Host Hotels & Resorts Report Full Year and Q4 Results: Q4 RevPAR Up 3.6%, Full Year 3.8%
February 17, 2016 3:53am
BETHESDA, Md., Feb. 17, 2016- Host Hotels & Resorts, Inc. (NYSE:HST), (“Host Hotels” or the “Company”), the nation’s largest lodging real estate investment trust (“REIT”), today announced results of operations for the fourth quarter and the year.
“In addition to having a solid quarter, especially from a bottom-line perspective, we undertook a number of initiatives in 2015 to capitalize on value-enhancing opportunities and better position Host Hotels for continued growth and success,” said W. Edward Walter, Chief Executive Officer. “In line with our disciplined approach to actively managing our portfolio and efficiently allocating capital, we sold more than $1 billion of non-core hotels, including hotels sold through joint ventures, returned more than $1.3 billion to stockholders through dividends and our stock repurchase program, invested more than $1 billion in new assets and capital improvements, and repaid or refinanced more than $1.4 billion of debt. Continually improving operational and financial performance and closing the gap between asset value and share price remain our top priorities. We are confident that we are taking the right steps to drive continued growth and value creation.”
(1) NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, Adjusted EBITDA and comparable hotel results are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.
(2) Net income for 2014 includes a net gain of $69 million, or $.09 of diluted earnings per share for settlement of litigation.
Fourth quarter and full year 2015 results reflect the following:
SHARE REPURCHASE PROGRAM AND DIVIDENDS
“During the fourth quarter, we continued to implement our plan to take advantage of the arbitrage between public and private market valuations, and repurchased 19.6 million shares for a total purchase price of $325 million,” said Gregory J. Larson, Executive Vice President and Chief Financial Officer. For the full year, the Company repurchased 38.3 million shares of common stock for a total purchase price of approximately $675 million. The Company currently has $325 million of repurchase capacity under its share repurchase program authorized by the Board of Directors in October 2015. The common stock may be purchased in the open market or through private transactions, from time to time, through December 31, 2016 depending upon market conditions. The plan does not obligate the Company to repurchase any specific number of shares and may be suspended at any time at its discretion.
The Company’s dividend policy is that it generally intends to distribute, over time, 100% of its taxable income, which is dependent primarily on the Company’s results of operations, as well as the tax gains and losses from property sales. The Company paid a regular quarterly cash dividend of $0.20 per share on its common stock on January 15, 2016 to stockholders of record as of December 31, 2015. On February 16, 2016, the Board of Directors authorized a regular quarterly cash dividend of $0.20 per share on its common stock, which equates to a 5.4% annualized yield based on the Company’s current stock price. The dividend will be paid on April 15, 2016, to stockholders of record on March 31, 2016. The Company is committed to sustaining a meaningful dividend, subject to approval by the Company’s Board of Directors.
Acquisition opportunities were limited by continued low interest rates, which increased competition and drove premium pricing for high-quality properties in the Company’s major markets or asset types. During 2015, the Company acquired The Phoenician, a 643-room Luxury Collection resort in Scottsdale, Arizona for $400 million and, during the fourth quarter, the long-term ground lease associated with the Marriott Minneapolis for $34 million. Conversely, this environment has helped the Company successfully execute on its strategic plan of reallocating capital out of markets where it expects lower growth or higher capital expenditure requirements. Proceeds from these sales have been utilized as a source of funds for the Company’s stock repurchase program, capital expenditure programs, and other corporate initiatives. Subsequent to year-end, the Company sold two non-core assets, the 139-room Novotel Wellington, New Zealand and the 350-room San Diego Marriott Mission Valley for a total sales price of approximately $98 million and recorded a total gain of $56 million. The following table is a summary of our completed and pending disposition activity (in US$, in millions):
(1) Owned by the Company's joint venture in Europe. Net proceeds are based on the Company's ownership percentage.
(2) Owned by the Company's joint venture in Asia. Net proceeds are based on the Company's ownership percentage.
(3) Represents three hotels currently under contract that are subject to various closing conditions. There can be no assurances that these properties will be sold within this time period or at the sales prices indicated.
The net impact on the Company’s forecast as a result of the 2016 sales discussed above, including three properties under contract, is a decrease to net income (excluding gain on sale) and Adjusted EBITDA of $8 million and $14 million, respectively.
REDEVELOPMENT, RETURN ON INVESTMENT (“ROI”) AND ACQUISITION CAPITAL PROJECTS
The Company invested approximately $100 million and $275 million in the fourth quarter and full year, respectively, on redevelopment, ROI and acquisition capital expenditures. Projects opened during the fourth quarter include the complete repositionings of the Houston Airport Marriott at George Bush Intercontinental, The Logan, Philadelphia, Curio – A Collection by Hilton, and The Camby Hotel, Phoenix, part of Marriott’s Autograph Collection. During January 2016, the Company also opened the completely repositioned and rebranded Axiom Hotel, San Francisco, which had been closed since January, 2015. The Company’s forecast reflects an increase to both net income and Adjusted EBITDA of approximately $32 million to $34 million compared to 2015 as a result of the completion of these four projects.
