Host Hotels & Resorts, Inc. · NASDAQ:HST
Host Hotels & Resorts — Investor Presentation (December 2018)
63 slides from Host Hotels & Resorts's investor presentation, December 2018
Slide 1: Investor Presentation
Bs HOST HOTELS & RESORTS" Investor Presentation Decembe
Slide 2: Forward-looking statements
This investor presentation, and the related discussion, contains forward-looking statements. These include statements about Host Hotels & Resorts’ plans, strategies, financial performance, prospects or future events. Forward-looking statements are not guarantees of future performance. They involve k
Slide 3: Host at a glance
Takeaway bar 1. Figures as of September 30, 2018. 2. See Appendix for calculation of Total Enterprise Value 3. See Appendix for a list of our top 40 hotels and a description of what we consider to be our comparable hotels 3 4. Average Daily Trading Volume between January 1, 2018 and September 30, 20
Slide 4: Key investment highlights
JF: realign to fit full page • Acquired $1.4bn of iconic and irreplaceable hotels since early 2017, each with very strong expected growth profiles • $4.2bn of acquisitions since 2010, including Andaz Maui, Grand Hyatt San Francisco, Hyatt Regency Coconut Point, The Phoenician, The Don CeSar and Beac
Slide 5: Strategic pillars: portfolio, analytics and balance sheet
• Focus on luxury and upper upscale resort • Keen focus on maintaining investment-grade and large convention center assets with rating. Provides dividend stability and high RevPAR and total RevPAR where • Established in early 2017 with the goal of financial flexibility projected supply is low (‘18-’
Slide 6: Market capitalization and trading volume vs. peers
($ bn) 9-month average2 ($ mm) $15.6 $138.8 $60.9 $6.6 $57.1 $4.4 $3.9 $3.8 $3.7 $31.5 $30.5 $27.0 $24.3 $2.5 $2.4 $22.5 $1.9 $9.0 $0.6 $3.5 HST PK RHP RLJ LHO SHO PEB DRH CHSP AHT HST LHO PK PEB SHO RLJ DRH RHP CHSP AHT 1. Equity Market Capitalization as of September 30, 2018. Based on data reporte
Slide 7: Irreplaceable Assets
Kerelalremelare Irreplaceable Assets
Slide 8: Top 40 assets vs. total portfolio
40 94 26,852 52,560 $228 $1801 $349 $2741 $935 $1,3481 / $571 $35 $281 / $11 61% 100% Note: Hotel EBITDA and EBITDA per key are non-GAAP measures. See appendix for definitions of these measures and reconciliations to comparable GAAP measures. 8 1. Based on our comparable hotel set at December 31, 20
Slide 9: Top Iconic Assets Cannot be Replicated
Top 40 Iconic Assets Cannot be Replicated HEST HOTELS & RESORTS"
Slide 10: Top 40 assets vs. closest peer
$228 $349 $350 $207 $302 HST Closest Peer HST Closest Peer Next Closest Top 40 PEB Top 40 RHP PEB $ mm $935 $758 HST Closest Peer Top 40 PK 1. See appendix for reconciliations of EBITDA to net income and a listing of what we consider to be our peer companies. Peer information is based on company fil
Slide 11: Geographic diversification by market
• Drives complexing synergies • Reduces volatility to provide long-term operational outperformance • Supports comprehensive market knowledge to drive key financial decisions San Diego 7% 11% New York 4% 9% San Francisco/San Jose 11% 8% Washington, D.C. (CBD) 8% 7% Maui/Oahu 8% 7% Boston 7% 6% Phoeni
Slide 12: Resort and convention focus vs. peers
% of Total Rooms CAGR 2017 − 2020F 2.5% 47.2% 36.3% 0.6% 0.6% 1 HST Peer Average Resort Convention Total United States greater resort and convention projected resort and focus vs. peers convention supply growth 2017-2020 Outsized benefit from Resort and convention supply growth projected lower than
