
|
| 48 |
|
|
| 46 |
|
Seattle |
|
| 29 |
|
|
| 27 |
|
|
| 47 |
|
|
| 37 |
|
Northern Virginia |
|
| 24 |
|
|
| 23 |
|
|
| 43 |
|
|
| 35 |
|
Philadelphia |
|
| 25 |
|
|
| 23 |
|
|
| 42 |
|
|
| 36 |
|
Denver |
|
| 23 |
|
|
| 24 |
|
|
| 37 |
|
|
| 36 |
|
Atlanta |
|
| 17 |
|
|
| 17 |
|
|
| 35 |
|
|
| 30 |
|
Other |
|
| 86 |
|
|
| 72 |
|
|
| 176 |
|
|
| 123 |
|
Domestic |
|
| 1,367 |
|
|
| 1,362 |
|
|
| 2,729 |
|
|
| 2,428 |
|
International |
|
| 26 |
|
|
| 19 |
|
|
| 45 |
|
|
| 27 |
|
Total |
| $ | 1,393 |
|
| $ | 1,381 |
|
| $ | 2,774 |
|
| $ | 2,455 |
|
5. | Property and Equipment |
Property and equipment consists of the following (in millions):
|
| June 30, 2023 |
|
| December 31, 2022 |
| ||
Land and land improvements |
| $ | 2,012 |
|
| $ | 2,020 |
|
Buildings and leasehold improvements |
|
| 13,919 |
|
|
| 13,849 |
|
Furniture and equipment |
|
| 2,247 |
|
|
| 2,249 |
|
Construction in progress |
|
| 403 |
|
|
| 313 |
|
|
| 18,581 |
|
|
| 18,431 |
| |
Less accumulated depreciation and amortization |
|
| (8,864 | ) |
|
| (8,683 | ) |
| $ | 9,717 |
|
| $ | 9,748 |
|
13
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
EquityThe components of the equity of Host Inc. is allocated between controlling and non-controlling interestsare as follows (in millions):
|
| Equity of Host Inc. |
|
| Non-redeemable, non-controlling interests |
|
| Total equity |
|
| Redeemable, non-controlling interests |
| |||||||||||||||||||||||||
Balance, December 31, 2016 |
| $ | 6,994 |
|
| $ | 39 |
|
| $ | 7,033 |
|
| $ | 165 |
| |||||||||||||||||||||
| Common Stock |
| Additional Paid-in Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings / (Deficit) |
| Non-redeemable, non-controlling interests |
| Total equity |
| Redeemable, non-controlling interests |
| |||||||||||||||||||||||
Balance, December 31, 2022 | $ | 7 |
| $ | 7,717 |
| $ | (75 | ) | $ | (939 | ) | $ | 5 |
| $ | 6,715 |
| $ | 164 |
| ||||||||||||||||
Net income |
|
| 472 |
|
|
| — |
|
|
| 472 |
|
|
| 6 |
|
| — |
| — |
| — |
| 497 |
| 1 |
| 498 |
| 7 |
| ||||||
Issuance of common stock for comprehensive stock plans |
|
| 17 |
|
|
| — |
|
|
| 17 |
|
|
| — |
| |||||||||||||||||||||
Issuance of common stock for comprehensive stock plans, net |
| — |
| 4 |
| — |
| — |
| — |
| 4 |
| — |
| ||||||||||||||||||||||
Repurchase of common |
| — |
| (50 | ) |
| — |
| — |
| — |
| (50 | ) |
| — |
| ||||||||||||||||||||
Dividends declared on common stock |
|
| (443 | ) |
|
| — |
|
|
| (443 | ) |
|
| — |
|
| — |
| — |
| — |
| (194 | ) |
| — |
| (194 | ) |
| — |
| ||||
Distributions to non-controlling interests |
|
| — |
|
|
| (14 | ) |
|
| (14 | ) |
|
| (5 | ) |
| — |
| — |
| — |
| — |
| (1 | ) |
| (1 | ) |
| (3 | ) | ||||
Changes in ownership and other |
|
| 14 |
|
|
| 3 |
|
|
| 17 |
|
|
| (9 | ) | |||||||||||||||||||||
Other comprehensive income |
|
| 25 |
|
|
| 1 |
|
|
| 26 |
|
|
| — |
|
| — |
|
| — |
|
| 5 |
|
| — |
|
| — |
|
| 5 |
|
| — |
|
Balance, September 30, 2017 |
| $ | 7,079 |
|
| $ | 29 |
|
| $ | 7,108 |
|
| $ | 157 |
| |||||||||||||||||||||
Balance, June 30, 2023 | $ | 7 |
| $ | 7,671 |
| $ | (70 | ) | $ | (636 | ) | $ | 5 |
| $ | 6,977 |
| $ | 168 |
|
| Common Stock |
| Additional Paid-in Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings / (Deficit) |
| Non-redeemable, non-controlling interests |
| Total equity |
| Redeemable, non-controlling interests |
| |||||||
Balance, March 31, 2023 | $ | 7 |
| $ | 7,663 |
| $ | (73 | ) | $ | (739 | ) | $ | 5 |
| $ | 6,863 |
| $ | 167 |
|
Net income |
| — |
|
| — |
|
| — |
|
| 210 |
|
| 1 |
|
| 211 |
|
| 3 |
|
Issuance of common stock for comprehensive stock plans, net |
| — |
|
| 8 |
|
| — |
|
| — |
|
| — |
|
| 8 |
|
| — |
|
Dividends declared on common stock |
| — |
|
| — |
|
| — |
|
| (107 | ) |
| — |
|
| (107 | ) |
| — |
|
Distributions to non-controlling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| (1 | ) |
| (1 | ) |
| (2 | ) |
Other comprehensive income |
| — |
|
| — |
|
| 3 |
|
| — |
|
| — |
|
| 3 |
|
| — |
|
Balance, June 30, 2023 | $ | 7 |
| $ | 7,671 |
| $ | (70 | ) | $ | (636 | ) | $ | 5 |
| $ | 6,977 |
| $ | 168 |
|
14
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| Common Stock |
| Additional Paid-in Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings / (Deficit) |
| Non-redeemable, non-controlling interests |
| Total equity |
| Redeemable, non-controlling interests |
| |||||||
Balance, December 31, 2021 | $ | 7 |
| $ | 7,702 |
| $ | (76 | ) | $ | (1,192 | ) | $ | 5 |
| $ | 6,446 |
| $ | 126 |
|
Net income |
| — |
|
| — |
|
| — |
|
| 372 |
|
| — |
|
| 372 |
|
| 6 |
|
Issuance of common stock for comprehensive stock plans, net |
| — |
|
| 3 |
|
| — |
|
| — |
|
| — |
|
| 3 |
|
| — |
|
Dividends declared on common stock |
| — |
|
| — |
|
| — |
|
| (65 | ) |
| — |
|
| (65 | ) |
| — |
|
Issuance of common OP units |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 56 |
|
Distributions to non-controlling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (1 | ) |
Changes in ownership and other |
| — |
|
| 24 |
|
| — |
|
| — |
|
| — |
|
| 24 |
|
| (24 | ) |
Other comprehensive income |
| — |
|
| — |
|
| 2 |
|
| — |
|
| — |
|
| 2 |
|
| — |
|
Balance, June 30, 2022 | $ | 7 |
| $ | 7,729 |
| $ | (74 | ) | $ | (885 | ) | $ | 5 |
| $ | 6,782 |
| $ | 163 |
|
| Common Stock |
| Additional Paid-in Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings / (Deficit) |
| Non-redeemable, non-controlling interests |
| Total equity |
| Redeemable, non-controlling interests |
| |||||||
Balance, March 31, 2022 | $ | 7 |
| $ | 7,680 |
| $ | (69 | ) | $ | (1,098 | ) | $ | 5 |
| $ | 6,525 |
| $ | 203 |
|
Net income (loss) |
| — |
|
| — |
|
| — |
|
| 256 |
|
| (1 | ) |
| 255 |
|
| 5 |
|
Issuance of common stock for comprehensive stock plans, net |
| — |
|
| 12 |
|
| — |
|
| — |
|
| — |
|
| 12 |
|
| — |
|
Dividends declared on common |
| — |
|
| — |
|
| — |
|
| (43 | ) |
| — |
|
| (43 | ) |
| — |
|
Distributions to non-controlling |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (1 | ) |
Changes in ownership and other |
| — |
|
| 37 |
|
| — |
|
| — |
|
| 1 |
|
| 38 |
|
| (44 | ) |
Other comprehensive loss |
| — |
|
| — |
|
| (5 | ) |
| — |
|
| — |
|
| (5 | ) |
| — |
|
Balance, June 30, 2022 | $ | 7 |
| $ | 7,729 |
| $ | (74 | ) | $ | (885 | ) | $ | 5 |
| $ | 6,782 |
| $ | 163 |
|
Capital of Host L.P.
As of SeptemberJune 30, 2017,2023, Host Inc. is the owner of approximately 99%99% of Host L.P.’s common OP units. The remaining common OP units are heldowned by third partyunaffiliated limited partners. Each common OP unit may be redeemed for cash or, at the election of Host Inc., Host Inc. common stock, based on the conversion ratio of 1.021494 shares of Host Inc. common stock for each common OP unit.
In exchange for any shares issued by Host Inc., Host L.P. will issue common OP units to Host Inc. based on the applicable conversion ratio. Additionally, funds used by Host Inc. to pay dividends on its common stock are provided by distributions from Host L.P.
Capital of Host L.P. is allocated between controlling and non-controlling interests as follows (in millions):
|
| Capital of Host L.P. |
|
| Non-controlling interests |
|
| Total capital |
|
| Limited partnership interest of third parties |
| ||||
Balance, December 31, 2016 |
| $ | 6,994 |
|
| $ | 39 |
|
| $ | 7,033 |
|
| $ | 165 |
|
Net income |
|
| 472 |
|
|
| — |
|
|
| 472 |
|
|
| 6 |
|
Issuance of common OP units to Host Inc. for comprehensive stock plans |
|
| 17 |
|
|
| — |
|
|
| 17 |
|
|
| — |
|
Distributions declared on common OP units |
|
| (443 | ) |
|
| — |
|
|
| (443 | ) |
|
| (5 | ) |
Distributions to non-controlling interests |
|
| — |
|
|
| (14 | ) |
|
| (14 | ) |
|
| — |
|
Changes in ownership and other |
|
| 14 |
|
|
| 3 |
|
|
| 17 |
|
|
| (9 | ) |
Other comprehensive income |
|
| 25 |
|
|
| 1 |
|
|
| 26 |
|
|
| — |
|
Balance, September 30, 2017 |
| $ | 7,079 |
|
| $ | 29 |
|
| $ | 7,108 |
|
| $ | 157 |
|
Dividends/Distributions
On September 18, 2017, Host Inc.’s Board of Directors declared a regular quarterly cash dividend of $0.20 per share on its common stock. The dividend was paid on October 16, 2017 to stockholders of record as of September 29, 2017. Accordingly, Host L.P. made a distribution of $0.2042988 per unit on its common OP units based on the current conversion ratio.
15
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The components of the Capital of Host L.P. are as follows (in millions):
| General Partner |
| Limited Partner |
| Accumulated Other Comprehensive Income (Loss) |
| Non-controlling interests |
| Total capital |
| Limited partnership interests of third parties |
| ||||||
Balance, December 31, 2022 | $ | 1 |
| $ | 6,784 |
| $ | (75 | ) | $ | 5 |
| $ | 6,715 |
| $ | 164 |
|
Net income |
| — |
|
| 497 |
|
| — |
|
| 1 |
|
| 498 |
|
| 7 |
|
Issuance of common OP units to Host Inc. for comprehensive stock plans, net |
| — |
|
| 4 |
|
| — |
|
| — |
|
| 4 |
|
| — |
|
Repurchase of common OP units |
| — |
|
| (50 | ) |
| — |
|
| — |
|
| (50 | ) |
| — |
|
Distributions declared on common OP units |
| — |
|
| (194 | ) |
| — |
|
| — |
|
| (194 | ) |
| (3 | ) |
Distributions to non-controlling interests |
| — |
|
| — |
|
| — |
|
| (1 | ) |
| (1 | ) |
| — |
|
Other comprehensive income |
| — |
|
| — |
|
| 5 |
|
| — |
|
| 5 |
|
| — |
|
Balance, June 30, 2023 | $ | 1 |
| $ | 7,041 |
| $ | (70 | ) | $ | 5 |
| $ | 6,977 |
| $ | 168 |
|
| General Partner |
| Limited Partner |
| Accumulated Other Comprehensive Income (Loss) |
| Non-controlling interests |
| Total capital |
| Limited partnership interests of third parties |
| ||||||
Balance, March 31, 2023 | $ | 1 |
| $ | 6,930 |
| $ | (73 | ) | $ | 5 |
| $ | 6,863 |
| $ | 167 |
|
Net income |
| — |
|
| 210 |
|
| — |
|
| 1 |
|
| 211 |
|
| 3 |
|
Issuance of common OP units to Host Inc. for comprehensive stock plans, net |
| — |
|
| 8 |
|
| — |
|
| — |
|
| 8 |
|
| — |
|
Distributions declared on common OP units |
| — |
|
| (107 | ) |
| — |
|
| — |
|
| (107 | ) |
| (2 | ) |
Distributions to non-controlling interests |
| — |
|
| — |
|
| — |
|
| (1 | ) |
| (1 | ) |
| — |
|
Other comprehensive income |
| — |
|
| — |
|
| 3 |
|
| — |
|
| 3 |
|
| — |
|
Balance, June 30, 2023 | $ | 1 |
| $ | 7,041 |
| $ | (70 | ) | $ | 5 |
| $ | 6,977 |
| $ | 168 |
|
General Partner |
| Limited Partner |
| Accumulated Other Comprehensive Income (Loss) |
| Non-controlling interests |
| Total capital |
| Limited partnership interests of third parties |
| |||||||
Balance, December 31, 2021 | $ | 1 |
| $ | 6,516 |
| $ | (76 | ) | $ | 5 |
| $ | 6,446 |
| $ | 126 |
|
Net income |
| — |
|
| 372 |
|
| — |
|
| — |
|
| 372 |
|
| 6 |
|
Issuance of common OP units to Host Inc. for comprehensive stock plans, net |
| — |
|
| 3 |
|
| — |
|
| — |
|
| 3 |
|
| — |
|
Distributions declared on common OP units |
| — |
|
| (65 | ) |
| — |
|
| — |
|
| (65 | ) |
| (1 | ) |
Issuance of common OP units |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 56 |
|
Changes in ownership and other |
| — |
|
| 24 |
|
| — |
|
| — |
|
| 24 |
|
| (24 | ) |
Other comprehensive income |
| — |
|
| — |
|
| 2 |
|
| — |
|
| 2 |
|
| — |
|
Balance, June 30, 2022 | $ | 1 |
| $ | 6,850 |
| $ | (74 | ) | $ | 5 |
| $ | 6,782 |
| $ | 163 |
|
16
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| General Partner |
| Limited Partner |
| Accumulated Other Comprehensive Income (Loss) |
| Non-controlling interests |
| Total capital |
| Limited partnership interests of third parties |
| ||||||
Balance, March 31, 2022 | $ | 1 |
| $ | 6,588 |
| $ | (69 | ) | $ | 5 |
| $ | 6,525 |
| $ | 203 |
|
Net income (loss) |
| — |
|
| 256 |
|
| — |
|
| (1 | ) |
| 255 |
|
| 5 |
|
Issuance of common OP units to Host Inc. for comprehensive stock plans, net |
| — |
|
| 12 |
|
| — |
|
| — |
|
| 12 |
|
| — |
|
Distributions declared on common |
| — |
|
| (43 | ) |
| — |
|
| — |
|
| (43 | ) |
| (1 | ) |
Changes in ownership and other |
| — |
|
| 37 |
|
| — |
|
| 1 |
|
| 38 |
|
| (44 | ) |
Other comprehensive loss |
| — |
|
| — |
|
| (5 | ) |
| — |
|
| (5 | ) |
| — |
|
Balance, June 30, 2022 | $ | 1 |
| $ | 6,850 |
| $ | (74 | ) | $ | 5 |
| $ | 6,782 |
| $ | 163 |
|
Share Repurchases
During the first quarter of 2023, we repurchased 3.2 million shares at an average price of $15.65 per share, exclusive of commissions, through our common share repurchase program for a total of $50 million. There were no share repurchases in the second quarter of 2023. As of June 30, 2023, there was $923 million available for repurchase under our common share repurchase program.
Issuance of Common Stock
On May 31, 2023, we entered into a distribution agreement with J. P. Morgan Securities LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc. and Wells Fargo Securities, LLC, as sales agents pursuant to which Host Inc. may offer and sell, from time to time, shares of Host Inc. common stock having an aggregate offering price of up to $600 million. The sales will be made in transactions that are deemed to be “at the market” offerings under the SEC rules. We may sell shares of Host Inc. common stock under this program from time to time based on market conditions, although we are not under an obligation to sell any shares. The agreement also contemplates that, in addition to the offering and sale of shares to or through the sales agents, we may enter into separate forward sale agreements with each of the forward purchasers named in the agreement. No shares were issued during the first half of 2023. As of June 30, 2023, there was $600 million of remaining capacity under the agreement.
Dividends/Distributions
On June 14, 2023, Host Inc.'s Board of Directors announced a regular quarterly cash dividend of $0.15 per share on its common stock. The dividend was paid on July 17, 2023 to stockholders of record as of June 30, 2023. Accordingly, Host L.P. made a distribution of $0.1532241 per unit on its common OP units based on the current conversion ratio.
17
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the third quarter 2017, we sold the Hilton Melbourne South Wharf for A$230 million ($184 million) and the Sheraton Indianapolis at Keystone Crossing for $66 million, and recorded a total gain of approximately $58 million. In connection with the sale of the Hilton Melbourne South Wharf, we recorded taxes of $22 million associated with the gain on sale.
As of September 30, 2017, the Key Bridge Marriott has been classified as held for sale.
| Fair Value Measurements |
Derivatives and Hedging
Foreign Investment Hedging Instruments. We have three foreign currency forward sale contracts in the aggregate notional amount of $70 million that hedge a portion of the foreign currency exposure resulting from the eventual repatriation of our Canadian dollar and euro net investments in foreign operations. These derivatives are considered hedges of the foreign currency exposure of a net investment in a foreign operation. The contracts are required to be measured at fair value on a recurring basis using significant other observable inputs (Level 2) in the GAAP fair value hierarchy. As a result, we recorded a liability of $4 million and an asset of $12 million as of September 30, 2017 and December 31, 2016, respectively, related to these foreign currency forward sale contracts. These contracts are marked-to-market with changes in fair value recorded to other comprehensive income (loss). We recorded losses of $4 million and $1 million for the quarters ended September 30, 2017 and 2016, respectively, and losses of $14 million and $3 million for the year-to-date periods ended September 30, 2017 and 2016, respectively. The foreign currency forward sale contracts are valued based on the forward yield curve of the foreign currency to U.S. dollar forward exchange rate on the date of measurement. We also evaluate counterparty credit risk when we calculate the fair value of the derivatives.
In addition to the foreign currency forward sale contracts, we have designated $128 million of the foreign currency draws on our credit facility as hedges of net investments in foreign operations. Changes in fair value of the designated credit facility draws are recorded to other comprehensive income (loss). We recorded a loss of $4 million and a gain of $2 million for the quarters ended September 30, 2017 and 2016, respectively, and losses of $12 million and $5 million for the year-to-date periods ended September 30, 2017 and 2016, respectively.
Other Liabilities
Fair Value of Other Financial Liabilities. We did not elect the fair value measurement option for any of our other financial assets or liabilities. The fair values of ournotes receivable, secured debt and our credit facility are determined based on the expected future payments discounted at risk-adjusted rates. Our senior notes are valued based on quoted market prices. The fair values of financial instruments not included in this table are estimated to be equal to their carrying amounts.
The fair value of certain financial assets and financial liabilities is shown below (in millions):
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||||||||||||||||||
|
| Carrying Amount |
|
| Fair Value |
|
| Carrying Amount |
|
| Fair Value |
|
| June 30, 2023 |
|
| December 31, 2022 |
| ||||||||||||||
|
| Carrying |
|
| Fair Value |
|
| Carrying |
|
| Fair Value |
| ||||||||||||||||||||
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Notes receivable (Level 2) |
| $ | 485 |
|
| $ | 483 |
|
| $ | 413 |
|
| $ | 404 |
| ||||||||||||||||
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Senior notes (Level 1) |
| $ | 2,777 |
|
| $ | 2,952 |
|
| $ | 2,380 |
|
| $ | 2,477 |
|
|
| 3,117 |
|
|
| 2,815 |
|
|
| 3,115 |
|
|
| 2,768 |
|
Credit facility (Level 2) |
|
| 1,184 |
|
|
| 1,193 |
|
|
| 1,206 |
|
|
| 1,211 |
|
|
| 987 |
|
|
| 1,000 |
|
|
| 994 |
|
|
| 1,000 |
|
Mortgage debt and other, excluding capital leases (Level 2) |
|
| — |
|
|
| — |
|
|
| 62 |
|
|
| 62 |
| ||||||||||||||||
Mortgage debt (Level 2) |
|
| 101 |
|
|
| 87 |
|
|
| 102 |
|
|
| 95 |
|
Notes receivable consists of three loans issued to the buyers in connection with the sales of The Camby, Autograph Collection, the Sheraton Boston Hotel and the Sheraton New York Times Square Hotel. The loan to the buyer of the Sheraton Boston Hotel matured on August 1, 2023. We entered into a forbearance agreement with the buyer on August 1, 2023, by which we will forbear exercising our remedies until September 30, 2023. In exchange, the all-in interest rate on the loan was increased from 6.5% to 12% and the buyer made a principal paydown of 10% of the outstanding principal balance, among other consideration.
E
| Geographic Information |
We consider each one of our hotels to be an operating segment, none of which meets the threshold for a reportable segment. We alsoas we allocate resources and assess operating performance based on individual hotels. All of our hotels meet the aggregation criteria for segment reporting and our other real estate investment activities (primarily our retail spaces and office buildings and apartments)buildings) are immaterial and, with our operating segments, meet the aggregation criteria, and thus,immaterial. As such, we report one segment: hotel ownership. Our consolidated foreign operations
16
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
consist of hotels in threetwo countries as of SeptemberJune 30, 2017.2023. There were no intersegment sales during the periods presented.
The following table presents total revenues and property and equipment, net, for each of the geographical areas in which we operate (in millions):
|
| Revenues |
|
| Revenues |
|
| Property and Equipment, net |
|
| Total Revenues |
|
| Property and Equipment, net |
| |||||||||||||||||||||||||||||||||
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
|
| September 30, |
|
| December 31, |
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
|
| June 30, |
|
| December 31, |
| ||||||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||||||
United States |
| $ | 1,225 |
|
| $ | 1,247 |
|
| $ | 3,947 |
|
| $ | 3,959 |
|
| $ | 9,864 |
|
| $ | 9,913 |
|
| $ | 1,367 |
|
| $ | 1,362 |
|
| $ | 2,729 |
|
| $ | 2,428 |
|
| $ | 9,645 |
|
| $ | 9,678 |
|
Australia |
|
| 2 |
|
|
| 8 |
|
|
| 18 |
|
|
| 24 |
|
|
| — |
|
|
| 85 |
| ||||||||||||||||||||||||
Brazil |
|
| 5 |
|
|
| 15 |
|
|
| 16 |
|
|
| 29 |
|
|
| 62 |
|
|
| 63 |
|
|
| 5 |
|
|
| 3 |
|
|
| 11 |
|
|
| 7 |
|
|
| 37 |
|
|
| 33 |
|
Canada |
|
| 16 |
|
|
| 16 |
|
|
| 42 |
|
|
| 40 |
|
|
| 73 |
|
|
| 71 |
|
|
| 21 |
|
|
| 16 |
|
|
| 34 |
|
|
| 20 |
|
|
| 35 |
|
|
| 37 |
|
Chile |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 9 |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||
Mexico |
|
| 6 |
|
|
| 6 |
|
|
| 20 |
|
|
| 21 |
|
|
| 15 |
|
|
| 13 |
| ||||||||||||||||||||||||
New Zealand |
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| 11 |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||
Total |
| $ | 1,254 |
|
| $ | 1,295 |
|
| $ | 4,043 |
|
| $ | 4,093 |
|
| $ | 10,014 |
|
| $ | 10,145 |
|
| $ | 1,393 |
|
| $ | 1,381 |
|
| $ | 2,774 |
|
| $ | 2,455 |
|
| $ | 9,717 |
|
| $ | 9,748 |
|
| Non-controlling Interests |
Host Inc.’s treatment of the non-controlling interests of Host L.P.: Host Inc. adjusts the amount of the non-controlling interests of Host L.P. each period so that the amount presented equals the greater of its carrying valueamount based on accumulated historical cost or its redemption value. The historical cost is based on the proportional relationship between the historical cost of equity held by our common stockholders relative to that of the common unitholders of Host L.P. The redemption value is based on the amount of cash or Host Inc. common stock, at our option, that would be paid to the non-controlling interests of Host L.P. if it were terminated. Therefore,We have estimated that the redemption value of the common OP units is equivalent to the number of common shares that would be issuedissuable upon conversion of the common OP units held by third parties valued at the market price of Host Inc. common stock at the balance sheet date. One common OP unit may be exchanged for 1.021494 shares of Host Inc. common stock. Non-controllingRedeemable non-controlling interests of Host L.P. are
18
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
classified in the mezzanine section of our balance sheets as they do not meet the requirements for equity classification because the redemption feature requires the delivery of registered shares.
