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Host Hotels & Resorts Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 17, 2011 04:49PM
Host Hotels & Resorts Inc. (HST) filed Quarterly Report for the period ended 2011-09-09.
Highlight of Business Operations:Interest Expense. The $2 million decrease in interest expense for the third quarter reflects a $3 million decrease in the costs associated with our debt extinguishments in the third quarter (which includes prepayment premiums, the acceleration of deferred financing costs and incremental interest), as well as a slight increase in interest expense due to the net effect of our recent debt transactions, including the issuance of the $500 million, 5 7/8% Series W senior notes in May 2011 and $500 million, 6% Series U senior notes that were issued in October, 2010; partially offset by the interest savings from the repayment of our 7 1/8% Series K senior notes and the redemption of the 2004 and 2007 Debentures. For year-to-date, interest expense includes total debt extinguishment charges of $8 million in 2011 compared to $15 million in 2010.
Exchangeable Senior Debentures. As of September 9, 2011, we have three issuances of exchangeable senior debentures outstanding: $400 million, 2 1/2% debentures that were issued on December 22, 2009 (the 2009 Debentures), $421 million, 2 5/8% debentures that were issued on March 23, 2007 (the 2007 Debentures) and $175 million, 3 1/4% debentures that were issued on March 16, 2004 (the 2004 Debentures, collectively, the Debentures). The Debentures are equal in right of payment with all of our other senior notes. Holders have the right to require us to purchase the Debentures at a price equal to 100% of the principal amount outstanding plus accrued interest (the put option) on certain dates subsequent to their respective issuances. Holders of the Debentures also have the right to exchange the Debentures prior to maturity under certain conditions, including at any time at which the closing price of our common stock is more than 120% (for the 2004 Debentures) or 130% (for the 2007 and 2009 Debentures) of the exchange price per share for at least 20 of 30 consecutive trading days during certain periods or any time up to two days prior to the date on which the Debentures have been called for redemption. We can redeem for cash all, or part of, any of the Debentures at any time subsequent to each of their
Rooms. Room revenue increased 16.9% and 14.2% for the quarter and year-to-date, respectively, which includes our Recent Acquisitions, which increased room revenue by $70 million, or 11.1%, and $152 million, or 8.5%, for the quarter and year-to-date, respectively. Operations at our hotels continued to improve as comparable RevPAR increased 6.4% for the quarter and 6.3% year-to-date.
Management fees. Base management fees, which are generally calculated as a percentage of total revenues, increased 13.9% for the quarter and 12.5% year-to-date, consistent with our overall increase in revenue, including the revenue from our Recent Acquisitions. Incentive management fees, which generally are based on the level of operating profit at each property after we have received a priority return on our investment, increased $1 million for the quarter and $5 million year-to-date. Our Recent Acquisitions increased overall management fees by $3 million, or 9.0%, and $7 million, or 6.6%, for the quarter and year-to-date, respectively.
Food and beverage. Food and beverage revenue increased 12.6% and 10.3% for the quarter and year-to-date, respectively, which was driven by our Recent Acquisitions, which increased food and beverage revenue by $25 million, or 9.7%, and $53 million, or 6.3%, for the quarter and year-to-date, respectively. Improvements in banquet and audio-visual revenue contributed to a comparable food and beverage revenue increase of 4.1% for the quarter and 4.8% year-to-date.
Stocks Discussed: HST,