Company Press Release: Host Marriott Corporation
May 5, 2000
BETHESDA, MD -- Host Marriott Corporation (NYSE: HMT) yesterday reported its first quarter 2000 results of operations,
noting that diluted Comparative Funds From Operations per share (``Comparative FFO,'' which represents Funds From
Operations, as defined by the National Association of Real Estate Investment Trusts, plus contingent rental revenues)
was $.39 per diluted share for the quarter, an improvement over first quarter 1999 Comparative FFO of $.38 per
diluted share. The company also reported that Earnings Before Interest Expense, Income Taxes, Depreciation and
Amortization and other non-cash items (``EBITDA'') from continuing operations was $231 million for the 2000 first
quarter, an increase of 2.2 percent over EBITDA of $226 million in the 1999 first quarter. Comparative FFO and
EBITDA growth were driven by an increase in room revenue per available room (``REVPAR'') of 3.3 percent for the
company's comparable hotels for the first quarter, partially offset by operations from hotel properties sold during
1999.
Mr. Christopher J. Nassetta, president and chief executive officer elect, stated, ``During the first quarter of
2000, we achieved strong operating results, exceeding our earlier expectations, despite a slow start in early January.
Our hotel operations improved throughout the quarter as a result of much stronger than expected economic growth
and a significant increase in short-term group bookings. We continue to benefit from 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.''
Mr. Nassetta noted, ``Our focus continues to be on strategically deploying our capital to improve returns to our
shareholders. During the first quarter, we continued our stock buyback plan and acquired the equivalent of 6.6
million shares of our stock for approximately $62 million. Since initiating our stock buyback plan, we have purchased
the equivalent of approximately 16.2 million shares spending approximately $150 million. We are pleased by the
recent improvement in our stock price, however, we continue to believe the current stock price represents a significant
discount to our net asset value.''
The company also announced that during the first quarter, it completed construction of the 717-room, full-service
Tampa Waterside Marriott. The hotel is adjacent to the convention center in downtown Tampa, Florida, and includes
45,000 square feet of meeting space, three restaurants and a 30-slip marina, as well as numerous other amenities.
In addition, our Singer Island hotel was reflagged to the Hilton brand on April 6, 2000 and is near completion
of a major renovation.
Mr. Robert E. Parsons, executive vice president and chief financial officer, stated, ``The new Tampa hotel is an
exceptionally high quality asset. We are pleased with the initial market acceptance and strong group bookings.
Hotel operations and sales levels have already exceeded our original expectations.''
Mr. Parsons added, ``In addition to the Tampa property, 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 2000,
these high-yielding investments will include projects such as the 500- room expansion of the Orlando World Center
Marriott and the 295-room golf resort expansion of the Ritz-Carlton, Naples, as well as spa additions at the Ritz-Carlton,
Naples and the Ft. Lauderdale Harbor Beach Marriott.''
Mr. Parsons noted, ``During the quarter we completed the refinancing of the mortgage on the Ft. Lauderdale Harbor
Beach Marriott and now have no significant debt maturities within the next two years. Since approximately 96 percent
of our debt is now at fixed interest rates, we are well insulated against increases in interest rates. ''
Our hotel revenues reflect rental income from leases, which are calculated based on hotel-level sales. First quarter
2000 hotel sales were $958 million, a 2.9 percent increase over 1999 first quarter hotel sales of $931 million.
We reported first quarter 2000 rental income of $173 million versus $171 million for the first quarter 1999. The
reported amounts for 2000 and 1999 exclude contingent rent deferred under SEC regulations (Staff Accounting Bulletin
101, ``SAB 101'') of $123 million and $115 million, 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 March 24, 2000 increased to $58 million compared
to a net loss of $44 million for the quarter ended March 26, 1999. First quarter 2000 results include $5.1 million
in dividends on preferred stock, which were 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. 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 would be $0 and $4 million for the twelve weeks ended March 24, 2000 and March
26, 1999, respectively. Funds from operations would be $.00 and $.02 per basic share 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 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