Slide 13: Unprecedented Scale and Integrated Platform
HOTELS & RESORTS" Unprecedented J Scale and Integrated Platform THE PHOENICIAN, A LUXURY COLLECTION RESORT
Slide 14: Integrated platform capabilities
+ • Data analytics platform that • Source and close new • Front line of real estate value • In-house Development, Design & tracks 1.2bn discrete data property acquisitions and creation Construction expertise led by former points negotiate the related head of development at Las Vegas • Implement oper
Slide 15: EBITDA margin expansion 2011 to 2017
2011 to 2017 EBITDA Margin Expansion 258 bps 560 27.9% bps 22.3% 302 bps 2011 2017 HST Peer Average $1.69 4.8x $0.92 2.0x 2011 2017 2011 September 2018 1. Hotel EBITDA margins are based on comparable hotels in each year, which will vary annually. Operating profit margins under GAAP were 6.5% in 2011
Slide 16: Enterprise analytics and capital allocation process
Data points Unique Property Peer groups / Unique manager Total Discrete processed each charts of attributes competitive account / Data Points month accounts (e.g., market, sets used for department size, location) benchmarking combinations • Strategic Insight group evaluates • Feasibility group under
Slide 17: Marriott-Starwood exposure and growth benefits
Companies with highest exposure to Marriott-Starwood brands projected to recognize outsized growth benefits as • Host is the largest owner Top-Line Projected Marriott embarks on 40bps to 50bps expected EBITDA of Marriott branded hotels Growth margin expansion annually through 2020 from Starwood in t
Slide 18: Dispositions and acquisitions of high-quality assets
Dispositions including: Acquisition of high-quality irreplaceable assets: • Blended TTM cap rate of 5.0%2 • ~5.5% estimated 2018 cap rate1 • $168 TTM RevPAR3 • $273 of 2018E RevPAR • $249 TTM Total RevPAR3 • $446 of 2018E Total RevPAR • $20k TTM EBITDA per key2,3 • $45k 2018E EBITDA per key1 • Recyc
Slide 19: Sustainability progress
We’re committed to enhancing the value and profitability of our owned hotels through sustainable business practices. Our strategic framework follows three themes to inform the integration of sustainability into the business and guide engagement with our CR stakeholders. Evaluate opportunities and cl
Slide 20: Investment-Grade Balance Sheet
Investment- (Cigelel= Balance Sheet GRANDMA WhytsHINGToM
Slide 21: Leverage vs. peers and debt maturities
(Net Debt + Preferred) / EBITDA vs. Peers1 as of December 31, 2017 ($ in mm) 10.9x $978 $850 6.9x $178 4.8x 4.5x 3.8x 3.7x 3.4x 3.3x 2.0x 1.4x $500 $500 AHT PEB RLJ RHP CHSP PK LHO DRH HST SHO $406 $400 $350 $500 $6 6.7x 4.7x $500 $300 $350 $850 $400 $500 $400 2.0x 2020 2021 2022 2023 2024 2025 2026
Slide 22: Dividend capacity through downturns
($ mm) Ability to continue to pay dividends even through significant downturns 2018F Adjusted EBITDAre differentiates Host from peers 2018F Cash Interest Expense $182 2018F Renewals & Replacement Capex $290 $66 2018F Adjustment for Taxes & Other $625 2018F Free Cash Flow Significant balance sheet ca
Slide 23: Premier Management Team
Premier Management Team
Slide 24: Management team
PRESIDENT & CEO EVP & CFO EVP & CIO EXPERIENCE: 40 YEARS EXPERIENCE: 28 YEARS EXPERIENCE: 23 YEARS HOST TENURE: 21 YEARS HOST TENURE: <1 YEAR HOST TENURE: 13 YEARS EVP & GENERAL COUNSEL EVP, HUMAN RESOURCES MD, DESIGN, DEVELOPMENT & CONSTRUCTION EXPERIENCE: 30 YEARS EXPERIENCE: 35 YEARS EXPERIENCE:
Slide 25: Board of directors
