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EX-31.4 - EX-31.4 - HOST HOTELS & RESORTS, INC.hst-ex314_2014063092.htm
EX-31.3 - EX-31.3 - HOST HOTELS & RESORTS, INC.hst-ex313_2014063091.htm
EX-12.1 - EX-12.1 - HOST HOTELS & RESORTS, INC.hst-ex121_2014063087.htm
EX-12.2 - EX-12.2 - HOST HOTELS & RESORTS, INC.hst-ex122_2014063088.htm
EX-32.1 - EX-32.1 - HOST HOTELS & RESORTS, INC.hst-ex321_2014063093.htm
EX-31.2 - EX-31.2 - HOST HOTELS & RESORTS, INC.hst-ex312_2014063090.htm
EX-10.2 - EX-10.2 - HOST HOTELS & RESORTS, INC.ex10-2.htm
EX-32.2 - EX-32.2 - HOST HOTELS & RESORTS, INC.hst-ex322_2014063094.htm
EXCEL - IDEA: XBRL DOCUMENT - HOST HOTELS & RESORTS, INC.Financial_Report.xls
EX-31.1 - EX-31.1 - HOST HOTELS & RESORTS, INC.hst-ex311_2014063089.htm

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2014

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 001-14625 (Host Hotels & Resorts, Inc.)

0-25087 (Host Hotels & Resorts, L.P.)

 

HOST HOTELS & RESORTS, INC.

HOST HOTELS & RESORTS, L.P.

(Exact name of registrant as specified in its charter)

 

 

Maryland (Host Hotels & Resorts, Inc.)

Delaware (Host Hotels & Resorts, L.P.)

(State or Other Jurisdiction of

Incorporation or Organization)

 

53-008595

52-2095412

(I.R.S. Employer

Identification No.)

 

 

 

6903 Rockledge Drive, Suite 1500

Bethesda, Maryland

(Address of Principal Executive Offices)

 

20817

(Zip Code)

(240) 744-1000

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Host Hotels & Resorts, Inc.

 

Yes  þ

  

    

 

No  ¨

  

Host Hotels & Resorts, L.P.

 

Yes  þ

  

    

 

No  ¨

  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Host Hotels & Resorts, Inc.

 

Yes  þ

  

    

 

No  ¨

  

Host Hotels & Resorts, L.P.

 

Yes  þ

  

    

 

No  ¨

  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Host Hotels & Resorts, Inc.

 

Large accelerated filer    þ

Accelerated filer    ¨

Non-accelerated filer (Do not check if a smaller reporting company)    ¨

Smaller reporting company    ¨

 

 

Host Hotels & Resorts, L.P.

 

Large accelerated filer    ¨

Accelerated filer    ¨

Non-accelerated filer (Do not check if a smaller reporting company)    þ

Smaller reporting company    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Host Hotels & Resorts, Inc.

 

Yes  ¨

  

    

 

No  þ

  

Host Hotels & Resorts, L.P.

 

Yes  ¨

  

    

 

No  þ

  

As of July 30, 2014 there were 757,235,777 shares of Host Hotels & Resorts, Inc.’s common stock, $.01 par value per share, outstanding.

 

 

 

 

 


 

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. Unless stated otherwise or the context requires otherwise, references to “Host Inc.” mean Host Hotels & Resorts, Inc., a Maryland corporation, and references to “Host L.P.” mean Host Hotels & Resorts, L.P., a Delaware limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between Host Inc. and Host L.P. We use the terms “we” or “our” or “the company” to refer to Host Inc. and Host L.P. together, unless the context indicates otherwise.

Host Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). Host Inc. owns properties and conducts operations through Host L.P., of which Host Inc. is the sole general partner and of which it holds approximately 99% of the partnership interests (“OP units”). The remaining OP units are owned by various unaffiliated limited partners. As the sole general partner of Host L.P., Host Inc. has the exclusive and complete responsibility for Host L.P.’s day-to-day management and control. Management operates Host Inc. and Host L.P. as one enterprise. The management of Host Inc. consists of the same persons who direct the management of Host L.P. As general partner with control of Host L.P., Host Inc. consolidates Host L.P. for financial reporting purposes, and Host Inc. does not have significant assets other than its investment in Host L.P. Therefore, the assets and liabilities of Host Inc. and Host L.P. are substantially the same on their respective condensed consolidated financial statements and the disclosures of Host Inc. and Host L.P. also are substantially similar. For these reasons, we believe that the combination into a single report of the quarterly reports on Form 10-Q of Host Inc. and Host L.P. results in benefits to management and investors.

