Host Hotels & Resorts refinances debt in Q4, ends year with $826 million of cash, equivalents

By Lisa Kerner

Charlotte, N.C., Feb. 14 - Host Hotels & Resorts, Inc.'s 2011 financial results were strong despite the macro economic environment, said chief executive officer Ed Walter during the company's fourth-quarter and full-year 2011 earnings call on Tuesday.

Total revenues for the quarter were up 11.2% at $1.69 billion from the prior-year period, and up 12.9% for the full year at about $5 billion, compared to $4.43 billion for 2010.

Host Hotels attributed the increase to the performance of its company-owned hotels, including the 14 acquired since July 2010, which increased revenues by an incremental $83 million and $296 million for the fourth quarter and full year 2011, respectively.

Chief financial officer Larry Harvey said the company will use proceeds of about $295 million from the issue of $300 million of 6% series Y 10-year senior notes in November for the repurchase or repayment of $388 million of 2 5/8% exchangeable senior debentures expected to be put to the company in April.

In November, the company closed on a new senior revolving credit facility with a syndicate of banks. The credit facility allows for borrowings in a total principal amount of up to $1 billion, $400 million more than the previous facility. The interest rate spread for Libor-based borrowings ranges from 175 to 275 basis points. The credit facility has an initial maturity of November 2015 with an option to extend for one additional year.

Also in November, Host Hotels refinanced the mortgage loan on the Hilton Melbourne South Wharf in November, which extended the maturity of the loan to 2016 and lowered the effective interest rate by 400 basis points. For the A$82 million loan, 75% bears interest at a fixed rate of 6.7%, through an interest rate swap, while the remaining 25% bears interest at a floating rate based on the 3-month Reuters' Bank Bill Swap Bid Rate (BBSY) plus 230 basis points for a combined rate of 6.77% at Dec. 31, 2011, according to a company news release.

Host Hotels had about $826 million of cash and cash equivalents and $883 million of available capacity under its credit facility as of Dec. 31, said Harvey.

The company reported net income of $16 million for the fourth quarter, compared with a net loss of $6 million for the fourth-quarter 2010, and net loss of $16 million for the full-year 2011, compared with a net loss of $132 million for 2010.

Host Hotels & Resorts is a lodging real estate investment trust based in Bethesda, Md.

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