CHAIRMAN OF THE BOARD PRESIDENT & CEO Former chair and chief executive Served as Chairman since 1993 officer of the Americas for Saatchi & Saatchi Worldwide. Member of the board of directors of PVH Corp and Ruth’s Hospitality Group Former Chair of the FDIC. Current CEO and Director of GGP. Member of
Slide 26: Investor relations contact
SVP Corporate Finance, Treasury & Investor Relations 240.744.5275 26
Slide 27: Case Studies
Case Studies => Write ANDAZ MAUI AT WAILEA-RESORT
Slide 28: New York Marriott Marquis retail units
•Utilization of the irreplaceable nature and scale of our assets to extract value via retail, advertising, and Leased retail, theater and signage outsourcing (Vornado Realty Trust handling retail leasing) condominium units in 2012 and eventually sold the units 6 years later for $442mm •In-house inve
Slide 29: Hyatt portfolio acquisition
| | Acquired March 29, 2018 • 2017 RevPAR of $277 and 2017 Total RevPAR of $430; portfolio collectively ranks top 10 in RevPAR; Andaz Maui ranks #2 and Grand Hyatt San Francisco #8 Three iconic assets in expected high-growth coastal markets • High free cash flow conversion given high RevPAR of prope
Slide 30: Andaz Maui at Wailea Resort
• 2017 Operating results: • Newest asset on the best beach in Hawaii in one of the strongest − ADR: $531 expected growth markets in the U.S. − Occupancy 85% • Full transformative $150mm repositioning ($498k/key of capex) from − RevPAR $453 Renaissance to Andaz in 2013 (Ranks #2 in the portfolio) • I
Slide 31: Grand Hyatt San Francisco
• 2017 Operating results: • Prime location, best urban location in the U.S.; Union Square San Francisco − ADR: $296 • Positioned to benefit from record-setting citywide pace following − Occupancy 92% Moscone expansion − RevPAR $272 • Asset in excellent condition – $84mm of renovations ($126k/key) si
Slide 32: Hyatt Regency Coconut Point
• 2017 Operating results • Prime gulf coast Florida resort − ADR: $224 • Positioned to benefit from demand from the Caribbean and expected − Occupancy 74% continued leisure demand strength − RevPAR $166 − EBITDA per key $32k1 • Hyatt Regency branded hotel in excellent condition • $40mm in renovation
Slide 33: The Phoenician
Acquired June 8, 2015 •Generational trophy asset; top 40 Host asset •2017 RevPAR of $193 and 2017 Total RevPAR of $417; 2017 EBITDA per key of $34k 1 Renowned resort icon – AAA Five- diamond luxury trophy destination resort •~$500mm capital investment limited bidder universe Landmark site with 300 a
Slide 34: The Don CeSar
•The legendary “pink palace” of St. Pete Beach Acquired February 16, 2017 •2017 RevPAR of $208 and 2017 Total RevPAR of $434; 2017 EBITDA per key of $46k1 An iconic, beachfront landmark on Florida’s Gulf Coast Conversion from brand managed •Enterprise Analytics identified $3mm - $4mm of potential co
Slide 35: Manchester Grand Hyatt San Diego renovation
•Waterfront hotel within walking distance to the best of downtown Completed June 2016 on-time and below budget •2017 RevPAR of $207 and 2017 Total RevPAR of $353; 2017 EBITDA per key of $42k1 Opportunity to create a “best-in-class” meeting space platform, with two 36k sf •Disruption minimized by tra
Slide 36: Appendix
SAN FRANCISCO MARRIOTT MARQUIS. ANY YE PERRRPR ERE REERE See 0 MAA AAA AAA AAAS BS 5 29 a! Appendix
Slide 37: Appendix Table of Contents
APPENDIX PAGE NO. APPENDIX TABLE OF CONTENTS Key Terms and Statistics .......................................................................................................................................................... A-1 • Defined Terms .......................................................
