Host Hotels & Resorts, Inc. Reports Results for 2020

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Host Hotels & Resorts, Inc.
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BETHESDA, Md., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Host Hotels & Resorts, Inc. (NASDAQ: HST) (the “Company”), the nation’s largest lodging real estate investment trust (“REIT”), today announced results for the fourth quarter and full year 2020.

OPERATING RESULTS
(unaudited, in millions, except per share and hotel statistics)

Quarter ended December 31,

Percent

Year ended December 31,

Percent

2020

2019

Change

2020

2019

Change

Revenues

$

267

$

1,334

(80.0

)%

$

1,620

$

5,469

(70.4

)%

All owned hotel revenues (pro forma) (1)

266

1,308

(79.7

)%

1,604

5,190

(69.1

)%

Net income (loss)

(66

)

81

N/M

(741

)

932

N/M

EBITDAre (1)

(53

)

355

N/M

(233

)

1,538

N/M

Adjusted EBITDAre (1)

(32

)

355

N/M

(168

)

1,534

N/M

All owned hotel (pro forma) Total
RevPAR - Constant US$

61.49

306.42

(79.9

)%

93.70

306.40

(69.4

)%

All owned hotel (pro forma) RevPAR -
Constant US$

38.09

187.83

(79.7

)%

57.17

192.45

(70.3

)%

Diluted earnings (loss) per common
share

(0.09

)

0.11

N/M

(1.04

)

1.26

N/M

NAREIT FFO per diluted share (1)

(0.07

)

0.33

N/M

(0.31

)

1.70

N/M

Adjusted FFO per diluted share (1)

(0.02

)

0.41

N/M

(0.17

)

1.78

N/M

*Additional detail on the Company’s results, including data for 22 domestic markets and top 40 hotels by Total RevPAR, is available in the Year End 2020 Supplemental Financial Information available on the Company’s website at www.hosthotels.com.

James F. Risoleo, President and Chief Executive Officer, said, “We continued to grow sequential revenues while minimizing operating expenses in the fourth quarter and further reduced our net loss and hotel-level operating losses from third-quarter levels. With accelerating vaccine deployment, decreasing weekly COVID-19 case counts and the easing of lockdowns, we are encouraged by recent booking activities. In January, we saw year-over-year increases in group bookings for future periods and near-term transient demand is continuing to show signs of improvement. We are optimistic that travel and tourism will continue to pick up as the pandemic recedes and expect our hotel portfolio to return to profitability in the aggregate sometime during the second half of 2021 based on hotel-level EBITDA.”

Risoleo continued, “We entered 2021 with $2.5 billion dollars in total available liquidity and remain focused on minimizing cash burn and preserving liquidity while increasing financial flexibility to create long-term value for our stockholders. On this front, we have secured a best-in-class second amendment to our credit agreement that extends our covenant waiver period while further enhancing our ability to opportunistically invest in value-creation opportunities. We also remain focused on our key strategic objectives of redefining our operating model and strategically allocating capital to accelerate our EBITDA recovery and deliver long-term growth for our stockholders.”

________________________

(1)

NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and all owned hotel results (pro forma) are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.

N/M = Not meaningful

HIGHLIGHTS:

Results for Fourth Quarter 2020

  • Recorded a GAAP net loss of $66 million in the fourth quarter 2020 compared to a net loss of $316 million in the third quarter, reflecting a relative improvement in hotel results and a fourth quarter gain on asset sales.

  • Reduced hotel-level operating loss by 23% compared to third quarter 2020 due to a sequential improvement in RevPAR and operations and improved year-over-year RevPAR declines each quarter since the second quarter of 2020.

  • Achieved break-even or positive hotel-level operating profit at 20 of its hotels, representing 24% of rooms, in the fourth quarter of 2020, an increase from 14 hotels, representing 13% of rooms, achieved in the third quarter.

  • Recorded a gain on sale of assets of approximately $195 million in the fourth quarter as a result of completing the previously announced sales of the Newport Beach Marriott Hotel & Spa for $216 million and 29 acres of land adjacent to The Phoenician hotel for approximately $66 million.

  • Ended the quarter with total available liquidity of approximately $2.5 billion, including FF&E escrow reserves of $139 million.

Progress in 2021

  • Achieved RevPAR of approximately $42 for January 2021 based on preliminary estimates, with performance driven by Sun Belt markets as well as Washington, D.C.

  • On January 21, 2021, celebrated the opening of the AC Hotel Scottsdale North, a 165-room select-service hotel that was developed by the Company on an underutilized parking lot alongside The Westin Kierland Resort & Spa. The Company now has a total of 80 consolidated hotels, of which 76 hotels, representing 94% of the Company’s room count, are open as of February 18, 2021.

  • On February 9, 2021, the Company amended its credit facility to extend the covenant waiver period through the first quarter of 2022 as well as to further modify the covenant levels required after the waiver period ends and to provide additional flexibility with regard to acquisitions, asset sales, capital expenditures and mandatory prepayment without any changes to the existing pricing grid. Additional details of the terms were provided in a press release published February 10, 2021.

OPERATING ACTIVITIES CASH AND CASH BURN

Significant components of the Company’s total cash burn are (in millions):

Quarter ended
December 31, 2020

Quarter ended
September 30, 2020

Net loss

$

(66

)

$

(316

)

GAAP net cash used in operating activities

(143

)

(149

)

Cash burn from operations

(149

)

(183

)

Cash burn (2)

(264

)

(267

)

Components of cash burn:

Hotel-level operating loss (2)

(75

)

(97

)

Interest payments (3)

(50

)

(27

)

Cash corporate and other expenses

(12

)

(15

)

Net proceeds from (payments to) unconsolidated operations

9

(1

)

Severance at hotel properties

(21

)

(43

)

Cash burn from operations

(149

)

(183

)

Capital expenditures

(115

)

(84

)

For the fourth quarter, improvement in RevPAR and operations offset the anticipated increase in cash expenditures for interest and capital expenditures, as well as less Employee Retention Credit (“ERC”) received. Fourth quarter cash burn also benefited from a $10 million distribution received from the Company’s joint venture that owns a timeshare in Hawaii. Until such time as COVID-19 case counts and hospitalizations decline, the Company anticipates that operations will continue to be significantly reduced at its hotel properties. Therefore, while forecasting remains difficult due to the uncertainty surrounding the on-going pandemic and minimal visibility into future results, the Company believes that hotel-level operations in the first quarter of 2021 will be commensurate with the fourth quarter of 2020 and anticipates the portfolio will return to profitability in the aggregate based on hotel-level EBITDA sometime during the second half of the year when vaccines for COVID-19 are expected to become more widely available. The Company estimates in the first quarter of 2021:

(i)

the average monthly GAAP cash used in operating activities would be approximately $57 million at the midpoint, which includes estimated interest, corporate-level expenses, and cash timing adjustments;

(ii)

monthly cash burn from operations would be approximately $49 million to $54 million, and total cash burn, which includes estimated monthly capital expenditures, would be $83 million to $93 million(2).

