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Funds From Operations for 2000 Increases
Nearly 15%
BETHESDA, Md., March 6, 2001 - Host Marriott Corporation
(NYSE: HMT - news) today reported record diluted Comparative Funds From
Operations per share for 2000 of $2.01 per diluted share, an improvement
of nearly 15 percent over 1999. Fourth quarter diluted Comparative
FFO per share increased over 18 percent to $.64 per diluted share versus
fourth quarter 1999. The company also reported that Earnings Before Interest
Expense, Income Taxes, Depreciation, and Amortization and other non-cash
items (�EBITDA�) from continuing operations was $349 million for the fourth
quarter and $1,098 million for the year, an increase of 12 percent and
9 percent, respectively, over the same periods in 1999.
The company also reported that comparable REVPAR
at its hotels increased significantly with 6.7 percent growth in fourth
quarter 2000 and a 6.6 percent increase for full year 2000.
Mr. Christopher J. Nassetta, president and chief
executive officer, stated, �We have had a great year and are pleased with
our outstanding results which significantly exceeded expectations. In a
year in which the broader indexes declined, Host Marriott�s shareholders
realized a total return from stock price growth and dividends of over 68%,
which was among the highest in the REIT and hospitality industries. Our
share price increased from $8.25 to $12.94, while our dividend increased
nearly 24% from $.84 to $1.04 on an annualized basis.�
Mr. Nassetta added, �During 2000 we continued
to improve our blue chip portfolio of upper-tier lodging properties by
reinvesting in our current portfolio, making strategic acquisitions, and
deploying capital in areas that will result in new sources of revenues.
We made several significant additions to our portfolio in 2000 including
the opening of both the 717-room Tampa Waterside Marriott and the 500-room
expansion of the Orlando World Center Marriott, and we continued the development
of an additional 295-room golf resort and world-class spa at the Ritz-Carlton,
Naples, both of which are scheduled to open in 2001. We also acquired a
controlling economic interest in the JW Marriott located on historic Pennsylvania
Avenue in the heart of Washington, DC, with rights to purchase the remaining
interests in the future.�
Mr. Nassetta continued, �Recently we made two
major investments that will provide substantial growth in FFO beginning
in 2001. In early January, we acquired all but one of the leases on our
hotels previously leased to Crestline Capital, which will generate strong
accretion to our FFO per share. Also, in the fourth quarter, we resolved
outstanding litigation on seven partnerships in which we serve as general
partner and, through this settlement, we invested in a joint venture which
acquired two of these partnerships. We believe these are the right steps
to create value for our shareholders and to continue to increase our profitability.�
Mr. Robert E. Parsons, executive vice president
and chief financial officer, stated, �Our financial strategy has focused
on maintaining a strong balance sheet, which provides us with the continued
flexibility to execute our corporate strategy. During the year, we completed
a $150 million stock buy- back program, by acquiring approximately 16 million
shares, refinanced and extended our line of credit to achieve more flexible
terms, and completed a $250 million debt offering.�
Our revenues reflect rental income from leases,
which are calculated based on hotel-level sales. Beginning with the first
quarter of 2001, we will report gross hotel sales at our hotel properties
as revenue for 116 of our hotels that were purchased from Crestline (six
leases, including one still held by Crestline, have not been purchased
and, therefore, results of these hotels will continue to be reported as
rental income). Fourth quarter 2000 hotel sales were $1.44 billion, a 5.6
percent increase over 1999 fourth quarter hotel sales of $1.37 billion.
Full year 2000 hotel sales were $4.51 billion, an increase of 5.4 percent
over full year 1999 hotel sales of $4.28 billion. We reported fourth quarter
2000 rental income of $810 million versus $749 million for the fourth quarter
1999 and full year 2000 rental income of $1.4 billion versus $1.3 billion
for full year 1999. The reported rental income amounts include the recognition
of contingent rent deferred under SEC regulations (Staff Accounting Bulletin
101, �SAB 101�) of $366 million and $339 million for the fourth quarter
2000 and 1999, respectively, because they were contingent upon achieving
annual levels of hotel sales. SAB 101 has no impact on the full year 2000
and 1999 results.
The net income available to common shareholders
for the quarter ended December 31, 2000 decreased to $279 million compared
to $320 million for the quarter ended December 31, 1999. For the full year
2000, the net income available to common shareholders decreased to $141
million compared to $216 million for the full year 1999. The decrease in
both fourth quarter and full year 2000 include a non-recurring loss, net
of taxes, of $125 million recognized on the repurchase of leases from Crestline.
