Host Hotels & Resorts : Second Quarter 2021 Earnings Press Release

SOURAV GHOSH	JAIME MARCUS
Chief Financial Officer	Investor Relations
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Host Hotels & Resorts, Inc. Reports Results for Second Quarter 2021

Continued Quarterly Revenue Growth and Sequentially Improved Operations;

Strong Beat to Consensus RevPAR;

Acquired Baker's Cay Resort Key Largo and a Luxury Downtown Hotel in Houston

BETHESDA, MD; August 3, 2021 - Host Hotels & Resorts, Inc. (NASDAQ: HST) (the "Company"), the nation's largest lodging real estate investment trust ("REIT"), today announced results for second quarter 2021.

OPERATING RESULTS

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

		Quarter ended June	Percent	Percent		Year-to-date ended	Percent	Percent
		30,			Change	Change		June 30,	Change	Change
							vs. Q2	vs. Q2							vs. Q2	vs. Q2
Revenues		2021			2020		2020	%	2019(2)	)%		2021			2020		2020	)%	2019(2)	)%
$	649		$	103		530.1	(56.2	$	1,048		$	1,155		(9.3	(63.5
All owned hotel revenues
(pro forma) (1) ....................		659			104		533.7%	(54.2)%		1,088			1,196		(9.0)%	(61.1)%
All owned hotel (pro forma)
Total RevPAR - Constant
US$...................................		152.84			23.86		540.7%	(54.4)%		126.83			139.05		(8.8)%	(61.3)%
All owned hotel (pro forma)
RevPAR - Constant US$...		99.86			14.12		607.0%	(52.0)%		82.28			82.57		(0.3)%	(59.3)%
		Quarter ended June						Year-to-date ended
		30,			Percent				June 30,	Percent
		2021			2020		Change				2021			2020		Change
................................Net loss		(61	)		(356	)	82.9%			$	(214	)	$	(359	)	40.4%
EBITDAre (1).........................		111			(190)	N/M				116			(26)	N/M
Adjusted EBITDAre (1)..........		110			(189)	N/M				113			(25)	N/M
Diluted loss per common
share.................................		(0.09)		(0.50)	82.0%				(0.30)		(0.50)	40.0%
NAREIT FFO per diluted
share (1) .............................		0.12			(0.26)	N/M				0.13			(0.03)	N/M
Adjusted FFO per diluted
share (1) .............................		0.12			(0.26)	N/M				0.13			(0.03)	N/M

• Additional detail on the Company's results, including data for 21 domestic markets, is available in the Second Quarter 2021 Supplemental Financial Information available on the Company's website atwww.hosthotels.com.

James F. Risoleo, President and Chief Executive Officer, said, "During the second quarter, we were extremely encouraged to see positive trends across the lodging industry and our portfolio, as our hotel operations continued to exceed our expectations. RevPAR reached nearly $100 for the quarter, which dramatically outperformed consensus RevPAR, with average room rates only 8.4% below our 2019 second quarter rates. These RevPAR gains have translated into significant

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.
2. Presentation includes comparisons to 2019 operating results so investors can better understand the trajectory and timing of any recovery from the

COVID-19 impacts on hotel operations.

N/M = Not Meaningful

HOST HOTELS & RESORTS, INC. NEWS RELEASE	AUGUST 3, 2021

sequential improvements in our bottom line as expense saving initiatives have been implemented by our managers, supplemented in part by the challenging labor environment."

Risoleo continued, "Subsequent to quarter end, we completed two additional opportunistic acquisitions - Baker's Cay Resort in Key Largo and a luxury hotel in downtown Houston. We believe these assets will provide meaningful opportunities for EBITDA growth and continue to improve the quality of our portfolio. Thus far in 2021, we have invested $1.1 billion in new assets. Additionally, we opportunistically issued 7.8 million shares of common stock through our "at-the-market" program at an average price of approximately $18 per share for total net proceeds of $138 million, which further strengthened our balance sheet. We remain encouraged by the continued improvement in lodging fundamentals and we believe our strong capital allocation decisions over the past few years will drive stockholder value through the upcoming lodging cycle."

