UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended March 31, 2017

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  

  

    

 

No  

  

Host Hotels & Resorts, L.P.

 

Yes  

  

    

 

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  

  

    

 

No  

  

Host Hotels & Resorts, L.P.

 

Yes  

  

    

 

No  

  

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

 

Host Hotels & Resorts, Inc.

 

Large accelerated filer    

Accelerated filer    

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

Smaller reporting company    

Emerging growth company    

 

 

 

Host Hotels & Resorts, L.P.

 

Large accelerated filer    

Accelerated filer    

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

Smaller reporting company    

Emerging growth company    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

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  

  

Host Hotels & Resorts, L.P.

 

Yes  

  

    

 

No  

  

As of April 28, 2017 there were 739,745,335 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, 2016 under the heading “Explanatory Note.”

 

 

 

i


 

HOST HOTELS & RESO RTS, 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 -
March 31, 2017 (unaudited) and December 31, 2016

1

 

 

 

 

 

  

Condensed Consolidated Statements of Operations (unaudited) -
Quarter ended March 31, 2017 and 2016

2

 

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) -
Quarter ended March 31, 2017 and 2016

3

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows (unaudited) -
Quarter ended March 31, 2017 and 2016

4

 

 

 

 

 

  

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

 

 

 

 

 

 

  

Condensed Consolidated Balance Sheets -
March 31, 2017 (unaudited) and December 31, 2016

6

 

 

 

 

 

  

Condensed Consolidated Statements of Operations (unaudited) -
Quarter ended March 31, 2017 and 2016

7

 

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) -
Quarter ended March 31, 2017 and 2016

8

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows (unaudited) -
Quarter ended March 31, 2017 and 2016

9

 

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements (unaudited)

11

 

 

 

 

Item 2.

  

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

21

 

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

43

 

 

 

 

Item 4.

  

Controls and Procedures

44

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

45

 

 

 

 

Item 6.

  

Exhibits

46

 

 

 

ii


 

HOST HOTELS & RESORTS , INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2017 and December 31, 2016

(in millions, except share and per share amounts)

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

Property and equipment, net

 

$

10,382

 

 

$

10,145

 

Assets held for sale

 

 

138

 

 

 

150

 

Due from managers

 

 

133

 

 

 

55

 

Advances to and investments in affiliates

 

 

295

 

 

 

286

 

Furniture, fixtures and equipment replacement fund

 

 

171

 

 

 

173

 

Other

 

 

244

 

 

 

225

 

Restricted cash

 

 

2

 

 

 

2

 

Cash and cash equivalents

 

 

411

 

 

 

372

 

Total assets

 

$

11,776

 

 

$

11,408

 

 

 

 

 

 

 

 

 

 

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY

 

Debt

 

 

 

 

 

 

 

 

Senior notes

 

$

2,776

 

 

$

2,380

 

Credit facility, including term loans of $998 million and $997 million,

     respectively

 

 

1,211

 

 

 

1,206

 

Mortgage debt and other

 

 

1

 

 

 

63

 

Total debt

 

 

3,988

 

 

 

3,649

 

Accounts payable and accrued expenses

 

 

218

 

 

 

278

 

Liabilities held for sale

 

 

74

 

 

 

 

Other

 

 

269

 

 

 

283

 

Total liabilities

 

 

4,549

 

 

 

4,210

 

 

 

 

 

 

 

 

 

 

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

 

 

161

 

 

 

165

 

 

 

 

 

 

 

 

 

 

Host Hotels & Resorts, Inc. stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01, 1,050 million shares authorized,

     738.6 million shares and 737.8 million shares issued and

     outstanding, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

8,089

 

 

 

8,077

 

Accumulated other comprehensive loss

 

 

(78

)

 

 

(83

)

Deficit

 

 

(992

)

 

 

(1,007

)

Total equity of Host Hotels & Resorts, Inc. stockholders

 

 

7,026

 

 

 

6,994

 

Non-controlling interests—other consolidated partnerships

 

 

40

 

 

 

39

 

Total equity

 

 

7,066

 

 

 

7,033

 

Total liabilities, non-controlling interests and equity

 

$

11,776

 

 

$

11,408

 

See notes to condensed consolidated financial statements.

