Host Hotels & Resorts, Inc. Provides Updated Guidance Due to
the Effects of Hurricane Sandy
BETHESDA, Md., Nov. 12, 2012 /PRNewswire/ -- Host Hotels &
Resorts, Inc. (NYSE: HST) today announced that several of the
Company's properties in New York,
Massachusetts, New Jersey, Maryland and Pennsylvania have reported some level of
damage or power outage due to Hurricane Sandy; however, the Company
is very pleased to report that there were no reported injuries to
guests or staff. The Company also appreciates the exceptional
teams at all of its east coast properties for their tremendous
efforts during this storm. The most significant damage took place
at the New York Marriott Downtown in lower Manhattan. This hotel was subject to an
evacuation order from the city of New
York, lost electrical power and steam service (used for
heating), experienced water damage to its basement and lobby areas
and was closed for 15 days. Electricity, steam and the damaged
areas have been restored and the hotel reopened today. In
addition, although the W New York,
Union Square, the Sheraton Parsippany and the Gaithersburg Marriott
Washingtonian Center did not suffer material damage, the hotels
were closed due to the loss of power and/or steam for periods of
time ranging from two to eight days. In addition to the
impact in New York, the storm
also affected markets throughout the Northeast and Mid-Atlantic,
particularly in Washington,
D.C. The reduction in demand in these regions was driven
primarily by lower levels of transient business, although there
were also a few group cancellations. The Company
has begun the process of assessing and quantifying the damage
amounts, both for property damage and business
interruption.
Based on preliminary information regarding the impact of
Hurricane Sandy and assuming no insurance recovery this year, the
Company is revising its 2012 guidance as follows:
- Comparable hotel RevPAR will increase 6.0% to 6.25%;
- Total revenues under GAAP would increase 6.8% to 7.2%;
- Total comparable hotel revenues would increase 5.0% to
5.4%;
- Operating profit margins under GAAP would increase
approximately 140 basis points to 160 basis points; and
- Comparable hotel adjusted operating profit margins will
increase approximately 120 basis points to 135 basis points.
Based upon these parameters, the Company estimates that its
revised 2012 guidance is as follows:
- earnings per diluted share should range from approximately
$.13 to $.15;
- net income should range from $100 million to
$113 million;
- NAREIT FFO per diluted share should be approximately
$1.00 to $1.02;
- Adjusted FFO per diluted share should be approximately
$1.05 to $1.07; and
- Adjusted EBITDA should be approximately $1,147 million to $1,160 million.
See the 2012 Forecast Schedules 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 104 properties in the United
States and 16 properties internationally totaling
approximately 65,000 rooms. The Company also holds non-controlling
interests in a joint venture in Europe that owns 14 hotels with approximately
4,400 rooms and a joint venture in Asia that owns one hotel with approximately
300 rooms in Australia and a
minority interest in seven hotels with approximately 1,750 rooms in
India, two in Bangalore and five that are in various stages
of development in two cities. 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 Méridien®, The
Luxury Collection®, Hyatt®,
Fairmont®, Four Seasons®, Hilton®,
Swissôtel®, 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 assumption
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: national and local economic and business
conditions, including the effect on travel of potential terrorist
attacks, that will affect occupancy rates at our hotels and the
demand for hotel products and services; operating risks associated
with the hotel business; risks associated with the level of our
indebtedness and our ability to meet covenants in our debt
agreements; relationships with property managers; our ability to
maintain our properties in a first-class manner, including meeting
capital expenditure requirements; our ability to compete
effectively in areas such as access, location, quality of
accommodations and room rate structures; changes in travel
patterns, taxes and government regulations which influence or
determine wages, prices, construction procedures and costs; our
ability to complete acquisitions and dispositions; and 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 November 12, 2012,
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.