________________________

(2)

Hotel-level operating loss and cash burn are non-GAAP financial measures within the meaning of the rules of the SEC. See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.

(3)

Interest payments for the fourth and third quarter do not include cash debt extinguishment costs of $8 million and $26 million, respectively, which are considered a financing activity on the Company’s statement of cash flows.

OPERATING RESULTS

Due to low occupancy levels and/or state mandates, operations remain suspended at four hotels in the Company’s portfolio as of February 18, 2021. The Company has provided a complete list of these suspended hotels on page 31 of its Year End 2020 Supplemental Financial Information available on the Company’s website at www.hosthotels.com.

The following presents the monthly pro forma hotel operating results for the full portfolio during the periods presented:

October
2020

October
2019

Change

November
2020

November
2019

Change

December
2020

December
2019

Change

Number of hotels

79

79

79

79

79

79

Number of rooms

46,142

46,142

46,142

46,142

46,142

46,142

Average Occupancy Percentage

21.3

%

82.5

%

(61.2

pts)

19.7

%

75.8

%

(56.1

pts)

17.3

%

70.3

%

(53.0

pts)

Average Room Rate

$

177.67

$

254.80

(30.3

)%

$

189.67

$

238.93

(20.6

)%

$

226.32

$

244.88

(7.6

)%

RevPAR

$

37.77

$

210.10

(82.0

)%

$

37.38

$

181.15

(79.4

)%

$

39.10

$

172.04

(77.3

)%

The following presents the monthly pro forma hotel operating results for the hotels without suspended operations during the periods presented:3

October
2020

November
2020

December 2020

Number of hotels(4)

72

75

75

Number of rooms

41,822

43,383

43,383

Average Occupancy Percentage

22.9

%

20.9

%

18.3

%

Average Room Rate

$

175.45

$

189.67

$

226.43

RevPAR

$

40.22

$

39.56

$

41.54

The Company has worked with its hotel operators to take the following actions to mitigate the operational impact of the COVID-19 pandemic:

  • Reduced portfolio-wide hotel operating costs by over 65%, excluding severance, in the fourth quarter compared to the prior year, by continuing to suspend or scale back operations at hotels.

    • Furloughed employees received healthcare benefits of approximately $27 million in the fourth quarter and approximately $112 million for the full year.

    • During the fourth quarter 2020, approximately $13 million of furlough costs were accrued, to be paid in the first quarter of 2021.

    • In addition, the Company’s hotel operators recorded a $15 million credit related to the ERC in the fourth quarter and $39 million for the full year, that, under the CARES Act, partially offset the costs for the operator’s furloughed hotel employees and reduced hotel-level operating expenses.

    • Furlough costs are expected to continue to decline as a result of the workforce reconfigurations, noted below. The related ERC is also expected to decline.

  • Re-evaluated the workforce structure and implemented changes that are expected to lead to a more efficient operating model in the long term. As a result, the Company recorded severance costs of approximately $21 million in the fourth quarter of 2020 and $65 million for the full year, with no further severance currently expected.

  • Reduced full year 2020 corporate expenses by nearly 17% compared to the prior year.

_________________________

(4)

Represents the hotels that were accepting reservations during the entirety of the month. Excludes the seven, four, and four hotels with suspended operations in the months of October, November and December, respectively.

HOTEL BUSINESS MIX UPDATE

The Company’s customers fall into three broad groups: transient, group and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its 2019 room sales.

During the fourth quarter, demand continued to be primarily driven by drive-to and resort destinations. The following are the sequential results of the Company’s consolidated portfolio, including all owned hotels at December 31, 2020, for transient, group and contract business:

Quarter ended December 31, 2020

Quarter ended September 30, 2020

Transient

Group

Contract

Transient

Group

Contract

Room nights (in thousands)

585

156

83

523

127

74

Percentage change in room
nights vs. same period in 2019

(70.1

)%

(86.0

)%

(47.1

)%

(75.4

)%

(88.7

)%

(57.7

)%

Room Revenues (in millions)

$

126

$

24

$

12

$

96

$

17

$

11

Percentage change in revenues
vs. same period in 2019

(74.9

)%

(91.0

)%

(63.6

)%

(81.1

)%

(93.0

)%

(68.7

)%

CAPITAL EXPENDITURES

The following presents the Company’s 2020 capital expenditures spend and forecast for 2021 (in millions):

Year ended December 31, 2020

2021 Full Year Forecast

Actuals

Low-end of range

High-end of range

ROI - Marriott transformational capital program

$

175

$

110

$

140

ROI - All other ROI projects

168

165

185

Total ROI project spend

343

275

325

Renewals and Replacements

156

100

150

Total Capital Expenditures

$

499

$

375

$

475

In 2020, the Company prioritized major capital projects in assets and markets that are expected to recover faster, such as leisure and drive-to destinations, as well as previously announced major return on investment projects and continued completion of the Marriott transformational capital program to take advantage of reduced demand. The Company is utilizing the low occupancy environment to accelerate certain projects and minimize future disruption. The Company believes the renovations will position these hotels to capture additional revenue during the economic recovery. Major projects completed in 2020 include:

  • Marriott transformational capital program completions at the Minneapolis Marriott City Center, San Antonio Marriott Rivercenter, and JW Marriott Atlanta Buckhead;

  • Resort renovations at the Hyatt Regency Maui Resort and Spa and The Don Cesar in St. Pete Beach; and

  • New hotel construction completion of the AC Hotel Scottsdale North.