The table below details the historical cost and redemption values for the non-controlling interests:interests of Host L.P.:
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
Common OP units outstanding (millions) |
|
| 8.3 |
|
|
| 8.6 |
|
Market price per Host Inc. common share |
| $ | 18.49 |
|
| $ | 18.84 |
|
Shares issuable upon conversion of one common OP unit |
|
| 1.021494 |
|
|
| 1.021494 |
|
Redemption value (millions) |
| $ | 157 |
|
| $ | 165 |
|
Historical cost (millions) |
|
| 82 |
|
|
| 84 |
|
Book value (millions) (1) |
|
| 157 |
|
|
| 165 |
|
___________ |
|
|
|
|
|
|
|
|
June 30, 2023 December 31, 2022 Common OP units outstanding (millions) 9.8 10.0 Market price per Host Inc. common share $ 16.83 $ 16.05 Shares issuable upon conversion of one common OP unit 1.021494 1.021494 Redemption value (millions) $ 168 $ 164 Historical cost (millions) 99 97 Book value (millions) ⁽¹⁾ 168 164 ___________ (1) The book value recorded is equal to the greater of redemption value or historical cost. |
|
|
Other Consolidated Partnerships. WeAs of June 30, 2023, we consolidate threetwo majority-owned partnerships that have third-party, non-controlling partners.ownership interests. The third-party partnershiplimited partner interests are included in non-redeemable non-controlling interests — other consolidated partnerships on the balance sheets and totaled $29 million and $39$5 million as of Septemberboth June 30, 20172023 and December 31, 2016, respectively2022.
10. | Contingencies |
11.Contingencies
AllWhile the majority of our hotels in Houston and Florida were affected by Hurricanes Harvey and Irma in August andHurricane Ian, which made landfall on September 2017, respectively. All four of our hotels in Houston were able to remain operational28, 2022, the most significant damage sustained during the hurricane. In Florida, duestorm occurred at The Ritz-Carlton, Naples and Hyatt Regency Coconut Point Resort and Spa. The Hyatt Regency Coconut Point reopened to evacuation mandatesguests in November 2022, and lossthe final phase of commercial power, seven ofreconstruction, the nine properties were closed for a period of time. Weresort's waterpark, was completed in June 2023. On July 6, 2023, The Ritz-Carlton, Naples reopened the guestrooms, suites and amenities, including the new tower expansion.
17
HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We are still evaluating the complete property and business interruption impact to our hotels. However, our current estimateimpacts of the book valuestorm. During the second quarter of the2023, we recorded an additional $25 million of property damage and equipment written off, and the related repairs and cleanupremediation costs, is approximately $31 million andincreasing our total estimate to $130 million. We have recorded a corresponding insurance receivable of $31$130 million. We believe ourAs of June 30, 2023, we have received $113 million of property insurance coverage should be sufficientproceeds related to cover a substantial portion ofthese claims, reducing the receivable to $17 million. Our expected potential insurance recovery is $310 million for covered costs, including the property damage to the hotelsremediation and reconstruction costs and the near-term loss of business.business; however, there can be no assurances that this coverage will be sufficient to cover the entirety of the impact from the storm.
| Legal Proceedings |
We are involved in various legal proceedings in the normalordinary course of business regarding the operation of our hotels and companyCompany matters. To the extent not covered by insurance, these legal proceedings generally fall into the following broad categories: disputes involving hotel-level contracts, employment litigation, compliance with laws such as the Americans with Disabilities Act, tax disputes and other general matters. Under our management agreements, our operators have broad latitude to resolve individual hotel-level claims for amounts generally less than $150,000.$150,000. However, for matters exceeding such threshold, our operators may not settle claims without our consent.
Based on our analysis of legal proceedings with which we currently are involved or of which we currently are aware and our experience in resolving similar claims in the past, we have accrued approximately $4 millionrecorded immaterial accruals as of SeptemberJune 30, 20172023 related to such claims. We have estimated that, in the aggregate, our losses related to these proceedings couldwill not be as much as $17 million. We believe this range represents the maximum potential loss for all our legal proceedings.material. We are not aware of any other matters with a reasonably possible unfavorable outcome for which disclosure of a loss contingency is required. No assurances can be given as to the outcome of any pending legal proceedings.
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report. Host Inc. operates as a self-managed and self-administered REIT. Host Inc. is the sole general partner of Host L.P. and holds approximately 99% of its partnership interests. Host L.P. is a limited partnership operating through an umbrella partnership structure. The remaining common OP units are owned by various unaffiliated limited partners.
Forward-Looking Statements
In this quarterly report on Form 10-Q, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 the duration and strength of U.S. economic growth and the potential for an economic recession in the United States or globally, the current 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, such as natural disasters, weather events (including Hurricane Ian in 2022), pandemics changes inand other public health crises, such as the international political climate,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 the pace of the economic recovery in Europe, the effects oflarge-scale wars or international conflicts, slowing global growth, or trade tensions and tariffs between the United Kingdom’s referendum to withdraw from the European Union, the slowing of growth in marketsStates and its trading partners such as China, and Brazil, or unrest in the Middle East, all of which could affect the relative volatility of global credit markets generally, global travel and lodging demand including with respect to our foreign hotel properties;
risks that the recent travel ban towithin the United States and proposed immigration policies will suppress international travel to the United States generally;
volatility in global financial and credit markets, including volatility caused by recent failures of several financial institutions and the impact of budget deficits and potential U.S. governmental action to address such deficits through reductions in spending and similar austerity measures,liquidity concerns at other financial institutions, 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;
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 or 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 which limit the amount of distributions from Host L.P. to Host Inc., 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;
our ability to maintain our propertieshotels 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 terms ofareas such as access, location, quality of accommodations and room rate structures;
our ability to acquire or develop additional propertieshotels and the risk that potential acquisitions or developments may not perform in accordance with our expectations;
20
risks associated with a single manager, Marriott International, managing a significant portionpercentage of our properties;
changes in the desirability of the geographic regions of the hotels in our portfolio or in the travel patterns of hotel customers;
|
|
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 propertieshotels on commercially reasonable terms;
the effect of a data breach or significant disruption of hotel operator information technology networks as a result of cybercyber- 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 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 our board of directors as to whether to pay future dividends at levels previously disclosed or to use available cash to pay special dividends.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions, including those risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 20162022 and in other filings with the Securities and Exchange Commission (“SEC”). Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material.
Operating Results
The following table reflects certain line items from our unaudited condensed consolidated statements of operations and significant operating statistics (in millions, except per share and hotel statistics):
Historical Income Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Quarter ended June 30, |
|
|
|
|
| Year-to-date ended June 30, |
|
|
|
| ||||||||||||
|
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Total revenues |
| $ | 1,393 |
|
| $ | 1,381 |
|
|
| 0.9 | % |
| $ | 2,774 |
|
| $ | 2,455 |
|
|
| 13.0 | % |
Net income |
|
| 214 |
|
|
| 260 |
|
|
| (17.7 | )% |
|
| 505 |
|
|
| 378 |
|
|
| 33.6 | % |
Operating profit |
|
| 249 |
|
|
| 327 |
|
|
| (23.9 | )% |
|
| 497 |
|
|
| 449 |
|
|
| 10.7 | % |
Operating profit margin under GAAP |
|
| 17.9 | % |
|
| 23.7 | % |
|
| (580 bps) |
|
|
| 17.9 | % |
|
| 18.3 | % |
|
| (40 bps) |
|
EBITDAre⁽¹⁾ |
| $ | 446 |
|
| $ | 506 |
|
|
| (11.9 | )% |
| $ | 890 |
|
| $ | 812 |
|
|
| 9.6 | % |
Adjusted EBITDAre⁽¹⁾ |
|
| 446 |
|
|
| 500 |
|
|
| (10.8 | )% |
|
| 890 |
|
|
| 806 |
|
|
| 10.4 | % |
Diluted earnings per common share |
|
| 0.29 |
|
|
| 0.36 |
|
|
| (19.4 | )% |
|
| 0.70 |
|
|
| 0.52 |
|
|
| 34.6 | % |
NAREIT FFO per diluted share⁽¹⁾ |
|
| 0.53 |
|
|
| 0.58 |
|
|
| (8.6 | )% |
|
| 1.07 |
|
|
| 0.97 |
|
|
| 10.3 | % |
Adjusted FFO per diluted share⁽¹⁾ |
|
| 0.53 |
|
|
| 0.58 |
|
|
| (8.6 | )% |
|
| 1.08 |
|
|
| 0.97 |
|
|
| 11.3 | % |
21
Comparable Hotel Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Quarter ended June 30, |
|
|
|
|
| Year-to-date ended June 30, |
|
|
|
| ||||||||||||
|
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Comparable hotel revenues ⁽¹⁾ |
| $ | 1,375 |
|
| $ | 1,324 |
|
|
| 3.9 | % |
| $ | 2,728 |
|
| $ | 2,334 |
|
|
| 16.9 | % |
Comparable hotel EBITDA ⁽¹⁾ |
|
| 449 |
|
|
| 490 |
|
|
| (8.4 | )% |
|
| 888 |
|
|
| 795 |
|
|
| 11.7 | % |
Comparable hotel EBITDA margin ⁽¹⁾ |
|
| 32.7 | % |
|
| 37.1 | % |
|
| (440 bps) |
|
|
| 32.6 | % |
|
| 34.1 | % |
|
| (150 bps) |
|
Comparable hotel Total RevPAR ⁽¹⁾ |
| $ | 367.54 |
|
| $ | 353.95 |
|
|
| 3.8 | % |
| $ | 366.74 |
|
| $ | 313.73 |
|
|
| 16.9 | % |
Comparable hotel RevPAR ⁽¹⁾ |
|
| 225.12 |
|
|
| 219.23 |
|
|
| 2.7 | % |
|
| 221.46 |
|
|
| 192.82 |
|
|
| 14.9 | % |
___________
Historical Income Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended September 30, |
|
|
|
|
|
| Year-to-date ended September 30, |
|
|
|
|
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Change |
|
| 2017 |
|
| 2016 |
|
| Change |
| ||||||
Total revenues |
| $ | 1,254 |
|
| $ | 1,295 |
|
|
| (3.2 | )% |
| $ | 4,043 |
|
| $ | 4,093 |
|
|
| (1.2 | )% |
Net income |
|
| 105 |
|
|
| 108 |
|
|
| (2.8 | )% |
|
| 478 |
|
|
| 643 |
|
|
| (25.7 | )% |
Operating profit |
|
| 127 |
|
|
| 144 |
|
|
| (11.8 | )% |
|
| 542 |
|
|
| 534 |
|
|
| 1.5 | % |
Operating profit margin under GAAP |
|
| 10.1 | % |
|
| 11.1 | % |
|
| (100 | bps) |
|
| 13.4 | % |
|
| 13.0 | % |
|
| 40 | bps |
Adjusted EBITDA (1) |
| $ | 317 |
|
| $ | 342 |
|
|
| (7.3 | )% |
| $ | 1,128 |
|
| $ | 1,123 |
|
|
| 0.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
| 0.14 |
|
|
| 0.14 |
|
| — |
|
|
| 0.64 |
|
|
| 0.85 |
|
|
| (24.7 | )% | |
NAREIT FFO and Adjusted FFO per diluted share (1) |
|
| 0.33 |
|
|
| 0.37 |
|
|
| (10.8 | )% |
|
| 1.27 |
|
|
| 1.28 |
|
|
| (0.8 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Hotel Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 Comparable Hotels (2) |
| |||||||||||||||||||||
|
| Quarter ended September 30, |
|
|
|
|
|
| Year-to-date ended September 30, |
|
|
|
|
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Change |
|
| 2017 |
|
| 2016 |
|
| Change |
| ||||||
Comparable hotel revenues (1) |
| $ | 1,136 |
|
| $ | 1,166 |
|
|
| (2.6 | )% |
| $ | 3,621 |
|
| $ | 3,616 |
|
|
| 0.1 | % |
Comparable hotel EBITDA (1) |
|
| 296 |
|
|
| 313 |
|
|
| (5.3 | )% |
|
| 1,015 |
|
|
| 1,010 |
|
|
| 0.5 | % |
Comparable hotel EBITDA margin (1) |
|
| 26.1 | % |
|
| 26.85 | % |
|
| (75 | bps) |
|
| 28.0 | % |
|
| 27.9 | % |
|
| 10 | bps |
Change in comparable hotel RevPAR - Constant US$ |
|
| (1.8 | )% |
|
|
|
|
|
|
|
|
|
| 1.0 | % |
|
|
|
|
|
|
|
|
Change in comparable hotel RevPAR - Nominal US$ |
|
| (1.7 | )% |
|
|
|
|
|
|
|
|
|
| 1.1 | % |
|
|
|
|
|
|
|
|
Change in comparable domestic RevPAR |
|
| (0.7 | )% |
|
|
|
|
|
|
|
|
|
| 1.6 | % |
|
|
|
|
|
|
|
|
Change in comparable international RevPAR - Constant US$ |
|
| (31.0 | )% |
|
|
|
|
|
|
|
|
|
| (17.6 | )% |
|
|
|
|
|
|
|
|
___________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
| EBITDAre,Adjusted EBITDAre, NAREIT |
|
|
The third quarter was negatively affected by weakness in group revenue due to the shift of the Jewish holidays into the quarter and significant declines at our Brazil properties in comparison to the results during the Olympics in 2016. In addition to the anticipated weakness due to the difficult quarter-over-quarter comparisons, 13 properties were affected by Hurricanes Harvey and Irma in August and September 2017, respectively, which negatively affected total revenues by approximately $12 million this quarter, with approximately 65% of the revenue lost coming from a decline in food and beverage revenues. These factors led to decreased RevPAR for the quarter, as well as a reduction in F&B revenues and profits, as both the decline in group revenue, and the shift in the mix of business due to the hurricanes, led to a reduction in F&B banquet and outlet business overall.
Revenue per Available Room (“RevPAR”)
Comparable RevPAR on a constant US$ basis decreased 1.8% for the third quarter, due to a 30 basis point decrease in occupancy and a 1.5% decrease in average room rate. Year-to-date, comparable RevPAR on a constant US$ basis improved 1.0% as a result of a 40 basis point increase in occupancy and a 0.6% increase in average room rate. Comparable RevPAR for the quarter was negatively impacted 110 basis points as a result of difficult year-over-year comparisons in Brazil (discussed below). Results were
mixed across our remaining portfolio for the quarter, as declines in our Florida, Atlanta and Chicago markets were partially offset by strong performances in our Phoenix, Seattle, and San Francisco markets. In addition to the negative effect of the holiday shift in the third quarter of 2017, the disruption in business from the hurricanes are estimated to have reduced Comparable RevPAR by approximately 45 basis points for the third quarter based on pre-hurricane forecasts.
On a constant US$ basis, RevPAR at our comparable international properties decreased 31.0% for the third quarter and 17.6% year-to-date. The decline was due to the highly unfavorable comparison to the prior year, when Brazil hosted the 2016 Olympics and Paralympics, as well as economic and over-supply issues in Brazil.
Operating profit
Operating profit margins (calculated based on GAAP operating profit as a percentage of GAAP revenues) decreased 100 basis points, to 10.1%, for the third quarter and increased 40 basis points, to 13.4%, year-to-date. These operating profit margins are affected significantly by several items, including dispositions, depreciation and corporate expenses. Our comparable hotel EBITDA margins, which exclude these items, decreased 75 basis points, to 26.1%, for the third quarter and increased 10 basis points, to 28.0%, year-to-date. For the quarter, approximately 85% of the decline was due to the performance of the properties in Brazil and the effects of the hurricanes described above. Year-to-date, we continue to see labor productivity improvements at certain of our properties, which are reflective of the time and motion studies we have initiated at some of our largest hotels over the past two years and continue to implement at our medium and smaller-sized hotels. These studies have resulted in hotel managers establishing more accurate labor model standards and improved and expanded forecasting tools, which allow them to more effectively schedule labor based on demand and to minimize excess staffing, thereby reducing costs.
Net income, Adjusted EBITDA and Adjusted FFO per Diluted Sharediluted share and comparable hotel operating results (including hotel revenues and hotel EBITDA and margins) are non-GAAP financial measures within the meaning of the rules of the SEC. See “Non-GAAP Financial Measures” and "Comparable Hotel Operating Statistics and Results" for more information on these measures, including why we believe these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics are based on 75 comparable hotels as of June 30, 2023 and include adjustments for non-comparable hotels, dispositions and acquisitions. See Comparable Hotel RevPAR Overview for results of the portfolio based on our ownership period, without these adjustments.
Operations
Net incomeTotal revenues increased $12 million, or 0.9%, and $319 million, or 13.0%, as compared to the second quarter of 2022 and year-to-date 2022, respectively, driven by improvements in group business and continued strength in rates for the portfolio overall, despite some moderation at our resort properties. In the second quarter, decreased $3 millionthe growth was offset by moderating transient demand in the San Francisco and Seattle markets and resort hotels, as well as elevated outbound travel without a corresponding increase in international inbound travel. Comparable hotel RevPAR and comparable hotel Total RevPAR for the second quarter increased 2.7% and 3.8%, respectively, compared to the second quarter of 2022, primarily due to rate growth. Year-to-date, comparable hotel RevPAR and comparable hotel Total RevPAR increased 14.9% and 16.9%, respectively, compared to 2022. The significant improvement year-to-date was buoyed by first quarter 2023 results, as the Omicron variant of COVID-19 significantly impaired travel during January and the first part of February in 2022. In addition, the recovery at our city-center properties during the first half of 2023 allowed for significant improvements at some of the markets such as New York, Washington, D.C. and Boston that lagged in 2022.
The recovery at our city-center properties led the portfolio, as comparable hotel Total RevPAR in our Boston, Houston and Chicago markets increased by 39.3%, 18.3% and 16.3%, respectively, in the second quarter, primarily driven by transient rate and city-wide events. Hotels in our Washington, D.C., San Diego and New York markets, some of our larger markets by room counts, also outperformed our portfolio with comparable hotel Total RevPAR increases of 11.0%, 10.4% and 10.0%, respectively. These strong performances were offset by comparable hotel Total RevPAR declines at our Austin, Miami and Orlando markets of 14.5%, 7.3% and 6.6%, respectively. The declines were driven primarily by decreases in transient demand, while Austin also experienced a decline in operating profit of 11.8%, partially offset byshort-term group demand in the increase in gain on sale of assets, net of tax. Year-to-date, netsecond quarter.
Our second quarter 2023 results when compared to 2022 are as follows:
For the second quarter of 2023, operating profit margin under GAAP was 17.9% and comparable hotel EBITDA margin was 32.7%, a decrease of 580 basis points and 440 basis points, respectively, due to closer to stable staffing levels and higher wages, insurance and utility expenses, compared to second quarter of 2022. Year-to-date, operating profit margin under GAAP was 17.9% and comparable hotel EBITDA margin was 32.6%, a decrease of 40 basis points and 150 basis points, respectively.
Outlook
Although we have not experienced significant signs of a weakening in the overall lodging industry, current macroeconomic headwinds and concerns surrounding the potential for year-to-date, reflecting thean economic slowdown have created uncertainty around operating results described above as well as an increase in interest expense.
The trends and transactions described for Host Inc. affected similarly the operating results for Host L.P., as the only significant difference between the Host Inc. and the Host L.P. statements of operations relates to the treatment of income attributable to the third party limited partners of Host L.P.
Outlook
Forecasts for the United States economy continue to be cautiously optimistic for the remainder of 2017,2023. Further improvement in operations will be dependent on the broader macroeconomic environment, which will affect our ability to maintain high-rated business in our resort markets, as well as the country continues to experience low unemployment rates, corporate profits have improvedcontinued improvement of group, business transient and business investment has accelerated. While discussions on tax reform have picked up, the timinginternational inbound travel. Accordingly, we believe that operations in specific markets and economic impact of any legislation remains uncertain though we remain hopeful itasset types will benefit the lodging industry.
While the industry has experienced slightly above average supply growth in 2017, demand growth has outpaced supply, and the majority of markets are operating at peak occupancy levels. Yet, some of our markets, such as New York and Houston, have continued to experience above-average supply growth in 2017 that has exceeded demand growth, which has made it more challenging for our operators to grow average rates. However, demand growth in these markets has remained strong overall and we continue to focus on shifting the mix of business toward more profitable channels.
Our operations were affected by Hurricanes Harvey and Irma during the third quarter and continue to be impacted by damages sustained duringuneven.
22
Blue Chip Economic Indicators consensus currently estimates an increase in real U.S. GDP of 1.6% for 2023, with a slight decline in the storms. All fourfourth quarter, while business investment is anticipated to increase 2.1%. Inflation has eased but remains above the Federal Reserve's target of 2%. Monetary policy, geopolitical uncertainty, and liquidity concerns at financial institutions has led to ongoing concerns surrounding a potential economic slowdown over the next 12 months. The range of potential outcomes on the economy and the lodging industry specifically remains exceptionally wide, reflecting varying analyst assumptions surrounding the impact of higher interest rates, inflation, ongoing labor shortages in key industries, and geopolitical conflicts.
Hotel supply growth is anticipated to remain below the long-term historical average in 2023. Supply chain challenges have resulted in project delays across the U.S., and regional banking stress has created construction financing challenges for future projects. We anticipate that the new project pipeline will remain suppressed until macroeconomic concerns abate. While the pandemic had an outsized impact on our industry, particularly in luxury and upper upscale hotels in top U.S. markets, where a majority of our hotels in Houston wereare located, our hotels have been able to remain operational duringmaintain rates even as leisure travel moderates. We also have seen steady increases in group business and a gradual recovery in business transient demand in 2023. However, transient demand has moderated in the hurricane. In Florida, due to evacuation mandates, seven of our nine consolidated properties were temporarily closed; however, all have since reopened, although approximately 320 rooms remain out of service. San Francisco and Seattle markets, as well as at resort hotels in recent months.
Based on the operating readiness and level of property damage sustained,trends noted above, we did not remove any properties from ourexpect comparable operations for the quarter and full year forecast. As a result, we estimate that comparablehotel RevPAR growth for the full year 20172023 will be between 1.15%7.0% and 1.35% on a constant US$ basis. Additionally, we have recorded an insurance receivable of $31 million; however, we are still evaluating9.0%.
As noted above, the complete property and business interruption impacts of the storms.
The current outlook for the lodging industry isremains highly uncertain; therefore, there can be no assurances that any increasesas to the continued recovery in hotel revenues or earnings will continuelodging demand for any number of reasons, including, but not limited to, slower than anticipated growth in the economy, changes inreturn of group and business travel patterns, and international economic and political instability. or deteriorating macroeconomic conditions.
Strategic Initiatives
Portfolio
Dispositions.Capital Projects. During the quarter,first half of 2023, we sold The Hilton Melbourne South Wharf for A$230spent approximately $97 million ($184 million) and the Sheraton Indianapolis Hotel at Keystone Crossing for $66 million. We also reached an agreement to sell the Key Bridge Marriott for $190 million, including $8 million of FF&E replacement funds, and as of September 30, 2017, it has been classified as held for sale. We expect the sale to be completed no later than the first quarter of 2018, subject to customary closing conditions. Subsequent to quarter end, we also sold a parcel of excess land at the previously sold Chicago Marriott O’Hare for approximately $10 million.
Balance Sheet
Debt transactions. During the quarter, in connection with the sale of the Hilton Melbourne South Wharf hotel, we repaid the A$86 million ($69 million) mortgage loan secured by the property and repaid A$50 million ($39 million) under the revolver portion of our credit facility. As of September 30, 2017, we had $807 million of available capacity remaining under the revolver portion of our credit facility.
Capital Investments
Value enhancements. During the quarter, subject to customary appeals, we received approvals for the rezoning of the golf course land at The Phoenician, A Luxury Collection Resort. The revised plan includes an 18-hole golf course, new tennis complex and activity center and allows for 60 acres of residential development. The approved plan allows for a mix of single-family, townhome and condominium units with approximately 360 units. The property is being marketed to third parties for the residential development.
In addition, we negotiated new management agreements for two properties in the third quarter, including the re-branding of The Ritz-Carlton, Buckhead in Atlanta to The Whitley, a Luxury Collection Hotel that will be managed by HEI Hotels & Resorts.
Redevelopment and Return on Investment Capital Expenditures. Redevelopment and return on investment (“ROI”("ROI") capital projects, primarily consist of large-scale redevelopment projects designed to increase cash flow and improve profitability by capitalizing on changing market conditions and the favorable locations of our properties, including projects such as the redevelopment of a hotel, the repositioning of a hotel restaurant, the installation of energy efficient systems or the conversion of underutilized space to more profitable uses. Additionally, in conjunction with the acquisition of a property, we prepare capital and operational improvement plans designed to maximize profitability. During the third quarter, we completed the pool renovation and restaurant repositioning at The Phoenician as part of a multi-year project, as well as the redesign of restaurant and meeting space at The Ritz-Carlton, Buckhead. We deployed approximately $53 million for these projects during the first three quarters of 2017.
We expect that redevelopment and ROI projects for full year 2017 will be approximately $90 million to $100 million.
Renewal and Replacement Capital Expenditures. These expenditures are designed to ensure that our standards for product quality are maintained and to enhance the overall competitiveness of our properties in the marketplace. We deployed $155$133 million on renewal and replacement capital expendituresprojects, and $93 million on hurricane restoration work. Significant projects completed during the first three quarters of 2017. During the thirdsecond quarter we completedinclude the renovation of the 48,000-square foot ballroomrooms and public spaces at the final hotel in the Marriott transformational capital program, the Washington Marriott at Metro Center. In addition, we continued our restoration efforts following Hurricane Ian, for which we estimate the total property reconstruction and remediation costs, including significant enhancements, to be approximately $260 million to $285 million of which approximately 35% relates to remediation costs. The Ritz-Carlton, Naples reopened on July 6, 2023, including the guestrooms, suites and amenities, and the new tower expansion. The Hyatt Regency Coconut Point Resort and Spa reopened to guests in November 2022, and the final phase of reconstruction, the resort's waterpark, was completed in June 2023.