Slide 38: Defined Terms
Key Terms and Statistics DEFINED TERMS Cash-on-cash return – The cash return for the first year of operations from a respective Investment. It is calculated as the incremental increase in cash flow from operations as a result of the project, including any cost savings, divided by the Investment. CAG
Slide 39: Non-GAAP financial measures: NAREIT FFO
Key Terms and Statistics accordance with GAAP. The following discussion defines these measures and presents why we believe they are useful supplemental measures of our performance. NAREIT FFO and NAREIT FFO per Diluted Share We present NAREIT FFO and NAREIT FFO per diluted share as non-GAAP measures
Slide 40: Adjusted FFO adjustments
Key Terms and Statistics ▪ Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance. I
Slide 41: EBITDAre and credit facility ratios
Key Terms and Statistics ▪ Acquisition Costs – Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of
Slide 42: Discretionary free cash flow
Key Terms and Statistics cash flows, provides useful supplemental information of cash available for acquisitions, capital expenditures, stock repurchases and other corporate purposes. We adjust cash provided by operating activities for the following items, which may occur in any period, and refer to
Slide 43: Comparable hotel property level results
Key Terms and Statistics needs, including the ability to make cash distributions, without consideration of the impact of the investing and financing cash requirements that are excluded from these calculations to the extent they are material to operating decisions. Comparable Hotel Property Level Ope
Slide 44: Peer group methodology
Key Terms and Statistics ratios commonly used by research analysts in the lodging industry. The leverage ratio (net debt plus preferred equity/EBITDA) for the Lodging and Blue Chip REITs presented herein is based on information reported by these companies. Additionally, metrics for specific time per
Slide 45: Comparable hotels and forecast considerations
Key Terms and Statistics these statistics and operating results relate only to our hotel properties, they exclude results for our non-hotel properties and other real estate investments. We define our comparable hotels as properties: (i) that are owned or leased by us and the operations of which are
Slide 46: Top 40 Domestic Hotels by RevPAR
Top 40 Domestic Hotels By RevPAR (in millions, except hotel statistics) Year ended December 31, 2017 Average Average Total Revenues Hotel Net No. of Room Occupancy Total per Income Hotel Location Rooms Rate Percentage RevPAR Revenues Available Room (Loss) Hotel EBITDA(1) 1 The Fairmont Kea Lani Maui
Slide 47: Top 40 hotels: net income to hotel EBITDA
Top 40 Domestic Hotels By RevPAR (in millions, except hotel statistics) The following table presents our Top 40 Domestic Hotels by RevPAR Reconciliation of Hotel Net Income to Hotel EBITDA (in millions, except hotel statistics): Year ended December 31, 2017 No. of Hotel Net Plus: Plus: Interest Plus
Slide 48: Hotel portfolio statistics vs. peers
Hotel Portfolio Statistics vs. Peers Performance Statistics The following presents RevPAR, Total RevPAR and EBITDA for Host and the Lodging REITs for the year ended December 31, 2017: RevPAR Total RevPAR EBITDA (in millions) Host Hotels & Resorts, Inc. Top 40 Domestic Hotels by RevPAR (HST) $ 227.89
Slide 49: Hotel EBITDA to net income by location
Reconciliation of Host EBITDA to Hotel Net Income by Location The following table presents the reconciliation of hotel EBITDA by location to net income (in millions): Year ended December 31, 2017 Adjusted Less: Hotel Net Hotel Net Plus: Plus: Interest Income Equals: Hotel Percent of Market(1) Income
Slide 50: Capitalization and Total Enterprise Value
Capitalization and Total Enterprise Value As of September 30, 2018 (in millions, except security pricing and Shares/Units per share amounts) Common shares outstanding 740.0 Common shares outstanding assuming conversion of OP Units (1) 748.1 Preferred OP Units outstanding .02 Security pricing Common
Slide 51: Comparable hotel EBITDA margin growth vs. Lodging REITs
Comparable Hotel EBITDA Margin Growth and Comparison to Lodging REITs The following tables present comparable hotel EBITDA margins growth of Host compared to the average comparable hotel EBITDA margins growth of the Lodging REITs. We define our comparable hotels as properties that are owned or lease