Planned 2021 projects include:

  • Marriott transformational capital program completions at The Ritz-Carlton Amelia Island, New York Marriott Marquis, Houston Marriott Medical Center, and Orlando World Center Marriott;

  • Value enhancing investments including completion of the luxury villa expansion at Andaz Maui at Wailea Resort and a new waterpark at The Ritz-Carlton Golf Resort, Naples;

  • Commencement of a tower expansion and extensive guestroom renovation at The Ritz-Carlton, Naples; and

  • Resort renovations at the Hyatt Regency Coconut Point Resort and Spa.

The Company received approximately $19 million in operating profit guarantees in 2020, under the Marriott transformational capital program, including $6 million that was received in the fourth quarter, and expects to receive approximately $16 million in 2021. The Company has established key milestones to review major projects prior to implementation with the ability to reduce 2021 capital expenditures by approximately $150 million if required to conserve cash.

BALANCE SHEET

The Company maintains a robust balance sheet with the following balances at December 31, 2020:

  • Total assets of $12.9 billion.

  • Cash balance of approximately $2.3 billion and FF&E escrow reserves of $139 million.

  • Debt balance of $5.5 billion, with an average maturity of 5.0 years, an average interest rate of 3.0%, and no maturities until 2023.

During the fourth quarter, the Company redeemed the remaining $86 million of outstanding 4.75% Series C Senior Notes due 2023 for $94 million, including $8 million of prepayment costs, which was its last senior notes issued before attaining an investment grade rating.

On February 9, 2021, the Company amended its credit facility for the second time during the pandemic to further extend the covenant waiver period through the first quarter of 2022. Financial covenant testing will resume for the second quarter of 2022, based on annualized results for the quarter, but only a fixed charge coverage ratio of 1.0x will be required for the second quarter of 2022. For subsequent quarters, all financial covenants will be tested, with leverage ratio tested at the modified levels agreed to in the second amendment. The second amendment also provided additional flexibility for $500 million in asset sales without a prepayment requirement provided that the net proceeds are used to acquire hotel properties unencumbered by debt. This, along with the previous ability to acquire up to $1.5 billion of acquisitions funded with existing liquidity, brings the total acquisition capacity up to $2 billion. The amendment also retained the ability to acquire up to $7.5 billion of acquisitions funded with equity. The credit facility amendments generally require that net proceeds from debt issuances and asset sales in excess of $350 million (which has been fully utilized), and subject to certain exceptions, be used to repay borrowings under the revolver and term loans. As a result of these requirements, a portion of the proceeds from the issuance of Series I senior notes, the Newport Beach Marriott sale and the land sale at The Phoenician were used to repay $12 million of the revolving credit facility during the fourth quarter. At December 31, 2020, the Company was below the financial covenant levels under its senior notes indentures necessary to incur debt and, as a result, it will not be able to redraw this amount under the credit facility or incur additional debt while below these levels. Quarterly dividends and stock repurchases also remain suspended to help preserve liquidity and are restricted under the terms of the credit facility amendments.

2021 OUTLOOK

Given the global economic uncertainty COVID-19 has created for the travel, airline, lodging and tourism and event industries, among others, the Company cannot provide guidance for its operations or fully estimate the effect of COVID-19 on operations.

The Company believes that recovery within the lodging industry is highly dependent on the strength of the economy, consumer confidence and, especially with respect to corporate and group travel, the timing of vaccine deployment. The Company does not expect to see a material improvement in operations until government restrictions have been lifted, and business and leisure travelers are comfortable that the risks associated with traveling and contracting COVID-19 are significantly reduced. Based on current expectations for widespread vaccine rollout, this is not expected to occur until the second half of 2021.

While the Company is not providing guidance on operations at this time, it estimates that for full year 2021, the following expenses will be in the following range (in millions):

Full Year 2021

Low-end of
range

High-end of
range

Interest expense

$

172

$

183

Corporate and other expenses

98

100

The Company does not intend to provide further guidance updates unless deemed appropriate.

ABOUT HOST HOTELS & RESORTS

Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 75 properties in the United States and five properties internationally totaling approximately 46,300 rooms. The Company also holds non-controlling interests in six domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, The Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Swissôtel®, ibis® and Novotel®, as well as independent brands. For additional information, please visit the Company’s website at www.hosthotels.com.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements include forecast results and are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,” “predict,” “project,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the duration and scope of the COVID-19 pandemic and its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; actions governments, businesses and individuals take in response to the pandemic, including limiting or banning travel or the size of gatherings; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies, travel, and economic activity, including the duration and magnitude of its impact on unemployment rates, business investment and consumer discretionary spending; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in U.S. markets where we own hotels and a worsening of economic conditions or low levels of economic growth in these markets; the effects of steps we and our hotel managers take to reduce operating costs in response to the COVID-19 pandemic; other changes (apart from the COVID-19 pandemic) in national and local economic and business conditions and other factors such as natural disasters and weather that will affect occupancy rates at our hotels and the demand for hotel products and services; the impact of geopolitical developments outside the U.S. on lodging demand; volatility in global financial and credit markets; operating risks associated with the hotel business; risks and limitations in our operating flexibility associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; risks associated with our relationships with property managers and joint venture partners; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; the effects of hotel renovations on our hotel occupancy and financial results; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; risks associated with our ability to complete acquisitions and develop new properties and the risks that acquisitions and new developments may not perform in accordance with our expectations; our ability to continue to satisfy complex rules in order for us to remain a REIT for federal income tax purposes; risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to make special dividends; and other risks and uncertainties associated with our business described in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of February 18, 2021 and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

* This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.

*** Tables to Follow ***


Host Hotels & Resorts, Inc., herein referred to as “we,” “Host Inc.,” or the “Company,” is a self-managed and self-administered real estate investment trust that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. (“Host LP”), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1% of the partnership interests in Host LP held by outside partners as of December 31, 2020, which is non-controlling interests in Host LP in our consolidated balance sheets and is included in net (income) loss attributable to non-controlling interests in our consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.

HOST HOTELS & RESORTS, INC.

Condensed Consolidated Balance Sheets

(unaudited, in millions, except shares and per share amounts)

December 31, 2020

December 31, 2019

ASSETS

Property and equipment, net

$

9,416

$

9,671

Right-of-use assets

597

595

Due from managers

22

63

Advances to and investments in affiliates

21

56

Furniture, fixtures and equipment replacement fund

139

176

Other

360

171

Cash and cash equivalents

2,335

1,573

Total assets

$

12,890

$

12,305

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY

Debt (1)

Senior notes

$

3,065

$

2,776

Credit facility, including the term loans of $997

2,471

989

Other debt

5

29

Total debt

5,541

3,794

Lease liabilities

610

606

Accounts payable and accrued expenses

71

263

Due to managers

64

Other

170

175

Total liabilities

6,456

4,838

Redeemable non-controlling interests - Host Hotels & Resorts, L.P.