We have completed the Marriott transformational capital program, which began in 2018. We believe this program will position these hotels to be more competitive in their respective markets and will enhance long-term performance through increases in RevPAR and market yield index. We agreed to invest amounts in excess of the furniture fixture and equipment ("FF&E") reserves required under our management agreements and, in exchange, Marriott has provided additional priority returns on the agreed upon investments and operating profit guarantees of $83 million, before reductions for incentive management fees, to offset expected business disruption.
The Marriott transformational capital program included projects at 16 hotels, which were completed as follows: projects at Coronado Island Marriott Resort & Spa, New OrleansYork Marriott as well as ballroom renovationsDowntown, San Francisco Marriott Marquis and Santa Clara Marriott in 2019; projects at the JWMinneapolis Marriott Hotel Mexico City theCenter, San Antonio Marriott Rivercenter and JW Marriott Atlanta Buckhead andin 2020; projects at The Ritz-Carlton Naples. WeAmelia Island, New York Marriott Marquis and Orlando World Center Marriott in 2021; projects at Boston Marriott Copley Place, the Houston Marriott Medical Center, JW Marriott Houston by the Galleria, and Marina del Rey Marriott in 2022; and projects at the Marriott Marquis San Diego Marina and Washington Marriott at Metro Center in 2023.
For full year 2023, we expect that our investment intotal capital expenditures of $625 million to $725 million, consisting of ROI projects of approximately $225 million to $250 million, renewal and replacement expenditures in full year 2017 will total approximately $270of $275 million to $300 million,which includes additional expected spend and restoration work for the damage caused by Hurricane Ian of $125 million to $175 million. The ROI projects include approximately $55$25 million related to replacements$30 million for hurricane damage.the Marriott transformational capital program discussed above.
Results of Operations
The following table reflects certain line items from our unaudited condensed consolidated statements of operations (in millions, except percentages):
|
| Quarter ended September 30, |
|
|
|
|
|
| Year-to-date ended September 30, |
|
|
|
|
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Change |
|
| 2017 |
|
| 2016 |
|
| Change |
| ||||||
Total revenues |
| $ | 1,254 |
|
| $ | 1,295 |
|
|
| (3.2 | )% |
| $ | 4,043 |
|
| $ | 4,093 |
|
|
| (1.2 | )% |
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property-level costs (1) |
|
| 1,104 |
|
|
| 1,135 |
|
|
| (2.7 | ) |
|
| 3,428 |
|
|
| 3,492 |
|
|
| (1.8 | ) |
Corporate and other expenses |
|
| 24 |
|
|
| 28 |
|
|
| (14.3 | ) |
|
| 79 |
|
|
| 82 |
|
|
| (3.7 | ) |
Gain on insurance and business interruption settlements |
|
| 1 |
|
|
| 12 |
|
|
| (91.7 | ) |
|
| 6 |
|
|
| 15 |
|
|
| (60.0 | ) |
Operating profit |
|
| 127 |
|
|
| 144 |
|
|
| (11.8 | ) |
|
| 542 |
|
|
| 534 |
|
|
| 1.5 |
|
Interest expense |
|
| 43 |
|
|
| 38 |
|
|
| 13.2 |
|
|
| 125 |
|
|
| 116 |
|
|
| 7.8 |
|
Gain on sale of assets |
|
| 59 |
|
|
| 14 |
|
|
| 321.4 |
|
|
| 105 |
|
|
| 245 |
|
|
| (57.1 | ) |
Provision for income taxes |
|
| 42 |
|
|
| 19 |
|
|
| 121.1 |
|
|
| 63 |
|
|
| 42 |
|
|
| 50.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Host Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to non- controlling interests |
|
| 1 |
|
|
| 1 |
|
|
| — |
|
|
| 6 |
|
|
| 7 |
|
|
| (14.3 | ) |
Net income attributable to Host Inc. |
|
| 104 |
|
|
| 107 |
|
|
| (2.8 | ) |
|
| 472 |
|
|
| 636 |
|
|
| (25.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Host L.P.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to non-controlling interests |
|
| (1 | ) |
|
| — |
|
| N/M |
|
|
| — |
|
|
| (1 | ) |
| N/M |
| ||
Net income attributable to Host L.P. |
|
| 106 |
|
|
| 108 |
|
|
| (1.9 | ) |
|
| 478 |
|
|
| 644 |
|
|
| (25.8 | ) |
___________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended June 30, |
|
|
|
|
| Year-to-date ended June 30, |
|
|
|
| ||||||||||||
|
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Total revenues |
| $ | 1,393 |
|
| $ | 1,381 |
|
|
| 0.9 | % |
| $ | 2,774 |
|
| $ | 2,455 |
|
|
| 13.0 | % |
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Property-level costs ⁽¹⁾ |
|
| 1,117 |
|
|
| 1,036 |
|
|
| 7.8 |
|
|
| 2,219 |
|
|
| 1,965 |
|
|
| 12.9 |
|
Corporate and other expenses |
|
| 30 |
|
|
| 25 |
|
|
| 20.0 |
|
|
| 61 |
|
|
| 48 |
|
|
| 27.1 |
|
Gain on insurance and business interruption settlements |
|
| 3 |
|
|
| 7 |
|
|
| (57.1 | ) |
|
| 3 |
|
|
| 7 |
|
|
| (57.1 | ) |
Operating profit |
|
| 249 |
|
|
| 327 |
|
|
| (23.9 | ) |
|
| 497 |
|
|
| 449 |
|
|
| 10.7 |
|
Interest expense |
|
| 45 |
|
|
| 37 |
|
|
| 21.6 |
|
|
| 94 |
|
|
| 73 |
|
|
| 28.8 |
|
Other gains |
|
| — |
|
|
| 1 |
|
|
| (100.0 | ) |
|
| 69 |
|
|
| 14 |
|
|
| 392.9 |
|
Provision for income taxes |
|
| 14 |
|
|
| 39 |
|
|
| (64.1 | ) |
|
| 12 |
|
|
| 23 |
|
|
| (47.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Host Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net income attributable to non-controlling interests |
|
| 4 |
|
|
| 4 |
|
| — |
|
|
| 8 |
|
|
| 6 |
|
|
| 33.3 |
| |
Net income attributable to Host Inc. |
|
| 210 |
|
|
| 256 |
|
|
| (18.0 | ) |
|
| 497 |
|
|
| 372 |
|
|
| 33.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Host L.P.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net income (loss) attributable to non-controlling interests |
|
| 1 |
|
|
| (1 | ) |
| N/M |
|
|
| 1 |
|
|
| — |
|
| N/M |
| ||
Net income attributable to Host L.P. |
|
| 213 |
|
|
| 261 |
|
|
| (18.4 | ) |
|
| 504 |
|
|
| 378 |
|
|
| 33.3 |
|
___________
(1) Amount represents total operating costs and expenses from our unaudited condensed consolidated statements of operations, less corporate and other expenses and gain on insurance and business interruption settlements.
N/M=Not meaningful.
Statement of Operations Results and Trends
For the third quarter and year-to-date 2017, the results of hotels acquired or sold during the comparable periods (collectively, our “Recent Acquisitions and Dispositions”) reduced our year-over-year comparisons. Comparisons of our operations were affected by the acquisition of two hotels during the first quarter 2017: the W Hollywood acquired in March 2017 and The Don CeSar and Beach House Suites complex acquired in February 2017. However, dispositions include the sale of four hotels in 2017 and ten hotels in 2016, which led to an overall net reduction in results. The table below presents the effects on earnings from our Recent Acquisitions and Dispositions (in millions, increase (decrease)):
|
| Quarter ended September 30, |
|
|
|
|
|
| Year-to-date ended September 30, |
|
|
|
|
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Change |
|
| 2017 |
|
| 2016 |
|
| Change |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
| $ | 24 |
|
| $ | — |
|
| $ | 24 |
|
| $ | 65 |
|
| $ | — |
|
| $ | 65 |
|
Dispositions |
|
| 6 |
|
|
| 45 |
|
|
| (39 | ) |
|
| 46 |
|
|
| 203 |
|
|
| (157 | ) |
Total revenues |
| $ | 30 |
|
| $ | 45 |
|
| $ | (15 | ) |
| $ | 111 |
|
| $ | 203 |
|
| $ | (92 | ) |
Net income (excluding gain on sale, net of tax): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Acquisitions |
| $ | 3 |
|
| $ | — |
|
| $ | 3 |
|
| $ | 14 |
|
| $ | — |
|
| $ | 14 |
|
Dispositions |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
|
| 8 |
|
|
| 20 |
|
|
| (12 | ) |
Net income (excluding gain on sale, net of tax): |
| $ | 6 |
|
| $ | — |
|
| $ | 6 |
|
| $ | 22 |
|
| $ | 20 |
|
| $ | 2 |
|
The following table presents total revenues in accordance with GAAP and includes both comparable and non-comparableall consolidated hotels (in millions, except percentages):
|
| Quarter ended June 30, |
|
|
|
|
| Year-to-date ended June 30, |
|
|
|
| ||||||||||||
|
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Rooms |
| $ | 850 |
|
| $ | 850 |
|
| — |
|
| $ | 1,670 |
|
| $ | 1,505 |
|
|
| 11.0 | % | |
Food and beverage |
|
| 415 |
|
|
| 405 |
|
|
| 2.5 | % |
|
| 846 |
|
|
| 702 |
|
|
| 20.5 |
|
Other |
|
| 128 |
|
|
| 126 |
|
|
| 1.6 |
|
|
| 258 |
|
|
| 248 |
|
|
| 4.0 |
|
Total revenues |
| $ | 1,393 |
|
| $ | 1,381 |
|
|
| 0.9 |
|
| $ | 2,774 |
|
| $ | 2,455 |
|
|
| 13.0 |
|
Second quarter total revenues improved 0.9% over 2022 reflecting improvements in group business and continued strength in rates for the portfolio overall, despite some moderation at our resort properties. In the second quarter, the growth was offset by moderating transient demand in the San Francisco and Seattle markets and resort hotels and elevated international outbound travel without a corresponding increase in international inbound travel. Year-to-date revenue improvement benefitted from easier comparisons to 2022, as the Omicron variant of COVID-19 significantly impaired travel during January and the first part of February in 2022 as noted previously. Operations in the second quarter and year-to-date 2023 in comparison to 2022 were impacted by lost revenues due to the closure of The Ritz-Carlton, Naples caused by Hurricane Ian, which reopened on July 6, 2023. In addition, the Four Seasons Resort and Residences Jackson Hole, which we acquired in November 2022, contributed $11 million and $42 million to the growth in revenues for the second quarter and year-to-date 2023, respectively, compared to the negative impact on revenues resulting from 2022 and 2023 dispositions of $15 million and $40 million, for the second quarter and year-to-date 2023, respectively.
|
| Quarter ended September 30, |
|
|
|
|
|
| Year-to-date ended September 30, |
|
|
|
|
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Change |
|
| 2017 |
|
| 2016 |
|
| Change |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms |
| $ | 860 |
|
| $ | 879 |
|
|
| (2.2 | )% |
| $ | 2,643 |
|
| $ | 2,655 |
|
|
| (0.5 | )% |
Food and beverage |
|
| 314 |
|
|
| 336 |
|
|
| (6.5 | ) |
|
| 1,152 |
|
|
| 1,183 |
|
|
| (2.6 | ) |
Other |
|
| 80 |
|
|
| 80 |
|
|
| — |
|
|
| 248 |
|
|
| 255 |
|
|
| (2.7 | ) |
Total revenues |
| $ | 1,254 |
|
| $ | 1,295 |
|
|
| (3.2 | ) |
| $ | 4,043 |
|
| $ | 4,093 |
|
|
| (1.2 | ) |
Rooms. Total rooms revenues decreased 2.2%were flat for the second quarter and 0.5%increased $165 million, or 11.0%, year-to-date, compared to 2022. The results reflect the increases at our comparable hotels of $22 million, or 2.7%, and $212 million, or 14.8%, for the second
24
quarter and year-to-date, respectively, driven by strong average room rates, which remain above 2019, but have started to moderate. The increases in revenues at our comparable hotels were partially offset by lost revenues from dispositions and the closure of The Ritz-Carlton, Naples, which is included in non-comparable hotels, caused by Hurricane Ian as noted above.
Food and beverage. Total food and beverage ("F&B") revenues increased $10 million, or 2.5%, and $144 million, or 20.5%, for the quarter and year-to-date, respectively. Forrespectively, compared to 2022. The improvements reflect the increases at our comparable hotels rooms revenues decreased 1.7% for the quarter, as an unfavorable holiday shift resulted in a decrease in group business, which led to declines in both average room rateof $22 million, or 5.7%, and occupancy. Year-to-date, comparable rooms revenues increased 0.8% reflecting increases in both average room rate and occupancy. The net effects of our Recent Acquisitions and Dispositions reduced rooms revenues by $8$166 million, or 25.2%, for the quarter and $52year-to-date, respectively, primarily driven by improvements in banquet and audio-visual revenues at convention hotels, as well as increased outlet spend per occupied room across our portfolio. Similar to rooms revenues, the increases in F&B revenues from our comparable hotels were partially offset by lost revenues from dispositions and the closure of The Ritz-Carlton, Naples, which is included in non-comparable hotels, caused by Hurricane Ian as noted above.
Other revenues. Total other revenues increased $2 million, for the year-to-date.
Foodor 1.6%, and beverage. Total food and beverage (“F&B”) revenues decreased 6.5%$10 million, or 4.0%, for the quarter and 2.6% year-to-date, reflectingrespectively, compared to 2022. The improvements reflect the reduction in group business, which led to decreases in both outletincreases at our comparable hotels of $7 million, or 5.8%, and banquet and audio visual revenue, as well as the negative impact of Hurricanes Harvey and Irma. Comparable F&B revenues decreased 5.6%$16 million, or 6.7%, for the quarter and 1.6% year-to-date. The net effect of our Recent Acquisitions and Dispositions reduced F&B revenues by $7 million for the quarter and $33 million for the year-to-date.
Other revenues. Total other revenues were flat for the quarter and decreased 2.7% year-to-date, respectively, primarily due to the net effect of our Recent Acquisitions and Dispositions, which did not materially impact other revenues for the quarter but reduced other revenues by $7 million year-to-date. At our comparable hotels, other revenues increased 0.8% for the quarter and 1.1% year-to-date as an increase in rental income at the New York Marriott Marquis offset a decline in attritionancillary revenues from improved occupancy levels and cancellationcontinued strong golf and spa revenues.
Property-level Operating Expenses
The following table presents property-level operating expenses in accordance with GAAP and includes both comparable and non-comparableall consolidated hotels (in millions, except percentages):
|
| Quarter ended September 30, |
|
|
|
|
|
| Year-to-date ended September 30, |
|
|
|
|
|
| Quarter ended June 30, |
|
|
|
| Year-to-date ended June 30, |
|
|
|
| |||||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| Change |
|
| 2017 |
|
| 2016 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Rooms |
| $ | 227 |
|
| $ | 225 |
|
|
| 0.9 | % |
| $ | 676 |
|
| $ | 674 |
|
|
| 0.3 | % |
| $ | 201 |
|
| $ | 189 |
|
|
| 6.3 | % |
| $ | 394 |
|
| $ | 349 |
|
|
| 12.9 | % |
Food and beverage |
|
| 242 |
|
|
| 257 |
|
|
| (5.8 | ) |
|
| 794 |
|
|
| 830 |
|
|
| (4.3 | ) |
|
| 263 |
|
|
| 245 |
|
|
| 7.3 |
|
|
| 532 |
|
|
| 445 |
|
|
| 19.6 |
|
Other departmental and support expenses |
|
| 309 |
|
|
| 321 |
|
|
| (3.7 | ) |
|
| 952 |
|
|
| 981 |
|
|
| (3.0 | ) |
|
| 323 |
|
|
| 300 |
|
|
| 7.7 |
|
|
| 638 |
|
|
| 573 |
|
|
| 11.3 |
|
Management fees |
|
| 53 |
|
|
| 54 |
|
|
| (1.9 | ) |
|
| 178 |
|
|
| 177 |
|
|
| 0.6 |
|
|
| 69 |
|
|
| 62 |
|
|
| 11.3 |
|
|
| 134 |
|
|
| 102 |
|
|
| 31.4 |
|
Other property-level expenses |
|
| 97 |
|
|
| 96 |
|
|
| 1.0 |
|
|
| 294 |
|
|
| 289 |
|
|
| 1.7 |
|
|
| 93 |
|
|
| 78 |
|
|
| 19.2 |
|
|
| 184 |
|
|
| 162 |
|
|
| 13.6 |
|
Depreciation and amortization |
|
| 176 |
|
|
| 182 |
|
|
| (3.3 | ) |
|
| 534 |
|
|
| 541 |
|
|
| (1.3 | ) |
|
| 168 |
|
|
| 162 |
|
|
| 3.7 |
|
|
| 337 |
|
|
| 334 |
|
|
| 0.9 |
|
Total property-level operating expenses |
| $ | 1,104 |
|
| $ | 1,135 |
|
|
| (2.7 | ) |
| $ | 3,428 |
|
| $ | 3,492 |
|
|
| (1.8 | ) |
| $ | 1,117 |
|
| $ | 1,036 |
|
|
| 7.8 |
|
| $ | 2,219 |
|
| $ | 1,965 |
|
|
| 12.9 |
|
Our operating costs and expenses, which haveconsist of both fixed and variable components, are affected by changes inseveral factors. Rooms expenses are affected mainly by occupancy, inflation,which drives costs related to items such as housekeeping, reservation systems, room supplies, laundry services and front desk costs. Food and beverage expenses correlate closely with food and beverage revenues (which affect management fees), thoughand are affected by occupancy and the effect on specific costs will differ. Ourmix of business between banquet, audio-visual and outlet sales. However, the most significant expense for the rooms, food and beverage, and other departmental and support expenses is wages and employee benefits, account forwhich comprise approximately 57%56% of these expenses. For the operatingsecond quarter and year-to-date 2023, these expenses atincreased 13%, and 22%, respectively, compared to 2022, reflecting an increase in hiring as operations have recovered. In addition, early in 2022, hiring was temporarily paused in many areas due to the Omicron variant, as well as seasonality in certain markets. Specifically, in the second quarter of 2022, the significant acceleration in demand further challenged the ability of our hotels (excluding depreciation). managers to increase hotel staffing commensurate with the increase in demand. Hiring pace has since improved, and managers at the majority of our hotels now are operating at desired staffing levels. Wage and benefit rate inflation is expected to be approximately 5% in 2023.
Other property-level expenses consist of property taxes, the amounts and structure of which are highly dependent on local jurisdiction taxing authorities, and property and general liability insurance, all of which do not necessarily increase or decrease based on similar changes in revenues at our hotels.
The increase in expenses for the second quarter and year-to-date 2023 compared to 2022 for rooms, food and beverage, other departmental and support, and management fees was generally due to the corresponding increase in revenues from improvements in occupancy and hotel operations, and an increase in staffing, as follows:
Rooms. Rooms expenses increased 0.9%$12 million, or 6.3%, and 0.3% for the third quarter and year-to-date 2017, respectively, which reflects an increase of 1.6% and 2.0%$45 million, or 12.9%, for the quarter and year-to-date, respectively, at ourrespectively. Our comparable hotels. The increase was driven by overall growth in wage rates. The net effect of our Recent Acquisitions and Dispositions reducedhotels rooms expenses $3increased $16 million, or 8.7%, and $14$62 million, or 19.0%, for the quarter and year to date,year-to-date, respectively. These increases reflect the increase in staffing described above.
25
Food and beverage. F&B expenses decreased 5.8% for the quarterincreased $18 million, or 7.3%, and 4.3% year-to-date. The net effect of our Recent Acquisitions and Dispositions reduced F&B expenses by $5$87 million, and $23 millionor 19.6%, for the quarter and year-to-date, respectively. For our comparable hotels, F&B expenses decreased 5.2%increased $25 million, or 10.8%, and $103 million, or 24.8% for the quarter and 3.0% year-to-date, consistent with the decline in comparablerespectively. Overall, F&B revenues. costs as a percentage of revenues increased slightly for the quarter as staffing levels normalized. F&B costs as a percentage of revenues declined year-to-date, benefiting from improved banquet revenues and ongoing productivity improvement.
Other departmental and support expenses. Other departmental and support expenses decreased $12increased $23 million, for the third quarteror 7.7%, and $29$65 million, year-to-date, primarily due to a decrease of $7 millionor 11.3%, for the quarter and $31 million year-to-date, from the net effect of our Recent Acquisitions and Dispositions.respectively. On a comparable hotel basis, other departmental and support expenses decreased $5increased $27 million, or 9.6%, and $79 million, or 14.7%, for the quarter and year-to-date, respectively. These increases were flat year-to-date.primarily due to the increase in staffing.
Management fees. Base management fees, which generally are calculated as a percentage of total revenues, decreased $2 million inwere flat for the thirdsecond quarter and $4increased $8 million, or 11.6%, year-to-date. At our comparable hotels, base management fees increased $1 million, or 2.9%, and $10 million, or 15.7%, for the quarter and year-to-date, due primarily to the net effect of our Recent Acquisitions and Dispositions.respectively. Incentive management fees, which generally are generally based on the levelamount of operating profit at each propertyhotel after we receive a priority return on our investment, increased $1$7 million, or 30.4%, and $24 million, or 72.7%, for the third quarter and $4year-to-date, respectively. At our comparable hotels, incentive management fees increased $8 million, year-to-date.or 34.9%, and $22 million, or 62.8% for the quarter and year-to-date, respectively. The increase in incentive management fees primarily reflects the improved operations at our properties.
Other property-level expenses. These expenses generally do not vary significantly based on occupancy and include expenses such as property taxes and insurance. Other property level expenses increased $1$15 million, or 19.2%, and $22 million, or 13.6%, for the third quarter and $5 million year-to-date.year-to-date, respectively, due to increases in property insurance premiums and rent on a portion of our ground leases that are based on a percentage of sales. Other property-level expenses also were partially offset by the receipt of operating profit guarantees received from Marriott under the transformational capital program in both 2022 and 2023, with the last of the payments received in the second quarter of 2023. Other property-level expenses at our comparable hotels were flat for the quarter. Year-to-date, comparable other property-level expenses increased 2.7% year-to-date, primarily due to increases in property taxes$17 million, or 20.8%, and ground rent, partially offset by a decrease in insurance expense. The net effect of our Recent Acquisitions and Dispositions reduced other property-level expenses by $1$27 million, or 17.0%, for the quarter and $6 million year-to-date.year-to-date, respectively.
Other Income and Expense
Corporate and other expenses. The following table details our corporate and other expenses for the quarter and year-to-date (in millions):
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
General and administrative costs |
| $ | 21 |
|
| $ | 26 |
|
| $ | 70 |
|
| $ | 74 |
|
Non-cash stock-based compensation expense |
|
| 3 |
|
|
| 2 |
|
|
| 8 |
|
|
| 8 |
|
Litigation accruals and acquisition costs, net |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
Total |
| $ | 24 |
|
| $ | 28 |
|
| $ | 79 |
|
| $ | 82 |
|
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
General and administrative costs |
| $ | 20 |
|
| $ | 20 |
|
| $ | 41 |
|
| $ | 38 |
|
Non-cash stock-based compensation expense |
|
| 6 |
|
|
| 5 |
|
|
| 13 |
|
|
| 10 |
|
Litigation accruals |
|
| 4 |
|
|
| — |
|
|
| 7 |
|
|
| — |
|
Total |
| $ | 30 |
|
| $ | 25 |
|
| $ | 61 |
|
| $ | 48 |
|
Interest expense. Interest expense increased for the quarter and year-to-date due to the issuance of the Series G senior notesan increase in the first quarter 2017.interest rates on our floating rate debt. The following table details our interest expense for the quarter and year-to-date (in millions):
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Cash interest expense ⁽¹⁾ |
| $ | 42 |
|
| $ | 35 |
|
| $ | 85 |
|
| $ | 68 |
|
Non-cash interest expense |
|
| 3 |
|
|
| 2 |
|
|
| 5 |
|
|
| 5 |
|
Non-cash debt extinguishment costs |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
Cash debt extinguishment costs ⁽¹⁾ |
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| — |
|
Total interest expense |
| $ | 45 |
|
| $ | 37 |
|
| $ | 94 |
|
| $ | 73 |
|
_________
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Cash interest expense(1) |
| $ | 41 |
|
| $ | 35 |
|
| $ | 120 |
|
| $ | 110 |
|
Non-cash interest expense |
|
| 2 |
|
|
| 3 |
|
|
| 5 |
|
|
| 6 |
|
Total interest expense |
| $ | 43 |
|
| $ | 38 |
|
| $ | 125 |
|
| $ | 116 |
|
___________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Including |
Other gains. Other gains increased $55 million year-to-date, reflecting the sale of Gain on sale of assets. During the third quarter and year-to-date 2017, we recognized a gain on sale of assets of $59change in accrued interest, total cash interest paid was $50 million and $105$41 million for the quarters ended June 30, 2023 and 2022, respectively, due primarily toand $90 million and $69 million for year-to-date 2023 and 2022, respectively.two hotelsThe Camby, Autograph Collection in the thirdfirst quarter and four hotels year-to-date. We recognized a gain on sale of assets of $14 million and $245 million during the third quarter and year-to-date 2016, respectively, due to the sale of two hotels during the third quarter and ten hotels year-to-date.
Equity in earnings of affiliates. affiliates. Equity in earnings of affiliates decreased $4increased $2 million for the quarter reflecting a declineand $7 million for the year-to-date, consisting of earnings from our investment in net income at our European joint venture and a decrease in operations at the Philadelphia Marriott Downtown. Year-to-date, equity in earnings of affiliates remained flat.Noble Joint Venture.