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and NAREIT
and
Adjusted Funds From Operations per Diluted Share for 2012 Forecasts
(a)
(unaudited, in millions, except per share amounts)
|
2012
|
|
Low-end
of
range
|
High-end
of
range
|
|
Net
income
|
$
100
|
$
113
|
Interest expense
|
372
|
372
|
Depreciation and
amortization
|
687
|
687
|
Income taxes
|
21
|
21
|
Discontinued operations
|
2
|
2
|
EBITDA
|
1,182
|
1,195
|
Gain on dispositions
|
(48)
|
(48)
|
Acquisition costs
|
6
|
6
|
Amortization of deferred
gains
|
(5)
|
(5)
|
Equity investment
adjustments:
|
|
|
Equity in
earnings of affiliates
|
(4)
|
(4)
|
Pro rata
Adjusted EBITDA of equity investments
|
32
|
32
|
Consolidated partnership
adjustments:
|
|
|
Pro rata
Adjusted EBITDA attributable to non-controlling partners in
other
consolidated partnerships
|
(16)
|
(16)
|
Adjusted EBITDA
|
$
1,147
|
$
1,160
|
|
|
|
|
2012
|
|
Low-end
of
range
|
High-end
of
range
|
Net
income
|
$
100
|
$
113
|
Less: Net income attributable to
non-controlling interests
|
(3)
|
(3)
|
Net
income attributable to Host Inc.
|
97
|
110
|
Adjustments:
|
|
|
Gain on dispositions
|
(48)
|
(48)
|
Depreciation and
amortization
|
685
|
685
|
Amortization of deferred
gains
|
(5)
|
(5)
|
Partnership adjustments
|
14
|
14
|
FFO of non-controlling interests
of Host LP
|
(11)
|
(11)
|
NAREIT
FFO
|
732
|
745
|
Adjustments:
|
|
|
Acquisition costs
|
8
|
8
|
Loss on debt
extinguishments
|
32
|
32
|
Loss attributable to
non-controlling interests
|
(1)
|
(1)
|
Adjusted FFO
|
771
|
784
|
Adjustment
for dilutive securities:
|
|
|
Assuming conversion of
Exchangeable Senior Debentures
|
31
|
31
|
Diluted
Adjusted FFO
|
$
802
|
$
815
|
|
|
|
Weighted average diluted shares –
EPS
|
718.9
|
718.9
|
Weighted average diluted shares – NAREIT and
Adjusted FFO (b)
|
760.6
|
760.6
|
Earnings per diluted share
|
$
.13
|
$
.15
|
NAREIT
FFO per diluted share
|
$
1.00
|
$
1.02
|
Adjusted FFO per diluted share
|
$
1.05
|
$
1.07
|
(a) The forecasts were based on the below
assumptions:
- Comparable hotel RevPAR will increase 6.0% to 6.25% for the low
and high ends of the forecasted range, respectively.
- Comparable hotel adjusted operating profit margins will
increase 120 basis points to 135 basis points for the low and high
ends of the forecasted range, respectively.
- Interest expense includes approximately $33 million
related to non-cash interest expense for exchangeable senior
debentures, amortization of original issue discounts and deferred
financing fees.
- No insurance recovery in 2012 for property damage and business
interruption for the effects of Hurricane Sandy.
- We expect to spend approximately $165 million to
$175 million on ROI/redevelopment capital expenditures,
approximately $125 million to $135 million on acquisition
expenditures and approximately $330 million
to $340 million on renewal and replacement
expenditures.
- We expect to complete the sale of $300 million to
$400 million of properties during the fourth quarter. However,
due to uncertainty around the completion and timing of these
transactions, we have not adjusted the forecast for any use of
proceeds, gains on sale or adjusted the number of comparable
properties.
(b) The Adjusted FFO per diluted share includes 41 million
shares for the dilution of exchangeable senior debentures.
HOST HOTELS & RESORTS,
INC.
Schedule of Comparable Hotel Adjusted Operating Profit
Margin for 2012 Forecasts (a)
(unaudited, in millions,
except hotel statistics)
|
2012
|
|
Low-end
|
High-end
|
|
of
range
|
of
range
|
Operating
profit margin under GAAP (b)
|
8.0%
|
8.2%
|
Comparable
hotel adjusted operating profit margin (c)
|
23.7%
|
23.85%
|
|
|
|
Comparable
hotel sales
|
|
|
Room
|
$
2,852
|
$
2,858
|
Other
|
1,580
|
1,590
|
Comparable hotel sales (d)
|
4,432
|
4,448
|
Comparable
hotel expenses
|
|
|
Rooms and other departmental
costs
|
1,899
|
1,902
|
Management fees, ground rent and
other costs
|
1,483
|
1,485
|
Comparable hotel expenses (e)
|
3,382
|
3,387
|
Comparable hotel adjusted operating
profit
|
1,050
|
1,061
|
Non-comparable hotel results, net
|
171
|
171
|
Loss from
hotels leased from HPT
|
(5)
|
(5)
|
Depreciation and amortization
|
(687)
|
(687)
|
Corporate
and other expenses
|
(105)
|
(105)
|
Operating profit
|
$
424
|
$
435
|
(a) Forecast comparable hotel results include the 104 hotels
that were classified as comparable as of September 7, 2012.
