Host Hotels & Resorts, Inc. Reports Strong Operating Results for the Fourth Quarter and Full Year 2013


BETHESDA, Md., Feb. 19, 2014 /PRNewswire/ -- Host Hotels & Resorts, Inc. (NYSE: HST), the nation's largest lodging real estate investment trust ("REIT"), today announced results of operations for the year.

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

 

Operating Results

(in millions, except per share and hotel statistics)







Quarter ended (a)



As Adjusted 


As Reported 


December 31,

December 31,

Percent 

December 31,


2013

2012 (b) 

Change (c) 

2012 (d) 

Total owned hotel revenues 

$     1,318

$     1,226

7.5%

$     1,590

Comparable hotel revenues (b) 

1,195

1,128

6.0%

N/M

Net income (loss)  

126

(26)

N/M

15

Adjusted EBITDA (b) 

322

314

2.5%

426

Change in comparable hotel RevPAR - Constant US$ (e) 

6.6%




Change in comparable hotel RevPAR - Nominal US$ (e) 

6.2%









Diluted earnings (loss) per share 

$       .16

$      (.04)

N/M

$       .02

NAREIT FFO per diluted share (b) 

.33

.29

13.8%

.40

Adjusted FFO per diluted share (b) 

.33

.30

10.0%

.40












Year ended 





December 31,

December 31,

Percent 





2013

2012

Change

Total owned hotel revenues 

$     5,115

$     4,788

6.8%

Comparable hotel revenues (b) 

4,670

4,452

4.9%

Net income 

325

63

N/M

Adjusted EBITDA (b) 

1,306

1,190

9.7%

Change in comparable hotel RevPAR - Constant US$ (e) 

5.8%



Change in comparable hotel RevPAR - Nominal US$ (e) 

5.6%







Diluted earnings per share 

$       .42

$       .08

N/M

NAREIT FFO per diluted share (b) 

1.26

1.04

21.2%

Adjusted FFO per diluted share (b) 

1.31

1.10

19.1%








N/M=Not Meaningful





(a) As of January 1, 2013, the Company adopted calendar quarter reporting periods. For further discussion, see "Adjustments for Calendar Quarter Reporting Periods" on page 2 of this release. 

(b) 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 fourth quarter 2012 As Adjusted results, including total owned hotel revenues and net income (loss), 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, the limitations on their use and information on the 2012 As Adjusted results calculations.

(c) Percent changes provided are from the fourth quarter 2012 As Adjusted results. 

(d) Historical operating results for the fourth quarter 2012 as filed with the SEC on February 21, 2013.

(e) For RevPAR statistics, the Company presents results in constant US$ and nominal US$. Constant US$ results assume that the year-over-year results are translated to U.S. Dollars using the same prevailing exchange rate; thereby eliminating the effect of currency fluctuation for comparative purposes. Nominal US$ results include the effect of currency fluctuations consistent with our financial statement presentation. See Notes to Financial Information.

The Company's owned hotel revenues increased 7.5% for the fourth quarter, compared to the corresponding 2012 "As Adjusted" quarterly results, as described herein, and 6.8% for the full year 2013, compared to 2012. The growth reflects a 6.0% revenue improvement at the Company's comparable hotels for the fourth quarter and a 4.9% increase for the full year.

The improvements in the Company's results were driven by strong growth in comparable RevPAR. On a constant US$ basis, RevPAR increased 6.6% and 5.8% for the fourth quarter and full year, respectively, reflecting strong improvements in average room rates, coupled with continued occupancy growth. The Company believes this presentation is useful to investors because it provides greater clarity with respect to growth in RevPAR in the local currency of the hotel consistent with how the Company would evaluate its domestic portfolio. On a nominal US$ basis, which includes the effect of foreign currency fluctuation, comparable hotel RevPAR increased 6.2% for the fourth quarter and 5.6% for the full year when compared to the 2012 results. For the fourth quarter and full year 2013, average room rates improved 4.1% and 4.2%, respectively, while occupancy improved 1.5 percentage points to 73% for the fourth quarter and one percentage point to 76% for the full year. Additionally, comparable food and beverage revenues increased 6.1% and 4.0% for the fourth quarter and full year, respectively. 

The improvements in revenues led to strong margin growth as comparable hotel adjusted operating profit margins increased 130 basis points for the fourth quarter and 100 basis points for the full year.

Adjustments for Calendar Quarter Reporting Periods- As of January 1, 2013, the Company adopted calendar quarter reporting periods, compared to 2012 where the Company reported quarterly results based on the fiscal quarters that had been used by Marriott International. Accordingly, the Company's revenues, net income, Adjusted EBITDA, diluted earnings per share and NAREIT and Adjusted FFO per diluted share quarterly results for 2013 are not comparable to the historical quarterly results of 2012. Because the Company has always reported full year results on a calendar year, full year results for 2013 and 2012 are comparable. To enable investors to evaluate its quarterly 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 fourth quarter results include (i) an adjustment to exclude operations from September 8, 2012 through September 30, 2012 for the Company's Marriott-managed hotels and (ii) an adjustment to exclude the September operations for its hotels managed by Ritz-Carlton, Hyatt, Starwood and other managers who report on a calendar basis, as the Company's historical fourth quarter results included September, October, November and December operations for these properties. Accordingly, the discussion of quarterly operating performance includes a comparison between the three months ended December 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 quarterly results, see the Notes to Financial Information included in this release.

Acquisitions

On January 21, 2014, the Company acquired the 151-room Powell Hotel in San Francisco, along with 8,554 square feet of retail space, and the fee simple interest in the land for $75 million. The property is located in the heart of downtown San Francisco, two blocks from Union Square and three blocks from the Moscone Convention Center. The hotel will be managed by Kokua Hospitality. The retail space is occupied by Sephora, a leading provider of perfume and cosmetics, under a long-term lease. The Company intends to invest approximately $22 million in an extensive redevelopment of the property beginning late 2014.

