BETHESDA, Md., Oct. 13, 1988 - Host Marriott Corporation
(NYSE: HMT) today reported its third quarter 1998 results of operations,
noting that Comparative Funds From Operations ("Comparative FFO," which
represents Funds From Operations, as defined by the National Association
of Real Estate Investment Trusts, plus deferred taxes) increased 33 percent
to $76 million for the quarter as compared to $57 million for the 1997
third quarter. On a per share basis diluted for the conversion of the company's
Convertible Preferred Securities, Comparative FFO improved 30 percent to
$.35 per share in the 1998 third quarter from $.27 per share in the 1997
third quarter.
Year-to-date Comparative FFO increased 40 percent to $282 million in
1998 as compared to $202 million for the comparable 1997 period. On a per
share basis diluted for the conversion of the company's Convertible Preferred
Securities, Comparative FFO improved 35 percent to $1.27 per share in 1998
from $.94 per share in the comparable 1997 year-to-date period.
For the quarter, the company reported that comparable full service hotel
Earnings Before Interest Expense, Taxes, Depreciation and Amortization
and Other Non-Cash items ("EBITDA") grew 11.0 percent on a 7.2 percent
increase in room revenue per available room ("REVPAR"). On a year-to-date
basis, comparable full service EBITDA grew 11.5 percent on REVPAR growth
of
7.9 percent.
Mr. Terence C. Golden, president and chief executive officer of Host
Marriott stated, "We are pleased by the continued strength of our operating
results in the third quarter, even as the economy has become less certain.
The strong REVPAR and EBITDA results validate our strategy of owning the
highest quality assets in urban, airport and resort/convention locations."
Mr. Golden added, "We remain comfortable with the analysts' consensus
Comparative FFO target of $1.81 per diluted share for 1998, which would
represent a 33% increase over 1997. For 1999, given the broad range of
forecasts of GDP for next year, we believe a range of Comparative FFO estimates
from approximately $2.25 to $2.35 per share is appropriate at this time."
Mr. Robert E. Parsons, Jr., executive vice president and chief financial
officer, stated, "During the third quarter, we completed the first phase
of the financial restructuring of our company, which included tendering
for almost $1.55 billion of outstanding public bonds, the issuance of $1.7
billion of new, less expensive bonds and the replacement of our previous
line of credit with a new $1.25 billion expanded line." Mr. Parsons further
noted, "We are pleased that these financing transactions now put us in
the financial position to effectively deal with the challenges and opportunities
facing us in today's economic environment."
Host Marriott's 1998 third quarter revenues increased 19 percent to
$293 million from $246 million in the 1997 third quarter. Operating profit
for the quarter improved to $119 million from $89 million in 1997, a 34
percent improvement. The company reported net income before extraordinary
item of $4 million ($.02 per share) for the quarter compared to $6 million
($.03 per share) in 1997. Year-to-date 1998 revenues, operating profit
and income before extraordinary item were significantly impacted by gains
totaling approximately $50 million before taxes on the disposition of the
New York East Side Marriott and the Napa Valley Marriott in the 1998 second
quarter. For the thirty-six weeks ended September 11, 1998, Host Marriott's
revenues increased 35 percent to $1,040 million, compared to $768 million
for the same period in 1997. Year-to-date operating profit for 1998 increased
62 percent to $493 million, reflecting the dramatic increase in hotel operating
results and the gains on the disposition of the two hotels. In addition,
the company's 1998 year-to-date income before extraordinary item totaled
$100 million ($.49 per share) compared to $38 million ($.19 per share)
in 1997. Net income for the 1998 third quarter and year-to-date included
a $148 million ($(.73) per share) extraordinary loss from the early extinguishment
of debt associated with the company's successful tender offer for substantially
all of its then outstanding public debt. The third quarter and year-to-date
operating profit and income before extraordinary item have also been impacted
by costs incurred for the company's conversion to a REIT. These costs include
primarily legal, printing, investment banking, and accounting fees and
totaled $8 million for the third quarter and $14 million year-to-date.