See "Comparable Hotel Operating Statistics" in Notes to Financial
Information. No assurances can be made as to the hotels that will
be in the comparable hotel set for 2012. Also, see the notes to the
"Reconciliation of Net Income to EBITDA, Adjusted EBITDA and NAREIT
and Adjusted Funds From Operations per Diluted Share for 2012
Forecasts" for other forecast assumptions and further discussion of
our comparable hotel set.
(b) Operating profit margin under GAAP is calculated as the
operating profit divided by the forecast total revenues per the
consolidated statements of operations. See (d) below for forecasted
revenues.
(c) Comparable hotel adjusted operating profit margin is
calculated as the comparable hotel adjusted operating profit
divided by the comparable hotel sales per the table
above.
(d) The reconciliation of forecast total revenues to the
forecast comparable hotel sales is as follows (in millions):
|
2012
|
|
Low-end
|
High-end
|
|
of
range
|
of
range
|
Revenues
|
$
5,282
|
$
5,300
|
Non-comparable hotel revenues
|
(670)
|
(672)
|
Revenues
for hotels leased from HPT
|
(231)
|
(231)
|
Hotel
revenues for which we record rental income, net
|
51
|
51
|
Comparable hotel sales
|
$
4,432
|
$
4,448
|
(e) The reconciliation of forecast operating costs
and expenses to the comparable hotel expenses is as follows (in
millions):
|
2012
|
|
Low-end
|
High-end
|
|
of
range
|
of
range
|
Operating
costs and expenses
|
$
4,858
|
$
4,865
|
Non-comparable hotel and other expenses
|
(500)
|
(502)
|
Expenses
for hotels leased from HPT
|
(236)
|
(236)
|
Hotel
expenses for which we record rental income
|
52
|
52
|
Depreciation and amortization
|
(687)
|
(687)
|
Corporate
and other expenses
|
(105)
|
(105)
|
Comparable hotel expenses
|
$
3,382
|
$
3,387
|
HOST HOTELS & RESORTS,
INC.
Notes to Financial Information
FORECASTS
Our forecast of earnings per diluted share, NAREIT and Adjusted
FFO per diluted share, EBITDA, Adjusted EBITDA and comparable hotel
adjusted operating profit margins are forward-looking statements
and are not guarantees of future performance and involve known and
unknown risks, uncertainties and other factors which may cause
actual results and performance to differ materially from those
expressed or implied by these forecasts. Although we believe the
expectations reflected in the forecasts are based upon reasonable
assumptions, we can give no assurance that the expectations will be
attained or that the results will not be materially different.
Risks that may affect these assumptions and forecasts include the
following: the recovery from Hurricane Sandy is ongoing and
the effects on future hotel demand are difficult to quantify at
this time based on the preliminary information
available; potential changes in overall economic outlook make
it inherently difficult to forecast the level of RevPAR and margin
growth; the amount and timing of acquisitions and dispositions of
hotel properties is an estimate that can substantially affect
financial results, including such items as net income, depreciation
and gains on dispositions; the level of capital expenditures may
change significantly, which will directly affect the level of
depreciation expense and net income; the amount and timing of debt
payments may change significantly based on market conditions, which
will directly affect the level of interest expense and net income;
the amount and timing of transactions involving shares of our
common stock may change based on market conditions; and other risks
and uncertainties associated with our business described herein and
in our annual report on Form 10‑K, quarterly reports on Form 10-Q
and current reports on Form 8‑K filed with the SEC.
COMPARABLE HOTEL OPERATING STATISTICS
To facilitate a year-to-year comparison of our operations, we
present certain operating statistics (i.e., RevPAR, average daily
rate and average occupancy) and operating results (revenues,
expenses, adjusted operating profit and associated margins) for the
periods included in this report on a comparable hotel basis.
Because these statistics and operating results are for our hotel
properties, they exclude results for our non-hotel properties and
other real estate investments. We define our comparable hotels as
properties:
(i) that are owned or leased by us and the operations of
which are included in our consolidated results, whether as
continuing operations or discontinued operations, for the entirety
of the reporting periods being compared; and
(ii) that have not sustained substantial property damage or
business interruption, or undergone large-scale capital projects
(as further defined below) during the reporting periods being
compared.
