Host Hotels & Resorts, Inc. Reports Strong Operating Performance For The First Quarter

BETHESDA, Md., May 3, 2013 /PRNewswire/ -- Host Hotels & Resorts, Inc. (NYSE: HST), the nation's largest lodging real estate investment trust ("REIT"), today announced results of operations for the first quarter ended March 31, 2013. On an "As Adjusted" basis, as described herein, the improvements in the Company's results were driven by a 5.1% increase in comparable hotel RevPAR and strong performances at its luxury and resort and conference center properties. 

(Logo: http://photos.prnewswire.com/prnh/20060417/HOSTLOGO )

As of January 1, 2013, the Company adopted calendar quarter reporting periods, compared to 2012 where the Company reported based on the fiscal quarters that had been used by Marriott International. Accordingly, the Company's revenues, net income, Adjusted EBITDA, diluted earnings (loss) per share and NAREIT and Adjusted FFO per diluted share quarterly results for 2013 are not comparable to the historical quarterly results of 2012 due to the change in periods. To enable investors to better evaluate its performance, the Company has presented 2012 RevPAR and certain historical results on a calendar quarter basis (the "2012 As Adjusted" results). The 2012 As Adjusted first quarter results include (i) an adjustment to add the operations from March 24, 2012 through March 31, 2012 for the Company's Marriott-managed hotels and (ii) an adjustment to add the March operations for its hotels managed by Ritz-Carlton, Hyatt, Starwood and other managers who report on a calendar basis, as the Company's historical first quarter results only included January and February operations for these properties. Accordingly, the following discussion of operating performance will include a comparison between the three months of operations ended March 31 for both years, which management believes is an important supplemental measure of the Company's performance. For further discussion of the 2012 As Adjusted results, see the Notes to the Financial Information included in this release.

 

Operating Results

(in millions, except per share and hotel statistics)



                                                    Quarter ended                                                   



As Adjusted


As Reported



March 31,

March 31,


March 23,



2013

2012 (a)

% Change (b)

2012 (c)

% Change

Total owned hotel revenues

$          1,238

$          1,183

4.6%

$             892

38.8%

Comparable hotel revenues (a)

1,165

1,135

2.6%

N/M  

N/M

Comparable hotel RevPAR

142.87

135.98

5.1%

               N/M  

N/M

Net income

60

59

1.7%

N/M

Adjusted EBITDA (a)

283

257

10.1%

176

60.8%







Diluted earnings (loss) per share

$               .08

$               .07

14.3%

$                —

N/M

NAREIT FFO per diluted share (a)

.29

.24

20.8%

.14

107.1%

Adjusted FFO per diluted share (a)

.28

.24

16.7%

.14

100.0%

__________


N/M=Not Meaningful




(a)

NAREIT Funds From Operations ("FFO") per diluted share, Adjusted FFO per diluted share (which excludes debt extinguishment costs and other expenses), Adjusted EBITDA (which is earnings before interest, taxes, depreciation, amortization and other items) and comparable hotel operating results (including comparable hotel revenues and comparable hotel adjusted operating profit margins) are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission ("SEC"). In addition, the presentation of 2012 As Adjusted results, including total owned hotel revenues and net income, are also non-GAAP financial measures. See the Notes to Financial Information included in this press release on why the Company believes these supplemental measures are useful, reconciliations to the applicable GAAP measure and the limitations on their use and information on how the 2012 As Adjusted results were calculated.

(b)

The March 31, 2012 As Adjusted results include one additional day of operations in February compared to March 31, 2013 due to the 2012 leap year.

(c)

Historical operating results for the first quarter 2012 as filed with the SEC on April 25, 2012.

 

The Company's owned hotel revenues increased 4.6% for the first quarter of 2013 compared to the 2012 As Adjusted results due to the strong performance of its comparable properties, as well as incremental revenues of $21 million from the Grand Hyatt Washington, which was acquired in July of 2012. The increase in comparable hotel RevPAR as adjusted was primarily driven by strong improvements in average room rates. For the first quarter, average room rates improved 4.0%, while occupancy improved 0.7 percentage points to 72.3%. The improvements in revenues led to solid margin growth as comparable hotel adjusted operating profit margins increased 85 basis points for the first quarter compared to 2012 As Adjusted.  