In December 2013, the Company made the final incremental payment of $19.9 million for the purchase of the fee simple interest in the land at the New York Marriott Marquis Times Square. In addition, $25 million of the payments made pursuant to the terms of the ground lease have been attributed toward the purchase of the land. The purchase was completed in conjunction with the Company's 2012 lease of the existing retail space to Vornado Realty Trust and its on-going redevelopment, which is expected to be completed in early 2015.

Dispositions

On November 20, 2013, the Company sold the Four Seasons Hotel Atlanta, including the furniture, fixtures and equipment ("FF&E") replacement fund, for a sale price of $63 million and recognized a gain on sale of approximately $11 million. On December 18, 2013, the Company sold the Dallas/Addison Marriott Quorum by the Galleria for a sale price of $56 million, including the FF&E replacement fund, and recognized a gain on sale of approximately $15 million.

On January 10, 2014, the Company sold an 89% interest in the Philadelphia Marriott Downtown to Clearview and funds managed by Oaktree Capital Management L.P. based on a market value of $303 million. The partnership owning the hotel entered into a $230 million mortgage loan to facilitate the transaction and the Company retained an $8 million equity interest in the hotel. The Company also completed the sale of the Courtyard Nashua, New Hampshire on February 12, 2014 for $10 million. In the last twelve months, the Company has sold six properties for a total sale price of approximately $667 million. The proceeds were used to repay debt and for general corporate purposes.

Capital Expenditures

The Company continues to pursue opportunities to enhance asset value through select capital improvements, while ensuring that its high standards for product quality are maintained. For full year 2013, the Company has completed renovations of 6,900 guestrooms, over 420,000 square feet of meeting space and approximately 150,000 square feet of public space. 

  • Redevelopment and Return on Investment Expenditures - The Company invested approximately $26 million and $97 million in the fourth quarter and full year 2013, respectively, in redevelopment and return on investment ("ROI") capital expenditures. These projects are designed to increase cash flow and to improve profitability by capitalizing on changing market conditions and the favorable locations of the Company's properties. Projects completed during the fourth quarter include the significant renovation of the food and beverage program at The Ritz-Carlton, Naples, including a repositioning of the Terrazza, Dusk and Grill outlets. The Company expects that ROI capital expenditures for 2014 will range from $70 million to $80 million.
  • Capital Expenditures for Recent Acquisitions - In conjunction with the acquisition of a property, the Company prepares capital and operational improvement plans designed to maximize profitability and to enhance the guest experience. The Company invested approximately $7 million and $36 million on these projects during the fourth quarter and full year 2013, respectively. The Company expects that acquisition capital expenditures will total $30 million to $35 million for 2014.
  • Renewal and Replacement Expenditures - The Company invested approximately $64 million and $303 million in renewal and replacement capital expenditures during the fourth quarter and full year 2013, respectively. During the fourth quarter, major renewal and replacement projects completed include the renovation of 230 suites at the Fairmont Kea Lani, Maui and renovation of the 35,000 square foot ballroom at the JW Marriott Washington, D.C. The Company expects that renewal and replacement expenditures for 2014 will total approximately $320 million to $340 million. 

Balance Sheet

During the quarter, the Company refinanced the 5.55%, $134 million mortgage loan on the Harbor Beach Marriott Resort and Spa through the issuance of a new $150 million mortgage loan, with an interest rate of 4.75% that matures in January 2024. Additionally, the Company prepaid the 8.5%, $31 million mortgage loan on The Westin Denver Downtown. Subsequent to year end, the Company redeemed the remaining $150 million of 6¾% Series Q senior notes at 101.125%, which reflects a $2 million call premium, and repaid $225 million borrowed under its credit facility. Additionally, the Company intends to repay the $300 million mortgage note on The Ritz-Carlton, Naples and Newport Beach Marriott Hotel & Spa when due on March 1, 2014 with available cash.

The Company's senior notes were recently upgraded by Standard & Poor's to a BBB investment grade rating, due in part to its low leverage levels, balanced debt maturities and large pool of unencumbered assets. Since January 1, 2013, including the debt repayments discussed above, the Company has reduced its total debt by $1.3 billion and extended its weighted average debt maturity to 6.0 years. As a result of these efforts, 2014 cash interest expense is forecast to be approximately $195 million, compared to cash interest expense of $282 million in 2013.

After adjusting for the acquisition, dispositions and dividend payments that have occurred in the first quarter of 2014, as well as the debt repayments discussed above, the Company has approximately $779 million of available capacity under its credit facility and a debt balance of $4,084 million. Additionally, after giving effect to these transactions, the Company has $310 million of available cash as detailed in the below table:

Cash balance at December 31, 2013

$                   861

Proceeds from the sale of 89% of the Philadelphia Marriott Downtown

290

Repayment of credit facility

(225)

Redemption of the 6¾% Series Q senior notes

(152)

January 15, 2014 dividend payment

(99)

Acquisition of Powell Hotel

(75)

Proceeds from the sale of the Courtyard Nashua, New Hampshire

10

Expected repayment of The Ritz-Carlton, Naples and Newport Beach Marriott mortgage

(300)

            Cash balance at March 1, 2014   

$                   310

European Joint Venture           

On December 12, 2013, the Company's joint venture in Europe entered into a €17 million mortgage loan secured by the Le Méridien Grand Hotel Nuremburg. The mortgage loan matures in 2016 and bears interest at an initial rate of 3%. The joint venture's comparable hotel RevPAR on a constant euro basis increased 5.1% in the fourth quarter and 1.9% for full year 2013 for the 12 properties with comparable results. The comparable RevPAR results exclude one hotel that was under extensive renovations in 2012, five hotels that were purchased by the joint venture in 2012 and one hotel that was acquired in 2013.  

Dividend

The Company paid a regular quarterly cash dividend of $.13 per share on its common stock on January 15, 2014 to stockholders of record on December 31, 2013. This dividend brings the total dividend for 2013 to $.46 per share, which represents a 53% increase over the total dividend for 2012. On February 18, 2014, the Board of Directors authorized a regular quarterly cash dividend of $.14 per share on its common stock. The dividend will be paid on April 15, 2014 to stockholders of record on March 31, 2014. 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.

