Company Press Release
HOST MARRIOTT CORPORATION
EBITDA (a)
(unaudited, in millions)
Twelve weeks ended
March 24, 2000 March 26, 1999
EBITDA
Hotels $114 $114
Office buildings -- --
Interest income 9 8
Corporate and other expenses (15) (11)
Effect on revenue of SAB 101 123 115
EBITDA of Host LP 231 226
Distributions to minority interest
partners of Host LP (b) (13) (14)
EBITDA of Host REIT $218 $212
Twelve weeks ended
March 24, 2000 March 26, 1999
EBITDA of Host REIT $218 $212
Effect on revenue of SAB 101 (123) (115)
Interest expense (96) (99)
Income taxes (1) (1)
Dividends on Convertible Preferred Securities (7) (9)
Depreciation and amortization (74) (68)
Minority interest benefit 11 8
Distributions to minority interest partners
of Host LP 13 14
Other non-cash changes, net 2 14
Net loss $(57) $(44)
(a) We consider our consolidated earnings before interest expense, income
taxes, depreciation, amortization, and other non-cash items (including
contingent rental revenue) ("EBITDA") to be an indicative measure 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 and income taxes have been,
and will be incurred which are not reflected in the EBITDA
presentation.
(b) Host REIT holds approximately 77% of the outstanding OP Units of Host
LP. The $13 million and $14 million in distributions for the twelve
weeks ended March 24, 2000 and March 26, 1999, respectively, reflect
distributions to minority holders of OP Units and holders of certain
preferred OP units. These units are convertible into cash or common
stock of Host REIT at Host REIT's option. Distributions of $0.21 per
unit were declared on March 23, 2000 and March 26, 1999, and paid on
April 14, 2000 and April 14, 1999.
HOST MARRIOTT CORPORATION
Other Financial Data
(unaudited, in millions, except per share and ratio data)
March 24, 2000 December 31, 1999
Capitalization
Diluted common shares outstanding,
excluding Convertible Preferred Securities (a) 299 304
Security pricing:
Share price - common (b) $8.88 $8.25
Share price - Class A Preferred stock (b) $20.63 $18.50
Share price - Class B Preferred stock (b) $20.48 $18.50
Share price - Convertible Preferred
Securities (b) $30.75 $34.25
Total enterprise value (c) $8,055 $7,794
Equity
Common shares outstanding 219.8 223.5
Common OP Units outstanding 283.4 287.5
Class A Preferred shares outstanding 4.2 4.2
Class B Preferred shares outstanding 4.0 4.0
Dividends (per share)
Common (d) $.21 $.84
Common dividend yield (f) 9% 10%
Common dividend payout ratio
(Common dividends/Net income) (g) n/a 88%
Comparative FFO payout ratio
(Common dividends/Comparative FFO) (g)(h) 50% 44%
Class A Preferred (e) $.63 $1.13
Class B Preferred (e) $.63 $.33
Debt
Percentage fixed rate 96% 96%
Weighted average rate 8.1% 8.1%
Weighted average maturity 7.9 years 7.9 years
Line of Credit, available balance (i) $900 $900
Line of Credit, outstanding balance (i) $125 $125
Financial Ratios
Interest coverage ratio
(EBITDA/cash interest expense) (j) (k) 2.4x 2.4x
Ratio of Earnings to Fixed Charges(l) 1.5x 1.5x
Debt service coverage ratio
(EBITDA/(interest + principal payments)) (j) 2.2x 2.2x
Debt as a percentage of total enterprise value 63% 65%
(a) Includes the number of shares of common stock outstanding plus shares
granted under comprehensive stock plans and those common and preferred
OP Units issuable or outstanding that are held by minority partners
which are assumed to be converted. We have repurchased approximately
325,000 OP Units during the first quarter of 2000 for $2.9 million.
(b) Share prices are the closing price on the balance sheet date, as
reported by the New York Stock Exchange for the common and preferred
stock. The shares of Convertible Preferred Securities are not traded
on an exchange. The per share price is the higher of the buy or sell
price as provided by the trading desk for Goldman Sachs in New York,
New York. We have repurchased approximately 4.9 million common shares
and approximately 435,000 shares of Convertible Preferred Securities
during the first quarter of 2000 for $58.6 million.
(c) Total enterprise value is calculated as the fair value of our debt,
plus the Class A and Class B Preferred Stock, diluted common shares
outstanding excluding Convertible Preferred Securities as computed in
footnote (a), and the Convertible Preferred Securities multiplied by
the closing stock prices on the balance sheet date, less cash. Total
enterprise value is based on a market price as of the balance sheet
date and should not be deemed to represent the fair market value of
the company.