During the first quarter of 2013, the Company recognized a previously deferred gain of approximately $11 million related to the 2005 eminent domain claim by the State of Georgia for 2.9 acres of land at the Atlanta Marriott Perimeter Center for highway expansion. The Company received the cash in 2007 but could not recognize the gain until certain requirements were completed. The gain has been included in NAREIT FFO per diluted share, which is consistent with the treatment of gains recognized on the disposition of undepreciated assets. However, due to the significant passage of time since receipt of the proceeds, the Company has excluded the gain from its Adjusted FFO per diluted share and Adjusted EBITDA for the quarter.

INVESTMENTS

  • REDEVELOPMENT AND RETURN ON INVESTMENT EXPENDITURES - The Company invested approximately $21 million during the first quarter of 2013 in redevelopment and return on investment ("ROI") expenditures. These projects are designed to increase cash flow and improve profitability by capitalizing on changing market conditions and the favorable locations of the Company's properties. Projects completed during the first quarter included the development of a pavilion at the JW Marriott Desert Springs Resort & Spa and the conversion of a former restaurant into meeting space at the Westin New York Grand Central. The Company expects ROI investments for 2013 of approximately $90 million to $100 million.

  • CAPITAL EXPENDITURES AT OUR RECENT ACQUISITIONS – In conjunction with the acquisition of a property, the Company prepares capital and operational improvement plans designed to maximize profitability and enhance the guest experience. The Company spent approximately $15 million during the first quarter of 2013 on properties acquired in 2012 and 2011 and expects to invest between $40 million and $50 million for 2013. During the first quarter, the Company completed the renovation of all 888 guest rooms at the Grand Hyatt Washington and continued work on the guestrooms renovation in the second tower of the Manchester Grand Hyatt San Diego.

  • RENEWAL AND REPLACEMENT EXPENDITURES - The Company invested approximately $87 million in renewal and replacement expenditures during the first quarter. These expenditures are designed to ensure that the high-quality standards of both the Company and its operators are maintained. During the quarter, major renewal and replacement projects included rooms renovations at the Philadelphia Airport Marriott, the San Francisco Marriott Marquis and the San Diego Marriott Mission Valley, as well as the renovation of almost 40,000 square feet of meeting and public space at The Ritz-Carlton, Tysons Corner and over 36,000 square feet of meeting space at the Westin Denver Downtown. The Company expects that renewal and replacement expenditures for 2013 will total approximately $270 million to $290 million. 

VALUE ENHANCEMENT PROJECTS

In addition to the investments described above, the Company looks to enhance the value of its portfolio by identifying and executing strategies designed to maximize the highest and best use of all aspects of its properties. In early April, the Company sold approximately four acres of excess land adjacent to its Newport Beach Marriott Resort and Spa to a luxury home builder for $24 million. The land, which had previously been used for tennis courts, has been approved for the development and sale of 79 luxury condominiums. The Company recognized a gain of approximately $21 million, which will be included in net income, Adjusted EBITDA and Adjusted FFO in the second quarter of this year.

BALANCE SHEET

During the quarter, the Company issued its first investment grade senior notes in a $400 million offering of 10-year bonds at an interest rate of 3.75%, which is 100 basis points lower than any non-convertible bond coupon in the history of the Company. The bonds mature in October of 2023. The proceeds of the offering, along with available cash, will be used to redeem on May 15, the $400 million of 9% Series T senior notes due 2017 at 104.5%, which reflects an $18 million call premium. The annual interest savings are $21 million per year. The Company also called the remaining $175 million of 2004 exchangeable debentures for redemption and holders of approximately $174 million of the debentures elected to exchange their debentures for shares of the Company's common stock totaling approximately 11.7 million shares, rather than receive the cash redemption proceeds, while the remaining $1 million of debentures were redeemed for cash. These shares have been included in our dilutive share count when determining our full year NAREIT and Adjusted FFO per diluted share for the past few years.

