Company Press Release: Host Marriott Corporation
July 20, 2000
Introduction
The following financial data is presented in order to help our investors understand the financial position and
operations of the company as of June 16, 2000. In this press release we present certain information regarding Comparative
FFO and EBITDA 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 77% owned operating partnership which, directly or through subsidiaries, owns all of our hotels. When
distinguishing between Host REIT and Host LP, the primary difference is the 23% ownership by outside partners in
Host LP, which is reflected for financial reporting purposes as minority interest in our balance sheet and minority
interest expense in our income statement. We have included below a brief discussion of these entities and their
relationship to one another. Readers are encouraged to find further detail regarding our corporate structure in
our annual report on Form 10-K for the year ended December 31, 1999.
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 77% 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 purposes of determining diluted earnings per share, diluted Comparative FFO per share and EBITDA (all of which
are defined herein) we consider all of the outstanding OP Units not held by Host REIT to have been exchanged for
common stock.
Host Marriott Corporation
Consolidated Balance Sheets (a)
(unaudited, in millions)
June 16, December 31,
2000 1999
ASSETS
Property and equipment, net $7,108 $7,108
Notes and other receivables
(including amounts due from
affiliates of $125 million and
$127 million, respectively) 173 175
Rent receivable 89 72
Investments in affiliates 96 49
Other assets 545 521
Cash and cash equivalents 155 277
$8,166 $8,202
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt
Senior notes $2,539 $2,539
Mortgage debt 2,296 2,309
Other 272 221
5,107 5,069
Accounts payable and accrued expenses 143 148
Deferred income taxes 48 49
Deferred rent 291 --
Other liabilities 396 426
Total liabilities 5,985 5,692
Minority interest 440 508
Company-obligated mandatorily redeemable
convertible preferred securities of a
subsidiary whose sole assets are the
convertible subordinated debentures due
2026 ("Convertible Preferred Securities") 475 497
Shareholders' equity
Cumulative redeemable preferred stock,
50 million shares authorized; 8.2 million
shares issued and outstanding 196 196
Common stock, 750 million shares authorized;
220.2 million shares and 223.5 million
shares issued and outstanding,
respectively 2 2
Additional paid-in capital 1,816 1,844
Accumulated other comprehensive income 3 2
Retained deficit (751) (539)
Total shareholders' equity 1,266 1,505
$8,166 $8,202
Host Marriott Corporation
Consolidated Statement of Operations (a)
(Unaudited, in millions, except per share amounts)
Twelve weeks ended Twenty-four weeks ended
June 16, June 18, June 16, June 18,
2000 1999 2000 1999
Revenues
Rental income (b) $183 $187 $356 $358
Interest income 8 8 17 16
Other 8 8 11 21
Total revenues 199 203 384 395
Expenses
Depreciation and
amortization 75 67 149 135
Property-level
owner expenses 63 62 122 120
Minority interest
benefit (b) (11) (5) (22) (13)
Interest expense 97 101 193 200
Dividends on
convertible
preferred securities
of subsidiary trust 7 8 14 17
Corporate expenses 10 8 20 15
Other expenses 6 5 12 7
Total expenses 247 246 488 481
Loss before income
taxes (48) (43) (104) (86)
Provision for income
taxes (2) (1) (3) (2)
Loss before
extraordinary items (50) (44) (107) (88)
Extraordinary
gain (loss) (3) 13 (3) 13
Net loss (53) (31) (110) (75)
Less:
Preferred dividends (5) -- (10) --
Add:
Gain on repurchase
of Convertible
Preferred Securities -- -- 4 --
Net loss available
to common
shareholders $(58) $(31) $(116) $(75)
Basic loss per
common share $(.26) $(.14) $(.53) $(.33)
Diluted loss per
common share $(.26) $(.14) $(.53) $(.33)
Host Marriott Corporation
Reconciliation of Earnings per Share
(unaudited, in millions, except per share amounts)
Twelve weeks ended June 16, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Net Loss $(53) 220.1 $(.24)
Dividends on
preferred stock (5) -- (.02)
Gain on repurchase
of Convertible
Preferred Securities -- -- --
Basic loss available to
common shareholders
per share (58) 220.1 (.26)
Assuming distribution of
common shares granted
under the comprehensive
stock plan, less shares
assumed purchased at
average market price (d) -- -- --
Assuming conversion of
minority OP Units
outstanding (b) (16) 63.5 --
Assuming conversion of
preferred OP Units (c) -- .6 --
Assuming conversion of
minority OP Units
issuable (d) -- -- --
Assuming conversion of
