Company Press Release: Host Marriott Corporation
July 21, 2000
BETHESDA, MD -- Host Marriott Corporation (NYSE: HMT) yesterday reported record diluted Comparative Funds From
Operations per share for the second quarter 2000 of $.55 per diluted share, an improvement of nearly 15 percent
over second quarter 1999. On a year-to-date basis, diluted Comparative FFO per share increased over 9 percent to
$.94 per diluted share versus 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 $282 million
for the 2000 second quarter and $513 million year-to-date, an increase of eleven percent and seven percent, respectively,
over EBITDA for the same periods in 1999.
The company also reported that REVPAR at its comparable hotels grew by seven percent in the 2000 second quarter
over the prior year. Excluding nine additional properties which were impacted by substantial construction or renovation,
REVPAR grew by 8.2 percent in the second quarter.
Mr. Christopher J. Nassetta, president and chief executive officer, stated, ``We are exceptionally pleased with
our operating results in the second quarter which significantly exceeded both our and market expectations. The
improvement in our hotel operations in the second quarter is a result of much stronger than expected economic growth
and continued strength in both short- term group bookings and from individual business travelers. Our core strategy
of focusing on high-quality urban, airport and resort/convention hotels located in strong markets with high barriers
to entry and strong brand affiliations continues to be validated by our outstanding results.''
Mr. Nassetta added, ``We continue to look for opportunities to make prudent investments which provide superior
returns on our invested capital and improve the long-term value of our assets. During the second quarter, we acquired
a controlling economic interest in the 772-room JW Marriott Hotel, which is ideally located just two blocks from
the White House in Washington, DC. In addition, the Orlando World Center Marriott hotel recently completed a major
renovation, including the addition of 500 hotel rooms and an additional 15,000 square feet of meeting space to
an already spectacular property.''
Mr. Robert E. Parsons, executive vice president and chief financial officer, stated, ``In addition to the strategic
deployment of capital, we continue to strengthen our balance sheet and maximize our financial flexibility. For
example, during the second quarter, we successfully modified our revolving line of credit and term loan facility
to obtain more flexible terms and extend the life of the revolver by two years. With initiatives such as this,
we feel we are well prepared to take advantage of opportunities the market may offer us in the future.''
Mr. Parsons also noted that, ``We continue to evaluate market conditions and will repurchase our stock and reduce
debt as opportunities present themselves to sell assets that do not meet our core portfolio profile or present
unique opportunities to unlock value from our hotel assets.''
Our hotel revenues reflect rental income from leases, which are calculated based on hotel-level sales. Second quarter
2000 hotel sales were $1,122 million, a six percent increase over 1999 second quarter hotel sales of $1,054 million.
Year-to-date hotel sales for 2000 were $2,080 million, an increase of five percent over 1999 year-to-date hotel
sales of $1,985 million. We reported second quarter 2000 rental income of $183 million versus $187 million for
the second quarter 1999 and year-to-date 2000 rental income of $356 million versus $358 million for year-to-date
1999. The reported rental income amounts for 2000 and 1999 exclude contingent rent deferred under SEC regulations
(Staff Accounting Bulletin 101, ``SAB 101'') of $168 million and $138 million for the second quarter 2000 and 1999
and $291 million and $253 million year-to-date 2000 and 1999, respectively, because they are contingent upon achieving
annual levels of hotel sales. The adoption of SAB 101 will have no impact on the full year 2000 results.
The net loss available to common shareholders for the quarter ended June 16, 2000 increased to $58 million compared
to $31 million for the quarter ended June 18, 1999. For the twenty-four weeks ended June 16, 2000, the net loss
available to common shareholders increased to $116 million compared to $75 million for the twenty-four weeks ended
June 18, 1999. Second quarter and year-to-date 2000 results include $5.1 million and $10.2 million, respectively,
in dividends on preferred stock, which was issued during the second half of 1999.
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. For further information, please visit the company's website at www.hostmarriott.com.
This press release includes various references to Comparative FFO and EBITDA. Comparative FFO represents Funds
From Operations, as defined by the National Association of Real Estate Investment Trusts, plus contingent rental
revenues. 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 generally accepted
accounting principles. 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 Comparative 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. Our
Comparative FFO calculation includes contingent rent, which is required to be deferred during interim periods under
SAB 101, but which will be fully realized at year-end under the terms of our leases. If such contingent rent were
not included in our Comparative FFO, then our funds from operations available to common unitholders would be $6
and $18 million for the twelve weeks and $6 and $22 million for the twenty-four weeks ended June 16, 2000 and June
18, 1999, respectively. Funds from operations would be $.02 and $.06 per basic and diluted share for the twelve
weeks ended and $.02 and $.07 per basic and diluted share for the twenty-four weeks ended for the same periods,
respectively. In the calculation of funds from operations per diluted share, the Convertible Preferred Securities
and other adjustments are anti-dilutive or have no impact for both periods.
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. Future
transactions, results, performance and achievements will be affected by general economic, business and financing
conditions, competition and governmental actions.
The cautionary statements set forth in reports filed with the Securities and Exchange Commission contain important
factors with respect to such forward-looking statements, including: (i) national and local economic and business
conditions that will, among other things, affect demand for hotels and other properties and the availability and
terms of financing; (ii) the ability to maintain the properties in a first-class manner (including meeting capital
expenditure requirements); (iii) the ability to compete effectively in areas such as access, location, quality
of accommodations and room rate structure; (iv) the ability to acquire or develop additional properties and risk
that potential acquisitions or developments may not perform in accordance with expectations; (v) changes in travel
patterns, taxes and government regulations; (vi) governmental approvals, actions and initiatives; (vii) the effects
of tax legislative action; and (viii) the ability of the company to satisfy complex rules in order to qualify for
taxation as a REIT for federal income tax purposes and to operate effectively within the limitations imposed by
these rules. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable
assumptions, we can give no assurance that our expectations will be attained or that any deviations will not be
material. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements
that may be made to reflect any future events or circumstances.
Tables to follow ***
SOURCE: Host Marriott Corporation