10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 001-14625 (Host Hotels & Resorts, Inc.)

0-25087 (Host Hotels & Resorts, L.P.)

HOST HOTELS & RESORTS, INC.

HOST HOTELS & RESORTS, L.P.

(Exact name of registrant as specified in its charter)


Maryland (Host Hotels & Resorts, Inc.) Delaware (Host Hotels & Resorts, L.P.) (State or Other Jurisdiction of Incorporation or Organization)		53-0085950 52-2095412 (I.R.S. Employer Identification No.)

4747 Bethesda Ave, Suite 1300 Bethesda, Maryland (Address of Principal Executive Offices)		20814 (Zip Code)

(240) 744-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


	Title of each class	Trading Symbol	Name of Each Exchange on Which Registered
Host Hotels & Resorts, Inc.	Common Stock, $0.01 par value	HST	The Nasdaq Stock Market LLC
Host Hotels & Resorts, L.P.	None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Host Hotels & Resorts, Inc.	Yes ☑	No ☐
Host Hotels & Resorts, L.P.	Yes ☑	No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Host Hotels & Resorts, Inc.	Yes ☑	No ☐
Host Hotels & Resorts, L.P.	Yes ☑	No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Host Hotels & Resorts, Inc.
Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

Host Hotels & Resorts, L.P.
Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☑	Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Host Hotels & Resorts, Inc.	Yes ☐	No ☑
Host Hotels & Resorts, L.P.	Yes ☐	No ☑

As of August 2, 2023, there were 711,604,872 shares of Host Hotels & Resorts, Inc.’s common stock, $0.01 par value per share, outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. Unless stated otherwise or the context requires otherwise, references to “Host Inc.” mean Host Hotels & Resorts, Inc., a Maryland corporation, and references to “Host L.P.” mean Host Hotels & Resorts, L.P., a Delaware limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between Host Inc. and Host L.P. We use the terms “we,” “our” or “the company” to refer to Host Inc. and Host L.P. together, unless the context indicates otherwise.

Host Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). Host Inc. owns properties and conducts operations through Host L.P., of which Host Inc. is the sole general partner and of which it holds approximately 99% of the partnership interests (“OP units”). The remaining OP units are owned by various unaffiliated limited partners. As the sole general partner of Host L.P., Host Inc. has the exclusive and complete responsibility for Host L.P.’s day-to-day management and control. Management operates Host Inc. and Host L.P. as one enterprise. The management of Host Inc. consists of the same persons who direct the management of Host L.P. As general partner with control of Host L.P., Host Inc. consolidates Host L.P. for financial reporting purposes, and Host Inc. does not have significant assets other than its investment in Host L.P. Therefore, the assets and liabilities of Host Inc. and Host L.P. are substantially the same on their respective condensed consolidated financial statements and the disclosures of Host Inc. and Host L.P. also are substantially similar. For these reasons, we believe that the combination into a single report of the quarterly reports on Form 10-Q of Host Inc. and Host L.P. results in benefits to management and investors.

The substantive difference between the filings of Host Inc. and Host L.P. is that Host Inc. is a REIT with public stock, while Host L.P. is a partnership with no publicly traded equity. In the condensed consolidated financial statements, this difference primarily is reflected in the equity (or partners’ capital for Host L.P.) section of the consolidated balance sheets and in the consolidated statements of equity (or partners’ capital for Host L.P.). Apart from the different equity treatment, the condensed consolidated financial statements of Host Inc. and Host L.P. are nearly identical.

This combined Form 10-Q for Host Inc. and Host L.P. includes, for each entity, separate interim financial statements (but combined footnotes), separate reports on disclosure controls and procedures and internal control over financial reporting and separate CEO/CFO certifications. In addition, with respect to any other financial and non-financial disclosure items required by Form 10-Q, any material differences between Host Inc. and Host L.P. are discussed separately herein. For a more detailed discussion of the substantive differences between Host Inc. and Host L.P. and why we believe the combined filing results in benefits to investors, see the discussion in the combined Annual Report on Form 10-K for the year ended December 31, 2022 under the heading “Explanatory Note.”

HOST HOTELS & RESORTS, INC. AND HOST HOTELS & RESORTS, L.P.