The substantive difference between Host Inc.’s and Host L.P.’s filings is the fact that Host Inc. is a REIT with public stock, while Host L.P. is a partnership with no publicly traded equity. In the condensed consolidated financial statements, this difference primarily is reflected in the equity (or partners’ capital for Host L.P.) section of the consolidated balance sheets and in the consolidated statements of equity (or partners’ capital for Host L.P.). Apart from the different equity treatment, the condensed consolidated financial statements of Host Inc. and Host L.P. nearly are identical.

This combined Form 10-Q for Host Inc. and Host L.P. includes, for each entity, separate interim financial statements (but combined footnotes), separate reports on disclosure controls and procedures and internal control over financial reporting and separate CEO/CFO certifications. In addition, with respect to any other financial and non-financial disclosure items required by Form 10-Q, any material differences between Host Inc. and Host L.P. are discussed separately herein. For a more detailed discussion of the substantive differences between Host Inc. and Host L.P. and why we believe the combined filing results in benefits to investors, see the discussion in the combined Annual Report on Form 10-K for the year ended December 31, 2013 under the heading “Explanatory Note.”

 

 

 

i


 

HOST HOTELS & RESORTS, INC. AND HOST HOTELS & RESORTS, L.P.

INDEX

PART I. FINANCIAL INFORMATION

 

 

  

 

Page No.

Item 1.

  

Financial Statements for Host Hotels & Resorts, Inc.:

 

 

 

 

 

 

  

Condensed Consolidated Balance Sheets -
June 30, 2014 (unaudited) and December 31, 2013

1

 

 

 

 

 

  

Condensed Consolidated Statements of Operations (unaudited) -
Quarter and Year-to-date ended June 30, 2014 and 2013

2

 

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) -
Quarter and Year-to-date ended June 30, 2014 and 2013

3

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows (unaudited) -
Year-to-date ended June 30, 2014 and 2013

4

 

 

 

 

 

  

Financial Statements for Host Hotels & Resorts, L.P.:

 

 

 

 

 

 

  

Condensed Consolidated Balance Sheets -
June 30, 2014 (unaudited) and December 31, 2013

6

 

 

 

 

 

  

Condensed Consolidated Statements of Operations (unaudited) -
Quarter and Year-to-date ended June 30, 2014 and 2013

7

 

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) -
Quarter and Year-to-date ended June 30, 2014 and 2013

8

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows (unaudited) -
Year-to-date ended June 30, 2014 and 2013

9

 

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements (unaudited)

11

 

 

 

 

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

 

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

46

 

 

 

 

Item 4.

  

Controls and Procedures

47

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

48

 

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

48

 

 

 

 

Item 6.

  

Exhibits

50

 

 

 

ii


 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2014 and December 31, 2013

(in millions, except share and per share amounts)

 

 

 

June 30, 2014

 

 

December 31, 2013

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

Property and equipment, net

 

$

10,749

 

 

$

10,995

 

Due from managers

 

 

129

 

 

 

52

 

Advances to and investments in affiliates

 

 

416

 

 

 

415

 

Deferred financing costs, net

 

 

39

 

 

 

42

 

Furniture, fixtures and equipment replacement fund

 

 

171

 

 

 

173

 

Other

 

 

238

 

 

 

244

 

Restricted cash

 

 

33

 

 

 

32

 

Cash and cash equivalents

 

 

440

 

 

 

861

 

Total assets

 

$

12,215

 

 

$

12,814

 

 

 

 

 

 

 

 

 

 

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY

 

Debt

 

 

 

 

 

 

 

 

Senior notes, including $378 million and $371 million, respectively, net of discount, of Exchangeable Senior Debentures

 

$

2,876

 

 

$

3,018

 

Credit facility, including the $500 million term loan

 

 

722

 

 

 

946

 

Mortgage debt

 

 

419

 

 

 

709

 

Other

 

 

13

 

 

 

86

 

Total debt

 

 

4,030

 

 

 

4,759

 

Accounts payable and accrued expenses

 

 

202

 

 

 

214

 

Other

 

 

388

 

 

 

389

 

Total liabilities

 

 

4,620

 

 

 

5,362

 

 

 

 

 

 

 

 

 

 

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

 

 