2014 Outlook

The Company anticipates that the following 2014 statistics will increase compared to 2013 as follows: 




Full Year 2014




Low-end 

High-end 




of range

of range

Comparable hotel RevPAR for domestic  properties 

5.0%

6.0%

Comparable hotel RevPAR for international  properties - constant US$ 

5.5%

6.5%

Total comparable hotel RevPAR - constant US$ 

5.0%

6.0%






Total revenues under GAAP 

2.9%

3.9%

Total comparable hotel revenues 

4.3%

5.3%

Operating profit margins under GAAP 

 140 bps 

 200 bps 

Comparable hotel adjusted operating profit margins 

60 bps

110 bps






Based upon these parameters, the Company estimates that its 2014 guidance is as follows (in millions, except per share amounts):  









Full Year 2014




Low-end 

High-end 




of range

of range

Diluted earnings per share 

$     0.63

$     0.68

Net income 

490

527

NAREIT FFO per diluted share 

1.39

1.44

Adjusted FFO per diluted share 

1.40

1.44

Adjusted EBITDA 

1,350

1,390

See the 2014 Forecast Schedules and the Notes to Financial Information for other assumptions used in the forecasts and items that may affect forecast 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 99 properties in the United States and 15 properties internationally totaling approximately 59,800 rooms. The Company also holds non-controlling interests in a joint venture in Europe that owns 19 hotels with approximately 6,400 rooms and a joint venture in Asia that owns one hotel in Australia and a minority interest in two hotels 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 February 19, 2014, 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 December 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. 

 

Consolidated Balance Sheets (a)

(in millions, except shares and per share amounts)









December 31, 

December 31, 




2013

2012




(unaudited)


ASSETS






Property and equipment, net

$    10,995

$    11,588

Due from managers

52

80

Advances to and investments in affiliates

415

347

Deferred financing costs, net

42

53

Furniture, fixtures and equipment replacement fund

173

154

Other

244

319

Restricted cash

32

36

Cash and cash equivalents

861

417

Total assets

$    12,814

$    12,994






LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY




Debt



Senior notes, including $371 million and $531 million, respectively, net of discount, of Exchangeable Senior Debentures

$     3,018

$     3,569

Credit facility, including the $500 million term loan 

946

763

Mortgage debt 

709

993

Other 

86

86

Total debt 

4,759

5,411

Accounts payable and accrued expenses 

214

194

Other  

389

372

Total liabilities  

5,362

5,977




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

190

158




Host Hotels & Resorts, Inc. stockholders' equity:



Common stock, par value $.01, 1,050 million shares authorized; 754.8 million shares and 724.6 million shares issued and outstanding, respectively

8

7

Additional paid-in capital

8,492

8,040

Accumulated other comprehensive income (loss)

(9)

12

Deficit

(1,263)

(1,234)

Total equity of Host Hotels & Resorts, Inc. stockholders

7,228

6,825

Non-controlling interests-other consolidated partnerships

34

34

Total equity

7,262

6,859

Total liabilities, non-controlling interests and equity

$    12,814

$    12,994






(a) Our consolidated balance sheets as of December 31, 2013 have 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.

Consolidated Statements of Operations (a)

(unaudited, in millions, except per share amounts)











Quarter ended December 31,

Year ended December 31, 




2013

2012

2013

2012

Revenues





Rooms

$        838

$      1,015

$      3,317

$      3,082

Food and beverage

407

485

1,503

1,419

Other

73

90

295

287

Owned hotel revenues

1,318

1,590

5,115

4,788

Other revenues

13

83

51

271

Total revenues

1,331

1,673

5,166

5,059

Expenses 





Rooms

226

272

894

836

Food and beverage

288

353

1,095

1,049

Other departmental and support expenses

317

395

1,249

1,219

Management fees

60

70

222

199

Other property-level expenses

92

180

376

576

Depreciation and amortization (b)

178

272

697

722

Corporate and other expenses

32

34

121

107

Gain on insurance settlements

-

(11)

-

(11)

Total operating costs and expenses

1,193

1,565

4,654

4,697

Operating profit

138

108

512

362

Interest income

1

12

4

23

Interest expense (c)

(60)

(101)

(304)

(373)

Net gains on property transactions and other

1

9

33

13

Gain (loss) on foreign currency transactions and derivatives

1

(1)

3

(4)

Equity in earnings (losses) of affiliates (b)

(20)

-

(17)

2

Income before income taxes

61

27

231

23

Provision for income taxes

(2)

(22)

(21)

(31)

Income (loss) from continuing operations

59

5

210

(8)

Income from discontinued operations, net of tax

67

10

115

71

Net income

126

15

325

63

Less:  Net income attributable to non-controlling interests

(3)

-

(8)

(2)

Net income attributable to Host Inc.

$        123

$         15

$        317

$         61

Basic earnings (loss) per common share:





Continuing operations

$        .07

$        .01

$        .27

$       (.01)

Discontinued operations

.09

.01

.16

.09

Basic earnings per common share

$        .16

$        .02

$        .43

$        .08

Diluted earnings (loss) per common share:





Continuing operations

$        .07

$        .01

$        .27

$       (.01)

Discontinued operations

.09

.01

.15

.09

Diluted earnings per common share

$        .16

$        .02

$        .42

$        .08








(a) Our 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) Depreciation and amortization expense includes a $60 million impairment expense in 2012 related to the Westin Mission Hills Resort & Spa. Equity in earnings (losses) of affiliates also includes an adjustment of $15 million in 2013 for our portion of the non-cash impairment expense related to one of the hotels in our joint venture in Europe.   

(c) Interest expense includes the following items:











Quarter ended December 31,

Year ended December 31, 




2013

2012

2013

2012

Non-cash interest for exchangeable debentures 

$          4

$          5

$         15

$         17

Debt extinguishment costs 

-

3

36

30

Total 

$          4

$          8

$         51

$         47

 

HOST HOTELS & RESORTS, INC.

