Portfolio Re-Investment and Growth Opportunities Presentation
COMPANY
OVERVIEW
RECENT
HIGHLIGHTS
PORTFOLIO
UPDATE
GROWTH
OPPORTUNITIES
CORPORATE
RESPONSIBILITY
RECONCILIATIONS &
SUPPLEMENTAL INFO
Key Terms And Statistics.
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 to be outside the ordinary
course of business. We believe that including these items is not consistent with our ongoing operating performance.
Severance Expense - 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 ongoing operating performance and, therefore, we excluded this
item from Adjusted FFO.
EBITDA and NOI
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. Management uses EBITDA to evaluate property-level results and EBITDA multiples (calculated as sales price divided by EBITDA) as one
measure in determining the value of acquisitions and dispositions and, like FFO and Adjusted FFO per diluted share, it is widely used by management in the annual budget
process and for our compensation programs. Management also uses NOI when calculating capitalization rates ("Cap Rates") to evaluate acquisitions and dispositions. For
a specific hotel, NOI is calculated as the hotel or entity level EBITDA less an estimate for the annual contractual reserve requirements for renewal and replacement
expenditures. Cap Rates are calculated as NOI divided by sales price. Management believes using Cap Rates allows for a consistent valuation method in comparing the
purchase or sale value of properties.
2024 Host Hotels & Resorts, Inc.
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