211

 

 

 

190

 

 

 

 

 

 

 

 

 

 

Host Hotels & Resorts, Inc. stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01, 1,050 million shares authorized, 755.6 million shares and 754.8 million shares issued and outstanding, respectively

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

8,485

 

 

 

8,492

 

Accumulated other comprehensive income (loss)

 

 

3

 

 

 

(9

)

Deficit

 

 

(1,148

)

 

 

(1,263

)

Total equity of Host Hotels & Resorts, Inc. stockholders

 

 

7,348

 

 

 

7,228

 

Non-controlling interests—other consolidated partnerships

 

 

36

 

 

 

34

 

Total equity

 

 

7,384

 

 

 

7,262

 

Total liabilities, non-controlling interests and equity

 

$

12,215

 

 

$

12,814

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

 

 

1


 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter and Year-to-date ended June 30, 2014 and 2013

(unaudited, in millions, except per share amounts)

 

 

 

Quarter ended June 30,

 

 

Year-to-date ended June 30,

 

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

921

 

 

$

891

 

 

$

1,729

 

 

$

1,654

 

 

Food and beverage

 

 

415

 

 

 

418

 

 

 

820

 

 

 

787

 

 

Other

 

 

95

 

 

 

90

 

 

 

191

 

 

 

183

 

 

Total revenues

 

 

1,431

 

 

 

1,399

 

 

 

2,740

 

 

 

2,624

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

234

 

 

 

227

 

 

 

460

 

 

 

442

 

 

Food and beverage

 

 

285

 

 

 

286

 

 

 

569

 

 

 

558

 

 

Other departmental and support expenses

 

 

320

 

 

 

316

 

 

 

635

 

 

 

623

 

 

Management fees

 

 

66

 

 

 

65

 

 

 

116

 

 

 

111

 

 

Other property-level expenses

 

 

98

 

 

 

92

 

 

 

195

 

 

 

187

 

 

Depreciation and amortization

 

 

174

 

 

 

171

 

 

 

346

 

 

 

345

 

 

Corporate and other expenses

 

 

29

 

 

 

37

 

 

 

63

 

 

 

63

 

 

Gain on insurance settlements

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

Total operating costs and expenses

 

 

1,206

 

 

 

1,194

 

 

 

2,381

 

 

 

2,329

 

 

OPERATING PROFIT

 

 

225

 

 

 

205

 

 

 

359

 

 

 

295

 

 

Interest income

 

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

 

Interest expense

 

 

(55

)

 

 

(103

)

 

 

(113

)

 

 

(179

)

 

Gain on sale of assets

 

 

 

 

 

21

 

 

 

111

 

 

 

32

 

 

Gain (loss) on foreign currency transactions and derivatives

 

 

(1

)

 

 

1

 

 

 

(1

)

 

 

3

 

 

Equity in earnings (losses) of affiliates

 

 

4

 

 

 

6

 

 

 

(3

)

 

 

4

 

 

INCOME BEFORE INCOME TAXES

 

 

174

 

 

 

131

 

 

 

355

 

 

 

157

 

 

Provision for income taxes

 

 

(15

)

 

 

(15

)

 

 

(11

)

 

 

(7

)

 

INCOME FROM CONTINUING OPERATIONS

 

 

159

 

 

 

116

 

 

 

344

 

 

 

150

 

 

Income from discontinued operations, net of tax

 

 

 

 

 

5

 

 

 

 

 

 

31

 

 

NET INCOME

 

 

159

 

 

 

121

 

 

 

344

 

 

 

181

 

 

Less: Net income attributable to non-controlling interests

 

 

(4

)

 

 

(2

)

 

 

(10

)

 

 

(6

)

 

NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.

 

$

155

 

 

$

119

 

 

$

334

 

 

$

175

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

.21

 

 

$

.15

 

 

$

.44

 

 

$

.20

 

 

Discontinued operations

 

 

 

 

 

.01

 

 

 

 

 

 

.04

 

 

Basic earnings per common share

 

$

.21

 

 

$

.16

 

 

$

.44

 

 

$

.24

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

.21

 

 

$

.15

 

 

$

.44

 

 

$

.20

 

 

Discontinued operations

 

 

 

 

 

.01

 

 

 

 

 

 

.04

 

 

Diluted earnings per common share

 

$

.21

 

 

$

.16

 

 

$

.44

 

 

$

.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

 

 

2


 