Subsequent to the end of the quarter, the Company repaid the 4.75%, $246 million mortgage loan on the Orlando World Center Marriott with available cash. The Company also called $200 million of its 6.75% Series Q senior notes due 2016 at 101.125%, which reflects a $2 million call premium. The redemption will be funded through a $150 million draw on the revolver portion of its credit facility and with available cash. After adjusting for these transactions, including the redemption of the Series T senior notes, the Company will have approximately $380 million of cash and cash equivalents, $692 million of available capacity under its credit facility and approximately $4.8 billion of debt. In addition, after adjusting for the above transactions, the Company's weighted average debt maturity is 5.8 years and its annual cash interest expense will be approximately $230 million.

Also, during the quarter, the Company issued 6.1 million shares of common stock, at an average price of $16.78 per share, for net proceeds of approximately $102 million. These issuances were made in "at-the-market" offerings pursuant to Sales Agency Financing Agreements with BNY Mellon Capital Markets, LLC and Scotia Capital (USA) Inc. There is approximately $198 million of issuance capacity remaining under the current agreements.

DIVIDEND

On April 15, 2013, the Company paid a regular quarterly cash dividend of $0.10 per share on its common stock to stockholders of record on March 28, 2013. The amount of any future dividend is dependent on the Company's taxable income and will be determined by the Company's Board of Directors.

2013 OUTLOOK

The Company anticipates that for 2013:

  • Comparable hotel RevPAR will increase 5.0% to 7.0%;
  • Total owned hotel revenues under GAAP will increase 5.4% to 7.5%;
  • Total comparable hotel revenues will increase 3.8% to 5.8%;
  • Operating profit margins under GAAP will increase approximately 250 basis points to 350 basis points; and
  • Comparable hotel adjusted operating profit margins will increase approximately 60 basis points to 120 basis points.

Based upon these parameters, the Company estimates that its 2013 guidance is as follows: 

  • earnings per diluted share should range from approximately $.31 to $.39;
  • net income should range from $238 million to $298 million;
  • NAREIT FFO per diluted share should range from approximately $1.22 to $1.30;
  • Adjusted FFO per diluted share should range from approximately $1.25 to $1.33; and
  • Adjusted EBITDA should be approximately $1,275 million to $1,335 million.

See the 2013 Forecast Schedules and the Notes to Financial Information for other assumptions used in the forecasts and items that may affect forecasted results.

ABOUT HOST HOTELS & RESORTS

Host Hotels & Resorts, Inc. is an S&P 500 and Fortune 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 103 properties in the United States and 15 properties internationally totaling approximately 62,500 rooms. The Company also holds non-controlling interests in a joint venture in Europe that owns 19 hotels with approximately 6,100 rooms and a joint venture in Asia that owns one hotel in Australia and a minority interest in two hotels in India and five hotels that are in various stages of development in India. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, Le Meridien®, The Luxury Collection®, Hyatt®, Fairmont®, Four Seasons®, Hilton®, Swissotel®, ibis®, Pullman®, and Novotel® in the operation of properties in over 50 major markets worldwide. For additional information, please visit the Company's website at www.hosthotels.com.

Note:   This press release contains forward-looking statements within the meaning of federal securities regulations.  These forward-looking statements include forecast results and are identified by their use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "plan," "predict," "project," "will," "continue" and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to:  changes in national and local economic and business conditions that will affect occupancy rates at our hotels and the demand for hotel products and services; the impact of geopolitical developments outside the U.S. on lodging demand; volatility in global financial and credit markets; operating risks associated with the hotel business; risks and limitations in our operating flexibility associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; risks associated with our relationships with property managers and joint venture partners; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; the effects of hotel renovations on our hotel occupancy and financial results; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; risks associated with our ability to complete acquisitions and dispositions and develop new properties and the risks that acquisitions and new developments may not perform in accordance with our expectations; our ability to continue to satisfy complex rules in order for us to remain a REIT for federal income tax purposes; and other risks and uncertainties associated with our business described in the Company's annual report on Form 10‑K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of May 3, 2013, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

*

This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.