Earnings per Common Share

(unaudited, in millions, except per share amounts)











Quarter ended December 31,

Year ended December 31, 




2013

2012

2013

2012

Net income

$        126

$         15

$        325

$         63

Less:  Net income attributable to non-controlling interests

(3)

-

(8)

(2)

Net income attributable to Host Inc. 

$        123

$         15

$        317

$         61

Diluted income attributable to Host Inc.

$        123

$         15

$        317

$         61






Basic weighted average common shares outstanding

754.7

723.9

744.4

718.2

Diluted weighted average common shares outstanding (a)

755.6

725.1

747.9

719.6

Basic earnings per common share

$        .16

$        .02

$        .43

$        .08

Diluted earnings per common share

$        .16

$        .02

$        .42

$        .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.




Hotel Operating Data for Consolidated Hotels (a)









Comparable Hotels by Market in Constant US$















As Adjusted



As of December 31, 2013

Quarter ended December 31, 2013

Quarter ended December 31, 2012






Average



Average


Percent


No. of

No. of 

Average

Occupancy


Average

Occupancy


Change in

Market (b)

Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Boston

6

3,672

$   202.76

73.7%

$   149.51

$   194.05

69.5%

$   134.85

10.9%

New York 

8

6,450

319.98

88.8

284.06

310.27

88.1

273.46

3.9

Philadelphia

3

2,191

191.20

74.6

142.55

183.67

66.4

121.91

16.9

Washington, D.C.

11

5,119

191.70

69.0

132.36

195.53

66.5

130.08

1.8

Atlanta

5

1,939

172.31

72.7

125.20

173.61

68.5

118.96

5.2

Florida

7

3,230

182.99

71.4

130.63

175.87

68.9

121.24

7.7

Chicago

6

2,387

189.94

72.2

137.17

194.70

73.1

142.42

(3.7)

Denver

3

1,363

145.69

57.9

84.38

143.49

54.4

78.00

8.2

Houston

4

1,706

179.57

74.4

133.64

153.93

75.9

116.88

14.3

Phoenix

4

1,522

189.31

65.2

123.39

178.45

63.5

113.29

8.9

Seattle

3

1,774

162.42

73.4

119.16

154.83

71.4

110.48

7.9

San Francisco

5

3,701

209.75

77.0

161.43

184.55

76.7

141.61

14.0

Los Angeles

8

3,228

156.75

77.1

120.81

150.62

76.2

114.77

5.3

San Diego

5

4,691

181.66

71.8

130.43

176.48

67.2

118.57

10.0

Hawaii

2

1,256

354.17

78.4

277.63

327.40

82.7

270.74

2.5

Other

12

7,532

159.51

62.5

99.65

147.44

63.6

93.72

6.3

Domestic

92

51,761

206.52

73.0

150.76

198.27

71.4

141.51

6.5













Asia-Pacific

6

1,255

$   158.97

82.0%

$   130.37

$   150.21

81.2%

$   121.89

7.0%

Canada

3

1,219

180.76

67.9

122.81

167.56

68.2

114.30

7.5

Latin America

4

1,075

242.05

69.7

168.63

214.56

73.4

157.47

7.1

International

13

3,549

189.77

73.4

139.36

174.91

74.4

130.06

7.2

All Markets - Constant US$

105

55,310

205.44

73.0

150.03

196.71

71.6

140.77

6.6













All Owned Hotels in Constant US$ (d)















As Adjusted



As of December 31, 2013

Quarter ended December 31, 2013

Quarter ended December 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

Comparable Hotels

105

55,310

$ 205.44

73.0%

$ 150.03

$ 196.71

71.6%

$ 140.77

6.6%

Non-comparable Hotels (Pro Forma)

10

6,030

218.02

69.5

151.46

204.41

65.2

133.18

13.7

All Hotels

115

61,340

206.63

72.7

150.17

197.39

70.9

140.04

7.2













Comparable Hotels in Nominal US$
















As Adjusted



As of December 31, 2013

Quarter ended December 31, 2013

Quarter ended December 31, 2012






Average



Average


Percent

International

No. of

No. of 

Average

Occupancy


Average

Occupancy


Change in

Market

Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Asia-Pacific

6

1,255

$   158.97

82.0%

$   130.37

$   159.18

81.2%

$   129.17

0.9%

Canada

3

1,219

180.76

67.9

122.81

177.05

68.2

120.77

1.7

Latin America

4

1,075

242.05

69.7

168.63

229.21

73.4

168.22

0.2

International

13

3,549

189.77

73.4

139.36

185.75

74.4

138.11

0.9

Domestic

92

51,761

206.52

73.0

150.76

198.27

71.4

141.51

6.5

All Markets —Constant US$

105

55,310

205.44

73.0

150.03

197.43

71.6

141.29

6.2













Comparable Hotels by Type in Nominal US$















As Adjusted



As of December 31, 2013

Quarter ended December 31, 2013

Quarter ended December 31, 2012






Average



Average


Percent


No. of

No. of 

Average

Occupancy


Average

Occupancy


Change in

Property Type (b)

Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Urban

54

34,215

$   223.69

75.3%

$   168.46

$   216.04

73.2%

$   158.12

6.5%

Suburban

28

10,021

161.76

66.5

107.60

153.46

66.1

101.49

6.0

Resort/Conference

12

5,906

234.70

66.7

156.44

223.93

66.3

148.47

5.4

Airport

11

5,168

132.30

77.8

102.98

127.85

77.4

98.91

4.1

All Types

105

55,310

205.44

73.0

150.03

197.43

71.6

141.29

6.2




















Comparable Hotels by Market in Constant US$






As of December 31, 2013

Year ended December 31, 2013

Year ended December 31, 2012






Average



Average


Percent


No. of

No. of 

Average

Occupancy


Average

Occupancy


Change in

Market (b)

Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Boston

6

3,672

$   193.69

77.6%

$   150.25

$   189.22

74.0%

$   140.11

7.2%

New York 

8

6,450

278.42

86.6

241.20

272.52

83.5

227.64

6.0

Philadelphia

3

2,191

185.36

75.2

139.37

180.98

74.7

135.24

3.1

Washington, D.C.