26
Provision for income taxes. We lease substantially all our properties to consolidated subsidiaries designated as taxable REIT subsidiaries (“TRS”) for U.S. federal income tax purposes. The difference betweenTaxable income or loss generated/incurred by the TRS primarily represents hotel-level operating cash flowoperations and the aggregate rent paid to Host L.P. by the TRS, represents its taxable income or loss, with regard toon which we record an income tax provision or benefit. The increase inFor the second quarter and year-to-date 2023, we recorded an income tax provision recorded in the third quarterof $14 million and year-to-date 2017 compared$12 million, respectively, due primarily to the same periods in 2016 relates to an increaseprofitability of taxable income ofhotel operations retained by the TRS and the Australian capital gains tax (approximately $22 million) associated with the sale of the Hilton Melbourne South Wharf on July 28, 2017.TRS.
Comparable Hotel RevPAR Overview
We discuss operatingEffective January 1, 2023, we have ceased presentation of All Owned Hotel results, and returned to a comparable hotel presentation for our hotels on a comparable basis.hotel level results. Comparable hotels are those properties that we have consolidated for the entirety of the reporting periods being compared. Comparable hotels do not include the results of hotels acquiredsold or sold,classified as held-for-sale, hotels that incurred significanthave sustained substantial property damage or business interruption, or hotels that have undergone large scalelarge-scale capital projects, in each case requiring closures lasting one month or longer during these periods. Asthe reporting periods being compared. We believe this will provide investors with a better understanding of September 30, 2017, 87 ofunderlying growth trends for our 94 owned hotels are classified ascurrent portfolio, without impact from properties that experienced closures. We have removed Hyatt Regency Coconut Point Resort and Spa and The Ritz-Carlton, Naples from our comparable hotels.operations for 2023 due to closures caused by Hurricane Ian. See “Comparable Hotel Operating Statistics”Statistics and Results” below for a complete description ofmore information on how we determine our comparable hotels.
We also discuss ourinclude, following the comparable RevPARhotels results by geographic marketlocation, the same operating statistics presentation on an actual basis, which includes results for our portfolio for the time period of our ownership, including the results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of the date of acquisition. Lastly, we discuss our hotel results by mix of business (i.e., transient, group, or contract).
Comparable Hotel RevPAROperating Data by Geographic MarketLocation
The following tables set forth performance information for our comparable hotels by geographic marketlocation for the quarters and year-to-date ended June 30, 2023 and 2022, respectively, on a comparable hotel and actual basis:
Comparable Hotel Results by Location
| As of June 30, 2023 |
| Quarter ended June 30, 2023 |
| Quarter ended June 30, 2022 |
|
|
|
|
| ||||||||||||||||||||||||||
Location | No. of |
| No. of |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Percent |
| Percent |
| ||||||||||||
Maui/Oahu |
| 4 |
|
| 2,006 |
| $ | 594.07 |
|
| 73.7 | % | $ | 437.96 |
| $ | 678.06 |
| $ | 567.20 |
|
| 78.0 | % | $ | 442.56 |
| $ | 690.02 |
|
| (1.0 | )% |
| (1.7 | )% |
Miami |
| 2 |
|
| 1,033 |
|
| 538.70 |
|
| 69.6 |
|
| 374.98 |
|
| 646.85 |
|
| 618.60 |
|
| 67.4 |
|
| 416.89 |
|
| 697.72 |
|
| (10.1 | ) |
| (7.3 | ) |
Jacksonville |
| 1 |
|
| 446 |
|
| 549.95 |
|
| 82.1 |
|
| 451.53 |
|
| 974.60 |
|
| 572.46 |
|
| 81.1 |
|
| 463.99 |
|
| 974.04 |
|
| (2.7 | ) |
| 0.1 |
|
Phoenix |
| 3 |
|
| 1,545 |
|
| 372.81 |
|
| 73.6 |
|
| 274.51 |
|
| 651.73 |
|
| 394.21 |
|
| 76.0 |
|
| 299.63 |
|
| 677.94 |
|
| (8.4 | ) |
| (3.9 | ) |
Florida Gulf Coast |
| 3 |
|
| 941 |
|
| 387.60 |
|
| 76.3 |
|
| 295.81 |
|
| 615.07 |
|
| 386.13 |
|
| 79.0 |
|
| 304.90 |
|
| 640.76 |
|
| (3.0 | ) |
| (4.0 | ) |
Orlando |
| 2 |
|
| 2,448 |
|
| 363.44 |
|
| 73.4 |
|
| 266.90 |
|
| 542.00 |
|
| 402.61 |
|
| 73.8 |
|
| 297.06 |
|
| 580.59 |
|
| (10.2 | ) |
| (6.6 | ) |
New York |
| 2 |
|
| 2,486 |
|
| 346.21 |
|
| 84.3 |
|
| 291.87 |
|
| 423.84 |
|
| 326.39 |
|
| 80.3 |
|
| 261.97 |
|
| 385.41 |
|
| 11.4 |
|
| 10.0 |
|
Los Angeles/Orange County |
| 3 |
|
| 1,067 |
|
| 297.22 |
|
| 82.4 |
|
| 245.01 |
|
| 352.37 |
|
| 278.61 |
|
| 87.4 |
|
| 243.48 |
|
| 356.01 |
|
| 0.6 |
|
| (1.0 | ) |
San Diego |
| 3 |
|
| 3,294 |
|
| 281.16 |
|
| 83.1 |
|
| 233.70 |
|
| 432.22 |
|
| 271.84 |
|
| 81.0 |
|
| 220.07 |
|
| 391.37 |
|
| 6.2 |
|
| 10.4 |
|
Washington, D.C. (CBD) |
| 5 |
|
| 3,240 |
|
| 312.23 |
|
| 78.0 |
|
| 243.43 |
|
| 346.51 |
|
| 286.32 |
|
| 77.0 |
|
| 220.58 |
|
| 312.13 |
|
| 10.4 |
|
| 11.0 |
|
Boston |
| 2 |
|
| 1,496 |
|
| 293.70 |
|
| 83.0 |
|
| 243.74 |
|
| 311.38 |
|
| 277.40 |
|
| 60.7 |
|
| 168.38 |
|
| 223.59 |
|
| 44.8 |
|
| 39.3 |
|
Austin |
| 2 |
|
| 767 |
|
| 257.48 |
|
| 70.8 |
|
| 182.18 |
|
| 327.53 |
|
| 272.13 |
|
| 80.7 |
|
| 219.57 |
|
| 383.03 |
|
| (17.0 | ) |
| (14.5 | ) |
Philadelphia |
| 2 |
|
| 810 |
|
| 249.51 |
|
| 83.5 |
|
| 208.44 |
|
| 327.91 |
|
| 229.82 |
|
| 86.6 |
|
| 199.08 |
|
| 303.95 |
|
| 4.7 |
|
| 7.9 |
|
Northern Virginia |
| 2 |
|
| 916 |
|
| 261.74 |
|
| 73.7 |
|
| 192.88 |
|
| 292.30 |
|
| 228.38 |
|
| 75.8 |
|
| 173.05 |
|
| 266.99 |
|
| 11.5 |
|
| 9.5 |
|
San Francisco/San Jose |
| 6 |
|
| 4,162 |
|
| 235.44 |
|
| 66.6 |
|
| 156.72 |
|
| 230.73 |
|
| 237.03 |
|
| 72.7 |
|
| 172.26 |
|
| 237.65 |
|
| (9.0 | ) |
| (2.9 | ) |
New Orleans |
| 1 |
|
| 1,333 |
|
| 208.75 |
|
| 75.0 |
|
| 156.55 |
|
| 241.38 |
|
| 219.22 |
|
| 76.4 |
|
| 167.55 |
|
| 237.37 |
|
| (6.6 | ) |
| 1.7 |
|
Chicago |
| 3 |
|
| 1,562 |
|
| 278.93 |
|
| 76.2 |
|
| 212.54 |
|
| 303.24 |
|
| 253.18 |
|
| 74.0 |
|
| 187.35 |
|
| 260.67 |
|
| 13.4 |
|
| 16.3 |
|
San Antonio |
| 2 |
|
| 1,512 |
|
| 214.90 |
|
| 63.9 |
|
| 137.37 |
|
| 219.40 |
|
| 202.69 |
|
| 70.3 |
|
| 142.44 |
|
| 213.86 |
|
| (3.6 | ) |
| 2.6 |
|
Houston |
| 5 |
|
| 1,942 |
|
| 208.54 |
|
| 72.3 |
|
| 150.82 |
|
| 207.78 |
|
| 184.11 |
|
| 67.1 |
|
| 123.53 |
|
| 175.70 |
|
| 22.1 |
|
| 18.3 |
|
Atlanta |
| 2 |
|
| 810 |
|
| 194.10 |
|
| 76.0 |
|
| 147.44 |
|
| 239.70 |
|
| 186.06 |
|
| 77.5 |
|
| 144.28 |
|
| 236.30 |
|
| 2.2 |
|
| 1.4 |
|
Seattle |
| 2 |
|
| 1,315 |
|
| 241.55 |
|
| 72.9 |
|
| 176.09 |
|
| 237.33 |
|
| 228.80 |
|
| 74.6 |
|
| 170.62 |
|
| 218.92 |
|
| 3.2 |
|
| 8.4 |
|
Denver |
| 3 |
|
| 1,340 |
|
| 196.19 |
|
| 66.2 |
|
| 129.88 |
|
| 190.82 |
|
| 188.02 |
|
| 69.4 |
|
| 130.52 |
|
| 189.86 |
|
| (0.5 | ) |
| 0.5 |
|
Other |
| 10 |
|
| 3,061 |
|
| 287.69 |
|
| 69.7 |
|
| 200.45 |
|
| 306.65 |
|
| 272.79 |
|
| 66.3 |
|
| 180.80 |
|
| 267.34 |
|
| 10.9 |
|
| 14.7 |
|
Domestic |
| 70 |
|
| 39,532 |
|
| 306.78 |
|
| 74.7 |
|
| 229.05 |
|
| 374.40 |
|
| 300.38 |
|
| 74.6 |
|
| 224.05 |
|
| 361.94 |
|
| 2.2 |
|
| 3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
International |
| 5 |
|
| 1,499 |
|
| 193.42 |
|
| 62.7 |
|
| 121.31 |
|
| 184.99 |
|
| 155.80 |
|
| 59.0 |
|
| 91.91 |
|
| 140.79 |
|
| 32.0 |
|
| 31.4 |
|
All Locations |
| 75 |
|
| 41,031 |
|
| 303.29 |
|
| 74.2 |
|
| 225.12 |
|
| 367.54 |
|
| 296.18 |
|
| 74.0 |
|
| 219.23 |
|
| 353.95 |
|
| 2.7 |
|
| 3.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Comparable Hotel Results by Location
| As of June 30, 2023 |
| Year-to-date ended June 30, 2023 |
| Year-to-date ended June 30, 2022 |
|
|
|
|
| ||||||||||||||||||||||||||
Location | No. of |
| No. of |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Percent |
| Percent |
| ||||||||||||
Maui/Oahu |
| 4 |
|
| 2,006 |
| $ | 599.89 |
|
| 75.0 | % | $ | 449.74 |
| $ | 689.14 |
| $ | 556.16 |
|
| 77.2 | % | $ | 429.37 |
| $ | 665.56 |
|
| 4.7 | % |
| 3.5 | % |
Miami |
| 2 |
|
| 1,033 |
|
| 594.02 |
|
| 73.8 |
|
| 438.09 |
|
| 753.95 |
|
| 677.26 |
|
| 69.1 |
|
| 468.18 |
|
| 758.30 |
|
| (6.4 | ) |
| (0.6 | ) |
Jacksonville |
| 1 |
|
| 446 |
|
| 532.21 |
|
| 74.7 |
|
| 397.60 |
|
| 872.26 |
|
| 555.35 |
|
| 70.8 |
|
| 393.31 |
|
| 846.75 |
|
| 1.1 |
|
| 3.0 |
|
Phoenix |
| 3 |
|
| 1,545 |
|
| 455.18 |
|
| 78.0 |
|
| 355.17 |
|
| 764.31 |
|
| 442.80 |
|
| 74.8 |
|
| 331.38 |
|
| 709.91 |
|
| 7.2 |
|
| 7.7 |
|
Florida Gulf Coast |
| 3 |
|
| 941 |
|
| 433.52 |
|
| 80.2 |
|
| 347.70 |
|
| 747.93 |
|
| 434.49 |
|
| 79.5 |
|
| 345.27 |
|
| 699.72 |
|
| 0.7 |
|
| 6.9 |
|
Orlando |
| 2 |
|
| 2,448 |
|
| 395.90 |
|
| 74.7 |
|
| 295.85 |
|
| 591.62 |
|
| 427.24 |
|
| 66.0 |
|
| 281.89 |
|
| 534.73 |
|
| 5.0 |
|
| 10.6 |
|
New York |
| 2 |
|
| 2,486 |
|
| 316.51 |
|
| 78.8 |
|
| 249.47 |
|
| 369.18 |
|
| 303.32 |
|
| 61.0 |
|
| 184.91 |
|
| 269.63 |
|
| 34.9 |
|
| 36.9 |
|
Los Angeles/Orange County |
| 3 |
|
| 1,067 |
|
| 296.97 |
|
| 81.2 |
|
| 241.12 |
|
| 352.91 |
|
| 282.52 |
|
| 76.2 |
|
| 215.25 |
|
| 311.32 |
|
| 12.0 |
|
| 13.4 |
|
San Diego |
| 3 |
|
| 3,294 |
|
| 282.01 |
|
| 80.1 |
|
| 225.75 |
|
| 427.16 |
|
| 265.79 |
|
| 71.3 |
|
| 189.62 |
|
| 343.77 |
|
| 19.1 |
|
| 24.3 |
|
Washington, D.C. (CBD) |
| 5 |
|
| 3,240 |
|
| 293.53 |
|
| 71.1 |
|
| 208.82 |
|
| 304.05 |
|
| 269.82 |
|
| 57.9 |
|
| 156.21 |
|
| 222.15 |
|
| 33.7 |
|
| 36.9 |
|
Boston |
| 2 |
|
| 1,496 |
|
| 256.23 |
|
| 76.1 |
|
| 195.06 |
|
| 262.66 |
|
| 235.57 |
|
| 54.2 |
|
| 127.70 |
|
| 168.31 |
|
| 52.8 |
|
| 56.1 |
|
Austin |
| 2 |
|
| 767 |
|
| 273.23 |
|
| 70.4 |
|
| 192.43 |
|
| 343.15 |
|
| 274.92 |
|
| 71.3 |
|
| 196.03 |
|
| 334.68 |
|
| (1.8 | ) |
| 2.5 |
|
Philadelphia |
| 2 |
|
| 810 |
|
| 229.68 |
|
| 78.9 |
|
| 181.17 |
|
| 283.96 |
|
| 206.81 |
|
| 76.7 |
|
| 158.68 |
|
| 244.18 |
|
| 14.2 |
|
| 16.3 |
|
Northern Virginia |
| 2 |
|
| 916 |
|
| 245.58 |
|
| 69.7 |
|
| 171.08 |
|
| 259.21 |
|
| 216.27 |
|
| 64.4 |
|
| 139.18 |
|
| 208.25 |
|
| 22.9 |
|
| 24.5 |
|
San Francisco/San Jose |
| 6 |
|
| 4,162 |
|
| 261.73 |
|
| 63.7 |
|
| 166.68 |
|
| 249.04 |
|
| 221.94 |
|
| 58.9 |
|
| 130.72 |
|
| 188.52 |
|
| 27.5 |
|
| 32.1 |
|
New Orleans |
| 1 |
|
| 1,333 |
|
| 215.24 |
|
| 74.0 |
|
| 159.23 |
|
| 240.08 |
|
| 212.83 |
|
| 66.2 |
|
| 140.90 |
|
| 202.78 |
|
| 13.0 |
|
| 18.4 |
|
Chicago |
| 3 |
|
| 1,562 |
|
| 238.80 |
|
| 64.0 |
|
| 152.79 |
|
| 219.73 |
|
| 220.82 |
|
| 57.4 |
|
| 126.78 |
|
| 174.77 |
|
| 20.5 |
|
| 25.7 |
|
San Antonio |
| 2 |
|
| 1,512 |
|
| 227.23 |
|
| 67.0 |
|
| 152.20 |
|
| 242.68 |
|
| 195.73 |
|
| 68.8 |
|
| 134.67 |
|
| 205.78 |
|
| 13.0 |
|
| 17.9 |
|
Houston |
| 5 |
|
| 1,942 |
|
| 206.36 |
|
| 72.8 |
|
| 150.32 |
|
| 208.68 |
|
| 182.12 |
|
| 64.0 |
|
| 116.60 |
|
| 162.56 |
|
| 28.9 |
|
| 28.4 |
|
Atlanta |
| 2 |
|
| 810 |
|
| 195.42 |
|
| 75.0 |
|
| 146.53 |
|
| 241.17 |
|
| 180.13 |
|
| 72.0 |
|
| 129.60 |
|
| 207.01 |
|
| 13.1 |
|
| 16.5 |
|
Seattle |
| 2 |
|
| 1,315 |
|
| 223.18 |
|
| 63.1 |
|
| 140.79 |
|
| 196.97 |
|
| 211.55 |
|
| 55.1 |
|
| 116.53 |
|
| 153.56 |
|
| 20.8 |
|
| 28.3 |
|
Denver |
| 3 |
|
| 1,340 |
|
| 185.96 |
|
| 57.5 |
|
| 106.90 |
|
| 152.98 |
|
| 173.91 |
|
| 57.4 |
|
| 99.84 |
|
| 146.61 |
|
| 7.1 |
|
| 4.3 |
|
Other |
| 10 |
|
| 3,061 |
|
| 319.34 |
|
| 64.0 |
|
| 204.29 |
|
| 314.22 |
|
| 323.74 |
|
| 59.1 |
|
| 191.24 |
|
| 284.58 |
|
| 6.8 |
|
| 10.4 |
|
Domestic |
| 70 |
|
| 39,532 |
|
| 314.70 |
|
| 71.7 |
|
| 225.60 |
|
| 374.31 |
|
| 304.95 |
|
| 64.8 |
|
| 197.64 |
|
| 321.78 |
|
| 14.1 |
|
| 16.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
International |
| 5 |
|
| 1,499 |
|
| 182.51 |
|
| 61.5 |
|
| 112.29 |
|
| 165.31 |
|
| 133.14 |
|
| 49.3 |
|
| 65.66 |
|
| 99.56 |
|
| 71.0 |
|
| 66.1 |
|
All Locations |
| 75 |
|
| 41,031 |
|
| 310.54 |
|
| 71.3 |
|
| 221.46 |
|
| 366.74 |
|
| 300.14 |
|
| 64.2 |
|
| 192.82 |
|
| 313.73 |
|
| 14.9 |
|
| 16.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results by Location - actual, based on ownership period(1)
| As of June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
| 2023 |
| 2022 |
| Quarter ended June 30, 2023 |
| Quarter ended June 30, 2022 |
|
|
|
|
| ||||||||||||||||||||||||
Location | No. of |
| No. of |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Percent |
| Percent |
| ||||||||||||
Maui/Oahu |
| 4 |
|
| 4 |
| $ | 594.07 |
|
| 73.7 | % | $ | 437.96 |
| $ | 678.06 |
| $ | 567.20 |
|
| 78.0 | % | $ | 442.56 |
| $ | 690.02 |
|
| (1.0 | )% |
| (1.7 | )% |
Miami |
| 2 |
|
| 2 |
|
| 538.70 |
|
| 69.6 |
|
| 374.98 |
|
| 646.85 |
|
| 596.12 |
|
| 68.2 |
|
| 406.35 |
|
| 676.00 |
|
| (7.7 | ) |
| (4.3 | ) |
Jacksonville |
| 1 |
|
| 1 |
|
| 549.95 |
|
| 82.1 |
|
| 451.53 |
|
| 974.60 |
|
| 572.46 |
|
| 81.1 |
|
| 463.99 |
|
| 974.04 |
|
| (2.7 | ) |
| 0.1 |
|
Phoenix |
| 3 |
|
| 4 |
|
| 372.81 |
|
| 73.6 |
|
| 274.51 |
|
| 651.73 |
|
| 367.35 |
|
| 75.5 |
|
| 277.29 |
|
| 612.01 |
|
| (1.0 | ) |
| 6.5 |
|
Florida Gulf Coast |
| 5 |
|
| 5 |
|
| 347.63 |
|
| 56.5 |
|
| 196.31 |
|
| 418.07 |
|
| 411.67 |
|
| 70.2 |
|
| 288.94 |
|
| 598.02 |
|
| (32.1 | ) |
| (30.1 | ) |
Orlando |
| 2 |
|
| 2 |
|
| 363.44 |
|
| 73.4 |
|
| 266.90 |
|
| 542.00 |
|
| 402.61 |
|
| 73.8 |
|
| 297.06 |
|
| 580.59 |
|
| (10.2 | ) |
| (6.6 | ) |
New York |
| 2 |
|
| 2 |
|
| 346.21 |
|
| 84.3 |
|
| 291.87 |
|
| 423.84 |
|
| 313.84 |
|
| 78.3 |
|
| 245.88 |
|
| 361.64 |
|
| 18.7 |
|
| 17.2 |
|
Los Angeles/Orange County |
| 3 |
|
| 3 |
|
| 297.22 |
|
| 82.4 |
|
| 245.01 |
|
| 352.37 |
|
| 278.61 |
|
| 87.4 |
|
| 243.48 |
|
| 356.01 |
|
| 0.6 |
|
| (1.0 | ) |
San Diego |
| 3 |
|
| 3 |
|
| 281.16 |
|
| 83.1 |
|
| 233.70 |
|
| 432.22 |
|
| 271.84 |
|
| 81.0 |
|
| 220.07 |
|
| 391.37 |
|
| 6.2 |
|
| 10.4 |
|
Washington, D.C. (CBD) |
| 5 |
|
| 5 |
|
| 312.23 |
|
| 78.0 |
|
| 243.43 |
|
| 346.51 |
|
| 286.32 |
|
| 77.0 |
|
| 220.58 |
|
| 312.13 |
|
| 10.4 |
|
| 11.0 |
|
Boston |
| 2 |
|
| 2 |
|
| 293.70 |
|
| 83.0 |
|
| 243.74 |
|
| 311.38 |
|
| 277.40 |
|
| 60.7 |
|
| 168.38 |
|
| 223.59 |
|
| 44.8 |
|
| 39.3 |
|
Austin |
| 2 |
|
| 2 |
|
| 257.48 |
|
| 70.8 |
|
| 182.18 |
|
| 327.53 |
|
| 272.13 |
|
| 80.7 |
|
| 219.57 |
|
| 383.03 |
|
| (17.0 | ) |
| (14.5 | ) |
Philadelphia |
| 2 |
|
| 2 |
|
| 249.51 |
|
| 83.5 |
|
| 208.44 |
|
| 327.91 |
|
| 229.82 |
|
| 86.6 |
|
| 199.08 |
|
| 303.95 |
|
| 4.7 |
|
| 7.9 |
|
Northern Virginia |
| 2 |
|
| 2 |
|
| 261.74 |
|
| 73.7 |
|
| 192.88 |
|
| 292.30 |
|
| 228.38 |
|
| 75.8 |
|
| 173.05 |
|
| 266.99 |
|
| 11.5 |
|
| 9.5 |
|
San Francisco/San Jose |
| 6 |
|
| 6 |
|
| 235.44 |
|
| 66.6 |
|
| 156.72 |
|
| 230.73 |
|
| 237.03 |
|
| 72.7 |
|
| 172.26 |
|
| 237.65 |
|
| (9.0 | ) |
| (2.9 | ) |
New Orleans |
| 1 |
|
| 1 |
|
| 208.75 |
|
| 75.0 |
|
| 156.55 |
|
| 241.38 |
|
| 219.22 |
|
| 76.4 |
|
| 167.55 |
|
| 237.37 |
|
| (6.6 | ) |
| 1.7 |
|
Chicago |
| 3 |
|
| 4 |
|
| 278.93 |
|
| 76.2 |
|
| 212.54 |
|
| 303.24 |
|
| 240.04 |
|
| 71.8 |
|
| 172.32 |
|
| 237.59 |
|
| 23.3 |
|
| 27.6 |
|
San Antonio |
| 2 |
|
| 2 |
|
| 214.90 |
|
| 63.9 |
|
| 137.37 |
|
| 219.40 |
|
| 202.69 |
|
| 70.3 |
|
| 142.44 |
|
| 213.86 |
|
| (3.6 | ) |
| 2.6 |
|
Houston |
| 5 |
|
| 5 |
|
| 208.54 |
|
| 72.3 |
|
| 150.82 |
|
| 207.78 |
|
| 184.11 |
|
| 67.1 |
|
| 123.53 |
|
| 175.70 |
|
| 22.1 |
|
| 18.3 |
|
Atlanta |
| 2 |
|
| 2 |
|
| 194.10 |
|
| 76.0 |
|
| 147.44 |
|
| 239.70 |
|
| 186.06 |
|
| 77.5 |
|
| 144.28 |
|
| 236.30 |
|
| 2.2 |
|
| 1.4 |
|
Seattle |
| 2 |
|
| 2 |
|
| 241.55 |
|
| 72.9 |
|
| 176.09 |
|
| 237.33 |
|
| 228.80 |
|
| 74.6 |
|