108

142

Host Hotels & Resorts, Inc. stockholders’ equity:

Common stock, par value $.01, 1,050 million shares authorized,
705.4 million shares and 713.4 million shares issued and outstanding,
respectively

7

7

Additional paid-in capital

7,568

7,675

Accumulated other comprehensive loss

(74

)

(56

)

Deficit

(1,180

)

(307

)

Total equity of Host Hotels & Resorts, Inc. stockholders

6,321

7,319

Non-redeemable non-controlling interests—other consolidated partnerships

5

6

Total equity

6,326

7,325

Total liabilities, non-controlling interests and equity

$

12,890

$

12,305

________

(1)

Please see our Year End 2020 Supplemental Financial Information for more detail on our debt balances and financial covenant ratios under our credit facility and senior notes indentures.



HOST HOTELS & RESORTS, INC.

Condensed Consolidated Statements of Operations

(unaudited, in millions, except per share amounts)

Quarter ended
December 31,

Year ended
December 31,

2020

2019

2020

2019

Revenues

Rooms

$

163

$

813

$

976

$

3,431

Food and beverage

54

424

426

1,647

Other

50

97

218

391

Total revenues

267

1,334

1,620

5,469

Expenses

Rooms

63

209

362

873

Food and beverage

64

285

420

1,120

Other departmental and support expenses

145

314

686

1,295

Management fees

6

62

39

239

Other property-level expenses

72

97

312

365

Depreciation and amortization

167

175

665

676

Corporate and other expenses(1)

21

27

89

107

Gain on insurance and business interruption settlements

(1

)

(5

)

Total operating costs and expenses

538

1,168

2,573

4,670

Operating profit (loss)

(271

)

166

(953

)

799

Interest income

1

9

8

32

Interest expense

(51

)

(90

)

(194

)

(222

)

Other gains/(losses)

195

4

208

340

Loss on foreign currency transactions and derivatives

(1

)

(1

)

Equity in earnings (losses) of affiliates

(4

)

1

(30

)

14

Income (loss) before income taxes

(130

)

89

(961

)

962

Benefit (provision) for income taxes(2)

64

(8

)

220

(30

)

Net income (loss)

(66

)

81

(741

)

932

Less: Net (income) loss attributable to
non-controlling interests

2

(1

)

9

(12

)

Net income (loss) attributable to Host Inc.

$

(64

)

$

80

$

(732

)

$

920

Basic and diluted earnings (loss) per common share

$

(.09

)

$

.11

$

(1.04

)

$

1.26

______________

(1)

Corporate and other expenses include the following items:

Quarter ended
December 31,

Year ended
December 31,

2020

2019

2020

2019

General and administrative costs

$

15

$

23

$

72

$

92

Non-cash stock-based compensation expense

6

4

17

15

Total

$

21

$

27

$

89

$

107

(2)

The income tax benefit recorded in 2020 reflects net operating losses incurred that, as a result of legislation enacted by the CARES Act, may be carried back up to five years in order to procure a refund of U.S. federal corporate income taxes previously paid. Any net operating loss not carried back pursuant to these rules may be carried forward indefinitely, subject to an annual limit on the use thereof of 80% of annual taxable income. We expect to generate additional net operating losses in 2021 and will evaluate whether to record an income tax benefit for all or a portion of such net operating loss during and throughout 2021.



HOST HOTELS & RESORTS, INC.

Earnings (Loss) per Common Share

(unaudited, in millions, except per share amounts)

Quarter ended December 31,

Year ended December 31,

2020

2019

2020

2019

Net income (loss)

$

(66

)

$

81

$

(741

)

$

932

Less: Net (income) loss attributable to non-controlling interests

2

(1

)

9

(12

)

Net income (loss) attributable to Host Inc.

$

(64

)

$

80

$

(732

)

$

920

Basic weighted average shares outstanding

705.3

716.3

705.9

730.3

Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market

.8

.8

Diluted weighted average shares outstanding (1)

705.3

717.1

705.9

731.1

Basic and diluted earnings (loss) per common share

$

(.09

)

$

.11

$

(1.04

)

$

1.26

________

(1)

Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units (“OP Units”) held by minority partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.



HOST HOTELS & RESORTS, INC.

Hotel Operating Data for Consolidated Hotels (1)(2)

All Owned Hotels (pro forma) by Location in Constant US$

As of
December 31, 2020

Quarter ended December 31, 2020

Quarter ended December 31, 2019

Location

No. of
Properties

No. of
Rooms

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Percent
Change in
RevPAR

Percent
Change in
Total
RevPAR

Jacksonville

1

446

$

394.11

28.8

%

$

113.66

$

255.23

$

334.64

62.4

%

$

208.94

$

497.75

(45.6

)%

(48.7

)%

Florida Gulf Coast

5

1,842

365.11

37.2

135.74

256.36

316.16

69.9

220.85

462.35

(38.5

)

(44.6

)

Miami

3

1,276

403.46

35.0

141.11

242.05

345.79

79.0

273.07

438.79

(48.3

)

(44.8

)

Maui/Oahu

4

1,987

359.56

25.8

92.86

131.30

434.72

79.6

346.15

517.77

(73.2

)

(74.6

)

Phoenix

3

1,654

301.20

35.7

107.53

217.08

293.33

72.6

213.00

489.76

(49.5

)

(55.7

)

Los Angeles

4

1,726

168.97

22.6

38.12

51.83

221.18

83.0

183.59

285.86

(79.2

)

(81.9

)

Atlanta

4

1,682

141.37

33.6

47.52

66.48

181.35

80.1

145.28

241.06

(67.3

)

(72.4

)

San Francisco/San Jose

7

4,528

150.32

13.1

19.72

24.45

261.28

82.2

214.69

303.58

(90.8

)

(91.9

)

New Orleans

1

1,333

138.80

41.4

57.42

73.00

185.82

76.5

142.21

209.94

(59.6

)

(65.2

)

Philadelphia

2

810

136.85

33.9

46.39

63.16

219.68

86.6

190.20

316.27

(75.6

)

(80.0

)