Fourth quarter and full year 2000 results include $5 million and $20 million,
respectively, in dividends on preferred stock, which were issued during
the second half of 1999.
Host Marriott Corporation - Introduction
The following financial data is presented in order
to help our investors understand the financial position and operations
of the company as of December 31, 2000. In this press release we present
certain information regarding Comparative FFO and EBITDA (defined below)
wherein Host Marriott Corporation (�Host REIT�) and Host Marriott, L.P.
(�Host LP�) are separate entities with distinct reconciling items between
them. Throughout this press release you will see references to Host LP,
a 78% owned operating partnership which owns all of our hotels. When distinguishing
between Host REIT and Host LP, the primary difference is the 22% ownership
by outside partners in Host LP, which is reflected as minority interest
in our balance sheet and minority interest expense in our income statement.
We have included below a brief discussion of these entities and their relationship
to one another. Readers are encouraged to find further detail regarding
our corporate structure in our annual report on Form 10-K.
Host REIT operates as a self-managed and self-administered
real estate investment trust with operations conducted solely through the
operating partnership, Host LP. Host REIT contributed substantially all
of its hotels and certain other assets and liabilities to Host LP on December
30, 1998 and holds approximately 78% of the operating partnership units-which
we refer to as OP Units-in an amount equal to the outstanding number of
shares of Host REIT�s common stock. Partners holding OP Units, other than
Host REIT, have the right to exchange their OP Units for cash, or, at Host
REIT�s option, shares of Host REIT common stock. For financial reporting
purposes, Host REIT presents the book value of OP Units held by partners
other than Host REIT in the balance sheet as minority interest and their
share of the net income of Host LP as minority interest expense. For purposes
of determining diluted earnings per share, diluted Comparative FFO per
share and EBITDA we consider all of the outstanding OP Units not held by
Host REIT to have been exchanged for common stock.
On February 1, 2001, Blackstone Real Estate Associates,
L.P., Blackstone Real Estate Associates II L.P., Blackstone Real Estate
Holdings L.P. and BRE Logan Hotel Inc. redeemed 12,500,000 Common OP Units
to Host LP for Host REIT Common Shares. As a result of this transaction,
as of February 1, 2001, Host REIT now holds approximately 82% of the OP
units. Disclosures included in this document have not been adjusted to
reflect this transaction.
Comparative FFO represents Funds From Operations,
as defined by the National Association of Real Estate Investment Trusts,
adjusted for contingent rental revenues and substantial non-recurring adjustments,
including the loss recognized on the repurchase of leases from Crestline
in 2000, the loss on the settlement of litigation in 1999, and the relief
of tax reserves upon the resolution of IRS audits for years prior to our
REIT conversion in both years. We consider Comparative FFO and our consolidated
earnings before interest expense, income taxes, depreciation, amortization,
and other non-cash items (including contingent rental revenue) (�EBITDA�)
to be an indicative measures of our operating performance due to the significance
of our long-lived assets and because such data is considered useful by
the investment community to better understand our results, and can be used
to measure our ability to service debt, fund capital expenditures and expand
our business. However, such information should not be considered as an
alternative to net income, operating profit, cash from operations, or any
other operating or liquidity performance measure prescribed by accounting
principles generally accepted in the United States. Cash expenditures for
various long-term assets and income taxes have been, and will be incurred,
which are not reflected in the Comparative FFO and EBITDA presentations.
In addition, Comparative FFO and EBITDA as presented may not be comparable
to amounts calculated by other companies.
HOST
MARRIOTT CORPORATION
Hotel Operational Data
Comparable Property Statistics
(unaudited)
Comparable by Region
As of December 31, 2000
Sixteen weeks ended December 31, 2000
No. of No. of
Average Average
Properties (a) Rooms Daily Rate
Occupancy REVPAR
Percentages (b)
Atlanta
11 5,351
$159.10 68.9%
$109.65
Florida
11 4,878
148.89 72.0
107.26
Mid-Atlantic
17 6,194
152.37 73.1
111.42
Midwest
14 5,008
149.91 72.3
108.39
New York
9 5,778
256.03 87.4
223.64
Northeast
11 4,294
145.04 75.5
109.56
South Central
18 9,108
129.07 75.6
97.60
Western
27 13,288
167.37 75.0
125.47
All Regions
118 53,899
164.46 75.1
123.52
Sixteen weeks ended December 31, 1999
Average
Percent
Average Occupancy
REVPAR Change in
Daily Rate Percentages
(b)
REVPAR
Atlanta
$157.96 70.6%
$111.57 (1.7)%
Florida
142.58 71.5
101.94 5.2
Mid-Atlantic
135.77 73.3
99.48 12.0
Midwest
138.53 74.0
102.57 5.7
New York
243.02 87.1
211.74 5.6
Northeast
138.10 76.2
105.29 4.1
South Central
125.28 73.8
92.48 5.5
Western
154.00 73.3
112.90 11.1
All Regions
154.92 74.7
115.79 6.7
As of December 31, 2000
Year ended December 31, 2000
No. of No.