Mr. Parsons also commented, "We are making great progress toward completion
of our conversion to REIT status at year end. We have completed our refinancing
objectives and launched an offer this week to acquire all of the outstanding
limited partner interests of eight limited partnerships in which we serve
as general partner. We continue to believe that our company will realize
significant benefits from our REIT conversion, including substantially
lower taxes, greater ability to compete for acquisitions, and improved
financial flexibility."
Comparative
Full Service Hotel Statistics
|
Twelve Weeks Ended
|
Thirty-six Weeks Ended
|
|
|
|
Sept. 11, 1998
|
Sept 12, 1997
|
Sept 11, 1998
|
Sept 12, 1997
|
Average Room Rate |
$132.16 |
$124.35 |
$141.68 |
$131.51 |
Average Occupancy |
80.7% |
80.0% |
79.9% |
79.8% |
REVPAR |
$106.65 |
$99.48 |
$113.27 |
$105.00 |
REVPAR Increase |
7.2% |
|
7.9% |
|
EBITDA Increase |
11.0% |
|
11.5% |
|
Host Marriott Corporation is a lodging real estate company
which currently owns, or holds controlling interests in, 104 upscale and
luxury full service hotel properties primarily operated under the Marriott
and Ritz-Carlton brand names. Additionally, the company owns 31 senior
living communities, all of which are operated by Marriott International.
The company also serves as general partner and holds minority interests
in various unconsolidated partnerships that own 240 lodging properties,
20 of which are full service hotels.
For further information on Host Marriott Corporation,
please visit the company's Web site at http://www.hostmarriott.com. Certain
matters discussed in this press release include forward-looking statements
within the meaning of the Private Litigation Reform Act of 1995, including,
without limitation, statements related to the proposed REIT conversion,
the terms, structure and timing thereof, and the expected effects of the
proposed REIT conversion and the Blackstone portfolio acquisition on FFO,
EBITDA, and business and operating strategies in the future. All forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual transactions, results, performance or achievements
to be materially different from any future transactions, results, performance
or achievements expressed or implied by such forward-looking statements.
Certain of the transactions described herein are subject to certain consents
of shareholders, lenders, debt holders and partners of Host Marriott and
its affiliates and of other third parties and various other conditions
and contingencies, and future results, performance and achievements will
be affected by general economic, business and financing conditions, competition
and governmental actions. The cautionary statements set forth in reports
filed under the Securities Act of 1934 contain important factors with respect
to such forward-looking statements: (i) national and local economic and
business conditions that will, among other things, affect demand for hotels
and other properties, the level of rates and occupancy that can be achieved
by such properties and the availability and terms of financing; (ii) the
ability to maintain the properties in a first-class manner; (iii) the ability
to compete effectively; (iv) the ability to acquire or develop additional
properties and risk that potential acquisitions or developments may not
perform in accordance with expectations; (v) the ability to obtain required
consents of shareholders, lenders, debtholders, partners and ground lessors
in connection with the Company's proposed conversion to a real estate investment
trust (REIT) and to consummate all of the transactions constituting the
REIT conversion; (vi) changes in travel patterns, taxes and government
regulations; (vii) governmental approvals, actions and initiatives; (viii)
the effects of tax legislative action; and (ix) the timing of the Company's
election to be taxed as a REIT and the ability to satisfy complex rules
in order to qualify for taxation as a REIT for federal income tax purposes
and to operate effectively within the limitations imposed by these rules.
Although the Company believes the expectations reflected
in such forward-looking statements are based upon reasonable assumptions,
they can give no assurance that their expectations will be attained or
that any deviations will not be material. The Company undertakes no obligation
to publicly release the result of any revisions to these forward-looking
statements that may be made to reflect any future events or circumstances. |