*** Tables to Follow ***

Host Hotels & Resorts, Inc., herein referred to as "we" or "Host Inc.," is a self-managed and self-administered real estate investment trust ("REIT") that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. ("Host LP"), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1.3% of the partnership interests in Host LP held by outside partners as of March 31, 2013, which is non-controlling interests in Host LP in our consolidated balance sheets and is included in net income attributable to non-controlling interests in our consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10‑K.

Effective January 1, 2013, we report quarterly operating results on a calendar cycle, which is not comparable to the quarterly reporting method used in 2012. For additional information on the change in reporting periods, comparable hotel measures and non-GAAP financial measures which we believe is useful to investors, see the Notes to Financial Information included in this release. 

 


HOST HOTELS & RESORTS, INC.

Condensed Consolidated Balance Sheets (a)

(in millions, except shares and per share amounts)



March 31,

December 31,


2013

2012


    (unaudited)  


ASSETS




Property and equipment, net

$             11,284

$             11,588

Due from managers

96

80

Advances to and investments in affiliates

337

347

Deferred financing costs, net

53

53

Furniture, fixtures and equipment replacement fund

157

154

Other

300

319

Restricted cash

35

36

Cash and cash equivalents

1,075

417

            Total assets

$             13,337

$             12,994




LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY




Debt



    Senior notes, including $359 million and $531 million, respectively, net of

        discount, of Exchangeable Senior Debentures

$               3,798

$               3,569

    Credit facility, including the $500 million term loan

658

763

    Mortgage debt

992

993

    Other

86

86

            Total debt

5,534

5,411

Accounts payable and accrued expenses

165

194

Other

353

372

            Total liabilities

6,052

5,977




Non-controlling interests—Host Hotels & Resorts, L.P

175

158




Host Hotels & Resorts, Inc. stockholders' equity:



    Common stock, par value $.01, 1,050 million shares authorized; 742.8 million

        shares and 724.6 million shares issued and outstanding, respectively

7

7

    Additional paid-in capital

8,303

8,040

    Accumulated other comprehensive income

14

12

    Deficit

(1,253)

(1,234)

            Total equity of Host Hotels & Resorts, Inc. stockholders

7,071

6,825

Non-controlling interests—other consolidated partnerships

39

34

            Total equity

7,110

6,859

            Total liabilities, non-controlling interests and equity

$             13,337

$             12,994

__________

(a)

Our condensed consolidated balance sheet as of March 31, 2013 has been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted.

 

HOST HOTELS & RESORTS, INC.

Condensed Consolidated Statements of Operations (a)

(unaudited, in millions, except per share amounts)



Quarter ended


March 31,

March 23,


2013

2012

Revenues



    Rooms

$                   781

$                   553

    Food and beverage

379

282

    Other

78

57

        Owned hotel revenues

1,238

892

    Other revenues

17

60

        Total revenues

1,255

952

Expenses



    Rooms

221

160

    Food and beverage

281

208

    Other departmental and support expenses

316

242

    Management fees

48

33

    Other property-level expenses

96

122

    Depreciation and amortization

177

149

    Corporate and other expenses

26

22

        Total operating costs and expenses

1,165

936

Operating profit

90

16

Interest income

1

4

Interest expense (b)

(76)

(86)

Net gains on property transactions and other

12

1

Gain (loss) on foreign currency transactions and derivatives

2

(1)

Equity in losses of affiliates

(2)

(2)

Income (loss) before income taxes

27

(68)

Benefit for income taxes

7

13

Income (loss) from continuing operations

34

(55)

Income from discontinued operations, net of tax

26

55

Net income

60

Less:  Net income attributable to non-controlling interests

(4)

(2)

Net income (loss) attributable to Host Inc.