San Diego

3

3,288

152.26

18.6

28.33

50.72

228.60

74.2

169.53

325.13

(83.3

)

(84.4

)

New York

3

4,261

163.99

11.4

18.78

21.71

335.19

90.2

302.22

449.65

(93.8

)

(95.2

)

Houston

4

1,716

118.00

37.2

43.93

63.24

176.32

70.9

124.95

188.16

(64.8

)

(66.4

)

Orange County

1

393

128.22

21.1

27.10

34.27

175.38

81.0

142.14

226.44

(80.9

)

(84.9

)

Northern Virginia

3

1,252

151.89

23.2

35.23

56.30

211.84

67.4

142.76

282.58

(75.3

)

(80.1

)

Washington, D.C. (CBD)

5

3,238

161.64

8.1

13.15

17.74

243.16

76.6

186.27

274.75

(92.9

)

(93.5

)

Orlando

1

2,004

145.24

8.6

12.48

44.26

189.16

63.0

119.23

300.42

(89.5

)

(85.3

)

Denver

3

1,340

112.46

16.1

18.16

23.99

167.45

62.9

105.31

174.21

(82.8

)

(86.2

)

Seattle

2

1,315

151.61

5.8

8.75

12.03

204.05

76.8

156.81

232.64

(94.4

)

(94.8

)

San Antonio

2

1,512

123.70

14.2

17.55

27.34

193.12

59.9

115.62

173.80

(84.8

)

(84.3

)

Chicago

4

1,816

110.71

13.4

14.87

18.68

207.41

76.1

157.94

218.58

(90.6

)

(91.5

)

Boston

3

2,715

126.56

6.3

8.03

10.91

232.62

78.4

182.29

261.40

(95.6

)

(95.8

)

Other

6

2,509

113.81

21.9

24.95

32.73

168.78

73.7

124.47

185.53

(80.0

)

(82.4

)

Domestic

74

44,643

198.63

19.6

39.00

63.06

249.88

76.4

190.87

311.45

(79.6

)

(79.8

)

International

5

1,499

86.73

12.8

11.13

14.71

138.95

70.1

97.42

156.53

(88.6

)

(90.6

)

All Locations -
Constant US$

79

46,142

196.23

19.4

38.09

61.49

246.57

76.2

187.83

306.42

(79.7

)

(79.9

)


All Owned Hotels (pro forma) in Nominal US$

As of
December 31, 2020

Quarter ended December 31, 2020

Quarter ended December 31, 2019

No. of
Properties

No. of
Rooms

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Percent
Change in
RevPAR

Percent
Change in
Total
RevPAR

International

5

1,499

$

86.73

12.8

%

$

11.13

$

14.71

$

149.12

70.1

%

$

104.55

$

165.87

(89.4

)%

(91.1

)%

Domestic

74

44,643

198.63

19.6

39.00

63.06

249.88

76.4

190.87

311.45

(79.6

)

(79.8

)

All Locations

79

46,142

196.23

19.4

38.09

61.49

246.87

76.2

188.07

306.73

(79.7

)

(80.0

)



All Owned Hotels (pro forma) by Location in Constant US$

As of
December 31, 2020

Year ended December 31, 2020

Year ended December 31, 2019

Location

No. of
Properties

No. of
Rooms

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Percent
Change in
RevPAR

Percent
Change in
Total
RevPAR

Jacksonville

1

446

$

403.32

39.3

%

$

158.58

$

330.97

$

372.94

73.5

%

$

274.07

$

613.80

(42.1

)%

(46.1

)%

Florida Gulf Coast

5

1,842

368.26

39.8

146.62

285.67

334.73

72.0

241.11

480.60

(39.2

)

(40.6

)

Miami

3

1,276

378.62

35.2

133.26

219.18

325.16

79.8

259.54

410.81

(48.7

)

(46.6

)

Maui/Oahu

4

1,987

403.12

28.8

115.91

167.60

409.40

88.1

360.59

552.08

(67.9

)

(69.6

)

Phoenix

3

1,654

313.05

32.9

102.99

233.16

292.50

71.9

210.32

476.62

(51.0

)

(51.1

)

Los Angeles

4

1,726

202.96

31.7

64.32

91.72

228.14

86.5

197.26

294.81

(67.4

)

(68.9

)

Atlanta

4

1,682

163.91

34.5

56.47

85.31

190.59

79.8

152.11

241.34

(62.9

)

(64.7

)

San Francisco/San Jose

7

4,528

249.28

22.4

55.76

79.82

274.62

81.6

224.18

312.49

(75.1

)

(74.5

)

New Orleans

1

1,333

164.70

33.3

54.89

76.95

187.65

79.0

148.30

216.97

(63.0

)

(64.5

)

Philadelphia

2

810

154.46

34.9

53.85

81.81

217.01

85.7

185.91

305.37

(71.0

)

(73.2

)

San Diego

3

3,288

218.59

24.4

53.40

102.63

249.41

79.4

198.02

360.49

(73.0

)

(71.5

)

New York

3

4,261

187.28

27.1

50.75

71.03

286.36

84.8

242.96

359.92

(79.1

)

(80.3

)

Houston

4

1,716

138.61

36.2

50.19

73.46

177.93

72.0

128.14

185.48

(60.8

)

(60.4

)

Orange County

1

393

166.55

28.0

46.63

67.52

185.86

79.3

147.41

228.57

(68.4

)

(70.5

)

Northern Virginia

3

1,252

179.08

25.8

46.29

73.95

208.94

70.9

148.19

255.14

(68.8

)

(71.0

)

Washington, D.C. (CBD)

5

3,238

216.26

18.2

39.30

55.93

245.82

81.5

200.27

288.52

(80.4

)

(80.6

)

Orlando

1

2,004

203.28

17.2

35.00

90.81

184.12

67.9

125.02

302.71

(72.0

)

(70.0

)

Denver

3

1,340

140.24

23.9

33.49

48.55

173.47

72.9

126.48

190.45

(73.5

)

(74.5

)

Seattle

2

1,315

187.91

16.7

31.38

44.67

225.12

82.4

185.50

250.12

(83.1

)

(82.1

)

San Antonio

2

1,512

159.16

19.0

30.27

45.28

185.33

69.7

129.14

189.71

(76.6

)

(76.1

)

Chicago

4

1,816

130.47

22.1

28.78

38.48

207.67

76.2

158.19

222.83

(81.8

)