| 170.62 |
|
| 218.92 |
|
| 3.2 |
|
| 8.4 |
|
Denver |
| 3 |
|
| 3 |
|
| 196.19 |
|
| 66.2 |
|
| 129.88 |
|
| 190.82 |
|
| 188.02 |
|
| 69.4 |
|
| 130.52 |
|
| 189.86 |
|
| (0.5 | ) |
| 0.5 |
|
Other |
| 10 |
|
| 9 |
|
| 287.69 |
|
| 69.7 |
|
| 200.45 |
|
| 306.65 |
|
| 262.88 |
|
| 69.1 |
|
| 181.67 |
|
| 265.61 |
|
| 10.3 |
|
| 15.5 |
|
Domestic |
| 72 |
|
| 73 |
|
| 306.27 |
|
| 73.8 |
|
| 226.00 |
|
| 370.80 |
|
| 300.15 |
|
| 74.3 |
|
| 223.13 |
|
| 362.34 |
|
| 1.3 |
|
| 2.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
International |
| 5 |
|
| 5 |
|
| 193.42 |
|
| 62.7 |
|
| 121.31 |
|
| 184.99 |
|
| 155.80 |
|
| 59.0 |
|
| 91.91 |
|
| 140.79 |
|
| 32.0 |
|
| 31.4 |
|
All Locations |
| 77 |
|
| 78 |
|
| 302.82 |
|
| 73.4 |
|
| 222.26 |
|
| 364.22 |
|
| 296.11 |
|
| 73.8 |
|
| 218.53 |
|
| 354.65 |
|
| 1.7 |
|
| 2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
Results by Location - actual, based on ownership period(1)
| As of June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
| 2023 |
| 2022 |
| Year-to-date ended June 30, 2023 |
| Year-to-date ended June 30, 2022 |
|
|
|
|
| ||||||||||||||||||||||||
Location | No. of |
| No. of |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Average |
| Average |
| RevPAR |
| Total RevPAR |
| Percent |
| Percent |
| ||||||||||||
Maui/Oahu |
| 4 |
|
| 4 |
| $ | 599.89 |
|
| 75.0 | % | $ | 449.74 |
| $ | 689.14 |
| $ | 556.16 |
|
| 77.2 | % | $ | 429.37 |
| $ | 665.56 |
|
| 4.7 | % |
| 3.5 | % |
Miami |
| 2 |
|
| 2 |
|
| 594.02 |
|
| 73.8 |
|
| 438.09 |
|
| 753.95 |
|
| 609.44 |
|
| 70.9 |
|
| 432.20 |
|
| 690.16 |
|
| 1.4 |
|
| 9.2 |
|
Jacksonville |
| 1 |
|
| 1 |
|
| 532.21 |
|
| 74.7 |
|
| 397.60 |
|
| 872.26 |
|
| 555.35 |
|
| 70.8 |
|
| 393.31 |
|
| 846.75 |
|
| 1.1 |
|
| 3.0 |
|
Phoenix |
| 3 |
|
| 4 |
|
| 446.98 |
|
| 78.0 |
|
| 348.64 |
|
| 738.46 |
|
| 412.40 |
|
| 74.7 |
|
| 307.94 |
|
| 643.07 |
|
| 13.2 |
|
| 14.8 |
|
Florida Gulf Coast |
| 5 |
|
| 5 |
|
| 392.96 |
|
| 58.6 |
|
| 230.46 |
|
| 497.50 |
|
| 485.09 |
|
| 72.1 |
|
| 349.66 |
|
| 691.06 |
|
| (34.1 | ) |
| (28.0 | ) |
Orlando |
| 2 |
|
| 2 |
|
| 395.90 |
|
| 74.7 |
|
| 295.85 |
|
| 591.62 |
|
| 427.24 |
|
| 66.0 |
|
| 281.89 |
|
| 534.73 |
|
| 5.0 |
|
| 10.6 |
|
New York |
| 2 |
|
| 2 |
|
| 316.51 |
|
| 78.8 |
|
| 249.47 |
|
| 369.18 |
|
| 276.49 |
|
| 56.1 |
|
| 155.17 |
|
| 222.91 |
|
| 60.8 |
|
| 65.6 |
|
Los Angeles/Orange County |
| 3 |
|
| 3 |
|
| 296.97 |
|
| 81.2 |
|
| 241.12 |
|
| 352.91 |
|
| 282.52 |
|
| 76.2 |
|
| 215.25 |
|
| 311.32 |
|
| 12.0 |
|
| 13.4 |
|
San Diego |
| 3 |
|
| 3 |
|
| 282.01 |
|
| 80.1 |
|
| 225.75 |
|
| 427.16 |
|
| 265.79 |
|
| 71.3 |
|
| 189.62 |
|
| 343.77 |
|
| 19.1 |
|
| 24.3 |
|
Washington, D.C. (CBD) |
| 5 |
|
| 5 |
|
| 293.53 |
|
| 71.1 |
|
| 208.82 |
|
| 304.05 |
|
| 269.82 |
|
| 57.9 |
|
| 156.21 |
|
| 222.15 |
|
| 33.7 |
|
| 36.9 |
|
Boston |
| 2 |
|
| 2 |
|
| 256.23 |
|
| 76.1 |
|
| 195.06 |
|
| 262.66 |
|
| 228.61 |
|
| 51.8 |
|
| 118.39 |
|
| 155.01 |
|
| 64.8 |
|
| 69.4 |
|
Austin |
| 2 |
|
| 2 |
|
| 273.23 |
|
| 70.4 |
|
| 192.43 |
|
| 343.15 |
|
| 274.92 |
|
| 71.3 |
|
| 196.03 |
|
| 334.68 |
|
| (1.8 | ) |
| 2.5 |
|
Philadelphia |
| 2 |
|
| 2 |
|
| 229.68 |
|
| 78.9 |
|
| 181.17 |
|
| 283.96 |
|
| 206.81 |
|
| 76.7 |
|
| 158.68 |
|
| 244.18 |
|
| 14.2 |
|
| 16.3 |
|
Northern Virginia |
| 2 |
|
| 2 |
|
| 245.58 |
|
| 69.7 |
|
| 171.08 |
|
| 259.21 |
|
| 216.27 |
|
| 64.4 |
|
| 139.18 |
|
| 208.25 |
|
| 22.9 |
|
| 24.5 |
|
San Francisco/San Jose |
| 6 |
|
| 6 |
|
| 261.73 |
|
| 63.7 |
|
| 166.68 |
|
| 249.04 |
|
| 221.94 |
|
| 58.9 |
|
| 130.72 |
|
| 188.52 |
|
| 27.5 |
|
| 32.1 |
|
New Orleans |
| 1 |
|
| 1 |
|
| 215.24 |
|
| 74.0 |
|
| 159.23 |
|
| 240.08 |
|
| 212.83 |
|
| 66.2 |
|
| 140.90 |
|
| 202.78 |
|
| 13.0 |
|
| 18.4 |
|
Chicago |
| 3 |
|
| 4 |
|
| 238.80 |
|
| 64.0 |
|
| 152.79 |
|
| 219.73 |
|
| 210.41 |
|
| 56.0 |
|
| 117.93 |
|
| 161.24 |
|
| 29.6 |
|
| 36.3 |
|
San Antonio |
| 2 |
|
| 2 |
|
| 227.23 |
|
| 67.0 |
|
| 152.20 |
|
| 242.68 |
|
| 195.73 |
|
| 68.8 |
|
| 134.67 |
|
| 205.78 |
|
| 13.0 |
|
| 17.9 |
|
Houston |
| 5 |
|
| 5 |
|
| 206.36 |
|
| 72.8 |
|
| 150.32 |
|
| 208.68 |
|
| 182.12 |
|
| 64.0 |
|
| 116.60 |
|
| 162.56 |
|
| 28.9 |
|
| 28.4 |
|
Atlanta |
| 2 |
|
| 2 |
|
| 195.42 |
|
| 75.0 |
|
| 146.53 |
|
| 241.17 |
|
| 180.13 |
|
| 72.0 |
|
| 129.60 |
|
| 207.01 |
|
| 13.1 |
|
| 16.5 |
|
Seattle |
| 2 |
|
| 2 |
|
| 223.18 |
|
| 63.1 |
|
| 140.79 |
|
| 196.97 |
|
| 211.55 |
|
| 55.1 |
|
| 116.53 |
|
| 153.56 |
|
| 20.8 |
|
| 28.3 |
|
Denver |
| 3 |
|
| 3 |
|
| 185.96 |
|
| 57.5 |
|
| 106.90 |
|
| 152.98 |
|
| 173.91 |
|
| 57.4 |
|
| 99.84 |
|
| 146.61 |
|
| 7.1 |
|
| 4.3 |
|
Other |
| 10 |
|
| 9 |
|
| 319.34 |
|
| 64.0 |
|
| 204.29 |
|
| 314.22 |
|
| 266.94 |
|
| 60.0 |
|
| 160.20 |
|
| 229.80 |
|
| 27.5 |
|
| 36.7 |
|
Domestic |
| 72 |
|
| 73 |
|
| 314.56 |
|
| 70.9 |
|
| 223.06 |
|
| 371.22 |
|
| 302.36 |
|
| 64.3 |
|
| 194.28 |
|
| 317.04 |
|
| 14.8 |
|
| 17.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
International |
| 5 |
|
| 5 |
|
| 182.51 |
|
| 61.5 |
|
| 112.29 |
|
| 165.31 |
|
| 133.14 |
|
| 49.3 |
|
| 65.66 |
|
| 99.56 |
|
| 71.0 |
|
| 66.1 |
|
All Locations |
| 77 |
|
| 78 |
|
| 310.46 |
|
| 70.6 |
|
| 219.11 |
|
| 363.94 |
|
| 297.88 |
|
| 63.7 |
|
| 189.88 |
|
| 309.66 |
|
| 15.4 |
|
| 17.5 |
|
___________
(1) Represents the results of the portfolio for the time period of our ownership, including the results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of September 30, 2017 and 2016, respectively:the date of acquisition.
Comparable Hotels by Market in Constant US$ (by RevPAR)
|
| As of September 30, 2017 |
|
| Quarter ended September 30, 2017 |
|
| Quarter ended September 30, 2016 |
|
|
|
|
| |||||||||||||||||||||||
Market |
| No. of Properties |
|
| No. of Rooms |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Percent Change in RevPAR |
| |||||||||
Hawaii |
|
| 3 |
|
|
| 1,682 |
|
| $ | 325.44 |
|
|
| 92.4 | % |
| $ | 300.75 |
|
| $ | 316.67 |
|
|
| 92.5 | % |
| $ | 292.77 |
|
|
| 2.7 | % |
Seattle |
|
| 2 |
|
|
| 1,315 |
|
|
| 267.84 |
|
|
| 93.6 |
|
|
| 250.75 |
|
|
| 258.78 |
|
|
| 90.9 |
|
|
| 235.26 |
|
|
| 6.6 |
|
New York |
|
| 8 |
|
|
| 6,961 |
|
|
| 271.00 |
|
|
| 91.3 |
|
|
| 247.53 |
|
|
| 280.23 |
|
|
| 89.8 |
|
|
| 251.75 |
|
|
| (1.7 | ) |
San Francisco |
|
| 4 |
|
|
| 2,912 |
|
|
| 256.52 |
|
|
| 89.4 |
|
|
| 229.21 |
|
|
| 252.99 |
|
|
| 86.8 |
|
|
| 219.71 |
|
|
| 4.3 |
|
Boston |
|
| 4 |
|
|
| 3,185 |
|
|
| 244.72 |
|
|
| 88.5 |
|
|
| 216.68 |
|
|
| 242.48 |
|
|
| 90.5 |
|
|
| 219.42 |
|
|
| (1.2 | ) |
San Diego |
|
| 3 |
|
|
| 2,981 |
|
|
| 225.90 |
|
|
| 86.5 |
|
|
| 195.47 |
|
|
| 213.13 |
|
|
| 91.4 |
|
|
| 194.80 |
|
|
| 0.3 |
|
Los Angeles |
|
| 7 |
|
|
| 2,843 |
|
|
| 214.72 |
|
|
| 87.7 |
|
|
| 188.40 |
|
|
| 216.17 |
|
|
| 86.9 |
|
|
| 187.75 |
|
|
| 0.3 |
|
Chicago |
|
| 6 |
|
|
| 2,392 |
|
|
| 204.47 |
|
|
| 88.5 |
|
|
| 180.94 |
|
|
| 216.88 |
|
|
| 87.0 |
|
|
| 188.71 |
|
|
| (4.1 | ) |
Denver |
|
| 2 |
|
|
| 735 |
|
|
| 190.27 |
|
|
| 88.6 |
|
|
| 168.50 |
|
|
| 189.33 |
|
|
| 85.5 |
|
|
| 161.91 |
|
|
| 4.1 |
|
Washington, D.C. |
|
| 12 |
|
|
| 6,024 |
|
|
| 193.93 |
|
|
| 82.5 |
|
|
| 160.05 |
|
|
| 193.50 |
|
|
| 81.4 |
|
|
| 157.43 |
|
|
| 1.7 |
|
Atlanta |
|
| 5 |
|
|
| 1,939 |
|
|
| 189.32 |
|
|
| 75.9 |
|
|
| 143.69 |
|
|
| 189.85 |
|
|
| 80.3 |
|
|
| 152.43 |
|
|
| (5.7 | ) |
Florida |
|
| 8 |
|
|
| 4,559 |
|
|
| 181.83 |
|
|
| 62.1 |
|
|
| 112.92 |
|
|
| 182.06 |
|
|
| 68.0 |
|
|
| 123.72 |
|
|
| (8.7 | ) |
Houston |
|
| 4 |
|
|
| 1,716 |
|
|
| 168.11 |
|
|
| 66.3 |
|
|
| 111.49 |
|
|
| 167.78 |
|
|
| 67.7 |
|
|
| 113.58 |
|
|
| (1.8 | ) |
Phoenix |
|
| 4 |
|
|
| 1,518 |
|
|
| 142.34 |
|
|
| 65.7 |
|
|
| 93.47 |
|
|
| 147.53 |
|
|
| 58.0 |
|
|
| 85.57 |
|
|
| 9.2 |
|
Other |
|
| 9 |
|
|
| 5,784 |
|
|
| 160.58 |
|
|
| 71.9 |
|
|
| 115.42 |
|
|
| 169.12 |
|
|
| 71.5 |
|
|
| 120.96 |
|
|
| (4.6 | ) |
Domestic |
|
| 81 |
|
|
| 46,546 |
|
|
| 219.88 |
|
|
| 81.6 |
|
|
| 179.38 |
|
|
| 221.01 |
|
|
| 81.8 |
|
|
| 180.69 |
|
|
| (0.7 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
| 2 |
|
|
| 849 |
|
|
| 192.87 |
|
|
| 79.4 |
|
|
| 153.11 |
|
|
| 198.84 |
|
|
| 76.7 |
|
|
| 152.45 |
|
|
| 0.4 |
|
Latin America |
|
| 4 |
|
|
| 962 |
|
|
| 167.13 |
|
|
| 58.7 |
|
|
| 98.08 |
|
|
| 299.89 |
|
|
| 67.9 |
|
|
| 203.58 |
|
|
| (51.8 | ) |
International |
|
| 6 |
|
|
| 1,811 |
|
|
| 181.13 |
|
|
| 68.4 |
|
|
| 123.87 |
|
|
| 249.47 |
|
|
| 72.0 |
|
|
| 179.62 |
|
|
| (31.0 | ) |
All Markets - Constant US$ |
|
| 87 |
|
|
| 48,357 |
|
|
| 218.65 |
|
|
| 81.1 |
|
|
| 177.30 |
|
|
| 221.95 |
|
|
| 81.4 |
|
|
| 180.65 |
|
|
| (1.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Hotels in Nominal US$ |
| |||||||||||||||||||||||||||||||||||
|
| As of September 30, 2017 |
|
| Quarter ended September 30, 2017 |
|
| Quarter ended September 30, 2016 |
|
|
|
|
| |||||||||||||||||||||||
|
| No. of Properties |
|
| No. of Rooms |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Percent Change in RevPAR |
| |||||||||
Canada |
|
| 2 |
|
|
| 849 |
|
| $ | 192.87 |
|
|
| 79.4 | % |
| $ | 153.11 |
|
| $ | 191.03 |
|
|
| 76.7 | % |
| $ | 146.46 |
|
|
| 4.5 | % |
Latin America |
|
| 4 |
|
|
| 962 |
|
|
| 167.13 |
|
|
| 58.7 |
|
|
| 98.08 |
|
|
| 290.57 |
|
|
| 67.9 |
|
|
| 197.25 |
|
|
| (50.3 | ) |
International |
|
| 6 |
|
|
| 1,811 |
|
|
| 181.13 |
|
|
| 68.4 |
|
|
| 123.87 |
|
|
| 240.91 |
|
|
| 72.0 |
|
|
| 173.45 |
|
|
| (28.6 | ) |
Domestic |
|
| 81 |
|
|
| 46,546 |
|
|
| 219.88 |
|
|
| 81.6 |
|
|
| 179.38 |
|
|
| 221.01 |
|
|
| 81.8 |
|
|
| 180.69 |
|
|
| (0.7 | ) |
All Markets |
|
| 87 |
|
|
| 48,357 |
|
|
| 218.65 |
|
|
| 81.1 |
|
|
| 177.30 |
|
|
| 221.67 |
|
|
| 81.4 |
|
|
| 180.41 |
|
|
| (1.7 | ) |
Comparable Hotels by Market in Constant US$ (by RevPAR)
|
| As of September 30, 2017 |
|
| Year-to-date ended September 30, 2017 |
|
| Year-to-date ended September 30, 2016 |
|
|
|
|
| |||||||||||||||||||||||
Market |
| No. of Properties |
|
| No. of Rooms |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Percent Change in RevPAR |
| |||||||||
Hawaii |
|
| 3 |
|
|
| 1,682 |
|
| $ | 339.86 |
|
|
| 90.9 | % |
| $ | 308.79 |
|
| $ | 326.28 |
|
|
| 91.4 | % |
| $ | 298.38 |
|
|
| 3.5 | % |
New York |
|
| 8 |
|
|
| 6,961 |
|
|
| 263.14 |
|
|
| 86.7 |
|
|
| 228.26 |
|
|
| 268.49 |
|
|
| 86.4 |
|
|
| 232.10 |
|
|
| (1.7 | ) |
San Francisco |
|
| 4 |
|
|
| 2,912 |
|
|
| 260.60 |
|
|
| 84.6 |
|
|
| 220.45 |
|
|
| 264.71 |
|
|
| 84.7 |
|
|
| 224.10 |
|
|
| (1.6 | ) |
Seattle |
|
| 2 |
|
|
| 1,315 |
|
|
| 242.23 |
|
|
| 86.8 |
|
|
| 210.24 |
|
|
| 226.40 |
|
|
| 81.8 |
|
|
| 185.30 |
|
|
| 13.5 |
|
Boston |
|
| 4 |
|
|
| 3,185 |
|
|
| 237.07 |
|
|
| 82.5 |
|
|
| 195.54 |
|
|
| 231.85 |
|
|
| 82.1 |
|
|
| 190.45 |
|
|
| 2.7 |
|
San Diego |
|
| 3 |
|
|
| 2,981 |
|
|
| 223.18 |
|
|
| 84.3 |
|
|
| 188.08 |
|
|
| 210.42 |
|
|
| 86.0 |
|
|
| 181.05 |
|
|
| 3.9 |
|
Washington, D.C. |
|
| 12 |
|
|
| 6,024 |
|
|
| 224.01 |
|
|
| 80.8 |
|
|
| 181.02 |
|
|
| 212.48 |
|
|
| 79.6 |
|
|
| 169.20 |
|
|
| 7.0 |
|
Los Angeles |
|
| 7 |
|
|
| 2,843 |
|
|
| 208.11 |
|
|
| 85.1 |
|
|
| 177.05 |
|
|
| 206.35 |
|
|
| 84.5 |
|
|
| 174.42 |
|
|
| 1.5 |
|
Florida |
|
| 8 |
|
|
| 4,559 |
|
|
| 235.84 |
|
|
| 73.2 |
|
|
| 172.56 |
|
|
| 230.87 |
|
|
| 75.5 |
|
|
| 174.35 |
|
|
| (1.0 | ) |
Chicago |
|
| 6 |
|
|
| 2,392 |
|
|
| 197.01 |
|
|
| 79.6 |
|
|
| 156.82 |
|
|
| 201.88 |
|
|
| 77.6 |
|
|
| 156.57 |
|
|
| 0.2 |
|
Phoenix |
|
| 4 |
|
|
| 1,518 |
|
|
| 208.06 |
|
|
| 74.1 |
|
|
| 154.14 |
|
|
| 213.44 |
|
|
| 68.4 |
|
|
| 146.04 |
|
|
| 5.5 |
|
Atlanta |
|
| 5 |
|
|
| 1,939 |
|
|
| 192.65 |
|
|
| 78.1 |
|
|
| 150.46 |
|
|
| 192.39 |
|
|
| 79.4 |
|
|
| 152.70 |
|
|
| (1.5 | ) |
Denver |
|
| 2 |
|
|
| 735 |
|
|
| 181.43 |
|
|
| 82.1 |
|
|
| 149.03 |
|
|
| 181.35 |
|
|
| 76.0 |
|
|
| 137.85 |
|
|
| 8.1 |
|
Houston |
|
| 4 |
|
|
| 1,716 |
|
|
| 179.40 |
|
|
| 71.8 |
|
|
| 128.87 |
|
|
| 182.61 |
|
|
| 73.6 |
|
|
| 134.44 |
|
|
| (4.1 | ) |
Other |
|
| 9 |
|
|
| 5,784 |
|
|
| 177.70 |
|
|
| 74.2 |
|
|
| 131.85 |
|
|
| 180.51 |
|
|
| 72.4 |
|
|
| 130.72 |
|
|
| 0.9 |
|
Domestic |
|
| 81 |
|
|
| 46,546 |
|
|
| 228.30 |
|
|
| 80.8 |
|
|
| 184.44 |
|
|
| 226.16 |
|
|
| 80.3 |
|
|
| 181.55 |
|
|
| 1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
| 2 |
|
|
| 849 |
|
|
| 179.33 |
|
|
| 65.9 |
|
|
| 118.18 |
|
|
| 176.57 |
|
|
| 63.9 |
|
|
| 112.79 |
|
|
| 4.8 |
|
Latin America |
|
| 4 |
|
|
| 962 |
|
|
| 177.99 |
|
|
| 59.2 |
|
|
| 105.44 |
|
|
| 232.98 |
|
|
| 66.5 |
|
|
| 154.82 |
|
|
| (31.9 | ) |
International |
|
| 6 |
|
|
| 1,811 |
|
|
| 178.65 |
|
|
| 62.4 |
|
|
| 111.41 |
|
|
| 207.10 |
|
|
| 65.2 |
|
|
| 135.13 |
|
|
| (17.6 | ) |
All Markets - Constant US$ |
|
| 87 |
|
|
| 48,357 |
|
|
| 226.85 |
|
|
| 80.1 |
|
|
| 181.70 |
|
|
| 225.58 |
|
|
| 79.7 |
|
|
| 179.81 |
|
|
| 1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Hotels in Nominal US$ |
| |||||||||||||||||||||||||||||||||||
|
| As of September 30, 2017 |
|
| Year-to-date ended September 30, 2017 |
|
| Year-to-date ended September 30, 2016 |
|
|
|
|
| |||||||||||||||||||||||
|
| No. of Properties |
|
| No. of Rooms |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Average Room Rate |
|
| Average Occupancy Percentage |
|
| RevPAR |
|
| Percent Change in RevPAR |
| |||||||||
Canada |
|
| 2 |
|
|
| 849 |
|
| $ | 179.33 |
|
|
| 65.9 | % |
| $ | 118.18 |
|
| $ | 174.32 |
|
|
| 63.9 | % |
| $ | 111.35 |
|
|
| 6.1 | % |
Latin America |
|
| 4 |
|
|
| 962 |
|
|
| 177.99 |
|
|
| 59.2 |
|
|
| 105.44 |
|
|
| 223.43 |
|
|
| 66.5 |
|
|
| 148.48 |
|
|
| (29.0 | ) |
International |
|
| 6 |
|
|
| 1,811 |
|
|
| 178.65 |
|
|
| 62.4 |
|
|
| 111.41 |
|
|
| 200.90 |
|
|
| 65.2 |
|
|
| 131.08 |
|
|
| (15.0 | ) |
Domestic |
|
| 81 |
|
|
| 46,546 |
|
|
| 228.30 |
|
|
| 80.8 |
|
|
| 184.44 |
|
|
| 226.16 |
|
|
| 80.3 |
|
|
| 181.55 |
|
|
| 1.6 |
|
All Markets |
|
| 87 |
|
|
| 48,357 |
|
|
| 226.85 |
|
|
| 80.1 |
|
|
| 181.70 |
|
|
| 225.39 |
|
|
| 79.7 |
|
|
| 179.66 |
|
|
| 1.1 |
|
Our top performing domestic markets for the quarter were Phoenix and Seattle, with RevPAR growth of 9.2% and 6.6%, respectively. In Phoenix, growth was led by a 12.1% increase in RevPAR at The Westin Kierland Resort & Spa, driven by strong corporate group room nights. Seattle saw gains in both occupancy and rate, with the W Seattle continuing to experience positive effects from the completed rooms renovation last year.
In the southern and central United States, our Florida properties were negatively affected by Hurricane Irma, as just two of our Florida assets remained open throughout the storm. Likewise, our Houston properties were impacted by Hurricane Harvey. RevPAR declined 1.8% due to a shift from transient to group business, mainly related to recovery efforts. Atlanta underperformed the market due to an occupancy decline of 440 basis points, largely due to renovations at three of our properties. Chicago underperformed the portfolio due to soft transient demand and fewer city-wide events.
In the west region, our San Francisco and Denver markets outperformed the portfolio. The San Francisco RevPAR growth was primarily driven by occupancy gains at the San Francisco Marriott Marquis and the San Francisco Marriott Fisherman’s Wharf. RevPAR at our Denver properties increased due to strong group volume. In Hawaii, group and transient rate gains at the Hyatt Regency Maui Resort & Spa were the primary contributor to the RevPAR growth in the market.