HIGHLIGHTS:

Results for Second Quarter 2021

• Improved GAAP net loss by $92 million to $61 million in the second quarter compared to the first quarter of 2021, reflecting sequential improvement in operations.
• Achieved positive cash provided by operating activities in the second quarter of 2021, fueled by All Owned Hotel Pro Forma EBITDA of $126 million, due to sequential improvement in RevPAR and operations. This included break- even or positive hotel-level operating profit at 52 of the Company's hotels, representing 56% of rooms, an increase from 31 hotels, representing 31% of rooms, achieved in the first quarter of 2021.
• Acquired the fee simple interest in the 444-room Four Seasons Resort Orlando at Walt Disney World® Resort for $610 million and acquired the Royal Ka'anapali and Ka'anapali Kai Golf Courses for $28 million.
• Completed the development of a new waterpark at The Ritz-Carlton Golf Resort, Naples and additional villas at the Andaz Maui at Wailea Resort. The 19 two-bedroom luxury villas achieved occupancy of 73% in the first full month of operations at an average rate of $1,626.
• Ended the quarter with total available liquidity of approximately $1.6 billion, including FF&E escrow reserves of $139 million. Following the property transactions completed subsequent to quarter end noted below, the Company's total available liquidity was approximately $1.3 billion, including the FF&E escrow reserves.

Subsequent Events

• Acquired the 200-room Baker's Cay Resort Key Largo, Curio Collection by Hilton for $200 million.
• Acquired a 223-room luxury downtown Houston hotel, formerly operated as the Hotel Alessandra, for $65 million.
• Preliminary forecast July RevPAR is expected to be $134.

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HOST HOTELS & RESORTS, INC. NEWS RELEASE

AUGUST 3, 2021

SOURCES AND USES OF CASH

Significant components of cash generated (burn) in the quarter included (in millions):

	Quarter ended					Quarter ended
	June 30, 2021					March 31, 2021
.................................................................................................................Net loss	$	(61	)	$	(153	)
GAAP net cash provided by (used in) operating activities.....................................		9				(49)
Cash generated (burn) before capital expenditures ..............................................		61				(45)
Cash burn (3) ..........................................................................................................		(26)			(138)
Components of cash generated (burn):
All Owned Hotel Pro Forma EBITDA (3)............................................................		126				25
Benefits for furloughed employees adjustment ................................................		(1)			(12)
Interest payments ............................................................................................		(48)			(35)
Cash corporate and other expenses ................................................................		(20)			(19)
Net proceeds from (payments to) unconsolidated operations..........................		4				(2)
Severance (expense) reversal at hotel properties............................................		1				2
Pro forma adjustment.......................................................................................		(1)			(4)
....................................Cash generated (burn) before capital expenditures		61				(45	)
Capital expenditures:
Renewals and replacements ......................................................................		(31)			(32)
ROI - Marriott transformational capital program..........................................		(22)			(28)
ROI - All other ROI projects........................................................................		(34)			(33)

For the quarter, the Company had positive operating cash flow at both the hotel and corporate level. Sourav Ghosh, Executive Vice President, Chief Financial Officer, stated, "The second quarter represents a significant milestone in our recovery. After taking into consideration our corporate overhead and interest expense, our operations generated $61 million of cash in the quarter. If you take into account our robust capital expenditures program, including ROI projects, renewal and replacement expenditures, and the Marriott transformational capital program, our cash outflows were only $26 million. As a result, we maintained our strong liquidity position, even as we continued to invest in our portfolio through hotel acquisitions and other capital projects."

OPERATING RESULTS

As of August 3, 2021, all of the 35 hotels that had suspended operations during the pandemic have been re-opened. Operations remained suspended at the Sheraton Boston Hotel during the quarter and the hotel re-opened on August 1, 2021.

The following presents the monthly pro forma hotel operating results on a constant dollar basis for the full portfolio owned as of June 30, 2021 compared to 2020 and 2019 for the periods presented(4):

		April		April			May		May		June		June
		2021			2020		Change		2021			2020		Change	2021			2020		Change
Number of hotels ........................		82			81				82			81			82			81
Number of rooms........................		47,199			47,034				47,219			47,054			47,222			47,057
Average Occupancy Percentage		38.6%		6.9%	31.7pts		42.0%		8.8%	33.2pts	48.5%		10.5%	38.0pts
Average Room Rate...................	$	242.01		$	128.47		88.4%	$	226.15		$	150.31		50.5%	$ 229.54		$	193.95		18.3%
RevPAR .....................................	$	93.49		$	8.84		957.8%	$	94.99		$	13.17		621.5%	$ 111.25		$	20.40		445.4%

1. All Owned Hotel pro forma EBITDA 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. All Owned Hotel Pro Forma EBITDA includes an Employee Retention Credit in the second quarter and first quarter of 2021 of $3 million and $7 million, respectively.
2. The AC Hotel Scottsdale North is a new development hotel that opened in January 2021. Therefore, there were no operations for the hotel prior to January 2021 and no adjustments made for pro forma results of the hotel for periods prior to its opening. Operations remained suspended at the Sheraton Boston Hotel during the quarter and the hotel re-opened on August 1, 2021.