 

 

 

1


 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDE NSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter ended March 31, 2017 and 2016

(unaudited, in millions, except per share amounts)

 

 

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

REVENUES

 

 

 

 

 

 

 

 

Rooms

 

$

843

 

 

$

843

 

Food and beverage

 

 

422

 

 

 

408

 

Other

 

 

83

 

 

 

88

 

Total revenues

 

 

1,348

 

 

 

1,339

 

EXPENSES

 

 

 

 

 

 

 

 

Rooms

 

 

219

 

 

 

221

 

Food and beverage

 

 

277

 

 

 

284

 

Other departmental and support expenses

 

 

319

 

 

 

328

 

Management fees

 

 

56

 

 

 

57

 

Other property-level expenses

 

 

100

 

 

 

93

 

Depreciation and amortization

 

 

180

 

 

 

181

 

Corporate and other expenses

 

 

29

 

 

 

27

 

Gain on insurance and business interruption settlements

 

 

(3

)

 

 

(3

)

Total operating costs and expenses

 

 

1,177

 

 

 

1,188

 

OPERATING PROFIT

 

 

171

 

 

 

151

 

Interest income

 

 

1

 

 

 

1

 

Interest expense

 

 

(39

)

 

 

(39

)

Gain on sale of assets

 

 

17

 

 

 

59

 

Gain (loss) on foreign currency transactions and derivatives

 

 

(2

)

 

 

1

 

Equity in earnings of affiliates

 

 

7

 

 

 

2

 

INCOME BEFORE INCOME TAXES

 

 

155

 

 

 

175

 

Benefit for income taxes

 

 

6

 

 

 

9

 

NET INCOME

 

 

161

 

 

 

184

 

Less: Net income attributable to non-controlling interests

 

 

(3

)

 

 

(2

)

NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.

 

$

158

 

 

$

182

 

Basic earnings per common share

 

$

.21

 

 

$

.24

 

Diluted earnings per common share

 

$

.21

 

 

$

.24

 

See notes to condensed consolidated financial statements.

 

 

2


 

 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter ended March 31, 2017 and 2016

(unaudited, in millions)

 

 

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

NET INCOME

 

$

161

 

 

$

184

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

 

 

 

 

 

 

 

 

Foreign currency translation and other comprehensive income

     of unconsolidated affiliates

 

 

7

 

 

 

14

 

Change in fair value of derivative instruments

 

 

(1

)

 

 

(5

)

Amounts reclassified from other comprehensive income (loss)

 

 

(1

)

 

 

4

 

OTHER COMPREHENSIVE INCOME, NET OF TAX

 

 

5

 

 

 

13

 

COMPREHENSIVE INCOME

 

 

166

 

 

 

197

 

Less: Comprehensive income attributable to non-controlling

     interests

 

 

(2

)

 

 

(2

)

COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST

     HOTELS & RESORTS, INC.

 

$

164

 

 

$

195

 

See notes to condensed consolidated financial statements.

 

 

 

3


 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter ended March 31, 2017 and 2016

(unaudited, in millions)

 

  

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

161

 

 

$

184

 

Adjustments to reconcile to cash provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

180

 

 

 

181

 

Amortization of finance costs, discounts and premiums, net

 

 

1

 

 

 

2

 

Stock compensation expense

 

 

3

 

 

 

3

 

Deferred income taxes

 

 

(6

)

 

 

(9

)

Gain on sale of assets

 

 

(17

)

 

 

(59

)

(Gain) loss on foreign currency transactions and derivatives

 

 

2

 

 

 

(1

)

Gain on property insurance settlement

 

 

 

 

 

(1

)

Equity in earnings of affiliates

 

 

(7

)

 

 

(2

)

Change in due from managers

 

 

(77

)

 

 

(83

)

Distributions from investments in affiliates

 

 

 

 

 

12

 

Changes in other assets

 

 

(12

)

 

 

9

 