On the east coast, our Washington, D.C. properties outperformed the portfolio, while our New York properties were in-line with the portfolio. In Washington, D.C., the RevPAR growth of 1.7% mainly was due to occupancy gains from strong city-wide events. In New York, RevPAR decreased due to rate declines across all the assets, despite an increase in occupancy.
On a constant dollar basis, our international markets experienced a decline in RevPAR of 31.0% for the quarter. The decline was primarily due to the highly unfavorable comparison to the prior year, when Brazil hosted the 2016 Olympics and Paralympics, as well as economic and over-supply issues in Brazil.
Hotels Sales byHotel Business Mix
The majority of ourOur customers fall into three broad categories: transient, group, and contract business.business, which accounted for approximately 65%, 32%, and 3%, respectively, of our full year 2022 room sales. The information below is derived from business mix data for 87the 75 comparable hotels as of our hotels for which business mix data is available from our managers.June 30, 2023. For additional detail on our business mix, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10‑K.
For the third quarter, our revenue decline was driven by a decrease in group revenue of 7.0%, with a decline in room nights sold of 6.9% and a decline in average rate of 0.2%. Group volume was negatively impacted by the shift of both Jewish holidays into the third quarter in 2017, as well as the difficult comparison with the OlympicsImprovements in the thirdsecond quarter compared to second quarter of 2016 for our properties in Brazil. Transient revenue declined 1.0%, despite a 1.3% increase in room nights, as hotels sought to replace lost group rooms through discount channels. Contract business was our strongest performing segment with a 20.2% increase in revenue due to a 21.8% increase in room nights. This performance was due to additional airline contracts at hotels in markets where new supply or demand concerns warranted negotiating multi-year contracts at favorable rates.
Year-to-date, group and transient revenue declined by 0.5% and 0.1%, respectively. The decline in group revenue was2022 were primarily driven by a 1.9% decrease in corporate groups and a 0.5% decrease in association group, partially offset by an increase in other group business, through increases in rate. At the same time, the recovery in business transient demand continued, driven by demand from small and medium-sized businesses, which includes social, military, education, religious, fraternalaccounted for a greater share of demand as compared to large-companies than prior to the COVID-19 pandemic.
The following are the results of our transient, group and youth and amateur sports teams. Our strongest performing segment year-to-date was contract business, which grew 19.7%.business:
|
| Quarter ended June 30, 2023 |
|
| Year-to-date ended June 30, 2023 |
| ||||||||||||||||||
|
| Transient business |
|
| Group business |
|
| Contract business |
|
| Transient business |
|
| Group business |
|
| Contract business |
| ||||||
Room nights (in thousands) |
|
| 1,517 |
|
|
| 1,085 |
|
|
| 174 |
|
|
| 2,849 |
|
|
| 2,123 |
|
|
| 332 |
|
Percentage change in room nights vs. same period in 2022 |
|
| (0.8 | )% |
|
| 0.0 | % |
|
| 12.6 | % |
|
| 3.7 | % |
|
| 22.5 | % |
|
| 12.0 | % |
Rooms revenues (in millions) |
| $ | 517 |
|
| $ | 292 |
|
| $ | 33 |
|
| $ | 992 |
|
| $ | 593 |
|
| $ | 62 |
|
Percentage change in revenues vs. same period in 2022 |
|
| 0.8 | % |
|
| 4.2 | % |
|
| 23.8 | % |
|
| 6.4 | % |
|
| 30.7 | % |
|
| 30.2 | % |
29
Liquidity and Capital Resources
Liquidity and Capital Resources of Host Inc. and Host L.P. The liquidity and capital resources of Host Inc. and Host L.P. are derived primarily from the activities of Host L.P., which generates the capital required by our business from hotel operations, the incurrence of debt, the issuance of OP units or the sale of properties.hotels. Host Inc. is a REIT, and its only significant asset is the ownership of partnershipgeneral and limited partner interests of Host L.P.; therefore, its financing and investing activities are conducted through Host L.P., except for the issuance of its common and preferred stock. Proceeds from common and preferred stock issuances by Host Inc. are contributed to Host L.P. in exchange for common and preferred OP units. Additionally, funds used by Host Inc. to pay dividends or to repurchase its stock are provided by Host L.P. Therefore, while we have noted those areas in which it is important to distinguish between Host Inc. and Host L.P., we have not included a separate discussion of liquidity and capital resources as the discussion below applies to both Host Inc. and Host L.P.
Overview. We look to maintain a capital structure and liquidity profile with an appropriate balance of cash, debt, and equity in order to provide financial flexibility given the inherent volatility of the lodging industry.We believe this strategy will resulthas resulted in a lower overallbetter cost of debt capital, allowallowing us to complete opportunistic investments and acquisitions and will positionpositioning us to manage potential declines in operations throughout the lodging cycle. We have structured our debt profile to maintain a balanced maturity schedule and to minimize the number of hotels that are encumbered by mortgage debt. Currently, only one of our consolidated hotels is encumbered by mortgage debt. Over the past several years leading up to the COVID-19 pandemic, we havehad decreased our leverage as measured by our net debt-to-EBITDA ratio and reduced our debt service obligations, leading to an increase in our fixed charge coverage ratio.
We intend to use available cash predominantly for acquisitions or other investments in our portfolio. If As a result, we are unable to find appropriate investment opportunities, we will consider other uses for our cash, such as a return of capital through dividends or common stock repurchases,were well positioned at the amounts of which will be determined by our operations and other market factors. Significant factors we review to determine the amount and timing of common stock repurchases include our current stock price compared to our determinationonset of the underlying value of our assets, currentCOVID-19 pandemic with sufficient liquidity and forecast operating resultsfinancial flexibility to withstand the severe slowdown in U.S. economic activity and lodging demand brought on by the completion of hotel sales.
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. Currently, none of our consolidated hotels are encumbered by mortgage debt. We have access to multiple types of financing, as all of our debt consists of senior notes and borrowings under our credit facility, none of which are collateralized by specific hotels.pandemic. We believe that we have sufficient liquidity and access to capital markets in order to take advantage of opportunities to enhance our portfolio, withstand declines in operating cash flow, pay near-term debt maturities, and fund ourcorporate expenses, capital expenditures programs. We may continueand dividends and remain well positioned to access capital markets if favorable conditions exist in orderexecute additional investment transactions to enhance our liquidity and to fund cash needs.the extent opportunities arise.
Cash Requirements. We use cash for acquisitions, capital expenditures, debt payments, operating costs, and corporate and other expenses, as well as for dividends and distributions to stockholders and to OP unitholders, respectively, and stock and OP unit repurchases. We have no significant debt maturities until April 2024. As a REIT, Host Inc. is required to distribute to its stockholders at least 90% of its taxable income, excluding net capital gain, on an annual basis. On October 16, 2017, we paid a dividend of $0.20 per share on Host Inc.’s common stock, which totaled approximately $148 million.
Capital Resources. As of SeptemberJune 30, 2017,2023, we had $789$802 million of cash and cash equivalents.equivalents, $213 million in our FF&E escrow reserves and $1.5 billion available under the revolver portion of our credit facility. We depend primarily on external sources of capital to finance future growth, including acquisitions. As a result, the liquidity and debt capacity provided by our credit facility and the ability to issue senior unsecured debt are key components of our capital structure. Our financial flexibility, (includingincluding our ability to incur debt, pay dividends, make distributions and make investments)investments, is contingent on our ability to maintain compliance with the financial covenants of such indebtedness,our credit facility and senior notes indentures, which include, among other things, the allowable amounts of leverage, interest coverage and fixed charges.
If, at any time, we determine that market conditionsTwo programs are favorable, after taking into accountcurrently in place relating to potential purchases or sales of our liquidity requirements, we may cause Host L.P. to issue senior notes or debentures exchangeable for shares of Host Inc. common stock. Given the total amount ofUnder our debt and our maturity schedule, we will continue to redeem or refinance senior notes and mortgage debt from time to time, taking advantage of favorable market conditions. In February 2017, Host Inc.’s Board of Directors authorized repurchases of up to $250 million of senior notes and mortgage debt other than in accordance with its terms, of which the entire amount remains available under this authority. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. Repurchases of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Any refinancing or retirement before the maturity date will affect earnings and NAREIT FFO per diluted share as a result of the payment of any applicable call premiums and the acceleration of previously deferred financing costs. In addition, while we intend to use any available cash predominantly for acquisitions or other investments in our hotel portfolio, to the extent we do not identify appropriate investments, we may elect in the future to use available cash for other purposes, including share repurchases, subject to market conditions. Accordingly, in light of our priorities in managing our capital structure and liquidity profile and given prevailing conditions and relative pricing in the capital markets, we may, at any time, subject to applicable securities laws, be considering, or be in discussions with respect to thecommon stock repurchase or issuance of exchangeable debentures and/or senior notes or the repurchase or sale of common stock. Any such transactions may, subject to applicable securities laws, occur simultaneously.
Additionally, in February 2017, Host Inc.’s Board of Directors authorized a new program, to repurchase up to $500 million of Host Inc. common stock. The common stock may be purchased from time to time depending upon market conditions and may be purchased in the open market or through private transactions or by other means, including principal transactions with various financial institutions, like accelerated share repurchases, forwards, options, and similar transactions and through one or more trading plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The plan does not obligate us to repurchase any specific number or any specific dollar amount of shares and may be suspended at any time at our discretion. There were no share repurchases during the second quarter. At June 30, 2023, we had $923 million available for repurchase under our program.
In addition, on May 31, 2023, we entered into a distribution agreement with J. P. Morgan Securities LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc. and Wells Fargo Securities, LLC, as sales agents pursuant to which Host Inc. may offer and sell, from time to time, shares of Host Inc. common stock having an aggregate offering price of up to $600 million. The sales will be made in transactions that are deemed to be “at the market” offerings under the SEC rules. We have not repurchased anymay sell shares of Host Inc. common stock under this program.program from time to time based on market conditions, although we are not under an obligation to sell any shares. The agreement also contemplates that, in addition to the offering and sale of shares to or through the sales agents, we may enter into separate forward sale agreements with each of the forward purchasers named in the agreement. No shares were issued during the first half of 2023. As of June 30, 2023, there was $600 million of remaining capacity under the agreement.
Given the total amount of our debt and our maturity schedule, we may continue to redeem or repurchase senior notes from time to time, taking advantage of favorable market conditions. In February 2023, Host Inc.’s Board of Directors authorized repurchases of
30
up to $1.0 billion of senior notes other than in accordance with their respective terms, of which the entire amount remains available under this authority. We may purchase senior notes with cash through open market purchases, privately negotiated transactions, a tender offer, or, in some cases, through the early redemption of such securities pursuant to their terms. Repurchases of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Any retirement before the maturity date will affect earnings and NAREIT FFO per diluted share as a result of the payment of any applicable call premiums and the accelerated expensing of previously deferred and capitalized financing costs. Accordingly, considering our priorities in managing our capital structure and liquidity profile, and given prevailing conditions and relative pricing in the capital markets, we may, at any time, subject to applicable securities laws and the requirements of our credit facility and senior notes indentures, be considering, or be in discussions with respect to, the repurchase or issuance of exchangeable debentures and/or senior notes or the repurchase or sale of our common stock. Any such transactions may, subject to applicable securities laws, occur simultaneously.
We continue to explore potential acquisitions and dispositions. We anticipate that any such future acquisitions will be funded primarily by proceeds from sales of hotels, but also potentially from equity offerings of Host Inc., issuances of OP units by Host L.P., or available cash. Given the nature of these transactions, we can make no assurances that we will be successful in acquiring any one or more hotels that we may review, bid on or negotiate to purchase or that we will be successful in disposing of any one or more of our hotels. We may acquire additional hotels or dispose of hotels through various structures, including transactions involving single assets, portfolios, joint ventures, acquisitions of the securities or assets of other REITs or distributions of hotels to our stockholders.
Sources and Uses of Cash. Our sources of cash generally include cash from operations, proceeds from debt and equity issuances, and proceeds from assethotel sales. Uses of cash include acquisitions, investments in our joint ventures, capital expenditures, operating costs, debt repayments, and repurchases of shares and distributions to equity holders.
Cash Provided by Operations. OurOperating Activities. Year-to-date in 2023, net cash provided by operations decreased $51operating activities was $820 million compared to $864$708 million for the year-to-date ended September 30, 20172022. The $112 million increase in 2023 was primarily driven by improved operations at our hotels compared to the same period of 2016, due to an increase2022.
Cash Used in interest expense and taxes paid.
Cash Provided by (Used in) Investing Activities. Net cash used in investing activities was $200$275 million during the first three quarters of 20172023 year-to-date compared to net cash provided by investing activities of $15$60 million for the first three quarters of 2016.2022. Cash used in investing activities during year-to-date 2023 primarily consistedrelated to $323 million of capital expenditures forand investment in our existing portfolio and the acquisition of The Don CeSar, W Hollywood and the Miami Marriott Biscayne Bay ground lease in 2017.joint ventures. Cash used for renewal and replacementin investing activities during year-to-date 2022 primarily related to $240 million of capital expenditures for the first three quarters of 2017 and 2016 was $155 million and $222 million, respectively, while cash used for capital expenditures investedan investment in ROI/redevelopment projects and acquisition capital expenditures during the same period was $53 million and $192 million, respectively. This use of cash was offset partiallya joint venture. Cash provided by proceeds frominvesting activities includes the sale of fourone hotel in 2023 and three hotels in 2017 and ten hotels2022, with 2023 proceeds of $34 million primarily related to the sale of The Camby, Autograph Collection, which is net of a $72 million loan issued to the buyer in 2016.
The following tables summarize significant acquisitions and dispositions that have been completed as of October 31, 2017 (in millions):connection with the sale.
Transaction Date |
| Description of Transaction |
|
|
|
| Investment |
| ||
Acquisitions |
|
|
|
|
|
|
|
|
|
|
March | 2017 |
| Acquisition of the Miami Marriott Biscayne Bay ground lease |
|
|
|
| $ | (38 | ) |
March | 2017 |
| Acquisition of the W Hollywood |
|
|
|
|
| (219 | ) |
February | 2017 |
| Acquisition of The Don CeSar and Beach House Suites complex |
|
|
|
|
| (214 | ) |
|
|
| Total acquisitions |
|
|
|
| $ | (471 | ) |
|
|
|
|
|
|
|
|
|
| |
Transaction Date |
| Description of Transaction |
| Net Proceeds(1) |
| Sales Price |
| |||
Dispositions |
|
|
|
|
|
|
|
|
|
|
September | 2017 |
| Disposition of Sheraton Indianapolis at Keystone Crossing |
| $ | 64 |
| $ | 66 |
|
July | 2017 |
| Disposition of the Hilton Melbourne South Wharf(2) |
|
| 182 |
|
| 184 |
|
April | 2017 |
| Disposition of Sheraton Memphis Downtown |
|
| 66 |
|
| 67 |
|
January | 2017 |
| Disposition of JW Marriott Desert Springs Resort & Spa |
|
| 160 |
|
| 172 |
|
|
|
| Total dispositions |
| $ | 472 |
|
|
|
|
___________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Used in Financing Activities. Year-to-date 2017,in 2023, net cash used in financing activities was $244$396 million compared to net cash used of $789$715 million for the year-to-date 2016. Cash provided by financing activities in 2017 included the issuance of the Series G senior notes.2022. Cash used in financing activities in 20172023 primarily consistedrelated to the payment of dividend paymentscommon stock dividends and common stock repurchases. In year-to-date 2022, cash used in financing activities included the repayment of mortgage debt, while 2016 also included the repurchase of Host Inc. common stock.credit facility revolver.
The following tables summarize significant issuances, net of deferred financing costs and issuance discounts, or repayments of debt, including premiums, that have been completed through October 31, 2017 (in millions):
Transaction Date |
|
| Description of Transaction |
| Net Proceeds |
| |
Debt Issuances |
|
|
|
|
|
|
|
March | 2017 |
| Proceeds from the issuance of $400 million 3.875% Series G senior notes |
| $ | 395 |
|
|
|
| Total issuances |
| $ | 395 |
|
|
|
|
|
| Transaction |
| |
Transaction Date |
|
| Description of Transaction |
| Amount |
| |
Debt Repayments |
|
|
|
|
|
|
|
July | 2017 |
| Repayment of A$86 mortgage loan on the Hilton Melbourne South Wharf |
| $ | (69 | ) |
January - September | 2017 |
| Net repayment on the revolver portion of credit facility |
|
| (39 | ) |
|
|
| Total cash repayments |
| $ | (108 | ) |
The following table summarizes significant equity transactions that have been completed through October 31, 2017August 2, 2023 (in millions):
Transaction Date |
| Description of Transaction |
| Transaction Amount |
| ||
Equity of Host Inc. |
|
|
|
|
|
| |
January - July | 2023 |
| Dividend payments⁽¹⁾⁽²⁾ |
| $ | (420 | ) |
March | 2023 |
| Repurchase of 3.2 million shares of Host Inc. common stock |
|
| (50 | ) |
|
| Cash payments on equity transactions |
| $ | (470 | ) |
___________
Debt
|
|
|
|
| Transaction |
| |
Transaction Date |
|
| Description of Transaction |
| Amount |
| |
Equity of Host Inc. |
|
|
|
|
|
|
|
January - October | 2017 |
| Dividend payments (1)(2) |
| $ | (628 | ) |
|
|
| Cash payments on equity transactions |
| $ | (628 | ) |
___________ |
|
|
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|
|
|
As of SeptemberJune 30, 2017,2023, our total debt was $4.0$4.2 billion, with ana weighted average interest rate of 3.9%4.5% and ana weighted average maturity of 5.44.7 years. Additionally, 70%76% of our debt has a fixed rate of interest and noneonly one of our consolidated hotels areis encumbered by mortgage debt.
Financial Covenants
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, Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. as co-syndication agents, and certain other agents and lenders. The credit facility allows for revolving borrowings in an aggregate principal amount of up to $1.5
31
billion. The revolver also includes 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 peso borrowings. The credit facility also provides for a term loan facility of $1 billion (which is fully utilized), a subfacility of up to $100 million for swingline borrowings in currencies other than U.S. dollars and a subfacility of up to $100 million for issuances of letters of credit. Host L.P. also has the option to add in the future $500 million of commitments which may be used for additional revolving credit facility borrowings and/or term loans, subject to obtaining additional loan commitments (which we have not currently obtained) and the satisfaction of certain conditions. The revolving credit facility has an initial scheduled maturity date of January 4, 2027, which date may be extended by up to a year, one $500 million term loan tranche has an initial maturity date of January 4, 2027, which date may be extended up to a year and the second $500 million term loan tranche has a maturity date of January 4, 2028, which date may not be extended. The exercise of any extension options is subject to certain various conditions, including the payment of an extension fee. The new credit facility also converted the underlying reference rate from LIBOR to SOFR plus a credit spread adjustment of 10 basis points. The credit facility includes a sustainability pricing adjustment that can result in a change in the interest rate applicable to borrowings. The adjustments will be determined based on our performance against targets established in the credit facility related to green building certifications and electricity used at all our consolidated properties that is generated by renewable resources. As of June 30, 2023, we achieved a milestone in the progress towards our renewable energy goal, resulting in a 2.5 basis point reduction in the interest rate on the outstanding term loans.
Credit Facility Covenants. Our credit facility contains certain important financial covenants concerning allowable leverage, unsecured interest coverage, and required fixed charge coverage. There were no changes to these financial covenants in connection with the May 2017 amendment and restatement of the credit facility. Total debt used in the calculation of our leverage ratio of consolidated total debt to consolidated EBITDA (our “Leverage Ratio”) is based on a “net debt” concept, underpursuant to which cash and cash equivalents in excess of $100 million are deducted from our total debt balance for purposes of measuring compliance. To the extent that no amounts are outstanding under the credit facility, breaching these covenants is not an event of default thereunder.
We areAt June 30, 2023, we were in compliance with all of our financial covenants under the credit facility. The following table summarizes the results of the financial tests required by the credit facility, as of September 30, 2017:which are calculated on a trailing twelve-month basis:
Actual Ratio | Covenant Requirement
| |||||
Leverage ratio |
| x | Maximum ratio of 7.25x | |||
Fixed charge coverage ratio |
| x | Minimum ratio of 1.25x | |||
Unsecured interest coverage ratio |
| x | Minimum ratio of 1.75x | |||
|
___________
|
|
(1) If, at any time, our leverage ratio is above 7.0x, our minimum unsecured interest coverage ratio will decrease to 1.50x.
Senior Notes Indenture Covenants
Covenants for Senior Notes Issued After We Attained an Investment Grade Rating
We are in compliance with all of the financial covenants applicable to our Series D, Series E, Series F and Series G senior notes. The following table summarizes the results of the financial tests required by the senior notes indentures for our Series D, Series E, Series F and Series G senior notes and our actual credit ratios as of SeptemberJune 30, 2017:2023:
Actual Ratio | Covenant Requirement | |||||
Unencumbered assets tests |
| % | Minimum ratio of 150% | |||
Total indebtedness to total assets | 20 | % | Maximum ratio of 65% | |||
Secured indebtedness to total assets |
|
| % | Maximum ratio of 40% | ||
EBITDA-to-interest coverage ratio | 9.1 | x | Minimum ratio of 1.5x |
Covenants for Senior Notes Issued Before We Attained an Investment Grade Rating
The terms of our senior notes that were issued before we attained an investment grade rating contained provisions providing that many of the restrictive covenants in the senior notes indenture would not apply should Host L.P. attain an investment grade rating. Accordingly, because our senior notes currently are rated investment grade by both Moody’s and Standard & Poor’s, the covenants in our senior notes indenture (for all series prior to the Series D senior notes) that previously limited our ability to incur indebtedness or pay dividends no longer are applicable. Even if we were to lose the investment grade rating, however, we would be in compliance with all of our financial covenants under the senior notes indenture. The following table summarizes the actual credit ratios for our existing senior notes (other than the Series D, Series E, Series F and Series G senior notes) as of September 30, 2017 and the covenant requirements contained in the senior notes indenture that would be applicable at such times as our existing senior notes no longer are rated investment grade by either Moody’s or Standard & Poor’s:
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For additional detaildetails on our credit facility and senior notes, including the terms of the Amendments, see our Annual Report on Form 10-K for the year ended December 31, 2016.2022.
Dividend Policy
Host Inc. is required to distribute at least 90% of its annual taxable income, excluding net capital gain,gains, to its stockholders in order to maintain its qualification as a REIT, including taxable income recognized for federal income tax purposes but with regard to which we do not receive cash.REIT. Funds used by Host Inc. to pay dividends on its common stock are provided throughby distributions from Host L.P. As of SeptemberJune 30, 2017,2023, Host Inc. is the owner of approximately 99% of the Host L.P. common OP units. The remaining common OP units are owned by third partyunaffiliated limited partners. Each Host L.P. common OP unit may be redeemed for cash or, at the election of Host Inc., Host Inc. common stock based on the conversion ratio. The conversion ratio is 1.021494 shares of Host Inc. common stock for each Host L.P. common OP unit.
Investors should take into accountconsider the non-controlling interestinterests in the Host L.P. common OP units when analyzing common dividend payments by Host Inc. to its stockholders, as these Host L.P. common OP unitholders share on a pro rata basis, in cash distributed by Host L.P. to all of its common OP unitholders.unitholders, on a pro rata basis. For example, if Host Inc. paid a $1 per share dividend on its common stock, it would be based on the
32
payment of a $1.021494 per common OP unit distribution by Host L.P. to Host Inc., as well as to the other unaffiliated Host L.P. common OP unitholders.
Host Inc.’s policy on common dividends generally is to distribute, over time, 100% of its taxable income, which primarily is dependent primarily on Host Inc.’s results of operations, as well as tax gains and losses on propertyhotel sales. On June 14, 2023, Host Inc. paid's Board of Directors announced a regular quarterly cash dividend of $0.20$0.15 per share on itsHost Inc.'s common stockstock. The dividend was paid on October 16, 2017July 17, 2023 to stockholders as of record on September 29, 2017.June 30, 2023. All future dividends are subject to approval by Host Inc.’s Board of Directors. While Host Inc. intends to use available cash predominantly for acquisitions or other investments in its portfolio, to the extent that we do not identify appropriate investments, we may decide in the future to use available cash for other items, such as common stock repurchases or increased dividends, the amount of which dividends could be in excess of taxable income.approval.
European Joint Venture
At September 30, 2017, hotel investments by the Euro JV total approximately €1.5 billion, with €0.7 billion of mortgage debt. All of the mortgage debt of the Euro JV is non-recourse to us and our partners and a default thereunder does not trigger a default under any of our debt. Our investment, total partners’ funding, and debt outstanding as of September 30, 2017 are as follows:
|
| Host's Net Investment |
|
| Total Partner Funding |
|
| % of Total Commitment |
|
| Debt balance |
|
| Host's Portion of Non-Recourse Debt |
| |||||
|
| (in millions) |
|
| (in millions) |
|
|
|
|
|
| (in millions) |
|
| (in millions) |
| ||||
Euro JV Fund I |
| € | 124 |
|
| € | 463 |
|
|
| 67 | % | (1) | € | 305 |
|
| € | 98 |
|
Euro JV Fund II |
|
| 91 |
|
|
| 301 |
|
|
| 67 | % |
|
| 394 |
|
|
| 132 |
|
|
| € | 215 |
|
| € | 764 |
|
|
|
|
|
| € | 699 |
|
| € | 230 |
|
___________ |
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The following table sets forth operating statistics for the 10 Euro JV hotels consisting of 3,902 rooms as of September 30, 2017 and 2016, all of which are comparable:
|
| Comparable Euro JV Hotels in Constant Euros |
| |||||||||||||||||||||
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| Quarter ended September 30, |
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| Year-to-date ended September 30, |
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| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Change |
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| 2017 |
|
| 2016 |
|
| Change |
| ||||||
Average room rate |
| € | 222.07 |
|
| € | 223.65 |
|
|
| (0.7 | )% |
| € | 217.66 |
|
| € | 215.71 |
|
|
| 0.9 | % |
Average occupancy |
|
| 81.9 | % |
|
| 78.8 | % |
|
| 310 | bps |
|
| 78.3 | % |
|
| 74.3 | % |
|
| 410 | bps |
RevPAR |
| € | 181.94 |
|
| € | 176.25 |
|
|
| 3.2 | % |
| € | 170.48 |
|
| € | 160.18 |
|
|
| 6.4 | % |
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The Euro JV’s comparable hotel RevPAR increased approximately 3.2% and 6.4% on a constant Euro basis for the third quarter and year-to-date, respectively, primarily due to improvement in occupancy driven by group performance.