$                     56

$                      (2)

Basic and diluted earnings (loss) per common share:



    Continuing operations

$                    .04

$                   (.08)

    Discontinued operations

.04

.08

Basic and diluted earnings per common share

$                    .08

$                      —

__________

(a)

Our condensed consolidated statements of operations presented above have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted.

(b)

Interest expense includes non-cash charges of $4 million and $5 million related to the exchangeable senior debentures for 2013 and 2012, respectively.    

 

HOST HOTELS & RESORTS, INC.

Earnings (Loss) per Common Share

(unaudited, in millions, except per share amounts)



Quarter ended


March 31,

March 23,


2013

2012

Net income

$                     60

$                      —

    Less:  Net income attributable to non-controlling interests                      

(4)

(2)

Net income (loss) attributable to Host Inc

$                     56

$                      (2)

Diluted income (loss) attributable to Host Inc

$                     56

$                      (2)




Basic weighted average shares outstanding

728.2

707.5

Diluted weighted average common shares outstanding (a)

738.6

707.5

Basic and diluted earnings (loss) per common share

$                    .08

$                      —

__________

(a)

Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units ("OP Units") held by minority partners, exchangeable debt securities and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.

 

HOST HOTELS & RESORTS, INC.

Comparable Hotel Operating Data (a)





As Adjusted



As of March 31, 2013

Quarter ended March 31, 2013

Quarter ended March 31, 2012






Average



Average


Percent


No. of

No. of

Average

Occupancy


  Average

Occupancy


Change in

Region

Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Pacific

27

16,884

$     197.12

74.2%

$     146.33

$     191.26

75.7%

$     144.72

1.1%

Mid-Atlantic

11

8,638

219.60

75.6

166.07

214.66

71.7

153.83

8.0

South Central

9

5,695

170.72

75.7

129.29

156.69

75.2

117.81

9.7

D.C. Metro

12

5,418

201.84

67.1

135.41

198.51

66.5

132.04

2.6

North Central

11

4,782

141.36

61.6

87.09

138.36

64.6

89.38

(2.6)

Florida

8

3,680

283.54

84.5

239.48

258.41

80.7

208.60

14.8

New England

6

3,672

160.83

64.4

103.56

156.77

58.6

91.82

12.8

Mountain

7

2,885

197.25

67.9

133.96

191.07

68.1

130.11

3.0

Atlanta

6

2,183

176.23

70.8

124.82

171.78

68.5

117.65

6.1

Asia-Pacific

6

1,255

163.69

83.8

137.13

158.25

82.0

129.73

5.7

Canada

3

1,219

178.00

64.3

114.45

172.97

61.9

107.03

6.9

Latin America

4

1,075

241.89

67.3

162.81

240.65

72.4

174.12

(6.5)

      All Regions

110

57,386

197.57

72.3

142.87

189.94

71.6

135.98

5.1















As Adjusted



As of March 31, 2013

Quarter ended March 31, 2013

Quarter ended March 31, 2012






Average



Average


Percent


No. of

No. of

Average

Occupancy


Average

Occupancy


Change in


Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Property Type










Urban

57

35,294

$     198.58

72.3%

$     143.49

$     194.81

71.2%

$     138.77

3.4%

Suburban

29

10,568

161.50

66.4

107.17

151.08

67.5

101.91

5.2

Resort/Conference  

13

6,356

294.56

79.6

234.57

273.88

76.7

210.15

11.6

Airport

11

5,168

130.35

75.8

98.86

125.20

76.2

95.36

3.7

    All Types

110

57,386

197.57

72.3

142.87

189.94

71.6

135.98

5.1

 


Hotel Operating Statistics for All Properties (b)



Quarter ended



As Adjusted


March 31,

March 31,


2013

2012

Average room rate

$               196.57

$               186.65

Average occupancy                                                                                

72.0%

71.1%

RevPAR

$               141.45

$               132.67

__________

(a)

See the Notes to Financial Information for a discussion of reporting periods and the calculation of comparable hotel operating statistics.

(b)

The operating statistics reflect all consolidated properties as of March 31, 2013 and March 31, 2012, respectively, and include the results of operations of properties sold or transferred during the year through the date of their disposition.