11

5,119

197.26

74.4

146.68

197.96

73.4

145.21

1.0

Atlanta

5

1,939

171.38

73.6

126.11

165.63

69.5

115.06

9.6

Florida

7

3,230

196.43

75.3

147.99

186.39

74.0

137.95

7.3

Chicago

6

2,387

191.06

75.1

143.52

184.03

75.5

138.94

3.3

Denver

3

1,363

144.17

63.9

92.18

138.62

63.6

88.13

4.6

Houston

4

1,706

181.26

76.6

138.75

157.53

76.5

120.51

15.1

Phoenix

4

1,522

188.53

68.2

128.65

180.15

66.9

120.47

6.8

Seattle

3

1,774

168.60

78.1

131.71

158.04

75.1

118.73

10.9

San Francisco

5

3,701

199.66

80.3

160.41

180.22

80.8

145.55

10.2

Los Angeles

8

3,228

162.93

81.7

133.11

152.29

81.1

123.49

7.8

San Diego

5

4,691

186.14

78.2

145.59

182.78

76.4

139.69

4.2

Hawaii

2

1,256

353.41

82.0

289.89

332.04

83.3

276.47

4.9

Other

12

7,532

155.82

66.8

104.05

146.87

68.0

99.90

4.2

Domestic

92

51,761

199.44

76.3

152.13

191.00

75.2

143.62

5.9













Asia-Pacific

6

1,255

$   156.30

82.3%

$   128.59

$   149.15

79.8%

$   118.96

8.1%

Canada

3

1,219

183.53

68.9

126.43

174.08

68.2

118.70

6.5

Latin America

4

1,075

238.71

65.6

156.52

224.15

71.2

159.49

(1.9)

International

13

3,549

187.71

72.6

136.31

179.22

73.2

131.15

3.9

All Markets - Constant US$

105

55,310

198.72

76.0

151.12

190.26

75.1

142.82

5.8













All Owned Hotels in Constant US$ (d)








As of December 31, 2013

Year ended December 31, 2013

Year ended December 31, 2012 (c)






Average



Average


Percent


No. of

No. of

Average

Occupancy


Average

Occupancy


Change in


Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Comparable Hotels

105

55,310

$ 198.73

76.0%

$ 151.12

$ 190.26

75.1%

$ 142.82

5.8%

Non-comparable Hotels (Pro Forma)

10

6,030

208.17

70.3

146.32

193.55

67.1

129.95

12.6

All Hotels

115

61,340

199.59

75.5

150.65

190.54

74.3

141.60

6.4













Comparable Hotels in Nominal US$






As of December 31, 2013

Year ended December 31, 2013

Year ended December 31, 2012 (c)






Average



Average


Percent

International

No. of

No. of 

Average

Occupancy


Average

Occupancy


Change in

Market

Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Asia-Pacific

6

1,255

$   156.30

82.3%

$   128.59

$   154.17

79.8%

$   122.96

4.6%

Canada

3

1,219

183.53

68.9

126.43

179.47

68.2

122.37

3.3

Latin America

4

1,075

238.71

65.6

156.52

232.18

71.2

165.21

(5.3)

International

13

3,549

187.71

72.6

136.31

185.24

73.2

135.56

0.6

Domestic

92

51,761

199.44

76.3

152.13

191.00

75.2

143.62

5.9

All Markets —Constant US$

105

55,310

198.72

76.0

151.12

190.64

75.1

143.10

5.6













Comparable Hotels by Type in Nominal US$








As of December 31, 2013

Year ended December 31, 2013

Year ended December 31, 2012 (c)






Average



Average


Percent


No. of

No. of 

Average

Occupancy


Average

Occupancy


Change in

Property Type (b)

Properties

Rooms

Room Rate

Percentage

RevPAR

Room Rate

Percentage

RevPAR

RevPAR

Urban

54

34,215

$   212.05

77.8%

$   164.95

$   205.15

76.4%

$   156.81

5.2%

Suburban

28

10,021

163.16

70.7

115.40

152.34

70.7

107.74

7.1

Resort/Conference

12

5,906

239.60

71.5

171.32

228.57

70.3

160.61

6.7

Airport

11

5,168

132.13

80.0

105.74

126.34

79.9

100.91

4.8

All Types

105

55,310

198.72

76.0

151.12

190.64

75.1

143.10

5.6



















(a) See the Notes to Financial Information for a discussion of reporting periods, comparable hotel operating statistics and constant US$ presentation. Nominal US$ results include the effect of currency fluctuations, consistent with our financial statement presentation.


(b) See the Notes to Financial Information for a description of these markets and property types.


(c) The full year 2012 is a leap year and includes one additional day of operations compared to 2013. 


(d) Operating statistics presented are for all consolidated properties owned as of December 31, 2013 and do not include the results of operations for properties sold in 2013 or 2012. Operations for hotels acquired in 2013 and 2012 are presented on a pro forma basis, assuming they were owned as of January 1, 2012. See the Notes to Financial Information for further information on these pro forma statistics and the limitations on their use.


 

Hotel Operating Data - European Joint Venture






Constant Euros (a)















As Adjusted



As of December 31, 2013

Quarter ended December 31, 2013

Quarter ended December 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

Total comparable

12

3,547

€   186.36

76.0%

€   141.63

€   187.94

71.7%

€   134.77

5.1%

Non-comparable (Pro Forma)

7

2,880

144.93

76.2

110.44

151.86

73.6

111.84

(1.3)

All Hotels

19

6,427

167.76

76.1

127.65

171.54

72.6

124.50

2.5













Constant Euros (a)




















As of December 31, 2013

Year ended December 31, 2013

Year ended December 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

Total comparable

12

3,547

€   192.70

77.0%

€   148.45

€   192.67

75.6%

€   145.75

1.9%

Non-comparable (Pro Forma)

7

2,880

151.28

76.3

115.44

154.59

73.0

112.82

2.3

All Hotels

19

6,427

174.24

76.7

133.66

175.95

74.5

130.99

2.0













(a) The presentation above includes the operating performance for the 12 properties in the joint venture with comparable results (determined on the same basis as for the Company's consolidated portfolio). The operations for five hotels acquired in 2012 and one hotel acquired in 2013 are presented as non-comparable properties on a pro forma basis, as the joint venture did not own the hotels for the entirety of 2012. The non-comparable properties also include one hotel that was under extensive renovations in 2012. See Notes to Financial Information for a discussion of the constant euro presentation and a discussion on these pro forma statistics and the limitations on their use. 