(d) On March 23, 2000, we declared a quarterly dividend of $.21 per common
share, which was paid on April 14, 2000. Consistent with federal
income tax regulation for REITs, which require that we distribute at
least 95% of our current year earnings and profits on a tax basis, we
have estimated the annualized dividend to be $.84 per share for common
shareholders in 2000. The responsibility to declare dividends is the
sole responsibility of our board of directors, who have not declared a
dividend other than for the first quarter, and so this annualized
amount may not reflect the actual dividend, if any, to common
shareholders. Throughout 1999, we declared a quarterly dividend of
$.21 per common share, totaling $0.84 per common share for the year,
of which $.63 was distributed as of year end. The 1999 fourth quarter
dividend of $0.21 per common share, was paid on January 17, 2000.
(e) 2000 dividends reflect a cash dividend of $0.625 per share of Class A
and Class B Preferred Stock, which was declared on March 23, 2000 and
paid on April 14, 2000. 1999 dividends reflect the pro rata dividend,
based on the stated rate of 10% per annum on a liquidation value of
$25 per share for both classes, from the date of issuance of each
respective class through the end of the year. On an annualized basis
the Class A and Class B Preferred Stock will earn $2.50 per share.
(f) The dividend yield ratio is calculated using the 2000 annualized
dividend to common shareholders as computed in footnote (d) and the
1999 annual dividend to common shareholders divided by the closing
stock price for common shares as of the respective balance sheet
dates.
(g) Dividends used for the calculation of the dividend payout ratio and
Comparative FFO payout ratio include, per basic share, the first
quarter 2000 dividend to common shareholders, as computed in footnote
(d), and the 1999 annual dividend to common shareholders.
(h) The Comparative FFO payout ratio has been calculated using Comparative
FFO available to common shareholders, per basic share.
(i) We established a $1.25 billion line of credit in August 1998 with a
consortium of lending institutions of which $350 million was a term
loan and the remaining $900 million balance in a revolving line of
credit. In 1999, we paid down $225 million of the outstanding balance
on the term loan. These repayments permanently reduced the term loan
portion to $125 million and the total amount of the line to $1.025
billion. On April 27, 2000, we borrowed $40 million under the revolver
portion of the line of credit. As a result, the available capacity
under the line of credit was reduced to $860 million, and the total
line remains $1.025 billion.
(j) These coverage ratios have been calculated using EBITDA of Host LP.
The financial ratios are not calculated in the same manner as required
by the indentures for the senior notes and the line of credit.
Calculation of these ratios consistent with those indentures would
require, among other items, presentation of certain pro forma
financial information, which has not been provided. These ratios are
intended to provide an investor with an understanding of our ability
to make interest and principal payments on our current debt structure.
(k) Cash interest is calculated as interest expense under generally
accepted accounting principles less amortization of deferred costs and
other non-cash interest expense, plus capitalized interest.
(l) The ratio of earnings to fixed charges for the first quarter of 2000
has been adjusted to include in earnings contingent rental revenue
deferred under SAB 101. Without this adjustment, we would show a
deficiency of earnings to fixed charges of $68 million.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Property Statistics
(unaudited)
Comparable by Region
As of March 24, 2000 Twelve weeks ended March 24, 2000
Average
No. of No. of Average Occupancy
Properties(a) Rooms Daily Rate Percentages REVPAR(b)
Atlanta 11 5,351 $165.56 77.3% $128.01
Florida 11 4,864 183.42 84.2 154.45
Mid-Atlantic 16 5,791 137.41 69.3 95.22
Midwest 13 4,688 125.76 69.0 86.73
New York 9 5,753 210.62 83.6 176.03
Northeast 10 3,935 121.83 67.2 81.92
South Central 19 9,439 137.77 77.1 106.27
Western 25 12,539 168.19 79.2 133.26
All Regions 114 52,360 159.51 76.7 122.38
Competitive set(c) $133.89 68.0% $91.11
Twelve weeks ended March 26, 1999
Average Percent
Average Occupancy Change in
Daily Rate Percentages REVPAR(b) REVPAR
Atlanta $147.13 78.8% $115.91 10.4%
Florida 178.03 87.0 154.91 (0.3)
Mid-Atlantic 128.44 70.7 90.81 4.9
Midwest 124.45 73.1 91.01 (4.7)
New York 193.91 84.3 163.44 7.7
Northeast 112.92 68.3 77.08 6.3
South Central 135.39 77.7 105.18 1.0
Western 162.62 80.3 130.57 2.1
All Regions 151.64 78.2 118.51 3.3
Competitive set(c) $129.27 68.1% $88.07 3.5%
Other Portfolio Statistics
As of March 24, 2000 Twelve weeks ended March 24, 2000
Average
No. of No. of Average Occupancy
Properties Rooms Daily Rate Percentages REVPAR(b)
Ritz-Carlton (d) 9 3,540 $241.77 77.9% $188.44
Twelve weeks ended March 26, 1999
Average Percent
Average Occupancy Change in
Daily Rate Percentages REVPAR(b) REVPAR
Ritz-Carlton (d) $228.07 78.9% $180.00 4.7%
(a) Comparable properties consist of the 114 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 and five properties where reported results were
affected by a change in reporting period.