of Average
Average
Properties (a) Rooms Daily Rate
Occupancy REVPAR
Percentages (b)
Atlanta
11 5,351
$158.54 72.4%
$114.75
Florida
11 4,878
155.04 77.1
119.53
Mid-Atlantic
17 6,194
145.42 75.9
110.33
Midwest
14 5,008
141.00 75.2
106.03
New York
9 5,778
228.99 87.5
200.39
Northeast
11 4,294
138.28 76.8
106.15
South Central
18 9,108
125.55 78.1
98.01
Western
27 13,288
164.43 79.6
130.94
All Regions
118 53,899
157.96 78.2
123.50
Year ended December 31, 1999
Average
Percent
Average Occupancy
REVPAR Change in
Daily Rate Percentages
(b)
REVPAR
Atlanta
$148.78 74.7%
$111.12 3.3%
Florida
147.10 77.5
113.95 4.9
Mid-Atlantic
132.80 75.8
100.69 9.6
Midwest
132.75 76.6
101.71 4.2
New York
212.25 87.0
184.70 8.5
Northeast
129.93 77.2
100.32 5.8
South Central
123.44 76.5
94.45 3.8
Western
154.26 78.2
120.60 8.6
All Regions
148.61 77.9
115.82 6.6
Year ended December 31, 2000
Average
Average Occupancy
REVPAR REVPAR
Daily Rate Percentages
(b)
Premium
Competitive set (c)
$132.83 70.5%
$93.60 32%
Year ended December 31, 1999
Average
Average Occupancy
REVPAR REVPAR
Daily Rate Percentages
(b)
Premium
Competitive set (c)
$127.25 69.1%
$87.95 32%
Other Portfolio Statistics
As of December 31, 2000
Sixteen weeks ended
December 31, 2000
No. of No. of
Average Average
Properties Rooms Daily
Rate Occupancy REVPAR
Percentages (b)
Ritz-Carlton (d)
9 3,541
$234.11 72.8%
$170.31
Sixteen weeks ended December 31, 1999
Average
Percent
Average Occupancy
REVPAR Change in
Daily Rate Percentages (b)
REVPAR
Ritz-Carlton (d)
$215.72 73.5%
$158.61 7.4%
As of December 31, 2000 Year ended December
31, 2000
No. of No. of
Average Average
Properties Rooms Daily
Rate Occupancy REVPAR
Percentages (b)
Ritz-Carlton (d)
9 3,541
$231.09 77.6%
$179.21
Year ended December 31, 1999
Average
Percent
Average Occupancy
REVPAR Change in
Daily Rate Percentages (b)
REVPAR
Ritz-Carlton (d)
$213.67 77.5%
$165.57 8.2%
(a) Comparable properties consist of
the 118 properties owned, directly
or indirectly
by us for the same period of time in each period
covered, excluding
two properties where significant expansion at
the hotels
affected operations, one property that sustained
substantial
damage from a fire in the fourth quarter of 2000, and
Tampa Waterside
Marriott which opened in February, 2000.
(b) REVPAR represents room revenue
per available room, which measures
daily room
revenues generated on a per room basis, excluding food
and beverage
revenues or other ancillary revenues generated by the
property.
(c) Based on historical data provided
by Smith Travel Research, our
"competitive
set" refers to hotels in the upscale and luxury full
service segment
of the lodging industry and consists of Crowne
Plaza; Doubletree;
Hyatt; Hilton; Radisson; Renaissance; Sheraton;
Westin; and
Wyndham.