 

HOST HOTELS & RESORTS, INC.

Comparable Hotel Operating Data

Schedule of Comparable Hotel Results (a)

(unaudited, in millions, except hotel statistics)







Quarter ended 

Year ended (b)



As Adjusted






December 31,

December 31,

December 31,

December 31,


2013

2012 (c)

2013

2012

Number of hotels

105

105

105

105

Number of rooms

55,310

55,310

55,310

55,310

Percent change in comparable hotel RevPAR - Constant US$

6.6%

-

5.8%

-

Percent change in comparable hotel RevPAR - Nominal US$

6.2%

-

5.6%

-

Operating profit margin (d)

10.4%

3.3%

9.9%

7.2%

Comparable hotel adjusted operating profit margin (d)

25.6%

24.3%

25.5%

24.5%

Comparable hotel revenues 





Room

$        764

$        719

$      3,051

$      2,896

Food and beverage (e)

364

343

1,347

1,295

Other

67

66

272

261

Comparable hotel revenues (f)

1,195

1,128

4,670

4,452

Comparable hotel expenses 





Room

205

194

817

777

Food and beverage (g)

259

249

983

958

Other

34

34

139

139

Management fees, ground rent and other costs

391

377

1,541

1,489

Comparable hotel expenses (h)

889

854

3,480

3,363

Comparable hotel adjusted operating profit

306

274

1,190

1,089

Non-comparable hotel results, net (i)

42

37

140

105

Earnings for hotels leased from HPT (j)

-

(5)

-

(3)

Depreciation and amortization

(178)

(235)

(697)

(722)

Corporate and other expenses (k)

(32)

(29)

(121)

(107)

Operating profit

$        138

$         42

$        512

$        362

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


66



Operating profit for the period September 8, 2012 through December 31, 2012 (As Reported)


$        108










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

(b) The full year 2012 is a leap year and includes one additional day of operations compared to the full year 2013.  

(c) Comparable hotel results and statistics for the quarter ended December 31, 2012 are based on 2012 As Adjusted results. For the As Adjusted quarter ended December 31, 2012, adjustments for the calendar period reflect (i) the exclusion of results for the 23 days from September 8, 2012 through September 30, 2012 for our Marriott-managed properties and (ii) for the remainder of the portfolio, the exclusion of the month of September 2012 results, which previously were reported in fourth quarter 2012 results. See the Notes to Financial Information for further discussion and information on how the 2012 As Adjusted results were calculated. 

(d) 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.  

(e) The reconciliation of total food and beverage sales per the consolidated statements of operations to the comparable food and beverage sales is as follows:









Quarter ended 

Year ended (b)





As Adjusted






December 31,

December 31,

December 31,

December 31,


2013

2012 (c)

2013

2012


Food and beverage sales per the consolidated statements of operations:






For the period September 8, 2012 through December 31, 2012 (As Reported)


$        485




Food and beverage adjustment for the calendar period (c)


(107)




For the quarter and year ended

$        407

378

$      1,503

$      1,419


Non-comparable hotel food and beverage sales

(51)

(43)

(189)

(157)


Food and beverage sales for the property for which we record rental income

8

8

33

33


Comparable food and beverage sales

$        364

$        343

$      1,347

$      1,295








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









Quarter ended 

Year ended (b)





As Adjusted






December 31,

December 31,

December 31,

December 31,


2013

2012 (c)

2013

2012


Revenues per the consolidated statements of operations:






For the period September 8, 2012 through December 31, 2012 (As Reported)


$      1,673




Revenue adjustment for the calendar period (c)


(383)




For the quarter and year ended

$      1,331

1,290

$      5,166

$      5,059


Non-comparable hotel revenues

(148)

(121)

(548)

(426)


Hotel revenues for which we record rental income, net

12

12

52

51


Revenues for hotels leased from HPT (j)

-

(53)

-

(232)


Comparable hotel revenues

$      1,195

$      1,128

$      4,670

$      4,452








(g) The reconciliation of total food and beverage expenses per the consolidated statements of operations to the comparable food and beverage expenses is as follows:






Quarter ended 

Year ended (b)





As Adjusted






December 31,

December 31,

December 31,

December 31,


2013

2012 (c)

2013

2012


Food and beverage expenses per the consolidated statements of operations






For the period September 8, 2012 through December 31, 2012 (As Reported)


$        353




Food and beverage expenses adjustment for the calendar period (c)


(76)




For the quarter and year ended

$        288

277

$      1,095

$      1,049


Non-comparable hotel food and beverage expenses

(34)

(33)

(133)

(112)


Food and beverage expenses for the property for which we record rental income

5

5

21

21


Comparable food and beverage expenses

$        259

$        249

$        983

$        958








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









Quarter ended 

Year ended (b)





As Adjusted






December 31,

December 31,

December 31,

December 31,


2013

2012 (c)

2013

2012


Operating costs and expenses per the consolidated statements of operations:






For the period September 8, 2012 through December 31, 2012 (As Reported)


$      1,565




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


(317)




For the quarter and year ended

$      1,193

1,248

$      4,654

$      4,697


Non-comparable hotel expenses

(106)

(84)

(408)

(321)


Hotel expenses for which we record rental income

12

12

52

51


Expense for hotels leased from HPT (j)

-

(58)

-

(235)


Depreciation and amortization

(178)

(235)

(697)

(722)


Corporate and other expenses (k)

(32)

(29)

(121)

(107)


Comparable hotel expenses

$        889

$        854

$      3,480

$      3,363








(i) 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.

(j) The leases terminated on December 31, 2012.