The hotel business is capital-intensive and renovations are a
regular part of the business. Generally, hotels under renovation
remain comparable hotels. A large scale capital project that would
cause a hotel to be excluded from our comparable hotel set is an
extensive renovation of several core aspects of the hotel, such as
rooms, meeting space, lobby, bars, restaurants and other public
spaces. Both quantitative and qualitative factors are taken into
consideration in determining if the renovation would cause a hotel
to be removed from the comparable hotel set, including unusual or
exceptional circumstances such as: a reduction or increase in room
count, rebranding, a significant alteration of the business
operations, or the closing of the hotel during the renovation.
We do not include an acquired hotel in our comparable hotel set
until the operating results for that hotel have been included in
our consolidated results for one full calendar year. For example,
we acquired the Westin Chicago River North in August of 2010. The
hotel was not included in our comparable hotels until January 1, 2012. Hotels that we sell are excluded
from the comparable hotel set once the transaction has closed.
Similarly, hotels are excluded from our comparable hotel set from
the date that they sustain substantial property damage or business
interruption or commence a large-scale capital project. In each
case, these hotels are returned to the comparable hotel set when
the operations of the hotel have been included in our consolidated
results for one full calendar year after completion of the repair
of the property damage or cessation of the business interruption,
or the completion of large-scale capital projects, as
applicable.
NON-GAAP FINANCIAL MEASURES
Included in this press release are certain "non-GAAP financial
measures," which are measures of our historical or future financial
performance that are not calculated and presented in accordance
with GAAP, within the meaning of applicable SEC rules. They are as
follows: (i) FFO and FFO per diluted share (both NAREIT and
Adjusted), (ii) EBITDA, (iii) Adjusted EBITDA and (iv) Comparable
Hotel Operating Results. The following discussion defines these
terms and presents why we believe they are useful supplemental
measures of our performance.
NAREIT FFO and NAREIT FFO per Diluted Share
We present NAREIT FFO and NAREIT FFO per diluted share as
non-GAAP measures of our performance in addition to our earnings
per share (calculated in accordance with GAAP). We calculate NAREIT
FFO per diluted share as our NAREIT FFO (defined as set forth
below) for a given operating period, as adjusted for the effect of
dilutive securities, divided by the number of fully diluted shares
outstanding during such period, in accordance with NAREIT
guidelines. NAREIT defines FFO as net income (calculated in
accordance with GAAP) excluding gains and losses from sales of real
estate, the cumulative effect of changes in accounting principles,
real estate-related depreciation, amortization and impairments and
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect our pro rata FFO of those entities on the
same basis.
We believe that NAREIT FFO per diluted share is a useful
supplemental measure of our operating performance and that the
presentation of NAREIT FFO per diluted share, when combined with
the primary GAAP presentation of earnings per share, provides
beneficial information to investors. By excluding the effect of
real estate depreciation, amortization, impairments and gains and
losses from sales of depreciable real estate, all of which are
based on historical cost accounting and which may be of lesser
significance in evaluating current performance, we believe that
such measures can facilitate comparisons of operating performance
between periods and with other REITs, even though NAREIT FFO per
diluted share does not represent an amount that accrues directly to
holders of our common stock. Historical cost accounting for real
estate assets implicitly assumes that the value of real estate
assets diminishes predictably over time. As noted by NAREIT in its
April 2002 "White Paper on Funds From
Operations," since real estate values have historically risen or
fallen with market conditions, many industry investors have
considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient by
themselves. For these reasons, NAREIT adopted the FFO metric in
order to promote an industry-wide measure of REIT operating
performance.
Adjusted FFO per Diluted Share
We also present Adjusted FFO per diluted share when evaluating
our performance because management believes that the exclusion of
certain additional items described below provides useful
supplemental information to investors regarding our ongoing
operating performance. Management historically has made the
adjustments detailed below in evaluating our performance, in our
annual budget process and for our compensation programs. We believe
that the presentation of Adjusted FFO per diluted share, when
combined with both the primary GAAP presentation of earnings per
share and FFO per diluted share as defined by NAREIT, provides
useful supplemental information that is beneficial to an investor's
complete understanding of our operating performance. We adjust
NAREIT FFO per diluted share for the following items, which may
occur in any period, and refer to this measure as Adjusted FFO per
diluted share:
- Gains and Losses on the Extinguishment of Debt – We exclude the
effect of finance charges and premiums associated with the
extinguishment of debt, including the acceleration of deferred
financing costs associated with the original issuance of the debt
being redeemed or retired. We also exclude the gains on debt
repurchases and the original issuance costs associated with the
retirement of preferred stock. We believe that these items are not
reflective of our ongoing finance costs.