 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter and Year-to-date ended June 30, 2014 and 2013

(unaudited, in millions)

 

 

 

Quarter ended June 30,

 

 

Year-to-date ended June 30,

 

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

NET INCOME

 

$

159

 

 

$

121

 

 

$

344

 

 

$

181

 

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation and other comprehensive

   income (loss) of unconsolidated affiliates

 

 

4

 

 

 

(26

)

 

 

11

 

 

 

(29

)

 

Change in fair value of derivative instruments

 

 

1

 

 

 

 

 

 

1

 

 

 

5

 

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

5

 

 

 

(26

)

 

 

12

 

 

 

(24

)

 

COMPREHENSIVE INCOME

 

 

164

 

 

 

95

 

 

 

356

 

 

 

157

 

 

Less: Comprehensive income attributable to non-controlling interests

 

 

(4

)

 

 

(2

)

 

 

(10

)

 

 

(6

)

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.

 

$

160

 

 

$

93

 

 

$

346

 

 

$

151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

 

 

3


 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year-to-date ended June 30, 2014 and 2013

(unaudited, in millions)

 

 

 

Year-to-date ended June 30,

 

 

 

2014

 

 

2013

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

344

 

 

$

181

 

Adjustments to reconcile to cash provided by operations:

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

Gain on dispositions

 

 

 

 

 

(19

)

Depreciation

 

 

 

 

 

6

 

Depreciation and amortization

 

 

346

 

 

 

345

 

Amortization of finance costs, discounts and premiums, net

 

 

13

 

 

 

14

 

Non-cash loss on extinguishment of debt

 

 

2

 

 

 

12

 

Stock compensation expense

 

 

10

 

 

 

8

 

Deferred income taxes

 

 

(3

)

 

 

(1

)

Gain on sale of assets

 

 

(111

)

 

 

(32

)

(Gain) loss on foreign currency transactions and derivatives

 

 

1

 

 

 

(3

)

Equity in (earnings) losses of affiliates

 

 

3

 

 

 

(4

)

Change in due from managers

 

 

(76

)

 

 

(55

)

Changes in other assets

 

 

6

 

 

 

34

 

Changes in other liabilities

 

 

(10

)

 

 

(26

)

Cash provided by operating activities

 

 

525

 

 

 

460

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from sales of assets, net

 

 

274

 

 

 

446

 

Return of investment

 

 

42

 

 

 

 

Acquisitions

 

 

(73

)

 

 

(139

)

Advances to and investments in affiliates

 

 

(32

)

 

 

(50

)

Capital expenditures:

 

 

 

 

 

 

 

 

Renewals and replacements

 

 

(147

)

 

 

(163

)

Redevelopment and acquisition-related investments

 

 

(36

)

 

 

(69

)

New development

 

 

(5

)

 

 

(11

)

Change in furniture, fixtures and equipment ("FF&E") replacement fund

 

 

(11

)

 

 

(39

)

Cash provided by (used in) investing activities

 

 

12

 

 

 

(25

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Financing costs

 

 

(4

)

 

 

(4

)

Issuances of debt

 

 

 

 

 

400

 

Draws on credit facility

 

 

 

 

 

148

 

Repayment of credit facility

 

 

(225

)

 

 

(200

)

Repurchase/redemption of senior notes

 

 

(150

)

 

 

(601

)

Mortgage debt and other prepayments and scheduled maturities

 

 

(373

)

 

 

(246

)

Scheduled principal repayments

 

 

 

 

 

(1

)

Issuance of common stock

 

 

3

 

 

 

192

 

Dividends on common stock

 

 

(204

)

 

 

(140

)

Contributions from non-controlling interests

 

 

1

 

 

 

3

 

Distributions to non-controlling interests

 

 

(7

)

 

 

(6

)

Change in restricted cash for financing activities

 

 

(1

)

 

 

1

 

Cash used in financing activities

 

 

(960

)

 

 

(454

)

Effects of exchange rate changes on cash held

 

 

2

 

 

 

(5

)

DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(421

)

 

 

(24

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

861

 

 

 

417

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

440

 

 

$

393

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

4


 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year-to-date ended June 30, 2014 and 2013

(unaudited)

Supplemental disclosure of cash flow information (in millions)

 

 

 

Year-to-date ended June 30,

 

 

 

2014

 

 

2013

 

Interest paid - periodic interest expense

 

$

93

 

 

$

148

 

Interest paid - debt extinguishments

 

 

2

 

 

 

20

 

Total interest paid

 

$

95

 

 

$

168

 

Income taxes paid

 

$

14

 

 

$

6

 

 

Supplemental disclosure of noncash investing and financing activities:

For the year-to-date periods ended June 30, 2014 and 2013, Host Inc. issued approximately 0.1 million shares and 0.1 million shares, respectively, upon the conversion of OP units of Host L.P. held by non-controlling partners valued at approximately $3 million and $2 million, respectively.