Changes in other liabilities

 

 

(19

)

 

 

(17

)

Cash provided by operating activities

 

 

209

 

 

 

219

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from sales of assets, net

 

 

160

 

 

 

115

 

Return of investments in affiliates

 

 

3

 

 

 

7

 

Advances to and investments in affiliates

 

 

 

 

 

(1

)

Acquisitions

 

 

(467

)

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

Renewals and replacements

 

 

(64

)

 

 

(89

)

Redevelopment and acquisition-related investments

 

 

(16

)

 

 

(79

)

Cash used in investing activities

 

 

(384

)

 

 

(47

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Financing costs

 

 

(3

)

 

 

 

Issuances of debt

 

 

398

 

 

 

 

Draws on credit facility

 

 

340

 

 

 

170

 

Repayment of credit facility

 

 

(340

)

 

 

(70

)

Mortgage debt and other prepayments and scheduled maturities

 

 

 

 

 

(20

)

Common stock repurchase

 

 

 

 

 

(81

)

Dividends on common stock

 

 

(185

)

 

 

(150

)

Other financing activities

 

 

(2

)

 

 

(1

)

Cash provided by (used in) financing activities

 

 

208

 

 

 

(152

)

Effects of exchange rate changes on cash held

 

 

4

 

 

 

4

 

INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

 

 

37

 

 

 

24

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

 

547

 

 

 

377

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

584

 

 

$

401

 

 

See notes to condensed consolidated financial statements.

 

 

4


 

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter ended March 31, 2017 and 2016

(unaudited)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statements of cash flows:

 

 

March 31, 2017

 

 

 

 

March 31, 2016

 

Cash and cash equivalents

 

$

411

 

 

 

 

$

234

 

Restricted cash

 

 

2

 

 

 

 

 

15

 

Cash included in Furniture, fixtures and equipment replacement fund

 

 

171

 

 

 

 

 

152

 

Total cash and cash equivalents and restricted cash shown in the statements of cash flows

 

$

584

 

 

 

 

$

401

 

 The following table presents cash paid during the quarter for the following: 

 

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

Total interest paid

 

$

37

 

 

$

34

 

Income taxes paid

 

$

1

 

 

$

2

 

 

See notes to condensed consolidated financial statements.

 

 

 

5


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2017 and December 31, 2016

(in millions)

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

Property and equipment, net

 

$

10,382

 

 

$

10,145

 

Assets held for sale

 

 

138

 

 

 

150

 

Due from managers

 

 

133

 

 

 

55

 

Advances to and investments in affiliates

 

 

295

 

 

 

286

 

Furniture, fixtures and equipment replacement fund

 

 

171

 

 

 

173

 

Other

 

 

244

 

 

 

225

 

Restricted cash

 

 

2

 

 

 

2

 

Cash and cash equivalents

 

 

411

 

 

 

372

 

Total assets

 

$

11,776

 

 

$

11,408

 

 

 

 

 

 

 

 

 

 

LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL

 

Debt

 

 

 

 

 

 

 

 

Senior notes

 

$

2,776

 

 

$

2,380

 

Credit facility, including term loans of $998 million and $997 million,

     respectively

 

 

1,211

 

 

 

1,206

 

Mortgage debt and other

 

 

1

 

 

 

63

 

Total debt

 

 

3,988

 

 

 

3,649

 

Accounts payable and accrued expenses

 

 

218

 

 

 

278

 

Liabilities held for sale

 

 

74

 

 

 

 

Other

 

 

269

 

 

 

283

 

Total liabilities

 

 

4,549

 

 

 

4,210

 

 

 

 

 

 

 

 

 

 

Limited partnership interests of third parties

 

 

161

 

 

 

165

 

 

 

 

 

 

 

 

 

 

Host Hotels & Resorts, L.P. capital:

 

 

 

 

 

 

 

 

General partner

 

 

1

 

 

 

1

 

Limited partner

 

 

7,103

 

 

 

7,076

 

Accumulated other comprehensive loss

 

 

(78

)

 

 

(83

)

Total Host Hotels & Resorts, L.P. capital

 

 

7,026

 

 

 

6,994

 

Non-controlling interests—consolidated partnerships

 

 

40

 

 

 

39

 

Total capital

 

 

7,066

 

 

 

7,033

 

Total liabilities, limited partnership interest of third parties and

     capital

 

$

11,776

 

 

$

11,408

 

See notes to condensed consolidated financial statements .