(d) Includes nine Ritz-Carlton properties
currently owned by us for all
periods presented.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Property Statistics by Region (All properties)
(unaudited)
As of December 31, 2000 Sixteen weeks ended December 31, 2000
No. of No. of
Average Average
Properties Rooms Daily Rate(a)
Occupancy
Percentages(a) REVPAR(a)
Atlanta
11 5,351
$159.10 68.9%
$109.65
Florida
13 7,595
151.60 70.1
106.28
Mid-Atlantic 17
6,194 152.37
73.1
111.42
Midwest
14 5,008
149.91 72.3
108.39
New York
10 7,186
243.55 82.8
201.55
Northeast
11 4,294
145.04 75.5
109.56
South Central 19
9,457 129.04
74.7
96.34
Western
27 13,288
167.37 75.0
125.47
All Regions 122
58,373 164.20
74.3
121.99
As of December 31, 1999 Sixteen weeks ended December 31, 1999
No. of No. of
Average
Average
Properties Rooms Daily Rate(b)
Occupancy
Percentages(b) REVPAR(b)
Atlanta
11 5,351
$157.96 70.6%
$111.57
Florida
12 6,367
147.16 71.1
104.60
Mid-Atlantic
17 6,195
135.77 73.3
99.48
Midwest
14 5,008
138.53 74.0
102.57
New York
10 7,163
231.35 83.6
193.35
Northeast
11 4,294
150.79 76.5
115.38
South Central 19
9,439 124.04
73.2
90.80
Western
27 13,269
154.00 73.3
112.90
All Regions
121 57,086
155.92 74.4
115.98
As of December 31, 2000 Sixteen weeks ended December 31, 2000
No. of No. of
Average Average
Properties Rooms Daily Rate(a)
Occupancy
Percentages(a) REVPAR(a)
Atlanta
11 5,351
$158.54 72.4%
$114.75
Florida
13 7,595
153.29 75.3
115.38
Mid-Atlantic 17
6,194 145.42
75.9
110.33
Midwest
14 5,008
141.00 75.2
106.03
New York
10 7,186
219.71 83.4
183.24
Northeast
11 4,294
138.28 76.8
106.15
South Central 19
9,457 126.72
77.4
98.13
Western
27 13,288
164.43 79.6
130.94
All Regions 122
58,373 157.93
77.5
122.43
As of December 31, 1999 Sixteen weeks ended December 31, 1999
No. of No. of
Average Average
Properties Rooms Daily Rate(b)
Occupancy
Percentages(b)
REVPAR(b)
Atlanta
11 5,351
$148.78 74.7%
$111.12
Florida
12 6,367
149.75 77.1
115.51
Mid-Atlantic 17
6,195 132.80
75.8 100.69
Midwest
14 5,008
132.19 76.6
101.24
New York
10 7,163
203.16 84.0
170.70
Northeast
11 4,294
140.99 77.4
109.07
South Central 19
9,439 123.25
76.2 93.89
Western
27 13,269
154.26 78.2
120.60
All Regions 121
57,086 149.51
77.7 116.13
(a) The operating results include operations
for the Tampa Waterside
Marriott,
which opened February 19, 2000.
(b) The operating results include operations
for five hotels (1,577
rooms) which
were sold at various times in 1999.
(a) The schedules of property-level
results represent the unaudited
results of operations of our leased properties. In connection with
the REIT conversion substantially all of these properties were
leased to Crestline Capital Corporation. Hotel operators conduct
the day to day management of the hotels pursuant to management
agreements with Crestline. Therefore, the hotel sales, costs, or
other expenses, including management fees, are not included in our
results of operations for the sixteen weeks ended and the year ended
December 31, 2000 and 1999, but rather are the sales and expenses of
our lessees with the exception of property-level owner expenses
which are Host REIT's for all periods presented. Additionally, the
sales and expenses are not subject to our system of internal
accounting controls. We have presented this information because we
feel that it may be useful to investors in determining the
unleveraged economic value of our properties. However, this should
not be deemed to be a method for the calculation of the market value
of either Host REIT or the hotel properties. It also does not
represent the value at which we could sell the properties on the
open market. Property-level hotel profit does not reflect
significant costs such as the requirements of the lease and
management agreements including the amounts due to the lessee of the
properties in the determination of the property-level profit.
Additionally, our management and lease agreements restrict our
ability to sell properties without incurring significant fees for
termination of these agreements.
(b) Comparable properties
consist of the 118 properties owned, directly
or indirectly by us for the same period of time in each period
covered, excluding two properties where significant expansion at the
hotels affected operations, one property that sustained substantial
fire damage in the fourth quarter of 2000, and Tampa Waterside
Marriott which opened in February, 2000.