 

In March 2013, holders of approximately $174 million of the 3.25% exchangeable debentures elected to exchange their debentures for approximately 11.7 million shares of Host Inc. common stock.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

 

 

 

5


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2014 and December 31, 2013

(in millions)

 

 

 

June 30, 2014

 

 

December 31, 2013

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

Property and equipment, net

 

$

10,749

 

 

$

10,995

 

Due from managers

 

 

129

 

 

 

52

 

Advances to and investments in affiliates

 

 

416

 

 

 

415

 

Deferred financing costs, net

 

 

39

 

 

 

42

 

Furniture, fixtures and equipment replacement fund

 

 

171

 

 

 

173

 

Other

 

 

238

 

 

 

244

 

Restricted cash

 

 

33

 

 

 

32

 

Cash and cash equivalents

 

 

440

 

 

 

861

 

Total assets

 

$

12,215

 

 

$

12,814

 

 

 

 

 

 

 

 

 

 

LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL

 

Debt

 

 

 

 

 

 

 

 

Senior notes, including $378 million and $371 million, respectively, net of discount, of Exchangeable Senior Debentures

 

$

2,876

 

 

$

3,018

 

Credit facility, including the $500 million term loan

 

 

722

 

 

 

946

 

Mortgage debt

 

 

419

 

 

 

709

 

Other

 

 

13

 

 

 

86

 

Total debt

 

 

4,030

 

 

 

4,759

 

Accounts payable and accrued expenses

 

 

202

 

 

 

214

 

Other

 

 

388

 

 

 

389

 

Total liabilities

 

 

4,620

 

 

 

5,362

 

 

 

 

 

 

 

 

 

 

Limited partnership interests of third parties

 

 

211

 

 

 

190

 

 

 

 

 

 

 

 

 

 

Host Hotels & Resorts, L.P. capital:

 

 

 

 

 

 

 

 

General partner

 

 

1

 

 

 

1

 

Limited partner

 

 

7,344

 

 

 

7,236

 

Accumulated other comprehensive income (loss)

 

 

3

 

 

 

(9

)

Total Host Hotels & Resorts, L.P. capital

 

 

7,348

 

 

 

7,228

 

Non-controlling interests—consolidated partnerships

 

 

36

 

 

 

34

 

Total capital

 

 

7,384

 

 

 

7,262

 

Total liabilities, limited partnership interest of third parties and capital

 

$

12,215

 

 

$

12,814

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

 

 

6


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter and Year-to-date ended June 30, 2014 and 2013

(unaudited, in millions, except per unit amounts)

 

 

 

Quarter ended June 30,

 

 

Year-to-date ended June 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

921

 

 

$

891

 

 

$

1,729

 

 

$

1,654

 

Food and beverage

 

 

415

 

 

 

418

 

 

 

820

 

 

 

787

 

Other

 

 

95

 

 

 

90

 

 

 

191

 

 

 

183

 

Total revenues

 

 

1,431

 

 

 

1,399

 

 

 

2,740

 

 

 

2,624

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

234

 

 

 

227

 

 

 

460

 

 

 

442

 

Food and beverage

 

 

285

 

 

 

286

 

 

 

569

 

 

 

558

 

Other departmental and support expenses

 

 

320

 

 

 

316

 

 

 

635

 

 

 

623

 

Management fees

 

 

66

 

 

 

65

 

 

 

116

 

 

 

111

 

Other property-level expenses

 

 

98

 

 

 

92

 

 

 

195

 

 

 

187

 

Depreciation and amortization

 

 

174

 

 

 

171

 

 

 

346

 

 

 

345

 

Corporate and other expenses

 

 

29

 

 

 

37

 

 

 

63

 

 

 

63

 

Gain on insurance settlements

 

 

 

 

 

 

 

 

(3

)

 

 

 

Total operating costs and expenses

 

 

1,206

 

 

 

1,194

 

 