 


HOST HOTELS & RESORTS, INC.

Comparable Hotel Operating Data

Schedule of Comparable Hotel Results (a)

(unaudited, in millions, except hotel statistics)




Quarter ended




As Adjusted



March 31,

March 31,



2013

2012 (b)

Number of hotels

110

110

Number of rooms

57,386

57,386

Percent change in comparable hotel RevPAR

5.1%

Operating profit margin (c)

7.2%

6.6%

Comparable hotel adjusted operating profit margin (c)

23.4%

22.55%

Comparable hotel revenues



    Room

$                   738

$                   710

    Food and beverage

352

354

    Other

75

71

          Comparable hotel revenues (d)

1,165

1,135

Comparable hotel expenses



    Room

206

197

    Food and beverage

260

259

    Other

40

39

    Management fees, ground rent and other costs

386

384

          Comparable hotel expenses (e)

892

879

Comparable hotel adjusted operating profit

273

256

Non-comparable hotel results, net (f)

20

16

Loss for hotels leased from HPT (g)

(4)

Depreciation and amortization

(177)

(161)

Corporate and other expenses

(26)

(24)

Operating profit

$                     90

83

Less:  Estimated operating profit adjustments for the calendar period (b)


(67)

Operating profit for the period January 1, 2012 through March 23, 2012 (as

    reported)


$                     16

__________

(a)

See the Notes to Financial Information for discussion of non-GAAP measures, reporting periods and the calculation of comparable hotel results.

(b)

Comparable hotel results and statistics for March 31, 2012 are based on 2012 As Adjusted results. Adjustments for the calendar period reflect estimated operations for eight days from March 24, 2012 through March 31, 2012 for our Marriott-branded properties and the month of March 2012 results for the remainder of the portfolio, which were previously reported in second quarter 2012 results. Additionally, the 2012 As Adjusted March 31 results include one additional day of operations in February compared to March 31, 2013 due to the 2012 leap year. See the Notes to Financial Information for further discussion and information on how the 2012 As Adjusted results were calculated.

(c)

Operating profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP margins are calculated using amounts presented in the consolidated statements of operations, or amounts As Adjusted. Comparable margins are calculated using amounts presented in the above table.

(d)

The reconciliation of total revenues per the consolidated statements of operations to the comparable hotel revenues is as follows:






Quarter ended




As Adjusted



March 31,

March 31,



2013

2012 (b)


Revenues per the consolidated statements of operations:




    For the period January 1, 2012 through March 23, 2012 (as reported)


$                    952


Revenue adjustment for the calendar period (b)


297


   For the quarter ended

$                 1,255

1,249


Non-comparable hotel revenues

(104)

(75)


Hotel revenues for which we record rental income, net

14

14


Revenues for hotels leased from HPT (g)

(53)


            Comparable hotel revenues

$                 1,165

$                 1,135

 

 

HOST HOTELS & RESORTS, INC.

Comparable Hotel Operating Data

Schedule of Comparable Hotel Results

(unaudited, in millions, except hotel statistics)




(e)

The reconciliation of operating costs per the consolidated statements of operations to the comparable hotel expenses is as follows:







Quarter ended





As Adjusted




March 31,

March 31,




2013

2012 (b)



Operating costs and expenses per the consolidated statements of operations:





    For the period January 1, 2012 through March 23, 2012 (as reported)


$                    936



Operating costs and expenses adjustment for the calendar period (b)


230



   For the quarter ended

$                 1,165

1,166



Non-comparable hotel expenses

(84)

(59)



Hotel expenses for which we record rental income

14

14



Expense for hotels leased from HPT (g)

(57)



Depreciation and amortization

(177)

(161)



Corporate and other expenses

(26)

(24)



            Comparable hotel expenses

$                    892

$                    879






(f)

Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels whose operations are included in our consolidated statements of operations as continuing operations, (ii) gains on property insurance settlements and (iii) the results of our office buildings.

(g)

The leases terminated on December 31, 2012.