Convertible Preferred
Securities (d) -- -- --
Diluted Loss per Share $(74) 284.2 $(.26)
Twelve weeks ended June 18, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Net Loss $(31) 227.9 $(.14)
Dividends on
preferred stock -- -- --
Gain on repurchase
of Convertible
Preferred Securities -- -- --
Basic loss available to
common shareholders
per share (31) 227.9 (.14)
Assuming distribution of
common shares granted
under the comprehensive
stock plan, less shares
assumed purchased at
average market price (d) -- -- --
Assuming conversion of
minority OP Units
outstanding (b) (12) 64.6 --
Assuming conversion of
preferred OP Units (c) -- -- --
Assuming conversion of
minority OP Units
issuable (d) -- -- --
Assuming conversion of
Convertible Preferred
Securities (d) -- -- --
Diluted Loss per Share $(43) 292.5 $(.14)
Twenty-four weeks ended June 16, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Net Loss $(110) 220.7 $(.50)
Dividends on
preferred stock (10) -- (.05)
Gain on repurchase
of Convertible
Preferred Securities 4 -- .02
Basic loss available to
common shareholders
per share (116) 220.7 (.53)
Assuming distribution of
common shares granted
under the comprehensive
stock plan, less shares
assumed purchased at
average market price (d) -- -- --
Assuming conversion of
minority OP Units
outstanding (b) (34) 63.7 --
Assuming conversion of
preferred OP Units (c) -- .6 --
Assuming conversion of
minority OP Units
issuable (d) -- -- --
Assuming conversion of
Convertible Preferred
Securities (d) -- -- --
Diluted Loss per Share $(150) 285.0 $(.53)
Twenty-four weeks ended June 18, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Net Loss $(75) 227.4 $(.33)
Dividends on
preferred stock -- -- --
Gain on repurchase
of Convertible
Preferred Securities -- -- --
Basic loss available to
common shareholders
per share (75) 227.4 (.33)
Assuming distribution of
common shares granted
under the comprehensive
stock plan, less shares
assumed purchased at
average market price (d) -- -- --
Assuming conversion of
minority OP Units
outstanding (b) (24) 64.6 --
Assuming conversion of
preferred OP Units (c) -- -- --
Assuming conversion of
minority OP Units
issuable (d) -- -- --
Assuming conversion of
Convertible Preferred
Securities (d) -- -- --
Diluted Loss per Share $(99) 292.0 $(.33)
Host Marriott Corporation
Comparative Funds From Operations (a)
(unaudited, in millions, except per share amounts)
Twelve weeks ended Twenty-four weeks ended
June 16, June 18, June 16, June 18,
2000 1999 2000 1999
Funds from Operations
Loss before
extraordinary items $(50) $(44) $(107) $(88)
Depreciation and
amortization 74 67 146 135
Other real estate
activities (1) (5) (1) (16)
Partnership
adjustments (12) -- (22) (9)
Funds from operations
of Host LP 11 18 16 22
Effect on funds from
operations of SAB
101 (a) 166 134 285 247
Comparative funds from
operations of
Host LP 177 152 301 269
Dividends on
preferred stock (5) -- (10) --
Comparative funds from
operations of Host
LP available to
common unitholders 172 152 291 269
Comparative funds from
operations of
minority partners
of Host LP (b) (39) (34) (66) (60)
Comparative funds from
operations available
to common
shareholders of
Host REIT $133 $118 $225 $209
Comparative funds from
operations of Host
REIT per basic
common share (c) $0.60 $0.52 $1.02 $0.92
Comparative funds from
operations of Host
REIT per diluted
common share (d) $0.55 $0.48 $0.94 $0.86
The deferrals under SAB 101 would have impacted funds from operations by $166 million and $134 million, respectively, and $285 million and $247 million, respectively, for the twelve weeks and twenty-four weeks ended June 16, 2000 and June 18, 1999, respectively. Rental revenues would have been increased by $168 million and $138 million, respectively, and $291 million and $253 million, respectively, for the twelve weeks and twenty-four weeks ended June 16, 2000 and June 18, 1999, respectively. Partnership adjustments would have been reduced by $2 million and $4 million, respectively, and $6 million and $6 million, respectively, for the same periods. 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, respectively, and $6 million and $22 million, respectively, for the twelve weeks and twenty-four weeks ended June 16, 2000 and June 18, 1999, respectively. Funds from operations per basic and diluted share would be $.02 and $.06, respectively, and $.02 and $.07, respectively for the same periods. Funds from operations per diluted share would equal funds from operations per basic share for the same periods because the Convertible Preferred Securities and other adjustments would be antidilutive or have no impact for all periods presented.