- Acquisition Costs – Under GAAP, costs associated with completed
property acquisitions are expensed in the year incurred. We exclude
the effect of these costs because we believe they are not
reflective of the ongoing performance of the Company.
- Litigation Gains and Losses – We exclude the effect of gains or
losses associated with litigation recorded under GAAP that we
consider outside the ordinary course of business. We believe that
including these items is not consistent with our ongoing operating
performance.
EBITDA
Earnings before Interest Expense, Income Taxes, Depreciation and
Amortization ("EBITDA") is a commonly used measure of performance
in many industries. Management believes EBITDA provides useful
information to investors regarding our results of operations
because it helps us and our investors evaluate the ongoing
operating performance of our properties after removing the impact
of the Company's capital structure (primarily interest expense) and
its asset base (primarily depreciation and amortization).
Management also believes the use of EBITDA facilitates comparisons
between us and other lodging REITs, hotel owners who are not REITs
and other capital-intensive companies. Management uses EBITDA to
evaluate property-level results and as one measure in determining
the value of acquisitions and dispositions and, like FFO and
Adjusted FFO per diluted share, is widely used by management in the
annual budget process and for our compensation programs.
Adjusted EBITDA
Historically, management has adjusted EBITDA when evaluating the
performance of Host Inc. and Host LP because we believe that the
exclusion of certain additional items described below provides
useful supplemental information to investors regarding our ongoing
operating performance and that the presentation of Adjusted EBITDA,
when combined with the primary GAAP presentation of net income, is
beneficial to an investor's complete understanding of our operating
performance. Adjusted EBITDA also is a relevant measure in
calculating certain credit ratios. We adjust EBITDA for the
following items, which may occur in any period, and refer to this
measure as Adjusted EBITDA:
- Real Estate Transactions – We exclude the effect of gains and
losses, including the amortization of deferred gains, recorded on
the disposition or acquisition of depreciable assets and property
insurance gains in our consolidated statement of operations because
we believe that including them in Adjusted EBITDA is not consistent
with reflecting the ongoing performance of our assets. In addition,
material gains or losses from the depreciated value of the disposed
assets could be less important to investors given that the
depreciated asset value often does not reflect the market value of
real estate assets as noted above.
- Equity Investment Adjustments – We exclude the equity in
earnings (losses) of affiliates as presented in our consolidated
statement of operations because it includes our pro rata portion of
the depreciation, amortization and interest expense related to such
investments, which are excluded from EBITDA. We include our pro
rata share of the Adjusted EBITDA of our equity investments as we
believe this reflects more accurately the performance of our
investments. The pro rata Adjusted EBITDA of equity investments is
defined as the EBITDA of our equity investments adjusted for any
gains or losses on property transactions multiplied by our
percentage ownership in the partnership or joint venture.
- Consolidated Partnership Adjustments – We deduct the
non-controlling partners' pro rata share of Adjusted EBITDA of our
consolidated partnerships as this reflects the non-controlling
owners' interest in the EBITDA of our consolidated partnerships.
The pro rata Adjusted EBITDA of non-controlling partners is defined
as the EBITDA of our consolidated partnerships adjusted for any
gains or losses on property transactions multiplied by the
non-controlling partners' percentage ownership in the partnership
or joint venture.
- Cumulative Effect of a Change in Accounting Principle –
Infrequently, the Financial Accounting Standards Board promulgates
new accounting standards that require the consolidated statement of
operations to reflect the cumulative effect of a change in
accounting principle. We exclude these one-time adjustments because
they do not reflect our actual performance for that period.
- Impairment Losses – We exclude the effect of impairment losses
recorded because we believe that including them in Adjusted EBITDA
is not consistent with reflecting the ongoing performance of our
remaining assets. In addition, we believe that impairment charges,
which are based off of historical cost accounting values, are
similar to gains and losses on dispositions and depreciation
expense, both of which are excluded from EBITDA.
- Acquisition Costs – Under GAAP, costs associated with completed
property acquisitions are expensed in the year incurred. We exclude
the effect of these costs because we believe they are not
reflective of the ongoing performance of the company.