 

2,381

 

 

 

2,329

 

OPERATING PROFIT

 

 

225

 

 

 

205

 

 

 

359

 

 

 

295

 

Interest income

 

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Interest expense

 

 

(55

)

 

 

(103

)

 

 

(113

)

 

 

(179

)

Gain on sale of assets

 

 

 

 

 

21

 

 

 

111

 

 

 

32

 

Gain (loss) on foreign currency transactions and derivatives

 

 

(1

)

 

 

1

 

 

 

(1

)

 

 

3

 

Equity in earnings (losses) of affiliates

 

 

4

 

 

 

6

 

 

 

(3

)

 

 

4

 

INCOME BEFORE INCOME TAXES

 

 

174

 

 

 

131

 

 

 

355

 

 

 

157

 

Provision for income taxes

 

 

(15

)

 

 

(15

)

 

 

(11

)

 

 

(7

)

INCOME FROM CONTINUING OPERATIONS

 

 

159

 

 

 

116

 

 

 

344

 

 

 

150

 

Income from discontinued operations, net of tax

 

 

 

 

 

5

 

 

 

 

 

 

31

 

NET INCOME

 

 

159

 

 

 

121

 

 

 

344

 

 

 

181

 

Less: Net income attributable to non-controlling interests

 

 

(2

)

 

 

(1

)

 

 

(5

)

 

 

(4

)

NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.

 

$

157

 

 

$

120

 

 

$

339

 

 

$

177

 

Basic earnings per common unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

.21

 

 

$

.15

 

 

$

.45

 

 

$

.20

 

Discontinued operations

 

 

 

 

 

.01

 

 

 

 

 

 

.04

 

Basic earnings per common unit

 

$

.21

 

 

$

.16

 

 

$

.45

 

 

$

.24

 

Diluted earnings per common unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

.21

 

 

$

.15

 

 

$

.45

 

 

$

.20

 

Discontinued operations

 

 

 

 

 

.01

 

 

 

 

 

 

.04

 

Diluted earnings per common unit

 

$

.21

 

 

$

.16

 

 

$

.45

 

 

$

.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

 

 

 

 

 

 

 

7


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter and Year-to-date ended June 30, 2014 and 2013

(unaudited, in millions)

 

 

 

Quarter ended June 30,

 

 

Year-to-date ended June 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

NET INCOME

 

$

159

 

 

$

121

 

 

$

344

 

 

$

181

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation and other comprehensive

   income (loss) of unconsolidated affiliates

 

 

4

 

 

 

(26

)

 

 

11

 

 

 

(29

)

Change in fair value of derivative instruments

 

 

1

 

 

 

 

 

 

1

 

 

 

5

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

5

 

 

 

(26

)

 

 

12

 

 

 

(24

)

COMPREHENSIVE INCOME

 

 

164

 

 

 

95

 

 

 

356

 

 

 

157

 

Less: Comprehensive income attributable to non-controlling interests

 

 

(2

)

 

 

(1

)

 

 

(5

)

 

 

(4

)

COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.

 

$

162

 

 

$

94

 

 

$

351

 

 

$

153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated statements.

 

 

 

8


 

 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year-to-date ended June 30, 2014 and 2013

(unaudited, in millions)

 

 

 

Year-to-date ended June 30,

 

 

 

2014

 

 

2013

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

344

 

 

$

181

 

Adjustments to reconcile to cash provided by operations:

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

Gain on dispositions

 

 

 

 

 

(19

)

Depreciation

 

 

 

 

 

6

 

Depreciation and amortization

 

 

346

 

 

 

345

 

Amortization of finance costs, discounts and premiums, net

 

 

13

 

 

 

14

 

Non-cash loss on extinguishment of debt

 

 

2

 

 

 

12

 

Stock compensation expense

 

 

10

 

 

 

8

 

Deferred income taxes

 

 

(3

)

 

 

(1

)

Gain on sale of assets

 

 

(111

)

 

 

(32

)

(Gain) loss on foreign currency transactions and derivatives

 

 

1

 

 

 

(3

)

Equity in (earnings) losses of affiliates

 

 

3

 

 

 

(4

)

Change in due from managers

 

 

(76

)

 

 

(55

)

Changes in other assets

 

 

6

 

 

 

34

 

Changes in other liabilities

 

 

(10

)

 

 

(26

)

Cash provided by operating activities

 

 

525

 

 

 

460