 

 

 

6


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter ended March 31, 2017 and 2016

(unaudited, in millions, except per unit amounts)

 

 

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

REVENUES

 

 

 

 

 

 

 

 

Rooms

 

$

843

 

 

$

843

 

Food and beverage

 

 

422

 

 

 

408

 

Other

 

 

83

 

 

 

88

 

Total revenues

 

 

1,348

 

 

 

1,339

 

EXPENSES

 

 

 

 

 

 

 

 

Rooms

 

 

219

 

 

 

221

 

Food and beverage

 

 

277

 

 

 

284

 

Other departmental and support expenses

 

 

319

 

 

 

328

 

Management fees

 

 

56

 

 

 

57

 

Other property-level expenses

 

 

100

 

 

 

93

 

Depreciation and amortization

 

 

180

 

 

 

181

 

Corporate and other expenses

 

 

29

 

 

 

27

 

Gain on insurance and business interruption settlements

 

 

(3

)

 

 

(3

)

Total operating costs and expenses

 

 

1,177

 

 

 

1,188

 

OPERATING PROFIT

 

 

171

 

 

 

151

 

Interest income

 

 

1

 

 

 

1

 

Interest expense

 

 

(39

)

 

 

(39

)

Gain on sale of assets

 

 

17

 

 

 

59

 

Gain (loss) on foreign currency transactions and derivatives

 

 

(2

)

 

 

1

 

Equity in earnings of affiliates

 

 

7

 

 

 

2

 

INCOME BEFORE INCOME TAXES

 

 

155

 

 

 

175

 

Benefit for income taxes

 

 

6

 

 

 

9

 

NET INCOME

 

 

161

 

 

 

184

 

Less: Net income attributable to non-controlling interests

 

 

(1

)

 

 

 

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

 

$

160

 

 

$

184

 

Basic earnings per common unit

 

$

.22

 

 

$

.25

 

Diluted earnings per common unit

 

$

.22

 

 

$

.25

 

See notes to condensed consolidated financial statements.

7


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter ended March 31, 2017 and 2016

(unaudited, in millions)

 

 

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

NET INCOME

 

$

161

 

 

$

184

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

 

 

 

 

 

 

 

 

Foreign currency translation and other comprehensive income

     of unconsolidated affiliates

 

 

7

 

 

 

14

 

Change in fair value of derivative instruments

 

 

(1

)

 

 

(5

)

Amounts reclassified from other comprehensive income (loss)

 

 

(1

)

 

 

4

 

OTHER COMPREHENSIVE INCOME, NET OF TAX

 

 

5

 

 

 

13

 

COMPREHENSIVE INCOME

 

 

166

 

 

 

197

 

Less: Comprehensive income attributable to non-controlling

     interests

 

 

 

 

 

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST

     HOTELS & RESORTS, L.P.

 

$

166

 

 

$

197

 

See notes to condensed consolidated financial statements.

8


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter ended March 31, 2017 and 2016

(unaudited, in millions)

 

 

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

161

 

 

$

184

 

Adjustments to reconcile to cash provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

180

 

 

 

181

 

Amortization of finance costs, discounts and premiums, net

 

 

1

 

 

 

2

 

Stock compensation expense

 

 

3

 

 

 

3

 

Deferred income taxes

 

 

(6

)

 

 

(9

)

Gain on sale of assets

 

 

(17

)

 

 

(59

)

(Gain) loss on foreign currency transactions and derivatives

 

 

2

 

 

 

(1

)

Gain on property insurance settlement

 

 

 

 

 

(1

)

Equity in earnings of affiliates

 

 

(7

)

 

 

(2

)

Change in due from managers

 

 

(77

)

 

 

(83

)