INDEX

PART I. FINANCIAL INFORMATION


		Page No.
Item 1.	Financial Statements for Host Hotels & Resorts, Inc.:

	Condensed Consolidated Balance Sheets - June 30, 2023 (unaudited) and December 31, 2022	1

	Condensed Consolidated Statements of Operations (unaudited) - Quarter and Year-to-date ended June 30, 2023 and 2022	2

	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Quarter and Year-to-date ended June 30, 2023 and 2022	3

	Condensed Consolidated Statements of Cash Flows (unaudited) - Year-to-date ended June 30, 2023 and 2022	4

	Financial Statements for Host Hotels & Resorts, L.P.:

	Condensed Consolidated Balance Sheets - June 30, 2023 (unaudited) and December 31, 2022	6

	Condensed Consolidated Statements of Operations (unaudited) - Quarter and Year-to-date ended June 30, 2023 and 2022	7

	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Quarter and Year-to-date ended June 30, 2023 and 2022	8

	Condensed Consolidated Statements of Cash Flows (unaudited) - Year-to-date ended June 30, 2023 and 2022	9

	Notes to Condensed Consolidated Financial Statements (unaudited)	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41

Item 4.	Controls and Procedures	42

	PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 5.	Other Information	44

Item 6.	Exhibits	44

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2023 and December 31, 2022

(in millions, except share and per share amounts)


	June 30, 2023			December 31, 2022
	unaudited
ASSETS
Property and equipment, net	$	9,717		$	9,748
Right-of-use assets		555			556
Due from managers		87			94
Advances to and investments in affiliates		144			132
Furniture, fixtures and equipment replacement fund		213			200
Notes receivable		485			413
Other		362			459
Cash and cash equivalents		802			667
Total assets	$	12,365		$	12,269

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY
Debt
Senior notes	$	3,117		$	3,115
Credit facility, including the term loans of $997 and $998, respectively		987			994
Mortgage and other debt		106			106
Total debt		4,210			4,215
Lease liabilities		567			568
Accounts payable and accrued expenses		209			372
Due to managers		67			67
Other		167			168
Total liabilities		5,220			5,390

Redeemable non-controlling interests - Host Hotels & Resorts, L.P.		168			164

Host Hotels & Resorts, Inc. stockholders’ equity:
Common stock, par value $.01, 1,050 million shares authorized, 711.4 million shares and 713.4 million shares issued and outstanding, respectively		7			7
Additional paid-in capital		7,671			7,717
Accumulated other comprehensive loss		(70	)		(75	)
Deficit		(636	)		(939	)
Total equity of Host Hotels & Resorts, Inc. stockholders		6,972			6,710
Non-redeemable non-controlling interests—other consolidated partnerships		5			5
Total equity		6,977			6,715
Total liabilities, non-controlling interests and equity	$	12,365		$	12,269

See notes to condensed consolidated financial statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter and Year-to-date ended June 30, 2023 and 2022

(unaudited, in millions, except per share amounts)


	Quarter ended June 30,						Year-to-date ended June 30,
	2023			2022			2023			2022
REVENUES
Rooms	$	850		$	850		$	1,670		$	1,505
Food and beverage		415			405			846			702
Other		128			126			258			248
Total revenues		1,393			1,381			2,774			2,455
EXPENSES
Rooms		201			189			394			349
Food and beverage		263			245			532			445
Other departmental and support expenses		323			300			638			573
Management fees		69			62			134			102
Other property-level expenses		93			78			184			162
Depreciation and amortization		168			162			337			334
Corporate and other expenses		30			25			61			48
Gain on insurance and business interruption settlements		(3	)		(7	)		(3	)		(7	)
Total operating costs and expenses		1,144			1,054			2,277			2,006
OPERATING PROFIT		249			327			497			449
Interest income		20			6			34			7
Interest expense		(45	)		(37	)		(94	)		(73	)
Other gains		—			1			69			14
Equity in earnings of affiliates		4			2			11			4
INCOME BEFORE INCOME TAXES		228			299			517			401
Provision for income taxes		(14	)		(39	)		(12	)		(23	)
NET INCOME		214			260			505			378
Less: Net income attributable to non-controlling interests		(4	)		(4	)		(8	)		(6	)
NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.	$	210		$	256		$	497		$	372
Basic earnings per common share	$	0.30		$	0.36		$	0.70		$	0.52
Diluted earnings per common share	$	0.29		$	0.36		$	0.70		$	0.52

