Press Release: Host Marriott Corporation
October 17, 2000
BETHESDA, MD -- Host Marriott Corporation (NYSE: HMT) today reported record diluted Comparative Funds From Operations
per share for the third quarter 2000 of $.42 per diluted share, an improvement of 20 percent over third quarter
1999. On a year-to-date basis, diluted Comparative FFO per share increased over 13 percent to $1.37 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 $236 million for the 2000
third quarter and $749 million for 2000 year-to-date, an increase of 11.3 percent and 8.0 percent, respectively,
over EBITDA for the same periods in 1999. The company also reported that comparable REVPAR at its hotels increased
significantly with 9.4 percent growth in the 2000 third quarter over the prior year.
Mr. Christopher J. Nassetta, president and chief executive officer, stated, ``We are extremely pleased with our
outstanding operating results in the third quarter which significantly exceeded our expectations. Given the combination
of the momentum generated in the third quarter, the strength of the first period of the fourth quarter and strong
advance bookings for the balance of the year, we expect to have a solid fourth quarter.''
Mr. Nassetta added, ``Our strategic initiatives for the year have focused primarily on improving the performance
and value of our portfolio. These initiatives have included a number of high-yielding ROI projects, such as adding
new rooms, meeting space, and spas. Two notable projects include the development of a golf resort and additional
rooms, and a world-class spa at The Ritz-Carlton in Naples, as well as a 20,000 square foot spa at the Marriott
Harbor Beach Resort. We also continue to focus on the use of technology to enhance our core business, including
a recent investment of $4.5 million by one of our affiliates to acquire a 4% preferred equity interest in STSN,
Inc., a privately held company that is a leading provider of in-room, high-speed internet access to the lodging
industry. We will 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.''
Mr. Robert E. Parsons, Jr., 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.
This year, we have successfully modified our revolving line of credit to obtain more flexible terms and extend
the maturity by two years and completed a $250 million debt offering, which we expect to use for our near- term
capital needs while maintaining full capacity under our bank line.'' Mr. Parsons also noted that, ``These transactions
are in line with our corporate strategy of securing long-term fixed rate debt at reasonable interest rates. This
strategy, combined with the growth in cash flow from our existing, high-quality assets, has significantly strengthened
Host Marriott's balance sheet and financial capacity allowing us to take advantage of opportunities that present
themselves to further enhance the value of the company for our shareholders.''
Our revenues reflect rental income from leases, which are calculated based on hotel-level sales. Third quarter
2000 hotel sales were $985 million, a 6.5 percent increase over 1999 third quarter hotel sales of $925 million.
Year- to-date hotel sales for 2000 were $3,065 million, an increase of 5.3 percent over 1999 year-to-date hotel
sales of $2,910 million. We reported third quarter 2000 rental income of $224 million versus $188 million for the
third quarter 1999 and year-to-date 2000 rental income of $580 million versus $546 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 $75 million and $86 million for the third quarter 2000 and 1999 and $366
million and $339 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 September 8, 2000 decreased to $22 million
compared to $29 million for the quarter ended September 10, 1999. For the thirty-six weeks ended September 8, 2000,
the net loss available to common shareholders increased to $138 million compared to $104 million for the thirty-six
weeks ended September 10, 1999. The net loss for the twelve and thirty-six weeks ended September 8, 2000 are due
to timing of the recognition of rental revenue as it was affected by our contingent rent during the respective
periods. Third quarter and year-to-date 2000 results include $5 million and $15 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 http://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 $54
million and $28 million for the twelve weeks and $60 million and $50 million for the thirty-six weeks ended September
8, 2000 and September 10, 1999, respectively. Funds from operations would be $0.19 and $0.09 per basic and diluted
share for the twelve weeks ended and $0.21 and $0.17 per basic and diluted share for the thirty-six weeks ended
for the same periods, respectively. The calculation of 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
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.
SOURCE: Host Marriott Corporation