(82.7

)

Boston

3

2,715

168.75

16.0

27.08

40.90

237.24

81.7

193.83

268.74

(86.0

)

(84.8

)

Other

6

2,509

140.44

28.7

40.34

54.71

171.63

77.7

133.40

191.70

(69.8

)

(71.5

)

Domestic

74

44,643

222.76

26.1

58.25

95.61

247.88

78.9

195.54

311.66

(70.2

)

(69.3

)

International

5

1,499

116.26

21.4

24.91

36.65

141.34

70.9

100.17

149.77

(75.1

)

(75.5

)

All Locations -
Constant US$

79

46,142

219.91

26.0

57.17

93.70

244.77

78.6

192.45

306.40

(70.3

)

(69.4

)


All Owned Hotels (pro forma) in Nominal US$

As of
December 31, 2020

Year ended December 31, 2020

Year ended December 31, 2019

No. of
Properties

No. of
Rooms

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Average
Room Rate

Average
Occupancy
Percentage

RevPAR

Total
RevPAR

Percent
Change in
RevPAR

Percent
Change in
Total
RevPAR

International

5

1,499

$

116.26

21.4

%

$

24.91

$

36.65

$

153.01

70.9

%

$

108.44

$

160.74

(77.0

)%

(77.2

)%

Domestic

74

44,643

222.76

26.1

58.25

95.61

247.88

78.9

195.54

311.66

(70.2

)

(69.3

)

All Locations

79

46,142

219.91

26.0

57.17

93.70

245.11

78.6

192.72

306.75

(70.3

)

(69.5

)

________

(1)

To facilitate a quarter-to-quarter comparison of our operations, we typically present certain operating statistics and operating results for the periods included in this presentation on a comparable hotel basis. However, due to the COVID-19 pandemic and its effects on operations there is little comparability between periods. For this reason, we are revising our presentation to instead present hotel operating results for all consolidated hotels and, to facilitate comparisons between periods, we are presenting results on a pro forma basis including the following adjustments: (1) operating results are presented for all consolidated properties owned as of December 31, 2020 but do not include the results of operations for properties sold in 2019 or through the reporting date; and (2) operating results for acquisitions in the current and prior year are reflected for full calendar years, to include results for periods prior to our ownership. For these hotels, since the year-over-year comparison includes periods prior to our ownership, the changes will not necessarily correspond to changes in our actual results. See the Notes to Financial Information – All Owned Hotel Operating Statistics and Results for further information on these pro forma statistics and – Constant US$ and Nominal US$ for a discussion on constant US$ presentation. Nominal US$ results include the effect of currency fluctuations, consistent with our financial statement presentation. CBD of a location refers to the central business district.

(2)

Hotel RevPAR is calculated as room revenues divided by the available room nights. Hotel Total RevPAR is calculated by dividing the sum of rooms, food and beverage and other revenues by the available room nights.


HOST HOTELS & RESORTS, INC.
Schedule of All Owned Hotel Pro Forma Results (1)
(unaudited, in millions, except hotel statistics)

Quarter ended December 31,

Year ended December 31,

2020

2019

2020

2019

Number of hotels

79

79

79

79

Number of rooms

46,142

46,142

46,142

46,142

Change in hotel Total RevPAR -

Constant US$

(79.9

)%

(69.4

)%

Nominal US$

(80.0

)%

(69.5

)%

Change in hotel RevPAR -

Constant US$

(79.7

)%

(70.3

)%

Nominal US$

(79.7

)%

(70.3

)%

Operating profit (loss) margin (2)

(101.5

)%

12.4

%

(58.8

)%

14.6

%

All Owned Hotel Pro Forma EBITDA margin (2)

(23.3

)%

27.6

%

(8.5

)%

28.8

%

Food and beverage profit margin (2)

(18.5

)%

32.8

%

1.4

%

32.0

%

All Owned Hotel Pro Forma food and beverage profit margin (2)

(1.9

)%

33.0

%

9.2

%

32.0

%

Net income (loss)

$

(66

)

$

81

$

(741

)

$

932

Depreciation and amortization

167

175

665

676

Interest expense

51

90

194

222

Provision (benefit) for income taxes

(64

)

8

(220

)

30

Gain on sale of property and corporate level
income/expense

(171

)

13

(97

)

(283

)

Severance at hotel properties (3)

21

65

Pro forma adjustments (4)

(6

)

(3

)

(84

)

All Owned Hotel Pro Forma EBITDA

$

(62

)

$

361

$

(137

)

$

1,493


Quarter ended December 31, 2020

Quarter ended December 31, 2019

Adjustments

Adjustments

GAAP
Results

Severance
at hotel
properties
(3)

Pro forma
adjustments(4)

Depreciation
and
corporate
level items

All
Owned
Hotel
Pro
Forma
Results
(4)

GAAP
Results

Pro forma
adjustments(4)

Depreciation
and
corporate
level items

All
Owned
Hotel
Pro
Forma
Results
(4)

Revenues

Room

$

163

$

$

(1

)

$

$

162

$

813

$

(14

)

$

$

799

Food and beverage

54

54

424

(9

)

415

Other

50

50

97

(3

)

94

Total revenues

267

(1

)

266

1,334

(26

)

1,308

Expenses

Room

63

(2

)

61

209

(4

)

205

Food and beverage

64

(9

)

55

285

(7

)

278

Other

223

(10

)

(1

)

212

473

(9

)

464

Depreciation and amortization

167

(167

)

175

(175

)

Corporate and other expenses

21

(21

)

27

(27

)

Gain on insurance and
business interruption
settlements

(1

)

1

Total expenses

538

(21

)

(1

)

(188

)

328

1,168

(20

)

(201

)

947

Operating Profit - All Owned
Hotel Pro Forma EBITDA

$

(271

)

$

21

$

$

188

$

(62

)

$

166

$

(6

)

$

201

$

361


Year ended December 31, 2020

Year ended December 31, 2019

Adjustments

Adjustments

GAAP
Results

Severance
at hotel
properties
(3)

Pro forma
adjustments(4)

Depreciation
and
corporate
level items

All
Owned
Hotel
Pro
Forma
Results
(4)

GAAP
Results

Pro forma
adjustments(4)

Depreciation
and
corporate
level items

All
Owned
Hotel
Pro
Forma
Results
(4)

Revenues

Room

$

976

$

$

(10

)