Distributions from investments in affiliates

 

 

 

 

 

12

 

Changes in other assets

 

 

(12

)

 

 

9

 

Changes in other liabilities

 

 

(19

)

 

 

(17

)

Cash provided by operating activities

 

 

209

 

 

 

219

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from sales of assets, net

 

 

160

 

 

 

115

 

Return of investments in affiliates

 

 

3

 

 

 

7

 

Advances to and investments in affiliates

 

 

 

 

 

(1

)

Acquisitions

 

 

(467

)

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

Renewals and replacements

 

 

(64

)

 

 

(89

)

Redevelopment and acquisition-related investments

 

 

(16

)

 

 

(79

)

Cash used in investing activities

 

 

(384

)

 

 

(47

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Financing costs

 

 

(3

)

 

 

 

Issuances of debt

 

 

398

 

 

 

 

Draws on credit facility

 

 

340

 

 

 

170

 

Repayment of credit facility

 

 

(340

)

 

 

(70

)

Mortgage debt and other prepayments and scheduled maturities

 

 

 

 

 

(20

)

Repurchase of common OP units

 

 

 

 

 

(81

)

Distributions on common OP units

 

 

(187

)

 

 

(151

)

Cash provided by (used in) financing activities

 

 

208

 

 

 

(152

)

Effects of exchange rate changes on cash held

 

 

4

 

 

 

4

 

INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

 

 

37

 

 

 

24

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

 

547

 

 

 

377

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

584

 

 

$

401

 

 

See notes to condensed consolidated financial statements.

 

 

9


 

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter ended March 31, 2017 and 2016

(unaudited)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statements of cash flows: 

 

 

March 31, 2017

 

 

 

 

March 31, 2016

 

Cash and cash equivalents

 

$

411

 

 

 

 

$

234

 

Restricted cash

 

 

2

 

 

 

 

 

15

 

Cash included in Furniture, fixtures and equipment replacement fund

 

 

171

 

 

 

 

 

152

 

Total cash and cash equivalents and restricted cash shown in the statements of cash flows

 

$

584

 

 

 

 

$

401

 

 The following table presents cash paid during the quarter for the following: 

 

 

Quarter ended March 31,

 

 

 

2017

 

 

2016

 

Total interest paid

 

$

37

 

 

$

34

 

Income taxes paid

 

$

1

 

 

$

2

 

 

See notes to condensed consolidated financial statements.

 

 

 

10


 

HOST HOTELS & RESORTS, INC., HOST HOTE LS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

1.

Organization

Description of Business

Host Hotels & Resorts, Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”), with its operations conducted solely through Host Hotels & Resorts, L.P. and its subsidiaries. Host Hotels & Resorts, L.P., a Delaware limited partnership, operates through an umbrella partnership structure, with Host Hotels & Resorts, Inc., a Maryland corporation, as its sole general partner. In the notes to these unaudited condensed consolidated financial statements, we use the terms “we” or “our” to refer to Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. together, unless the context indicates otherwise. We also use the term “Host Inc.” specifically to refer to Host Hotels & Resorts, Inc. and the term “Host L.P.” specifically to refer to Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. As of March 31, 2017, Host Inc. holds approximately 99% of Host L.P.’s OP units.

Consolidated Portfolio

As of March 31, 2017, our consolidated portfolio, primarily consisting of luxury and upper upscale hotels, is located in the following countries:

 

 

Hotels

 

United States

 

90

 

Australia

 

1

 

Brazil

 

3

 

Canada

 

2

 

Mexico

 

1

 

Total

 

97

 

 

Joint Ventures

We own a non-controlling interest in a joint venture in Europe (“Euro JV”) that owns hotels in two separate funds. We own a 32.1% interest in the first fund (“Euro JV Fund I”) (3 hotels) and a 33.4% interest in the second fund (“Euro JV Fund II”) (7 hotels).

As of March 31, 2017, the Euro JV owned hotels located in the following countries:

 

 

Hotels

 

Belgium

 

1

 

France

 

3

 

Germany

 

1

 

Spain

 

2

 

Sweden

 

1