During the above reorganization, Host REIT received a number of units of general and limited partnership interests
in the Operating Partnership -- which we refer to as OP Units - equal to the number of the then outstanding shares
of Host REIT common stock, and Host LP assumed all of the liabilities of Host REIT. As a result of this reorganization
we are the sole general partner in Host LP and as of June 16, 2000 held approximately 77% of the outstanding OP
Units. The $39 million and $34 million, respectively, deducted for the twelve weeks ended and $66 million and $60
million, respectively, deducted for the twenty-four weeks ended June 16, 2000 and June 18, 1999, respectively,
represent the Comparative FFO attributable to the interests in Host LP held by the 23% minority partners. OP Units
owned by holders other than us are redeemable at the option of the holder, generally commencing one year after
the issuance of their OP Units. Upon redemption of an OP Unit, the holder would receive from Host LP cash in an
amount equal to the market value of one share of our common stock, or at our option, a share of our common stock.
For additional detail regarding the reorganization and our operating structure investors should read our annual
report on Form 10-K for the year ended December 31, 1999.
Host Marriott Corporation
Reconciliation of Comparative Funds From
Operations on a per Share Basis (a)
(unaudited, in millions, except per share basis)
Twelve weeks ended June 16, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations
available to common
shareholders $133 220.1 $0.60
Assuming distribution
of common shares granted
under the comprehensive
stock plan, less shares
assumed purchased at
average market price -- 4.4 (0.01)
Assuming conversion of
minority OP Units
outstanding (b) 39 63.5 --
Assuming conversion of
preferred OP Units(c) -- 0.6 --
Assuming conversion of
minority OP units
issuable (c) 4 10.1 (0.01)
Assuming conversion of
Convertible Preferred
Securities 7 31.1 (0.03)
Diluted Comparative Funds
from Operations $183 329.8 $0.55
Twelve weeks ended June 18, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations
available to common
shareholders $118 227.9 $0.52
Assuming distribution
of common shares
granted under the
comprehensive stock
plan, less shares
assumed purchased at
average market price -- 5.7 (0.01)
Assuming conversion of
minority OP Units
outstanding (b) 34 64.6 --
Assuming conversion of
preferred OP Units(c) -- 0.6 --
Assuming conversion of
minority OP Units
issuable (c) 4 8.7 --
Assuming conversion of
Convertible Preferred
Securities 8 35.8 (0.03)
Diluted Comparative Funds
from Operations $164 343.3 $0.48
Twenty-four weeks ended June 16, 2000
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations
available to common
shareholders $225 220.7 $1.02
Assuming distribution
of common shares
granted under the
comprehensive stock plan,
less shares assumed
purchased at average
market price -- 4.4 (0.02)
Assuming conversion of
minority OP Units
outstanding (b) 66 63.7 --
Assuming conversion of
preferred OP Units(c) -- 0.6 --
Assuming conversion of
minority OP units
issuable (c) 8 10.1 (0.01)
Assuming conversion of
Convertible Preferred
Securities 14 31.1 (0.05)
Diluted Comparative Funds
from Operations $313 330.6 $0.94
Twenty-four weeks ended June 18, 1999
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic Comparative Funds
from Operations
available to common
shareholders $209 227.4 $0.92
Assuming distribution
of common shares
granted under the
comprehensive stock plan,
less shares assumed
purchased at average
market price -- 5.7 (0.02)
Assuming conversion of
minority OP Units
outstanding (b) 60 64.6 --
Assuming conversion of
preferred OP Units(c) -- 0.6 --
Assuming conversion of
minority OP units
issuable (c) 8 8.6 --
Assuming conversion of
Convertible Preferred
Securities 17 35.8 (0.04)
Diluted Comparative Funds
from Operations $294 342.7 $0.86
SOURCE: Host Marriott Corporation