$

$

966

$

3,431

$

(184

)

$

$

3,247

Food and beverage

426

(3

)

423

1,647

(71

)

1,576

Other

218

(3

)

215

391

(24

)

367

Total revenues

1,620

(16

)

1,604

5,469

(279

)

5,190

Expenses

Room

362

(15

)

(3

)

344

873

(45

)

828

Food and beverage

420

(33

)

(3

)

384

1,120

(49

)

1,071

Other

1,037

(17

)

(7

)

1,013

1,899

(101

)

1,798

Depreciation and amortization

665

(665

)

676

(676

)

Corporate and other expenses

89

(89

)

107

(107

)

Gain on insurance and
business interruption
settlements

(5

)

5

Total expenses

2,573

(65

)

(13

)

(754

)

1,741

4,670

(195

)

(778

)

3,697

Operating Profit - All Owned
Hotel Pro Forma EBITDA

$

(953

)

$

65

$

(3

)

$

754

$

(137

)

$

799

$

(84

)

$

778

$

1,493

________

(1)

See the Notes to Financial Information for a discussion of non-GAAP measures and the calculation of all owned hotel pro forma results, including the limitations on their use.

(2)

Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP profit margins are calculated using amounts presented in the unaudited condensed consolidated statements of operations. Hotel margins are calculated using amounts presented in the above tables.

(3)

Effective for the third quarter of 2020, we have changed our definition of Adjusted EBITDAre and Adjusted FFO and removed amounts from hotel property level operating results to exclude non-ordinary course severance costs, which we believe provides useful supplemental information that is beneficial to an investor’s understanding of our ongoing operating performance. Including these severance costs, our All Owned Hotel Pro Forma EBITDA would have been $(83) million for the fourth quarter 2020 and $(202) million for full year 2020.

(4)

Pro forma adjustments represent the following items: (i) the elimination of results of operations of our sold hotels, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations and (ii) the addition of results for periods prior to our ownership for hotels acquired during the presented periods. For this presentation, we no longer adjust for certain items such as the results of our leased office buildings and other non-hotel revenue and expense items, and they are included in the All Owned Hotel Pro Forma results.





HOST HOTELS & RESORTS, INC.
Reconciliation of Net Income (Loss) to
EBITDA, EBITDAre and Adjusted EBITDAre (1)
(unaudited, in millions)

Quarter ended December 31,

Year ended December 31,

2020

2019

2020

2019

Net income (loss) (2)

$

(66

)

$

81

$

(741

)

$

932

Interest expense

51

90

194

222

Depreciation and amortization

167

167

665

662

Income taxes

(64

)

8

(220

)

30

EBITDA (2)

88

346

(102

)

1,846

Gain on dispositions (3)

(148

)

(2

)

(149

)

(334

)

Non-cash impairment expense

8

14

Equity investment adjustments:

Equity in (earnings) losses of affiliates

4

(1

)

30

(14

)

Pro rata EBITDAre of equity investments

3

4

(12

)

26

EBITDAre (2)

(53

)

355

(233

)

1,538

Adjustments to EBITDAre:

Severance at hotel properties (4)

21

65

Gain on property insurance settlement

(4

)

Adjusted EBITDAre (2)

$

(32

)

$

355

$

(168

)

$

1,534

_________

(1)

See the Notes to Financial Information for discussion of non-GAAP measures.

(2)

Net income (loss), EBITDA, EBITDAre, Adjusted EBITDAre, NAREIT FFO and Adjusted FFO include a gain of $47 million in the fourth quarter 2020 and $59 million for the year ended December 31, 2020 from the sale of land adjacent to The Phoenician hotel. The year ended December 31, 2020 also includes a loss of $14 million related to inventory impairment expense recorded by our Maui timeshare joint venture, reflected through equity in (earnings) losses of affiliates.

(3)

Reflects the sale of one hotel in 2020 and 14 hotels in 2019.

(4)

Refer to footnote (3) on the Schedule of All Owned Hotel Pro Forma Results. Including severance costs, Adjusted EBITDAre and Adjusted FFO would have been $(53) million and $(38) million, respectively, for the fourth quarter 2020 and $(233) million and $(184) million, respectively, for the full year 2020.




HOST HOTELS & RESORTS, INC.
Reconciliation of Diluted Earnings (Loss) per Common Share to
NAREIT and Adjusted Funds From Operations per Diluted Share (1)
(unaudited, in millions, except per share amounts)

Quarter ended
December 31,

Year ended
December 31,

2020

2019

2020

2019

Net income (loss)

$

(66

)

$

81

$

(741

)

$

932

Less: Net (income) loss attributable to
non-controlling interests

2

(1

)

9

(12

)

Net income (loss) attributable to Host Inc.

(64

)

80

(732

)

920

Adjustments:

Gain on dispositions (3)

(148

)

(2

)

(149

)

(334

)

Tax on dispositions

(3

)

(3

)

(3

)

(6

)

Gain on property insurance settlement

(4

)

Depreciation and amortization

167

164

663

657

Non-cash impairment expense

6

Equity investment adjustments:

Equity in (earnings) losses of affiliates

4

(1

)

30

(14

)

Pro rata FFO of equity investments

(1

)

4

(21

)

20

Consolidated partnership adjustments:

FFO adjustment for non-controlling partnerships

(1

)

FFO adjustments for non-controlling interests of Host L.P.

(1

)

(2

)

(6

)

(3

)

NAREIT FFO (2)

(46

)

240

(219

)

1,242

Adjustments to NAREIT FFO:

Loss on debt extinguishment

8

53

36

57

Severance at hotel properties (4)

21

65

Loss attributable to non-controlling interests

(1

)

(1

)

(1

)

Adjusted FFO (2)

$

(17

)

$

292

$

(119

)

$

1,298

For calculation on a per share basis (5):

Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO

705.3

717.1

705.9

731.1

Diluted earnings (loss) per common share

$

(.09

)

$

.11

$

(1.04

)

$

1.26

NAREIT FFO per diluted share

$

(.07

)

$

.33

$

(.31

)

$

1.70

Adjusted FFO per diluted share

$

(.02

)

$

.41

$

(.17

)

$

1.78

_________

(1-4)

Refer to the corresponding footnote on the Reconciliation of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre.

(5)

Diluted earnings (loss) per common share, NAREIT FFO per diluted share and Adjusted FFO per diluted share are adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, preferred OP units held by non-controlling partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP units. No effect is shown for securities if they are anti-dilutive.