(c) Hotel sales amounts
represent the unaudited comparable gross hotel
sales, which includes room, food and beverage and other hotel
revenues generated by the properties. Gross hotels sales are
presented here to provide a means of comparison of property-level
results which investors may find useful. However, these gross sales
do not represent our reported results of operations. Our rental
income under each lease is the greater of base or percentage rent as
defined in the lease agreements. Percentage rent applicable to
room, food and beverage, and other types of hotel revenue varies by
lease and is calculated by multiplying fixed percentages by the
total amount of such revenues over specified threshold amounts. Both
the minimum rents and the revenue thresholds used in computing
percentage rents are subject to annual adjustments based on
increases in the United States Consumer Price Index and the Labor
Index, as defined in the lease agreements.
(d) These amounts represent
our direct obligations as owner of the hotel
properties as well as management fees and other expenses such as
permit and license fees and certain taxes which are obligations of
the lessee. Our direct obligations are primarily insurance, ground
rent, property taxes and rental payments on certain leased hotel
properties. Management fees represent amounts paid to Marriott
International and other hotel operators under management agreements
with Crestline. These agreements generally provide for payment of
base management fees equal to one to four percent of sales and
incentive management fees generally equal to 20% to 50% of operating
profit (as defined in the agreements) over a priority return to the
lessee, with total incentive management fees not to exceed 20% of
cumulative operating profit, or 20% of current year operating
profit. We remain obligated to the hotel operators in case the
lessee fails to pay these fees (but we would be entitled to
reimbursement from the lessee under the terms of the leases). The
management fees and other expenses of the lessee are not included in
our results of operations or net income for all periods presented.
(e) As stated above, these
results represent property-level results and
are not the revenues or operating profit of Host REIT. Further,
certain significant cost items normally recorded under accounting
principles generally accepted in the United States including lease
payments, depreciation and amortization have not been included in
the calculation of property-level profit. Additionally, the
property-level profit does not reflect our EBITDA reported herein or
that of our lessee.
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HOST MARRIOTT CORPORATION
Select Development and Expansion Data
(unaudited, in millions)
Project
Expected
Estimated
Description
Completion
Total
Date
Investment
(a)
Tampa Waterside 717 room new hotel
Opened February 2000 104
Marriott Orlando 500 room expansion
Completed June 21, 2000 88
World Center
Ritz-Carlton
50,000 sq. foot spa April 15, 2001
23
Naples Spa
Marriott Harbor 20,000 sq. foot addition
May 31, 2001 7
Beach Resort Spa
Ritz-Carlton
295 room hotel December
1, 2001 75
Naples Golf Resort
Coronado Island Resort spa addition
June 1, 2001 10
Resort Spa
Memphis Marriott 200 room expansion
April 1, 2002 16
(a) Represents estimated total cost (unleveraged) to construct
the designated development or expansion project |
Host Marriott is a lodging real estate company
which currently owns or holds controlling interests in 122 upscale and
luxury hotel properties primarily operated under premium brands such as
Marriott, Ritz-Carlton, Hyatt, Four Seasons, Hilton, and Swissotel.
This press release includes various
references to Comparative FFO and EBITDA. Comparative FFO represents Funds
From Operations, as defined by the National Association of Real Estate
Investment Trusts, adjusted for contingent rental revenues and substantial
non-recurring items, including the loss recognized on the repurchase of
leases from Crestline in 2000, the loss on the settlement of litigation
in 1999, and the relief of tax reserves upon the resolution of IRS audits
for years prior to our REIT conversion in both years. If these items were
not included in our Comparative FFO, then our funds from operations available
to common unitholders would be $459 million and $492 million for the sixteen
weeks ended December 31, 2000 and 1999, respectively, and $519 million
and $533 million for the years then ended. We consider Comparative FFO
and EBITDA to be indicative measures of our operating performance, due
to the significance of our long-lived assets and because such data is considered
useful by the investment community to better understand our results, and
can be used to measure our ability to service debt, fund capital expenditures,
and expand our business. However, such information should not be considered
as an alternative to net income, operating profit, cash from operations,
or any other operating or liquidity performance measure prescribed by accounting
principles generally accepted in the United States. Cash expenditures for
various long-term assets, interest expense (for EBITDA purposes only) and
income taxes that have been, and will be, incurred are not reflected in
the Comparative FFO and EBITDA presentations. Although FFO and EBITDA
are considered standard benchmarks utilized by the investment community,
our Comparative FFO and EBITDA may not be comparable to similarly titled
measures reported by other companies.
Certain matters discussed in this
press release are forward-looking statements within the meaning of federal
securities regulations. All forward- looking statements involve known
and unknown risks, uncertainties, and other factors which may cause the
actual transactions, results, performance, or achievements to be materially
different from any future transactions, results, performance, or achievements
expressed or implied by such forward-looking statements.
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