Slide 52: Comparable hotel EBITDA margin reconciliation
Comparable Hotel EBITDA Margin Growth and Comparison to Lodging REITs The following reconciles net income to our comparable hotel EBITDA and hotel EBITDA margin growth for our comparable hotels for 2011 and 2017 (in millions, except hotel statistics and per key) (1): Year ended December 31, December
Slide 53: Comparable hotel EBITDA margin comparison tables
Comparison of Comparable Hotel EBITDA Margin Growth to Lodging REITs Year ended December 31, 2017 Year ended December 31, 2011 Adjustments Adjustments Non- Non- comparable Depreciation comparable Depreciation hotel and Comparable hotel and Comparable GAAP results, net corporate Hotel GAAP results, n
Slide 54: Hotels removed from comparable set
Comparison of Comparable Hotel EBITDA Margin Growth to Lodging REITs • Hyatt Regency San Francisco Airport, removed in the first quarter of 2016 (business disruption due to extensive renovations, including all guestrooms and bathrooms, meeting space, the repositioning of the atrium into a new restau
Slide 55: GAAP leverage ratio to credit facility leverage ratio
Reconciliation of GAAP Leverage Ratio to Credit Facility Leverage Ratio The following tables present the calculation of our leverage ratio using GAAP measures and as used in the financial covenants of the credit facility (in millions, except ratios): GAAP Leverage Ratio September 30, 2018 December 3
Slide 56: Adjusted EBITDAre reconciliation, trailing twelve months
Reconciliation of GAAP Leverage Ratio to Credit Facility Leverage Ratio (2) The following presents the reconciliation of net income (loss) EBITDA, EBITDAre, Adjusted EBITDAre and EBITDA per our credit facility definition in determining leverage ratio (in millions): Trailing twelve months September 3
Slide 57: Leverage ratios of Blue Chip and Lodging REIT peers
Leverage Ratios of Blue Chip REITs and Lodging REITs Peer Groups Leverage Ratios of Blue Chip REITs and Lodging REITs Peer Groups The following tables present the leverage ratios of Blue Chip REITs and Lodging REITs peer groups: Lodging REIT Peers Blue Chip REITs September 30, 2018 September 30, 201
Slide 58: Interest coverage ratio reconciliation
Reconciliation of GAAP Interest Coverage Ratio to EBITDA to Interest Coverage Ratio Interest Coverage Ratio The following tables present the calculation of our interest coverage ratio using GAAP measures and as used in the financial covenants of the senior notes indenture (in millions, except ratios
Slide 59: Net income to Adjusted FFO per share and CAGR
Reconciliation of Net Income to Adjusted FFO per Diluted Share and CAGR The following tables present our compound annual growth rate (“CAGR”) of earnings per diluted share and Adjusted FFO per diluted share. Adjusted FFO is a term as defined by Host and is based on the NAREIT FFO adjusted for certai
Slide 60: Acquisitions and Disposition Metrics
Acquisitions and Disposition Metrics (in millions, except hotel statistics) 2015 Full Year Forecast at Date of Underwriting Hotel Net Plus: Plus: Equals: Renewal & Net Income Plus: Interest Income Hotel Replacement Operating Hotel Location No. of Rooms (Loss) Depreciation Expense Tax EBITDA funding
Slide 61: Acquisitions and Disposition Metrics: 2020 forecast
Acquisitions and Disposition Metrics (in millions, except hotel statistics) 2020 Forecast Hotel Net Plus: Plus: Equals: Renewal & Net Income Plus: Interest Income Hotel Replacement Operating Hotel Location No. of Rooms (Loss) Depreciation Expense Tax EBITDA funding Income(2) The Phoenician, A Luxury
Slide 62: New York Marquis retail sale multiples
Acquisitions and Disposition Metrics (in millions, except hotel statistics) The following tables present the calculation of EBITDA Multiple and Net Income Multiple for New York Marquis Retail (in millions, except ratios): Full year 2018 Full year 2019 Sale Price $ 442 $ 442 Forecast Net Income(1) 12
Slide 63: 2018 Outlook: net income to Adjusted EBITDAre
2018 Outlook Reconciliation of Net Income to EBITDA, EBITDAre, Adjusted EBITDAre for 2018 Forecast (1) Full Year 2018 Low-end High-end of range of range Net income $ 971 $ 981 Interest expense 179 179 Depreciation and amortization 688 688 Income taxes 66 66 EBITDA 1,904 1,914 Gain on dispositions (6
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