Critical Accounting PoliciesEstimates
Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and on various other assumptions that we believe to beare reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies, are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016. For a detailed discussion of the new accounting standards, see “Note 2. Summary of Significant Accounting Policies” in this quarterly report.2022.
Comparable Hotel Operating Statistics and Results
Effective January 1, 2023, the Company ceased presentation of All Owned Hotel results and returned to a comparable hotel presentation for its hotel level results. Management believes this provides investors with a better understanding of underlying growth trends for our current portfolio, without impact from properties that experienced closures due to renovations or property damage sustained.
To facilitate a quarter-to-quarteryear-to-year comparison of our operations, we present certain operating statistics (i.e., Total RevPAR, RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in this reportour reports on a comparable hotel basis in order to enable our investors to better evaluate our operating performance.
Because these statistics and operating results relate only to our hotel properties, they exclude results for our non-hotel properties and other real estate investments. We define our comparable hotels as properties:those that: (i) are owned or leased by us as of the reporting date and are not classified as held-for-sale; and (ii) have not sustained substantial property damage or business interruption, or undergone large-scale capital projects, in each case requiring closures lasting one month or longer (as further defined below), during the reporting periods being compared.
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|
We make adjustments to include recent acquisitions to include results for periods prior to our ownership. For these hotels, since the year-over-year comparison includes periods prior to our ownership, the changes will not necessarily correspond to changes in our actual results. Additionally, operating results of hotels that we sell are excluded from the comparable hotel set once the transaction has closed or the hotel is classified as held-for-sale.
The hotel business is capital-intensive and renovations are a regular part of the business. Generally, hotels under renovation remain comparable hotels. A large scalelarge-scale capital project that would cause a hotel to be excluded from our comparable hotel set is an extensive renovation of several core aspects ofif it requires the hotel, such as rooms, meeting space, lobby, bars, restaurants, and other public spaces. Both quantitative and qualitative factors are taken into consideration in determining if the renovation would cause a hotelentire property to be removed from the comparableclosed to hotel set, including unusual or exceptional circumstances such as: a reduction or increase in room count, rebranding, a significant alteration of the business operations, or the closing of the hotel during the renovation.
We do not include an acquired hotel in our comparable hotel set until the operating results for that hotel have been included in our consolidated resultsguests for one full calendar year. For example, we acquired The Don CeSar in February of 2017. The hotel will not be included in our comparable hotel set until January 1, 2019. Hotels that we sell are excluded from the comparable hotel set once the transaction has closed. month or longer.
Similarly, hotels are excluded from our comparable hotel set from the date that they sustain substantial property damage or business interruption if it requires the property to be closed to hotel guests for one month or commence a large-scale capital project.longer. In each case, these hotels are returned to the comparable hotel set when the operations of the hotel have been included in our consolidated results for one full calendar year after completion of the repair of thehotel has reopened. Often, related to events that cause property damage or cessationand the closure of thea hotel, we will collect business interruption orinsurance proceeds for the completionnear-term loss of large-scale capital projects, as applicable.business. These proceeds are included in gain on property insurance and business interruption settlements on our consolidated statements of operations. Business interruption insurance gains related to a hotel that was excluded from our comparable hotel set also will be excluded from the comparable hotel results.
Of the 9477 hotels that we owned on Septemberas of June 30, 2017, 872023, 75 have been classified as comparable hotels. The operating results of the following hotels that we owned as of SeptemberJune 30, 20172023 are excluded from comparable hotel results for these periods:periods, due to closure of the property:
The Denver Marriott Tech Center, removed in the first quarter of 2016Hyatt Regency Coconut Point Resort & Spa (business disruption due to extensive renovations, including conversion of 64 rooms to 41 suites, conversion of the concierge lounge into three meeting rooms,Hurricane Ian beginning in September 2022, reopened in November 2022); and the repositioning of the public space and food and beverage areas);
The Hyatt Regency San Francisco Airport, removed in the first quarter of 2016Ritz-Carlton, Naples (business disruption due to extensive renovations, including all guestrooms and bathrooms, meeting space, the repositioning of the atrium into a new restaurant and lounge, and conversion of the existing restaurant to additional meeting space);
Marriott Marquis San Diego Marina, removedHurricane Ian beginning in the first quarter of 2015 (business interruption due to the demolition of the existing conference center and construction of the new exhibit hall);
Axiom Hotel (acquired as the Powell Hotel in January 2014, then closed during 2015 for extensive renovations andSeptember 2022, reopened in January 2016);
The Don CeSar and Beach House Suites complex (acquired February 2017); and
W Hollywood (acquired March 2017)July 2023).
The operating results of 14 hotels disposed of in 2017 and 2016 are not included in comparable hotel results for the periods presented herein. None of our hotels have been excluded from our comparable hotel results due to Hurricanes Harvey or Irma.33
CONSTANT US$, NOMINAL US$ AND CONSTANT EUROSForeign Currency Translation
Operating results denominated in foreign currencies are translated using the prevailing exchange rates on the date of the transaction, or monthly based on the weighted average exchange rate for the period. For comparative purposes, we also present the RevPARTherefore, hotel statistics and results for the prior year assuming the results of our foreign operations were translated using the same exchange rates that were effective for the comparable periods in the current year, thereby eliminating the effect of currency fluctuation for the year-over-year comparisons. We believe that this presentation is useful to investors as it provides clarity with respect to the growth in RevPAR in the local currency of the hotel consistent with the manner in which we would evaluate our domestic portfolio. However, the estimated effect of changes in foreign currency has been reflected in the actual and forecast results of net income, EBITDA, earnings per diluted share and Adjusted FFO per diluted share. Nominal US$ resultsnon-U.S. properties include the effect of currency fluctuations, consistent with our financial statement presentation.
We present RevPAR results for our joint venture in Europe in constant Euros using the same methodology as used for the constant US$ presentation.
Non-GAAP Financial Measures
We use certain “non-GAAP financial measures,” which are measures of our historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. These measures include the following:
Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”), Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for real estate (“EBITDAre”)and Adjusted EBITDAre, as a measure of performance for Host Inc. and Host L.P.,
Funds From Operations (“FFO”) and FFO per diluted share, both calculated in accordance with National Association of Real Estate Investment Trusts (“NAREIT”) guidelines and with certain adjustments from those guidelines, as a measure of performance for Host Inc., and
Comparable hotel operating results, as a measure of performance for Host Inc. and Host L.P.
The following discussion below defines these measures and presents why we believe they are useful supplemental measures of our performance.
Set forth below for each such non-GAAP financial measure is a reconciliation of the measure with the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable thereto. We also have included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2016,2022 further explanations of the adjustments being made, a statement disclosing the reasons why we believe the presentation of each of the non-GAAP financial measures provide useful information to investors regarding our financial condition and results of operations, the additional purposes for which we use the non-GAAP financial measures and limitations on their use.
EBITDA, EBITDAre and Adjusted EBITDAEBITDAre
Earnings before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”)EBITDA
EBITDA is a commonly used measure of performance in many industries. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). Management
also believes the use of EBITDA facilitates comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. Management uses EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO and Adjusted FFO per diluted share, it is widely used by management in the annual budget process and for compensation programs.
EBITDAre and Adjusted EBITDAEBITDAre
Historically, management has adjustedWe present EBITDAre in accordance with NAREIT guidelines, as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate,” to provide an additional performance measure to facilitate the evaluation and comparison of our results with other REITs. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) excluding interest expense, income tax, depreciation and amortization, gains or losses on disposition of depreciated property (including gains or losses on change of control), impairment expense for depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s pro rata share of EBITDAre of unconsolidated affiliates.
We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance andperformance. We believe that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, (loss), is beneficial to an investor’s complete understanding of our operating performance. Adjusted EBITDAre also is a relevantsimilar to the measure in calculating
34
used to calculate certain credit ratios.ratios for our credit facility and senior notes. We adjust EBITDAre for the following items, which may occur in any period, and refer to this measure as Adjusted EBITDA:EBITDAre:
Real Estate TransactionsProperty Insurance Gains – We exclude the effect of gains and losses, including the amortization of deferred gains, recorded on the disposition or acquisition of depreciable assets and property insurance gains reflected in our condensed consolidated statementstatements of operations because we believe that including them in Adjusted EBITDAre is not consistent with reflecting the ongoing performance of our assets. In addition, materialproperty insurance gains or losses from the depreciated value of the disposed assets could be less important to investors given that the depreciated asset book value written off in connection with the calculation of the property insurance gain often does not reflect itsthe market value (as noted below for FFO).
Equity Investment Adjustments – We exclude the equity in earnings (losses) of unconsolidated investments in partnerships and joint ventures as presented in our consolidated statement of operations because it includes our pro rata portion of depreciation, amortization and interest expense, which are excluded from EBITDA. We include our pro rata share of the Adjusted EBITDA of our equity investments as we believe this more accurately reflects the performance of our investments. The pro rata Adjusted EBITDA of equity investments is defined as the EBITDA of our equity investments, adjusted for any gains or losses on property transactions, multiplied by our percentage ownership in the partnership or joint venture.
Consolidated Partnership Adjustments – We deduct the non-controlling partners’ pro rata share of the Adjusted EBITDA of our consolidated partnerships as this reflects the non-controlling owners’ interest in the EBITDA of our consolidated partnerships. The pro rata Adjusted EBITDA of non-controlling partners is defined as the EBITDA of our consolidated partnerships, adjusted for any gains or losses on property transactions, multiplied by the non-controlling partners’ percentage ownership in the partnership or joint venture.
Cumulative Effect of a Change in Accounting Principle – Infrequently, the Financial Accounting Standards Board (“FASB”) promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments because they do not reflect our actual performance for that period.
Impairment Losses – We exclude the effect of impairment expense recorded because we believe that including it in Adjusted EBITDA is not consistent with reflecting the ongoing performance of our assets. In addition, we believe that impairment expense, which is based on historical cost book values, is similar to gains (losses) on dispositions and depreciation expense, both of which also are excluded from EBITDA.
Acquisition Costs – Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the company.
Litigation Gains and Losses– We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
In unusual circumstances, we also may adjust EBITDAre for gains or losses that management believes are not representative of ourthe Company’s current operating performance. The last such adjustment of this nature was in 2013.a 2013 exclusion of a gain from an eminent domain claim.
The following table provides a reconciliation of the differences between EBITDA, EBITDAre, and Adjusted EBITDA andre to net income, the financial measure calculated and presented in accordance with GAAP that we consider the most directly comparable:
Reconciliation of Net Income to EBITDA, EBITDAreand Adjusted EBITDAre for Host Inc. and Host L.P.
(in millions)
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income (1) |
| $ | 105 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 643 |
|
Interest expense |
|
| 43 |
|
|
| 38 |
|
|
| 125 |
|
|
| 116 |
|
Depreciation and amortization |
|
| 176 |
|
|
| 182 |
|
|
| 534 |
|
|
| 541 |
|
Income taxes |
|
| 42 |
|
|
| 19 |
|
|
| 63 |
|
|
| 42 |
|
EBITDA (1) |
|
| 366 |
|
|
| 347 |
|
|
| 1,200 |
|
|
| 1,342 |
|
Gain on dispositions (2) |
|
| (58 | ) |
|
| (12 | ) |
|
| (101 | ) |
|
| (242 | ) |
Gain on property insurance settlement |
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
|
| (1 | ) |
Acquisition costs |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
Equity investment adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of affiliates |
|
| (4 | ) |
|
| (8 | ) |
|
| (19 | ) |
|
| (19 | ) |
Pro rata Adjusted EBITDA of equity investments |
|
| 16 |
|
|
| 17 |
|
|
| 55 |
|
|
| 51 |
|
Consolidated partnership adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro rata Adjusted EBITDA attributable to non- controlling partners in other consolidated partnerships |
|
| (2 | ) |
|
| (2 | ) |
|
| (7 | ) |
|
| (8 | ) |
Adjusted EBITDA (1) |
| $ | 317 |
|
| $ | 342 |
|
| $ | 1,128 |
|
| $ | 1,123 |
|
___________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Net income |
| $ | 214 |
|
| $ | 260 |
|
| $ | 505 |
|
| $ | 378 |
|
Interest expense |
|
| 45 |
|
|
| 37 |
|
|
| 94 |
|
|
| 73 |
|
Depreciation and amortization |
|
| 168 |
|
|
| 162 |
|
|
| 337 |
|
|
| 334 |
|
Income taxes |
|
| 14 |
|
|
| 39 |
|
|
| 12 |
|
|
| 23 |
|
EBITDA |
|
| 441 |
|
|
| 498 |
|
|
| 948 |
|
|
| 808 |
|
Gain on dispositions⁽¹⁾ |
|
| — |
|
|
| (1 | ) |
|
| (69 | ) |
|
| (13 | ) |
Equity investment adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity in earnings of affiliates |
|
| (4 | ) |
|
| (2 | ) |
|
| (11 | ) |
|
| (4 | ) |
Pro rata EBITDAre of equity investments⁽²⁾ |
|
| 9 |
|
|
| 11 |
|
|
| 22 |
|
|
| 21 |
|
EBITDAre |
|
| 446 |
|
|
| 506 |
|
|
| 890 |
|
|
| 812 |
|
Adjustments to EBITDAre: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gain on property insurance settlement |
|
| — |
|
|
| (6 | ) |
|
| — |
|
|
| (6 | ) |
Adjusted EBITDAre |
| $ | 446 |
|
| $ | 500 |
|
| $ | 890 |
|
| $ | 806 |
|
___________
(1) Reflects the sale of one hotel in 2023 and three hotels in 2022.
(2) Unrealized gains of our unconsolidated investments are not recognized in our EBITDAre, Adjusted EBITDAre, NAREIT FFO or Adjusted FFO until they have been realized by the unconsolidated partnership.
FFO Measures
We present NAREIT FFO and NAREIT FFO per diluted share as non-GAAP measures of our performance in addition to our earnings (loss) per share (calculated in accordance with GAAP). We calculate NAREIT FFO per diluted share as our NAREIT FFO (defined as set forth below) for a given operating period, as adjusted for the effect of dilutive securities, divided by the number of fully diluted shares outstanding during such period, in accordance with NAREIT guidelines. Effective January 1, 2019, we adopted NAREIT’s
35
definition of FFO included in NAREIT’s Funds From Operations White Paper – 2018 Restatement. NAREIT defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (losses) from sales ofdepreciation and amortization related to certain real estate assets, gains and losses from the cumulative effectsale of changescertain real estate assets, gains and losses from change in accounting principles,control, impairment expense of certain real estate-related depreciation, amortizationestate assets and impairments,investments and adjustments for consolidated partially-owned entities and unconsolidated partnerships and joint ventures.affiliates. Adjustments for consolidated partially-owned entities and unconsolidated partnerships and joint venturesaffiliates are calculated to reflect our pro rata share of the FFO of those entities on the same basis.
We also present Adjusted FFO per diluted share when evaluating our performance because management believes that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. Management historically has made the adjustments detailed below in evaluating our performance, in our annual budget process and for our compensation programs. We believe that the presentation of Adjusted FFO per diluted share, when combined with both the primary GAAP presentation of diluted earnings per share and FFO per diluted share as defined by NAREIT, provides useful supplemental information that is beneficial to an investor’s complete understanding of our operating performance. We adjust NAREIT FFO per diluted share for the following items, which may occur in any period, and refer to this measure as Adjusted FFO per diluted share:
Gains and Losses on the Extinguishment of Debt – We exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of the write-off of deferred financing costs from the original issuance of the debt being redeemed or retired and incremental interest expense incurred during the refinancing period. We also exclude the gains on debt repurchases and the original issuance costs associated with the retirement of preferred stock. We believe that these items are not reflective of our ongoing finance costs.
Acquisition Costs – Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the company.
Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
In unusual circumstances, we also may adjust NAREIT FFO for gains or losses that management believes are not representative of our current operating performance. The last suchFor example, in 2017, as a result of the reduction of the U.S. federal corporate income tax rate from 35% to 21% by the Tax Cuts and Jobs Act, we remeasured our domestic deferred tax assets as of December 31, 2017 and recorded a one-time adjustment was in 2013.to reduce our deferred tax assets and to increase the provision for income taxes by approximately $11 million. We do not consider this adjustment to be reflective of our ongoing operating performance and, therefore, we excluded this item from Adjusted FFO.
The following table provides a reconciliation of the differences between our non-GAAP financial measures, NAREIT FFO and Adjusted FFO (separately and on a per diluted share basis), and net income, the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable:
Host Inc. Reconciliation of Net IncomeDiluted Earnings per Common Share to
NAREIT and Adjusted Funds From Operations per Diluted Share
(in millions, except per share amount)
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income (1) |
| $ | 105 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 643 |
|
Less: Net income attributable to non-controlling interests |
|
| (1 | ) |
|
| (1 | ) |
|
| (6 | ) |
|
| (7 | ) |
Net income attributable to Host Inc. |
|
| 104 |
|
|
| 107 |
|
|
| 472 |
|
|
| 636 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on dispositions (2) |
|
| (58 | ) |
|
| (12 | ) |
|
| (101 | ) |
|
| (242 | ) |
Tax on dispositions |
|
| 22 |
|
|
| — |
|
|
| 22 |
|
|
| 9 |
|
Gain on property insurance settlement |
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
|
| (1 | ) |
Depreciation and amortization |
|
| 175 |
|
|
| 181 |
|
|
| 532 |
|
|
| 538 |
|
Equity investment adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of affiliates |
|
| (4 | ) |
|
| (8 | ) |
|
| (19 | ) |
|
| (19 | ) |
Pro rata FFO of equity investments |
|
| 11 |
|
|
| 13 |
|
|
| 39 |
|
|
| 38 |
|
Consolidated partnership adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO adjustment for non-controlling partnerships |
|
| (1 | ) |
|
| (1 | ) |
|
| (2 | ) |
|
| (3 | ) |
FFO adjustments for non-controlling interests of Host L.P. |
|
| (1 | ) |
|
| (2 | ) |
|
| (6 | ) |
|
| (3 | ) |
NAREIT FFO (1) |
|
| 247 |
|
|
| 278 |
|
|
| 936 |
|
|
| 953 |
|
Adjustments to NAREIT FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
Loss on debt extinguishment |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
Adjusted FFO (1) |
| $ | 247 |
|
| $ | 278 |
|
| $ | 938 |
|
| $ | 953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For calculation on a per share basis(3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO |
|
| 739.0 |
|
|
| 741.1 |
|
|
| 738.7 |
|
|
| 745.2 |
|
NAREIT FFO and Adjusted FFO per diluted share |
| $ | .33 |
|
| $ | .37 |
|
| $ | 1.27 |
|
| $ | 1.28 |
|
___________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Net income |
| $ | 214 |
|
| $ | 260 |
|
| $ | 505 |
|
| $ | 378 |
|
Less: Net income attributable to non-controlling interests |
|
| (4 | ) |
|
| (4 | ) |
|
| (8 | ) |
|
| (6 | ) |
Net income attributable to Host Inc. |
|
| 210 |
|
|
| 256 |
|
|
| 497 |
|
|
| 372 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gain on dispositions⁽¹⁾ |
|
| — |
|
|
| (1 | ) |
|
| (69 | ) |
|
| (13 | ) |
Gain on property insurance settlement |
|
| — |
|
|
| (6 | ) |
|
| — |
|
|
| (6 | ) |
Depreciation and amortization |
|
| 168 |
|
|
| 162 |
|
|
| 336 |
|
|
| 333 |
|
Equity investment adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity in earnings of affiliates |
|
| (4 | ) |
|
| (2 | ) |
|
| (11 | ) |
|
| (4 | ) |
Pro rata FFO of equity investments⁽²⁾ |
|
| 6 |
|
|
| 8 |
|
|
| 16 |
|
|
| 17 |
|
Consolidated partnership adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
FFO adjustments for non-controlling interests of Host L.P. |
|
| (3 | ) |
|
| (1 | ) |
|
| (4 | ) |
|
| (4 | ) |
NAREIT FFO |
|
| 377 |
|
|
| 416 |
|
|
| 765 |
|
|
| 695 |
|
Adjustments to NAREIT FFO: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loss on debt extinguishment |
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| — |
|
Adjusted FFO |
| $ | 377 |
|
| $ | 416 |
|
| $ | 769 |
|
| $ | 695 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
For calculation on a per share basis:⁽³⁾ |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO |
| 713.2 |
|
|
| 717.0 |
|
|
| 714.2 |
|
|
| 716.8 |
| |
Diluted earnings per common share |
| $ | 0.29 |
|
| $ | 0.36 |
|
| $ | 0.70 |
|
| $ | 0.52 |
|
NAREIT FFO per diluted share |
| $ | 0.53 |
|
| $ | 0.58 |
|
| $ | 1.07 |
|
| $ | 0.97 |
|
Adjusted FFO per diluted share |
| $ | 0.53 |
|
| $ | 0.58 |
|
| $ | 1.08 |
|
| $ | 0.97 |
|
___________
|
|
|
|
(1-2) Refer to the corresponding footnote on the Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre for Host Inc. and Host L.P.
(3) Diluted earnings per common share, NAREIT FFO per diluted share and Adjusted FFO per diluted share are adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, preferred OP units held by minority partners and other non-controlling interests that have the option to convert their limited partner interests to common OP units. No effect is shown for securities if they are anti-dilutive.
Comparable Hotel Property Level Operating Results
We present certain operating results offor our hotels, such as hotel revenues, expenses, food and beverage profit, and EBITDA (and the related margins), on a comparable hotel, or “same"same store,”" basis as supplemental information for our investors. For an explanation of whichOur comparable hotel results present operating results for our hotels without giving effect to dispositions or properties we considerthat experienced closures due to be “comparable hotels”, seerenovations or property damage, as discussed in “Comparable Hotel Operating Statistics”Statistics and Results” above. We present comparable hotel EBITDA to help us and our investors evaluate the ongoing operating performance of our comparable hotels after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization expense). Corporate-level costs and expenses also are removed to arrive at property-level results. We believe these property-level results provide investors with supplemental information about the ongoing operating performance of our comparable hotels. Comparable hotel results are presented both by location and for our properties in the aggregate. We eliminate from our comparable hotel level operating results severance costs related to broad-based and significant property-level reconfiguration that is not considered to be within the normal course of business, as we believe this elimination provides useful supplemental information that is beneficial to an investor’s understanding of our ongoing operating performance. We also eliminate depreciation and amortization expense because, even though depreciation and amortization expense are property-level expenses, these non-cash expenses, which are based on historical cost accounting for real estate assets, implicitly assume that the value of real estate assets diminishes predictably over time. As noted earlier, because real estate values historically have risen or fallen with market conditions, many real estate industry investors have considered presentation of historical cost accounting for operating results to be insufficient.
Because of the elimination of corporate-level costs and expenses, gains or losses on disposition, certain severance expenses and depreciation and amortization expense, the comparable hotel operating results we present do not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.
We present these hotel operating results on a comparable hotel basis because we believe that doing so provides investors and management with useful information for evaluating the period-to-period performance of our hotels and facilitates comparisons with other hotel REITs and hotel owners. In particular, these measures assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at comparable hotels (which represent the vast majority of our portfolio) or from other factors. While management believes that presentation of comparable hotel results is a supplemental measure that provides useful information in evaluating our ongoing performance, this measure is not used to allocate resources or to assess the operating performance of each of our hotels, as these decisions are based on data for individual hotels and are not based on comparable hotel results in the aggregate. For these reasons, we believe comparable hotel operating results, when combined with the presentation of GAAP operating profit, revenues and expenses, provide useful information to investors and management.
The following tables presentspresent certain operating results and statistics for our comparable hotels for the periods presented herein and a reconciliation of the differences between comparable hotelHotel EBITDA, a non-GAAP financial measure, and net income, the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable. Similar reconciliations of the differences between (i) comparable hotel revenues and (ii) our revenues as calculated and presented in accordance with GAAP (each of which is used in the applicable margin calculation), and between (iii) comparable hotel expenses and (iv) operating costs and expenses as calculated and presented in accordance with GAAP, also are also included in the reconciliation:
38
Comparable Hotel Results for Host Inc. and Host L.P.