(k) For the year ended December 31, 2013, corporate expenses include a litigation accrual of $8 million due to an adverse ruling related to our San Antonio ground lease. 

 

HOST HOTELS & RESORTS, INC.

Other Financial Data

(unaudited, in millions, except per share amounts)













December 31,

December 31,






2013

2012








Equity





Common shares outstanding 

754.8

724.6

Common shares outstanding assuming conversion of non-controlling interest OP Units (a) 

764.5

734.7

Preferred OP Units outstanding 

.02

.02








Security pricing





Common (b) 

$       19.44

$       15.67

3¼% Exchangeable Senior Debentures (c) 

$               -

$    1,152.8

2½% Exchangeable Senior Debentures (c) 

$    1,507.7

$    1,309.2








Dividends declared per share for calendar year



Common



$           .46

$          .30








Debt










December 31,

December 31,

Senior debt 

Rate 

Maturity date

2013

2012

Series Q

6¾%

6/2016

$        150

$        550

Series T

9%

5/2017

-

391

Series V

6%

11/2020

500

500

Series X

5⅞%

6/2019

497

497

Series Z

6%

10/2021

300

300

Series B

5¼%

3/2022

350

350

Series C

4¾%

3/2023

450

450

Series D

3¾%

10/2023

400

-

Exchangeable senior debentures 

3¼%

4/2024

-

175

Exchangeable senior debentures (d)

2½%

10/2029

371

356

Credit facility term loan

1.8%

7/2017

500

500

Credit facility revolver (e)

2.2%

11/2015

446

263






3,964

4,332








Mortgage debt and other





Mortgage debt (non-recourse)

3.3-6.3%

3/2014-1/2024

709

993

Other

7.0-7.8%

10/2014-12/2017

86

86

Total debt (f)(g)



$      4,759

$      5,411








January 10, 2014 repayment on the credit facility 



(225)


February 10, 2014 redemption of 6¾% Series Q senior note 



(150)


Anticipated repayment of The Ritz-Carlton, Naples and Newport Beach Marriott Hotel & Spa mortgage (h) 



(300)


Total debt: as adjusted for subsequent debt transactions 



$      4,084
















Percentage of fixed rate debt 



71%

78%

Weighted average interest rate 



4.7%

5.4%

Weighted average debt maturity 



5.3 years

5.1 years

Cash interest expense (i) 



$        282









(a) Each OP Unit is redeemable for cash or, at our option, for 1.021494 common shares of Host Inc. At December 31, 2013 and 2012, there were 9.5 million and 9.9 million common OP Units, respectively, held by non-controlling interests.

(b) Share prices are the closing price as reported by the New York Stock Exchange.  

(c) Amount reflects market price of a single $1,000 debenture as quoted by Bloomberg L.P.

(d) At December 31, 2013, the principal balance outstanding of the 2½% Exchangeable Senior Debentures due 2029 (the "2009 Debentures") is $400 million. The discount related to these debentures is amortized through October 15, 2015, the first date at which holders can require us to repurchase the 2009 Debentures for cash. 

(e) The interest rate shown is the weighted average rate of the outstanding credit facility at December 31, 2013. 

(f) In accordance with GAAP, total debt includes the debt of entities that we consolidate, but of which we do not own 100%, and excludes the debt of entities that we do not consolidate, but of which we have a non-controlling ownership interest and record our investment therein under the equity method of accounting. As of December 31, 2013, our non-controlling partners' share of consolidated debt is $93 million and our share of debt in unconsolidated investments is $500 million.

(g) Total debt as of December 31, 2013 and 2012 includes net discounts of $31 million and $48 million, respectively.

(h) We intend to repay the 3.25% $300 million mortgage loan on The Ritz-Carlton, Naples and Newport Beach Marriott Hotel & Spa at maturity on March 1, 2014 with available cash.

(i) The following chart reconciles cash interest expense to the GAAP interest expense for 2013 and Forecast Full Year 2014:








Forecast

December 31,




Full Year 2014

2013




GAAP interest expense

$        222

$        304




Non-cash losses on debt extinguishments (1)

(1)

(13)




Non-cash interest for exchangeable debentures

(16)

(15)




Amortization of deferred financing costs

(9)

(10)




Change in accrued interest

(1)

16




Cash interest expense

$        195

$        282









(1) Represents the accelerated amortization of deferred financing costs and original issue discounts due to debt extinguishments.

 


HOST HOTELS & RESORTS, INC.

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (a)

(unaudited, in millions)












Quarter ended 

Year ended





As Adjusted

As Reported






December 31,

December 31,

December 31,

December 31,

December 31,




2013

2012 (a)

2012

2013

2012

Net income (loss) (b) (f)

$        126

$        (26)

$         15

$        325

$         63

Interest expense

60

81

101

304

373

Depreciation and amortization

177

175

212

696

662

Income taxes

2

12

22

21

31

Discontinued operations (c)

-

8

9

15

32

EBITDA (d)

365

250

359

1,361

1,161

Gain on dispositions (e)

(66)

-

-

(98)

(48)

Acquisition costs 

-

-

-

1

7

Recognition of deferred gain on land condemnation (f)

-

-

-

(11)

-

Litigation loss (g)

-

-

-

8

-

Gain on property insurance settlement

-

(2)

(2)

-

(2)

Non-cash impairment expense

1

60

60

1

60

Amortization of deferred gains and other property transactions

-

(1)

(1)

-

(4)

Equity investment adjustments:






Equity in (earnings) losses of affiliates (h)

20

2

-

17

(2)

Pro rata Adjusted EBITDA of equity investments

11

9

14

48

34

Consolidated partnership adjustments:






Pro rata Adjusted EBITDA attributable to non-controlling partners in other consolidated partnerships

(9)

(4)

(4)

(21)

(16)

Adjusted EBITDA (d)

$        322

$        314

$        426

$      1,306

$      1,190









(a) See the Notes to Financial Information for discussion of non-GAAP measures, reporting periods and information on the calculation of As Adjusted quarterly results.