For 2016, the Company expects to invest approximately $180 million to $195 million in redevelopment projects, ROI, and acquisition capital expenditures or a decline of approximately $88 million from 2015. These projects, which will result in the hotels being classified as non-comparable in 2016, include:
RENEWAL AND REPLACEMENT EXPENDITURES
The Company invested approximately $91 million and $388 million in the fourth quarter and full year, respectively, in renewal and replacement capital expenditures. For 2016, the Company expects to invest between $310 million to $325 million, a decrease of over $60 million, or approximately 18%. Significant projects completed during the fourth quarter include the renovation of 295 rooms at The Ritz-Carlton Golf Resort, Naples, the restaurant at The Ritz-Carlton, Amelia Island and the 3030 Ocean Restaurant & Bar at the Fort Lauderdale Marriott Harbor Beach Resort & Spa.
For 2016, renewal and replacement capital expenditures include room renovations at The Ritz-Carlton, Tysons Corner, Fort Lauderdale Marriott Harbor Beach Resort & Spa, and W Seattle and the renovation of the ballroom and event lawn at the Hyatt Regency Maui Resort and Spa.
EUROPEAN JOINT VENTURE
The European joint venture’s comparable hotel RevPAR, on a constant euro basis (which excludes the eight hotels sold in October) increased approximately 1.7% and 4.2% for the fourth quarter and full year, respectively, and was significantly impacted by the November terrorist attacks in Paris. The increase in comparable hotel RevPAR resulted in a total revenue increase of 1.0% and 2.5% for the fourth quarter and full year, respectively, at the European joint venture’s comparable properties on a constant euro basis.
The Company believes that its strong balance sheet is a key competitive advantage that affords it a low cost of capital and the necessary financial flexibility to take advantage of opportunities throughout the lodging cycle. The Company’s long term unsecured debt currently maintains an investment grade rating. At December 31, 2015, the Company had approximately $239 million of cash, $702 million of available capacity under its revolving credit facility, and $4.0 billion of debt. Additionally, the five hotels either sold or under contract noted in the table on page 3 are expected to generate a total sales price of $215 million, which is not included in the year-end balances.
On December 29, 2015, the Company drew the remaining $200 million available under its 2015 Term Loan facility. During the year, the Company repaid or refinanced $1.4 billion of debt with a weighted average interest rate of 5.0% with proceeds from the issuance of $1.5 billion of debt with a weighted average interest rate of 3.1%. As a result of these transactions, the Company decreased its weighted average interest rate by 110 basis points to 3.7%, lowered its annualized interest expense by $24 million to $165 million, and extended its weighted average debt maturity by 0.8 years to 6.0 years, with no significant maturities until 2019, assuming the Company exercises the extensions on its credit facility.
Tables associated with this release are accessible via the PDF or by visiting:
Tags: host hotels & resorts,
q4 2015 results
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 93 properties in the United States and 12 properties internationally totaling approximately 57,000 rooms. The Company also holds non-controlling interests in five joint ventures, including one in Europe that owns 10 hotels with approximately 3,900 rooms and one in Asia that has interests in five 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 Méridien®, The Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Swissôtel®, ibis®, Pullman ®, and Novotel® as well as independent brands in the operation of properties in over 50 major markets worldwide. For additional information, please visit the Company’s website at www.hosthotels.com.
Contact: Gregory J. Larson, CFO
Host Hotels & Resorts Appoints Michael D. Bluhm Executive Vice President and Chief Financial Officer to Succeed Gregory Larson Entering Retirement
Host Hotels & Resorts Reports Q1 2017 Net Income of $161 Million, a Decrease of $23 Million Compared to Q1 2016
Host Hotels & Resorts Acquires 305-Room W Hollywood for $219 Million
Host Hotels & Resorts, Inc. Reports RevPAR Increase of 1.7% in Q4 2016; Net Income Dropped $37 Million for the Quarter
Sage Hospitality Completes Renovation and Expansion of The Denver Marriott Tech Center
Host Hotels & Resorts Completes Transformation of The Canyon Suites at The Phoenician, a Luxury Collection Hotel
Host Hotels & Resorts Reports Q3 2016 Net Income of $108 million, Compared to $87 million in the Year Ago Period; RevPAR up 3.8%
Host Hotels & Resorts, Inc. Closes on Sale of Three Non-Core Hotels for $175 million
Host Hotels & Resorts, Inc. Reports First Quarter 2016 Net Income of $184 million Compared to $99 million in 2015
Hyatt Regency San Francisco Airport Undergoing Multimillion-Dollar Renovation Slated for Completion by Summer 2016
Host Hotels & Resorts to Debut $107 Million Expansion of Marriott Marquis San Diego in June 2016
Ryman Hospitality Properties Reports Q4 2015 Net Income of $38.9 million Compared to $62.2 million in the Year Ago Quarter
Hilton Worldwide Reports Fourth Quarter and Full Year 2015 Results with Net Income of $814 million Compared to $158 million in the Year Ago Quarter
La Quinta Holdings Inc. Reports Results For Both Fourth Quarter And Full Year 2015
Summit Hotel Properties Reports Fourth Quarter And Full Year 2015 Results; Pro forma RevPAR Grew to $97.13, an Increase of 5.5%
FelCor Reports Fourth Quarter 2015 Earnings with RevPAR Growth of 8.1%
RLJ Lodging Trust Reports Fourth Quarter and Full Year 2015 Results; Q4 RevPAR up 2.5% with Net Income of $73.8 million Compared to $33.8 million in Q4 2014
Belmond Ltd. Reports Fourth Quarter and Full Year 2015 Results: Same Store RevPAR up 11% for the Quarter
Caesars Entertainment Reports Fourth Quarter and Full-Year 2015 Results
Hospitality Properties Trust Reports 2015 Q4 and Full Year Results: Comparable Hotel RevPAR Up 6.2% Year Over Year
Please login or register to post a comment.