(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 segment
of the lodging industry and consists of Crowne Plaza; Doubletree;
Hyatt; Hilton; Radisson; Renaissance; Sheraton; Westin; Swissotels;
and Wyndham.
(d) Includes nine Ritz-Carlton properties owned by Host REIT for all
periods presented.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Comparable Property Statistics
(unaudited)
Twelve weeks ended March 24, 2000
Average
No. of No. of Average Occupancy
Properties(a) Rooms(a) Daily Rate(b) Percentages(b) REVPAR(b)
Atlanta 11 5,351 $165.56 77.3% $128.01
Florida 13 7,084 182.72 81.6 149.10
Mid-Atlantic 17 6,195 135.52 69.3 93.85
Midwest 14 5,008 124.62 69.1 86.08
New York 10 7,163 202.45 78.8 159.45
Northeast 11 4,294 121.85 68.5 83.52
South Central 19 9,439 137.77 77.1 106.27
Western 27 13,269 165.63 79.4 131.45
All Regions 122 57,803 158.85 76.3 121.11
Twelve weeks ended March 26, 1999
Average
No. of No. of Average Occupancy
Properties(a) Rooms(a) Daily Rate(c) Percentages(c)REVPAR(c)
Atlanta 11 5,351 $147.13 78.8% $115.91
Florida 13 6,673 177.28 86.1 152.59
Mid-Atlantic 17 6,195 126.81 70.8 89.74
Midwest 14 5,008 121.65 72.7 88.48
New York 10 7,166 184.88 82.0 151.53
Northeast 12 4,569 119.42 68.7 82.03
South Central 20 9,735 133.61 77.9 104.09
Western 27 13,269 160.51 80.3 128.94
All Regions 124 57,966 150.86 78.1 117.81
(a) Represents the number of properties outstanding as of March 24, 2000
and March 26, 1999, respectively.
(b) The operating results include operations for the Tampa Waterside
Marriott, which opened February 19, 2000.
(c) The operating results include operations for five hotels (1,577 rooms)
which were sold at various times in 1999.
HOST MARRIOTT CORPORATION
Hotel Operational Data
Schedule of Property Level Results (a)
(unaudited, in millions)
Comparable Properties (b)
Twelve weeks ended
March 24, 2000 March 26, 1999
Sales (c)
Room $505 $488
Food and beverage 242 228
Other 59 56
Total hotel sales 806 772
Hotel costs and expenses 484 463
Management fees and other
property-level expenses (d) 88 86
572 549
Property-level hotel profit before
depreciation and amortization (e) $234 $223
(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. Marriott International and other
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 twelve weeks ended March
24, 2000 and March 26, 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 114 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 and five properties where reported results were
affected by a change in reporting period.
(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 for all periods
presented. 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. Certain amounts of
the percentage rent considered contingent under SAB 101 are deferred
until such time as the underlying sales exceeds annual thresholds,
which are determined individually by property.
(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 generally
accepted accounting principles 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.
HOST MARRIOTT CORPORATION
Select Development and Expansion Data
(unaudited, in millions)
Estimated
Expected Total
Project Description Completion Date Investment(a)
Tampa Waterside
Marriott 717 room hotel Opened February 2000 $104
Ritz-Carlton
Naples Golf
Lodge 295 room hotel November 1, 2001 75
Ritz-Carlton
Naples Spa 50,000 sq. foot addition December 20, 2000 23
Marriott Orlando
World Center 500 room expansion June 15, 2000 84
Memphis Marriott 200 room expansion September 30, 2001 15
Marriott Harbor
Beach Resort Spa 20,000 sq. foot addition July 1, 2001 7
(a) Represents estimated total cost (unleveraged) to construct the
designated development or expansion project.
Twelve Weeks Ended Twelve Weeks Ended
March 24, 2000 March 26, 1999
Replacement and renewal
cash expenditures (b) $54 $50
(b) Represents amounts expended or reserved for routine maintenance or
replacement of furniture, fixtures and equipment at the properties.