(b) The difference of $41 million in net income (loss) between the As Adjusted quarter ended December 31, 2012 and the As Reported quarter ended December 31, 2012 reflects the exclusion of estimated net income (loss) from September 8, 2012 through September 30, 2012 for our Marriott-managed hotels and the exclusion of September 2012 operations for our non-Marriott properties, which previously had been reported in the fourth quarter 2012 results.   

(c) Reflects the interest expense, depreciation and amortization and income taxes included in discontinued operations.

(d) EBITDA and Adjusted EBITDA include a gain on sale of $21 million for the year ended December 31, 2013 for the sale of excess land adjacent to our Newport Beach Marriott Hotel & Spa as a gain on sale of undepreciated property. 

(e) Reflects the gain recorded on the sale of five hotels in 2013 and three hotels in 2012.  

(f) During the first quarter of 2013, we recognized a previously deferred gain of approximately $11 million related to the eminent domain claim by the State of Georgia for 2.9 acres of land at the Atlanta Marriott Perimeter Center for highway expansion, for which we received cash proceeds in 2007. We have included the gain 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 we received the proceeds, we have excluded the gain from Adjusted FFO per diluted share and Adjusted EBITDA.  

(g) Effective April 1, 2013, we modified the definition of Adjusted EBITDA to exclude gains or losses associated with litigation outside the ordinary course of business, which is consistent with the definition of Adjusted FFO that we adopted effective January 1, 2011. See the Notes to Financial Information for further discussion. On December 13, 2013, the Texas Supreme Court granted our Petition for Review on litigation related to the sale of land under the San Antonio Marriott Rivercenter in 2005. We have accrued $68 million related to this litigation, which we believe reflects substantially all of our obligation assuming we lose the appeal. We have $25 million in restricted cash that will be utilized to pay a portion of any judgment, assuming we lose the appeal.  

(h) Includes an adjustment of $15 million for our portion of the non-cash impairment charges related to one of the hotels in our joint venture in Europe. The impairment charge has no effect on Adjusted EBITDA, NAREIT FFO or Adjusted FFO.  See the Notes to Financial Information.  

 

 

HOST HOTELS & RESORTS, INC.

Reconciliation of Net Income (Loss) to NAREIT

and Adjusted Funds From Operations per Diluted Share (a)

(unaudited, in millions, except per share amounts)












Quarter ended 

Year ended





As Adjusted

As Reported






December 31,

December 31,

December 31,

December 31,

December 31,




2013

2012 (a)

2012

2013

2012

Net income (loss) (b)

$        126

$        (26)

$         15

$        325

$         63

Less:  Net income attributable to non-controlling interests

(3)

-

-

(8)

(2)

Net income (loss) attributable to Host Inc.

123

(26)

15

317

61

Gain on dispositions, net of taxes (c)

(65)

-

-

(97)

(48)

Gain on property insurance settlement

-

(2)

(2)

-

(2)

Amortization of deferred gains and other property transactions, net of taxes

-

(1)

(1)

-

(4)

Depreciation and amortization

176

182

220

703

691

Non-cash impairment charges

1

60

60

1

60

Equity investment adjustments:







Equity in (earnings) losses of affiliates

20

1

-

17

(2)


Pro rata FFO of equity investments (d)

1

4

7

26

20

Consolidated partner adjustments:







FFO adjustment for non-controlling partnerships 

(3)

(2)

(2)

(8)

(7)


FFO adjustment for non-controlling interests of Host LP

(2)

(3)

(4)

(8)

(10)

NAREIT FFO (e)

251

213

293

951

759

Loss on debt extinguishment

-

3

3

40

35

Acquisition costs (f)

-

2

2

1

10

Recognition of deferred gain on land condemnation (g)

-

-

-

(11)

-

Litigation loss (h)

-

-

-

8

-

Loss attributable to non-controlling interests

-

-

-

-

(1)

Adjusted FFO (e)

$        251

$        218

$        298

$        989

$        803







For calculation on a per share basis:












Adjustments for dilutive securities (i):






Assuming conversion of Exchangeable Senior Debentures

$          7

$          8

$         10

$         26

$         31

Diluted NAREIT FFO

$        258

$        221

$        303

$        977

$        790

Diluted Adjusted FFO

$        258

$        226

$        308

$      1,015

$        834







Diluted weighted average shares outstanding-EPS

755.6

725.3

725.1

747.9

719.6

Assuming conversion of Exchangeable Senior Debentures

29.9

40.7

40.7

29.5

40.4

Diluted weighted average shares outstanding - NAREIT FFO and Adjusted FFO

785.5

766.0

765.8

777.4

760.0

NAREIT FFO per diluted share

$        .33

$        .29

$        .40

$       1.26

$       1.04

Adjusted FFO per diluted share

$        .33

$        .30

$        .40

$       1.31

$       1.10









(a) See the Notes to Financial Information for discussion of non-GAAP measures, reporting periods and information on the calculation of As Adjusted quarterly results.

(b) The difference of $41 million in net income (loss) between the As Adjusted quarter ended December 31, 2012 and the As Reported quarter ended December 31, 2012 reflects the exclusion of estimated net income (loss) from September 8, 2012 through September 30, 2012 for our Marriott-managed hotels and the exclusion of the September 2012 operations for our non-Marriott properties, which previously were reported in the fourth quarter 2012 results.

(c) Reflects the gain recorded on the sale of five hotels in 2013 and three hotels in 2012.  

(d) See footnote (h) to the Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA. 

(e) NAREIT and Adjusted FFO include a gain on sale of $21 million for the year ended December 31, 2013 for the sale of excess land adjacent to our Newport Beach Marriott Hotel & Spa. 

(f) Includes approximately $3 million for the year ended December 31, 2012, related to our share of acquisition costs incurred by unconsolidated joint ventures.

(g) See footnote (f) to the Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA. 

(h) See footnote (g) to the Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA. 

(i) Earnings (loss) per diluted share and NAREIT FFO and Adjusted FFO per diluted share are adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, preferred OP units held by non-controlling 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 securities if they are anti-dilutive.