(in millions, except hotel statistics)
|
| Quarter ended September 30, |
|
| Year-to-date ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Number of hotels |
|
| 87 |
|
|
| 87 |
|
|
| 87 |
|
|
| 87 |
|
Number of rooms |
|
| 48,357 |
|
|
| 48,357 |
|
|
| 48,357 |
|
|
| 48,357 |
|
Change in comparable hotel RevPAR - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant US$ |
|
| (1.8 | )% |
|
| — |
|
|
| 1.0 | % |
|
| — |
|
Nominal US$ |
|
| (1.7 | )% |
|
| — |
|
|
| 1.1 | % |
|
| — |
|
Operating profit margin (1) |
|
| 10.1 | % |
|
| 11.1 | % |
|
| 13.4 | % |
|
| 13.0 | % |
Comparable hotel EBITDA margin (1) |
|
| 26.1 | % |
|
| 26.85 | % |
|
| 28.0 | % |
|
| 27.9 | % |
Food and beverage profit margin (1) |
|
| 22.9 | % |
|
| 23.5 | % |
|
| 31.1 | % |
|
| 29.8 | % |
Comparable hotel food and beverage profit margin (1) |
|
| 22.9 | % |
|
| 23.3 | % |
|
| 30.9 | % |
|
| 29.9 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 105 |
|
| $ | 108 |
|
| $ | 478 |
|
| $ | 643 |
|
Depreciation and amortization |
|
| 176 |
|
|
| 182 |
|
|
| 534 |
|
|
| 541 |
|
Interest expense |
|
| 43 |
|
|
| 38 |
|
|
| 125 |
|
|
| 116 |
|
Provision for income taxes |
|
| 42 |
|
|
| 19 |
|
|
| 63 |
|
|
| 42 |
|
Gain on sale of property and corporate level income/expense |
|
| (39 | ) |
|
| 7 |
|
|
| (45 | ) |
|
| (185 | ) |
Non-comparable hotel results, net (2) |
|
| (31 | ) |
|
| (41 | ) |
|
| (140 | ) |
|
| (147 | ) |
Comparable hotel EBITDA |
| $ | 296 |
|
| $ | 313 |
|
| $ | 1,015 |
|
| $ | 1,010 |
|
|
| Quarter ended June 30, |
|
| Year-to-date ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Number of hotels |
|
| 75 |
|
|
| 75 |
|
|
| 75 |
|
|
| 75 |
|
Number of rooms |
|
| 41,031 |
|
|
| 41,031 |
|
|
| 41,031 |
|
|
| 41,031 |
|
Change in comparable hotel Total RevPAR |
|
| 3.8 | % |
|
| — |
|
|
| 16.9 | % |
|
| — |
|
Change in comparable hotel RevPAR |
|
| 2.7 | % |
|
| — |
|
|
| 14.9 | % |
|
| — |
|
Operating profit margin⁽¹⁾ |
|
| 17.9 | % |
|
| 23.7 | % |
|
| 17.9 | % |
|
| 18.3 | % |
Comparable hotel EBITDA margin⁽¹⁾ |
|
| 32.7 | % |
|
| 37.1 | % |
|
| 32.6 | % |
|
| 34.1 | % |
Food and beverage profit margin⁽¹⁾ |
|
| 36.6 | % |
|
| 39.5 | % |
|
| 37.1 | % |
|
| 36.6 | % |
Comparable hotel food and beverage profit margin⁽¹⁾ |
|
| 36.9 | % |
|
| 39.8 | % |
|
| 37.2 | % |
|
| 37.2 | % |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
| $ | 214 |
|
| $ | 260 |
|
| $ | 505 |
|
| $ | 378 |
|
Depreciation and amortization |
|
| 168 |
|
|
| 162 |
|
|
| 337 |
|
|
| 334 |
|
Interest expense |
|
| 45 |
|
|
| 37 |
|
|
| 94 |
|
|
| 73 |
|
Provision for income taxes |
|
| 14 |
|
|
| 39 |
|
|
| 12 |
|
|
| 23 |
|
Gain on sale of property and corporate level income/expense |
|
| 6 |
|
|
| 10 |
|
|
| (53 | ) |
|
| 17 |
|
Severance expense at hotel properties |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
Property transaction adjustments⁽²⁾ |
|
| — |
|
|
| (3 | ) |
|
| (3 | ) |
|
| 16 |
|
Non-comparable hotel results, net⁽³⁾ |
|
| 2 |
|
|
| (15 | ) |
|
| (4 | ) |
|
| (48 | ) |
Comparable hotel EBITDA |
| $ | 449 |
|
| $ | 490 |
|
| $ | 888 |
|
| $ | 795 |
|
|
| Quarter ended September 30, 2017 |
|
| Quarter ended September 30, 2016 |
| ||||||||||||||||||||||||||
|
|
|
|
|
| Adjustments |
|
|
|
|
|
|
|
|
|
| Adjustments |
|
|
|
|
| ||||||||||
|
| GAAP Results |
|
| Non-comparable hotel results, net(2) |
|
| Depreciation and corporate level items |
|
| Comparable Hotel Results |
|
| GAAP Results |
|
| Non-comparable hotel results, net(2) |
|
| Depreciation and corporate level items |
|
| Comparable Hotel Results |
| ||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room |
| $ | 860 |
|
| $ | (71 | ) |
| $ | — |
|
| $ | 789 |
|
| $ | 879 |
|
| $ | (76 | ) |
| $ | — |
|
| $ | 803 |
|
Food and beverage |
|
| 314 |
|
|
| (35 | ) |
|
| — |
|
|
| 279 |
|
|
| 336 |
|
|
| (40 | ) |
|
| — |
|
|
| 296 |
|
Other |
|
| 80 |
|
|
| (12 | ) |
|
| — |
|
|
| 68 |
|
|
| 80 |
|
|
| (13 | ) |
|
| — |
|
|
| 67 |
|
Total revenues |
|
| 1,254 |
|
|
| (118 | ) |
|
| — |
|
|
| 1,136 |
|
|
| 1,295 |
|
|
| (129 | ) |
|
| — |
|
|
| 1,166 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room |
|
| 227 |
|
|
| (18 | ) |
|
| — |
|
|
| 209 |
|
|
| 225 |
|
|
| (19 | ) |
|
| — |
|
|
| 206 |
|
Food and beverage |
|
| 242 |
|
|
| (27 | ) |
|
| — |
|
|
| 215 |
|
|
| 257 |
|
|
| (30 | ) |
|
| — |
|
|
| 227 |
|
Other |
|
| 459 |
|
|
| (43 | ) |
|
| — |
|
|
| 416 |
|
|
| 471 |
|
|
| (51 | ) |
|
| — |
|
|
| 420 |
|
Depreciation and amortization |
|
| 176 |
|
|
| — |
|
|
| (176 | ) |
|
| — |
|
|
| 182 |
|
|
| — |
|
|
| (182 | ) |
|
| — |
|
Corporate and other expenses |
|
| 24 |
|
|
| — |
|
|
| (24 | ) |
|
| — |
|
|
| 28 |
|
|
| — |
|
|
| (28 | ) |
|
| — |
|
Gain on insurance and business interruption settlements |
|
| (1 | ) |
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| (12 | ) |
|
| 12 |
|
|
| — |
|
|
| — |
|
Total expenses |
|
| 1,127 |
|
|
| (87 | ) |
|
| (200 | ) |
|
| 840 |
|
|
| 1,151 |
|
|
| (88 | ) |
|
| (210 | ) |
|
| 853 |
|
Operating Profit - Comparable Hotel EBITDA |
| $ | 127 |
|
| $ | (31 | ) |
| $ | 200 |
|
| $ | 296 |
|
| $ | 144 |
|
| $ | (41 | ) |
| $ | 210 |
|
| $ | 313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year-to-date ended September 30, 2017 |
|
| Year-to-date ended September 30, 2016 |
| |||||||||||||||||||||||||||
|
|
|
|
|
| Adjustments |
|
|
|
|
|
|
|
|
|
| Adjustments |
|
|
|
|
| ||||||||||
|
| GAAP Results |
|
| Non-comparable hotel results, net(2) |
|
| Depreciation and corporate level items |
|
| Comparable Hotel Results |
|
| GAAP Results |
|
| Non-comparable hotel results, net(2) |
|
| Depreciation and corporate level items |
|
| Comparable Hotel Results |
| ||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room |
| $ | 2,643 |
|
| $ | (244 | ) |
| $ | — |
|
| $ | 2,399 |
|
| $ | 2,655 |
|
| $ | (275 | ) |
| $ | — |
|
| $ | 2,380 |
|
Food and beverage |
|
| 1,152 |
|
|
| (133 | ) |
|
| — |
|
|
| 1,019 |
|
|
| 1,183 |
|
|
| (148 | ) |
|
| — |
|
|
| 1,035 |
|
Other |
|
| 248 |
|
|
| (45 | ) |
|
| — |
|
|
| 203 |
|
|
| 255 |
|
|
| (54 | ) |
|
| — |
|
|
| 201 |
|
Total revenues |
|
| 4,043 |
|
|
| (422 | ) |
|
| — |
|
|
| 3,621 |
|
|
| 4,093 |
|
|
| (477 | ) |
|
| — |
|
|
| 3,616 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room |
|
| 676 |
|
|
| (58 | ) |
|
| — |
|
|
| 618 |
|
|
| 674 |
|
|
| (68 | ) |
|
| — |
|
|
| 606 |
|
Food and beverage |
|
| 794 |
|
|
| (90 | ) |
|
| — |
|
|
| 704 |
|
|
| 830 |
|
|
| (104 | ) |
|
| — |
|
|
| 726 |
|
Other |
|
| 1,424 |
|
|
| (140 | ) |
|
| — |
|
|
| 1,284 |
|
|
| 1,447 |
|
|
| (173 | ) |
|
| — |
|
|
| 1,274 |
|
Depreciation and amortization |
|
| 534 |
|
|
| — |
|
|
| (534 | ) |
|
| — |
|
|
| 541 |
|
|
| — |
|
|
| (541 | ) |
|
| — |
|
Corporate and other expenses |
|
| 79 |
|
|
| — |
|
|
| (79 | ) |
|
| — |
|
|
| 82 |
|
|
| — |
|
|
| (82 | ) |
|
| — |
|
Gain on insurance and business interruption settlements |
|
| (6 | ) |
|
| 6 |
|
|
| — |
|
|
| — |
|
|
| (15 | ) |
|
| 15 |
|
|
| — |
|
|
| — |
|
Total expenses |
|
| 3,501 |
|
|
| (282 | ) |
|
| (613 | ) |
|
| 2,606 |
|
|
| 3,559 |
|
|
| (330 | ) |
|
| (623 | ) |
|
| 2,606 |
|
Operating Profit - Comparable Hotel EBITDA |
| $ | 542 |
|
| $ | (140 | ) |
| $ | 613 |
|
| $ | 1,015 |
|
| $ | 534 |
|
| $ | (147 | ) |
| $ | 623 |
|
| $ | 1,010 |
|
___________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________
(1) Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP profit margins are calculated using amounts presented in the unaudited condensed consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the following tables, which include reconciliations to the applicable GAAP results:
| Quarter ended June 30, 2023 |
|
| Quarter ended June 30, 2022 |
| ||||||||||||||||||||||||||||||
|
|
|
| Adjustments |
|
|
|
|
|
|
|
| Adjustments |
|
|
|
| ||||||||||||||||||
| GAAP Results |
|
| Non-comparable hotel results, net ⁽⁴⁾ |
|
| Depreciation and corporate level items |
|
| Comparable Hotel Results |
|
| GAAP Results |
|
| Property transaction adjustments ⁽³⁾ |
|
| Non-comparable hotel results, net ⁽⁴⁾ |
|
| Depreciation and corporate level items |
|
| Comparable Hotel Results |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Room | $ | 850 |
|
| $ | (8 | ) |
| $ | — |
|
| $ | 842 |
|
| $ | 850 |
|
| $ | (8 | ) |
| $ | (22 | ) |
| $ | — |
|
| $ | 820 |
|
Food and beverage |
| 415 |
|
|
| (9 | ) |
|
| — |
|
|
| 406 |
|
|
| 405 |
|
|
| (3 | ) |
|
| (18 | ) |
|
| — |
|
|
| 384 |
|
Other |
| 128 |
|
|
| (1 | ) |
|
| — |
|
|
| 127 |
|
|
| 126 |
|
|
| — |
|
|
| (6 | ) |
|
| — |
|
|
| 120 |
|
Total revenues |
| 1,393 |
|
|
| (18 | ) |
|
| — |
|
|
| 1,375 |
|
|
| 1,381 |
|
|
| (11 | ) |
|
| (46 | ) |
|
| — |
|
|
| 1,324 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Room |
| 201 |
|
|
| (2 | ) |
|
| — |
|
|
| 199 |
|
|
| 189 |
|
|
| (3 | ) |
|
| (3 | ) |
|
| — |
|
|
| 183 |
|
Food and beverage |
| 263 |
|
|
| (7 | ) |
|
| — |
|
|
| 256 |
|
|
| 245 |
|
|
| (1 | ) |
|
| (13 | ) |
|
| — |
|
|
| 231 |
|
Other |
| 485 |
|
|
| (11 | ) |
|
| — |
|
|
| 474 |
|
|
| 440 |
|
|
| (4 | ) |
|
| (15 | ) |
|
| — |
|
|
| 421 |
|
Depreciation and amortization |
| 168 |
|
|
| — |
|
|
| (168 | ) |
|
| — |
|
|
| 162 |
|
|
| — |
|
|
| — |
|
|
| (162 | ) |
|
| — |
|
Corporate and other expenses |
| 30 |
|
|
| — |
|
|
| (30 | ) |
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| — |
|
|
| (25 | ) |
|
| — |
|
Gain on insurance and |
| (3 | ) |
|
| — |
|
|
| — |
|
|
| (3 | ) |
|
| (7 | ) |
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| (1 | ) |
Total expenses |
| 1,144 |
|
|
| (20 | ) |
|
| (198 | ) |
|
| 926 |
|
|
| 1,054 |
|
|
| (8 | ) |
|
| (31 | ) |
|
| (181 | ) |
|
| 834 |
|
Operating Profit - Comparable | $ | 249 |
|
| $ | 2 |
|
| $ | 198 |
|
| $ | 449 |
|
| $ | 327 |
|
| $ | (3 | ) |
| $ | (15 | ) |
| $ | 181 |
|
| $ | 490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
| Year-to-date ended June 30, 2023 |
|
| Year-to-date ended June 30, 2022 |
| ||||||||||||||||||||||||||||||||||||||
|
|
|
|
| Adjustments |
|
|
|
|
|
|
|
| Adjustments |
|
|
|
| ||||||||||||||||||||||||||
|
| GAAP Results |
|
| Property transaction adjustments⁽²⁾ |
|
| Non-comparable hotel results, net ⁽³⁾ |
|
| Depreciation and corporate level items |
|
| Comparable hotel Results |
|
| GAAP Results |
|
| Severance at hotel properties |
|
| Property transaction adjustments⁽²⁾ |
|
| Non-comparable hotel results, net ⁽³⁾ |
|
| Depreciation and corporate level items |
|
| Comparable hotel Results |
| |||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Room |
| $ | 1,670 |
|
| $ | (5 | ) |
| $ | (18 | ) |
| $ | — |
|
| $ | 1,647 |
|
| $ | 1,505 |
|
| $ | — |
|
| $ | (13 | ) |
| $ | (57 | ) |
| $ | — |
|
| $ | 1,435 |
|
Food and beverage |
|
| 846 |
|
|
| (2 | ) |
|
| (18 | ) |
|
| — |
|
|
| 826 |
|
|
| 702 |
|
|
| — |
|
|
| — |
|
|
| (42 | ) |
|
| — |
|
|
| 660 |
|
Other |
|
| 258 |
|
|
| — |
|
|
| (3 | ) |
|
| — |
|
|
| 255 |
|
|
| 248 |
|
|
| — |
|
|
| 4 |
|
|
| (13 | ) |
|
| — |
|
|
| 239 |
|
Total revenues |
|
| 2,774 |
|
|
| (7 | ) |
|
| (39 | ) |
|
| — |
|
|
| 2,728 |
|
|
| 2,455 |
|
|
| — |
|
|
| (9 | ) |
|
| (112 | ) |
|
| — |
|
|
| 2,334 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Room |
|
| 394 |
|
|
| (1 | ) |
|
| (4 | ) |
|
| — |
|
|
| 389 |
|
|
| 349 |
|
|
| — |
|
|
| (13 | ) |
|
| (9 | ) |
|
| — |
|
|
| 327 |
|
Food and beverage |
|
| 532 |
|
|
| (1 | ) |
|
| (13 | ) |
|
| — |
|
|
| 518 |
|
|
| 445 |
|
|
| — |
|
|
| (3 | ) |
|
| (27 | ) |
|
| — |
|
|
| 415 |
|
Other |
|
| 956 |
|
|
| (2 | ) |
|
| (18 | ) |
|
| — |
|
|
| 936 |
|
|
| 837 |
|
|
| (2 | ) |
|
| (9 | ) |
|
| (28 | ) |
|
| — |
|
|
| 798 |
|
Depreciation and amortization |
|
| 337 |
|
|
| — |
|
|
| — |
|
|
| (337 | ) |
|
| — |
|
|
| 334 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (334 | ) |
|
| — |
|
Corporate and other expenses |
|
| 61 |
|
|
| — |
|
|
| — |
|
|
| (61 | ) |
|
| — |
|
|
| 48 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (48 | ) |
|
| — |
|
Gain on insurance and |
|
| (3 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3 | ) |
|
| (7 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| (1 | ) |
Total expenses |
|
| 2,277 |
|
|
| (4 | ) |
|
| (35 | ) |
|
| (398 | ) |
|
| 1,840 |
|
|
| 2,006 |
|
|
| (2 | ) |
|
| (25 | ) |
|
| (64 | ) |
|
| (376 | ) |
|
| 1,539 |
|
Operating Profit - Comparable |
| $ | 497 |
|
| $ | (3 | ) |
| $ | (4 | ) |
| $ | 398 |
|
| $ | 888 |
|
| $ | 449 |
|
| $ | 2 |
|
| $ | 16 |
|
| $ | (48 | ) |
| $ | 376 |
|
| $ | 795 |
|
(2) Property transaction adjustments represent the following items: (i) the elimination of results of operations of hotels sold or held-for-sale as of June 30, 2023, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations, and (ii) the addition of results for periods prior to our ownership for hotels acquired as of June 30, 2023.
(3) Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels, which operations are included in our consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds relating to events that occurred while the hotels were classified as non-comparable.
40
Item 3. Quantitative and Qualitative Disclosures about Market Risk
All information in this section applies to both Host Inc. and Host L.P.
Interest Rate Sensitivity
As of SeptemberJune 30, 20172023 and December 31, 2016, 70% and 65%, respectively,2022, 76% of our outstanding debt bore interest at fixed rates. To manage interest rate risk applicable to our debt, we may enter into interest rate swaps or caps. The interest rate derivatives into which we may enter are strictly to hedge interest rate risk, and are not for trading purposes. The percentages above reflect the effectAs of any derivatives into whichJune 30, 2023, we do not have entered to manageany interest rate risk. No interest rate hedging transactions were entered into during the first three quarters of 2017.derivatives outstanding. See Item 7A of our most recent Annual Report on Form 10–K and Note 8 – “Fair Value Measurements” in this quarterly report.K.
Exchange Rate Sensitivity
As we have operations outside of the United States (specifically, the ownership of hotels in Brazil and Canada and Mexico and oura minority investmentsinvestment in the Euro JV and a joint venture in India), currency exchange risks arise in the normal course of our business. To manage the currency exchange risk, we may enter into forward or option contracts or hedge our investment through the issuance of foreign currency denominated debt. No foreign currency hedging transactions were entered into during 2023. We currently have three foreign currency forward salepurchase contracts forwith a total notional amount of $70 million. No forward purchase contracts were entered into during the first three quarters of 2017.
CAD 99 million ($75 million), which will mature in August and September 2023. The foreign currency exchange agreements into which we have entered are strictly to hedge foreign currency risk and are not for trading purposes. In addition to the forward sales contracts, we have designated $128 million of the foreign currency draws on our credit facility as hedges of net investments in foreign operations. As a result, currency translation adjustments in the designated credit facility draws are recorded to other comprehensive income (loss), which adjustments offset a portion of the translation adjustment related to our international investments.
See Item 7A of our most recent Annual Report on Form 10-K10-K.
41
Item 4. Controls and Note 8 – “Fair Value Measurements” in this quarterly report.Procedures
Controls and Procedures (Host Hotels & Resorts, Inc.)
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.
Changes to Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Controls and Procedures (Host Hotels & Resorts, L.P.)
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including Host Inc.’s Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, Host Inc.’s Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.
Changes to Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (Host Hotels & Resorts, Inc.)
On February 22, 2017, Host Inc. announced aAugust 3, 2022, the Board of Directors authorized an increase in the amount authorized under the Company’s share repurchase program from the existing $371 remaining available to repurchase up to $500 million of common stock.$1 billion. The common stock may be purchased from time to time depending upon market conditions and repurchases may be made in the open market or through private transactions or by other means, including principal transactions with various financial institutions, like accelerated share repurchases, forwards, options and similar transactions, and through one or more trading plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The program does not obligate us to repurchase any specific number of shares or any specific dollar amount and may be suspended at any time at our discretion. No repurchases were made in the first three quarters of 2017.
Period |
| Total Number of |
| Average Price Paid |
| Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs |
|
| Approximate Dollar Value of Common Shares that May Yet Be Purchased Under the Plans or Programs (in millions) |
| ||||
July 1, 2017 – July 31, 2017 |
|
| — |
| $ | — |
|
| — |
|
| $ | 500 |
|
August 1, 2017 – August 31, 2017 |
|
| — |
|
| — |
|
| — |
|
|
| 500 |
|
September 1, 2017 – September 30, 2017 |
|
| — |
|
| — |
|
| — |
|
|
| 500 |
|
Total |
|
| — |
| $ | — |
|
| — |
|
| $ | 500 |
|
Period |
| Total Number of Host Inc. Common Shares Purchased |
|
| Average Price Paid |
|
| Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs |
|
| Approximate Dollar Value of Common Shares that May Yet Be Purchased Under the Plans or Programs (in millions) |
| ||||
April 1, 2023 – April 30, 2023 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 923 |
|
May 1, 2023 – May 31, 2023 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 923 |
|
June 1, 2023 – June 30, 2023 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 923 |
|
Total |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 923 |
|
Issuer Purchases of Equity Securities (Host Hotels & Resorts, L.P.)
Period | Total Number of | Average Price | Total Number of OP | Approximate Dollar Value | ||||||||||
|
| * | 1.021494 shares of Host Hotels & Resorts, Inc. common stock |
|
| |||||||||
|
| * | 1.021494 shares of Host Hotels & Resorts, Inc. common stock |
|
| |||||||||
|
| * | 1.021494 shares of Host Hotels & Resorts, Inc. common stock |
|
| |||||||||
Total |
| * |
|
|
___________ |
|
|
Issuer Sales of Unregistered Securities (Host Hotels & Resorts, Inc.)
On July 5, 2017, Host Inc. issued 15,322 shares of*Reflects common stock to Fidelity Investments Charitable Gift FundOP units offered for redemption by limited partners in exchange for 15,000 OP unitsshares of Host L.P. heldInc.'s common stock.
43
Item 5. Other Information
During the period covered by Fidelity Investments Charitable Gift Fund. All shares were issued pursuant to the private placement exemption from registration provided by Section 4(2)this report, no director or officer of the Securities Act. The numberCompany adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of shares issued was based on the current conversion factor of 1.021494 common shares per OP unit.Regulation S-K.
Item 6. Exhibits
In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the company, its subsidiaries or other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
have been qualified by disclosures that were made to other partyparties in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
were made only as of the date of the applicable agreement or such other date or date as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representation and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
The exhibits listed on the accompanying Exhibit Index are filed as part of this report and such Exhibit Index is incorporated herein by reference.
Exhibit No. | Description | |
10. | Material Contracts | |
|
| |
10.9 | ||
| ||
10.11* | ||
|
| |
| ||
|
| |
| Rule 13a-14(a)/15d-14(a) Certifications | |
31.1* | ||
31.2* | ||
31.3* | ||
31.4* | ||
32 | Section 1350 Certifications | |
32.1†* | ||
44
32.2†* | ||
101 | XBRL | |
|
| |
| Inline XBRL Taxonomy Extension Schema Document. Submitted electronically with this report. | |
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document. Submitted electronically with this report. | |
|
| |
Inline XBRL Taxonomy Extension Definition Linkbase Document. Submitted electronically with this report. | ||
101.LAB | Inline XBRL Taxonomy Label Linkbase Document. Submitted electronically with this report. | |
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document. Submitted electronically with this report. | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
Attached as Exhibit 101 to this report are theThe following documentsmaterials, formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 2016,2022, respectively, for Host Hotels & Resorts, Inc.; (ii) the Condensed Consolidated Balance Sheets at SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively, for Host Hotels & Resorts, Inc.; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 2016,2022, respectively, for Host Hotels & Resorts, Inc.; (iv) the Condensed Consolidated Statements of Cash Flows for the Year-to-date ended SeptemberJune 30, 20172023 and 2016,2022, respectively, for Host Hotels & Resorts, Inc.; (v) the Condensed Consolidated Statements of Operations for the Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 2016,2022, respectively, for Host Hotels & Resorts, L.P.; (vi) the Condensed Consolidated Balance Sheets at SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively, for Host Hotels & Resorts, L.P.; (vii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the Quarter and Year-to-date ended SeptemberJune 30, 20172023 and 2016,2022, respectively, for Host Hotels & Resorts, L.P.; (viii) the Condensed Consolidated Statements of Cash Flows for the Year-to-date ended SeptemberJune 30, 20172023 and 2016,2022, respectively, for Host Hotels & Resorts, L.P.; and (ix) Notes to Condensed Consolidated Financial Statements that have been detail tagged.Statements.
|
|
|
|
* Filed herewith.
† This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HOST HOTELS & RESORTS, INC. | |||
| / | ||
Senior Vice President, Corporate Controller
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HOST HOTELS & RESORTS, L.P. By: HOST HOTELS & RESORTS, INC., its general partner | |||
| / | ||
Senior Vice President, Corporate Controller of Host Hotels & Resorts, Inc., general partner of Host Hotels & Resorts, L.P.
|
49