Limitations on the Use of NAREIT FFO per Diluted Share,
Adjusted FFO per Diluted Share, EBITDA and Adjusted EBITDA
We calculate NAREIT FFO per diluted share in accordance with
standards established by NAREIT, which may not be comparable to
measures calculated by other companies who do not use the NAREIT
definition of FFO or do not calculate FFO per diluted share in
accordance with NAREIT guidance. In addition, although FFO per
diluted share is a useful measure when comparing our results to
other REITs, it may not be helpful to investors when comparing us
to non-REITs. We also calculate Adjusted FFO per diluted share,
which is not in accordance with NAREIT guidance and may not be
comparable to measures calculated by other REITs. EBITDA and
Adjusted EBITDA, as presented, may also not be comparable to
measures calculated by other companies. This information should not
be considered as an alternative to net income, operating profit,
cash from operations or any other operating performance measure
calculated in accordance with GAAP. Cash expenditures for various
long-term assets (such as renewal and replacement capital
expenditures), interest expense (for EBITDA and Adjusted EBITDA
purposes only) and other items have been and will be incurred and
are not reflected in the EBITDA, Adjusted EBITDA, NAREIT FFO per
diluted share and Adjusted FFO per diluted share presentations.
Management compensates for these limitations by separately
considering the impact of these excluded items to the extent they
are material to operating decisions or assessments of our operating
performance. Our consolidated statement of operations and cash
flows include interest expense, capital expenditures, and other
excluded items, all of which should be considered when evaluating
our performance, as well as the usefulness of our non-GAAP
financial measures. Additionally, NAREIT FFO per diluted share,
Adjusted FFO per diluted share, EBITDA and Adjusted EBITDA should
not be considered as a measure of our liquidity or indicative of
funds available to fund our cash needs, including our ability to
make cash distributions. In addition, NAREIT FFO per diluted share
and Adjusted FFO per diluted share do not measure, and should not
be used as a measure of, amounts that accrue directly to
stockholders' benefit.
Comparable Hotel Operating Results
We present certain operating results for our hotels, such as
hotel revenues, expenses, adjusted operating profit (and the
related margin) and food and beverage adjusted profit (and the
related margin), on a comparable hotel, or "same store," basis as
supplemental information for investors. Our comparable hotel
results present operating results for hotels owned during the
entirety of the periods being compared without giving effect to any
acquisitions or dispositions, significant property damage or large
scale capital improvements incurred during these periods. We
present these comparable hotel operating results by eliminating
corporate-level costs and expenses related to our capital
structure, as well as depreciation and amortization. We eliminate
corporate-level costs and expenses to arrive at property-level
results because we believe property-level results provide investors
with supplemental information into the ongoing operating
performance of our hotels. We eliminate depreciation and
amortization because, even though depreciation and amortization are
property-level expenses, these non-cash expenses, which are based
on historical cost accounting for real estate assets, implicitly
assume that the value of real estate assets diminishes predictably
over time. As noted earlier, because real estate values have
historically risen or fallen with market conditions, many real
estate industry investors have considered presentation of
historical cost accounting for operating results to be insufficient
by themselves.
As a result of the elimination of corporate-level costs and
expenses and depreciation and amortization, the comparable hotel
operating results we present do not represent our total revenues,
expenses, operating profit or operating profit margin and should
not be used to evaluate our performance as a whole. Management
compensates for these limitations by separately considering the
impact of these excluded items to the extent they are material to
operating decisions or assessments of our operating performance.
Our consolidated statements of operations include such amounts, all
of which should be considered by investors when evaluating our
performance.
We present these hotel operating results on a comparable hotel
basis because we believe that doing so provides investors and
management with useful information for evaluating the
period-to-period performance of our hotels and facilitates
comparisons with other hotel REITs and hotel owners. In particular,
these measures assist management and investors in distinguishing
whether increases or decreases in revenues and/or expenses are due
to growth or decline of operations at comparable hotels (which
represent the vast majority of our portfolio) or from other
factors, such as the effect of acquisitions or dispositions. While
management believes that presentation of comparable hotel results
is a "same store" supplemental measure that provides useful
information in evaluating our ongoing performance, this measure is
not used to allocate resources or to assess the operating
performance of each of these hotels, as these decisions are based
on data for individual hotels and are not based on comparable hotel
results. For these reasons, we believe that comparable hotel
operating results, when combined with the presentation of GAAP
operating profit, revenues and expenses, provide useful information
to investors and management.
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SOURCE Host Hotels & Resorts, Inc.