HOST HOTELS & RESORTS, INC.
Notes to Financial Information

ALL OWNED HOTEL OPERATING STATISTICS AND RESULTS

To facilitate a quarter-to-quarter comparison of our operations, we typically present certain operating statistics (i.e., Total RevPAR, RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in this presentation on a comparable hotel basis in order to enable our investors to better evaluate our operating performance (discussed in “Comparable Hotel Operating Statistics” below). However, due to the COVID-19 pandemic and its effects on operations, there is little comparability between periods. For this reason, we temporarily are suspending our comparable hotel presentation and instead present hotel operating results for all consolidated hotels and, to facilitate comparisons between periods, we are presenting results on a pro forma basis, including the following adjustments: (1) operating results are presented for all consolidated hotels owned as of December 31, 2020, but do not include the results of operations for properties sold in 2019 or through the reporting date; and (2) operating results for acquisitions in the current and prior year are reflected for full calendar years, to include results for periods prior to our ownership. For these hotels, since the year-over-year comparison includes periods prior to our ownership, the changes will not necessarily correspond to changes in our actual results.

CONSTANT US$ and NOMINAL US$

Operating results denominated in foreign currencies are translated using the prevailing exchange rates on the date of the transaction, or monthly based on the weighted average exchange rate for the period. For comparative purposes, we also present the RevPAR results for the prior year assuming the results of our foreign operations were translated using the same exchange rates that were effective for the comparable periods in the current year, thereby eliminating the effect of currency fluctuation for the year-over-year comparisons. We believe this presentation is useful to investors as it provides clarity with respect to growth in RevPAR in the local currency of the hotel consistent with the way we would evaluate our domestic portfolio. However, the effect of changes in foreign currency has been reflected in the results of net income (loss), EBITDA, Adjusted EBITDAre, diluted earnings (loss) per common share and Adjusted FFO per diluted share. Nominal US$ results include the effect of currency fluctuations, consistent with our financial statement presentation.

NON-GAAP FINANCIAL MEASURES

Included in this press release are certain “non-GAAP financial measures,” which are measures of our historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. They are as follows: (i) FFO and FFO per diluted share (both NAREIT and Adjusted), (ii) EBITDA, (iii) EBITDAre and Adjusted EBITDAre, (iv) All Owned Hotel Property Level Operating Results (v) Hotel-level operating loss and (vi) Cash burn. 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 of our performance in addition to our earnings per share (calculated in accordance with GAAP). We calculate NAREIT FFO per diluted share as our NAREIT FFO (defined as set forth below) for a given operating period, as adjusted for the effect of dilutive securities, divided by the number of fully diluted shares outstanding during such period, in accordance with NAREIT guidelines. Effective January 1, 2019, we adopted NAREIT’s definition of FFO included in NAREIT’s Funds From Operations White Paper – 2018 Restatement. NAREIT defines FFO as net income (calculated in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment expense of certain real estate assets and investments and adjustments for consolidated partially-owned entities and unconsolidated affiliates. Adjustments for consolidated partially-owned entities and unconsolidated affiliates are calculated to reflect our pro rata share of the FFO of those entities on the same basis.

We believe that NAREIT FFO per diluted share is a useful supplemental measure of our operating performance and that the presentation of NAREIT FFO per diluted share, when combined with the primary GAAP presentation of earnings per share, provides beneficial information to investors. By excluding the effect of real estate depreciation, amortization, impairment expense and gains and losses from sales of depreciable real estate, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe that such measures can facilitate comparisons of operating performance between periods and with other REITs, even though NAREIT FFO per diluted share does not represent an amount that accrues directly to holders of our common stock. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. As noted by NAREIT in its Funds From Operations White Paper – 2018 Restatement, the primary purpose for including FFO as a supplemental measure of operating performance of a REIT is to address the artificial nature of historical cost depreciation and amortization of real estate and real estate-related assets mandated by GAAP. For these reasons, NAREIT adopted the FFO metric in order to promote a uniform industry-wide measure of REIT operating performance.

Adjusted FFO per Diluted Share

We also present Adjusted FFO per diluted share when evaluating our performance because management believes that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. Management historically has made the adjustments detailed below in evaluating our performance, in our annual budget process and for our compensation programs. We believe that the presentation of Adjusted FFO per diluted share, when combined with both the primary GAAP presentation of diluted earnings per share and FFO per diluted share as defined by NAREIT, provides useful supplemental information that is beneficial to an investor’s understanding of our operating performance. We adjust NAREIT FFO per diluted share for the following items, which may occur in any period, and refer to this measure as Adjusted FFO per diluted share:

  • Gains and Losses on the Extinguishment of Debt – We exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of the write-off of deferred financing costs from the original issuance of the debt being redeemed or retired and incremental interest expense incurred during the refinancing period. We also exclude the gains on debt repurchases and the original issuance costs associated with the retirement of preferred stock. We believe that these items are not reflective of our ongoing finance costs.

  • 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 the Company.

  • 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.

  • Severance Expense – Effective beginning the third quarter of 2020, in certain circumstances, we will add back hotel-level severance expenses when we do not believe that such expenses are reflective of the ongoing operation of our properties. Situations that would result in a severance add-back include, but are not limited to, (i) costs incurred as part of a broad-based reconfiguration of the operating model with the specific hotel operator for a portfolio of hotels and (ii) costs incurred at a specific hotel due to a broad-based and significant reconfiguration of a hotel and/or its workforce. We do not add back corporate-level severance costs or severance costs at an individual hotel that we consider to be incurred in the normal course of business.

In unusual circumstances, we also may adjust NAREIT FFO for gains or losses that management believes are not representative of the Company’s current operating performance. For example, in 2017, as a result of the reduction of the U.S. federal corporate income tax rate from 35% to 21% by the Tax Cuts and Jobs Act, we remeasured our domestic deferred tax assets as of December 31, 2017 and recorded a one-time adjustment to reduce our deferred tax assets and to increase the provision for income taxes by approximately $11 million. We do not consider this adjustment to be reflective of our on-going operating performance and, therefore, we excluded this item from Adjusted FFO.

EBITDA

Earnings before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”) is a commonly used measure of performance in many industries. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of the Company’s capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other lodging REITs, hotel owners that are not REITs and other capital-intensive companies. Managem