See notes to condensed consolidated financial statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter and Year-to-date ended June 30, 2023 and 2022

(unaudited, in millions)


	Quarter ended June 30,						Year-to-date ended June 30,
	2023			2022			2023			2022
NET INCOME	$	214		$	260		$	505		$	378
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation and other comprehensive income of unconsolidated affiliates		4			(6	)		6			1
Change in fair value of derivative instruments		(1	)		1			(1	)		1
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		3			(5	)		5			2
COMPREHENSIVE INCOME		217			255			510			380
Less: Comprehensive income attributable to non-controlling interests		(4	)		(4	)		(8	)		(6	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.	$	213		$	251		$	502		$	374

See notes to condensed consolidated financial statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year-to-date ended June 30, 2023 and 2022

(unaudited, in millions)


	Year-to-date ended June 30,
	2023			2022
OPERATING ACTIVITIES
Net income	$	505		$	378
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		337			334
Amortization of finance costs, discounts and premiums, net		5			5
Loss on extinguishment of debt		4			—
Stock compensation expense		13			10
Other gains		(69	)		(14	)
Gain on property insurance settlement		—			(6	)
Equity in earnings of affiliates		(11	)		(4	)
Change in due from/to managers		3			(53	)
Distributions from investments in affiliates		18			20
Property insurance proceeds - remediation costs		83			—
Changes in other assets		16			43
Changes in other liabilities		(84	)		(5	)
Net cash provided by operating activities		820			708

INVESTING ACTIVITIES
Proceeds from sales of assets, net		34			217
Advances to and investments in affiliates		(20	)		(44	)
Capital expenditures:
Renewals and replacements		(226	)		(78	)
Return on investment		(97	)		(162	)
Property insurance proceeds		34			7
Net cash used in investing activities		(275	)		(60	)

FINANCING ACTIVITIES
Financing costs		(10	)		—
Repayment of credit facility		—			(683	)
Mortgage debt and other prepayments and scheduled maturities		(1	)		(1	)
Debt extinguishment costs		(3	)		—
Common stock repurchases		(50	)		—
Dividends on common stock		(313	)		(21	)
Distributions and payments to non-controlling interests		(6	)		—
Other financing activities		(13	)		(10	)
Net cash used in financing activities		(396	)		(715	)
Effects of exchange rate changes on cash held		2			(1	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		151			(68	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		874			953
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	1,025		$	885

See notes to condensed consolidated financial statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

Year-to-date ended June 30, 2023 and 2022

(unaudited)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the amount shown in the statements of cash flows:


	June 30, 2023		June 30, 2022
Cash and cash equivalents	$	802	$	699
Restricted cash (included in other assets)		10		7
Cash included in furniture, fixtures and equipment replacement fund		213		179
Total cash and cash equivalents and restricted cash shown in the statements of cash flows	$	1,025	$	885

The following table presents cash paid (received) for the following:


	Year-to-date ended June 30,
	2023		2022
Total interest paid	$	90	$	69
Income taxes paid (refunds received)	$	2	$	(7	)

Supplemental schedule of noncash investing and financing activities:

In connection with the sales of The Camby, Autograph Collection in March 2023, the Sheraton Boston Hotel in February 2022, and the Sheraton New York Times Square Hotel in April 2022, we issued loans to the buyers for $72 million, $163 million, and $250 million, respectively. The proceeds received from the sales are net of the loans.

On January 20, 2022, we entered into definitive agreements with Noble Investment Group, LLC, and certain other entities and persons related to Noble Investment Group, LLC, pursuant to which we made an investment in a joint venture with Noble Investment Group. In connection with the investment, Host Hotels & Resorts, L.P. issued approximately 3.2 million OP units valued at approximately $56 million.

See notes to condensed consolidated financial statements.

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2023 and December 31, 2022

(in millions)


		June 30, 2023				December 31, 2022
		unaudited