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HOST HOTELS & RESORTS, INC. NEWS RELEASE										AUGUST 3, 2021
		April	April			May	May		June	June
Number of hotels		2021		2019		Change		2021		2019		Change	2021		2019		Change
	82		81				82		81			82		81
Number of rooms........................		47,199		47,034				47,219		47,054			47,222		47,057
Average Occupancy Percentage		38.6%	82.7%	(44.1pts)		42.0%	81.0%	(39.0pts)	48.5%	82.4%	(33.9pts)
Average Room Rate...................	$	242.01		$ 262.18		(7.7)%	$	226.15		$ 248.88		(9.1)%	$ 229.54		$ 249.30		(7.9)%
RevPAR .....................................	$	93.49		$ 216.82		(56.9)%	$	94.99		$ 201.70		(52.9)%	$ 111.25		$ 205.50		(45.9)%

Second Quarter 2021 Revenue Performance

• All Owned Hotel Pro Forma RevPAR improved 55% compared to the first quarter of 2021, although still a decline of 52% compared to the second quarter of 2019. The sequential improvement was primarily due to strong leisure demand for resorts and hotels located in the Company's Sunbelt markets and Hawaii.

1. Average room rates in the second quarter were 91.6% of second quarter 2019 rates. Rates declined by 3.9% compared to the first quarter of 2021, representing a mix shift as urban hotels begin to recover.

1. Average occupancy declined by 39.0 percentage points compared to the second quarter of 2019 and improved 16.3 percentage points compared to the first quarter of 2021.

Second Quarter 2021 Hotel Operating Expense Performance

• Portfolio-widepro forma hotel operating costs were approximately 46% lower compared to the second quarter of 2019, with a 54% decrease in total revenues compared to second quarter of 2019, and costs were only 32% higher compared to the first quarter of 2021, despite an approximately 54% increase in total revenues quarter over quarter.

1. Ramp up of staffing at several properties continues to lag the pace of demand due to the challenging labor environment across the industry. The Company expects hotel operating costs to increase more in line with total revenues over time as hotels continue to transition from their contingency level operational plans to increased staffing levels and controllable spending.

1. Benefit costs for furloughed employees had a minimal impact on results in the second quarter as they are eligible to be reimbursed through the American Rescue Plan Act.

1. Re-introductionof marketing, maintenance and other support costs is expected to increase other departmental and support expenses as the recovery continues to gain momentum.

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 second quarter, demand continued to be primarily driven by leisure at drive-to and resort destinations. The following are the sequential results of the Company's consolidated portfolio, including all owned hotels at June 30, 2021 on a pro forma basis, for transient, group and contract business in comparison to 2019 performance:

				Quarter ended							Quarter ended
				June 30, 2021						March 31, 2021
Room nights (in thousands)		Transient		Group		Contract			Transient		Group		Contract
	1,397			344			109			779			267			89
Percentage change in room nights
vs. same period in 2019...........		(30.0)%		(74.5)%		(34.3)%		(56.2)%		(79.2)%		(43.0)%
Room Revenues (in millions).........	$	357		$	59		$	14		$	218		$	42		$	13
Percentage change in revenues
vs. same period in 2019...........		(33.0)%		(81.9)%		(58.5)%		(54.2)%		(86.8)%		(62.4)%

ACQUISITIONS

During the quarter, the Company acquired the 444-room Four Seasons Resort Orlando at Walt Disney World® Resort for $610 million and acquired the Royal Ka'anapali and Ka'anapali Kai Golf Courses for $28 million. Subsequent to quarter end, the Company acquired the 200-room Baker's Cay Resort in Key Largo for $200 million and a 223-room luxury hotel in downtown Houston for $65 million. The hotel completed construction in 2017 at a cost of $90 million and is currently closed.

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HOST HOTELS & RESORTS, INC. NEWS RELEASE	AUGUST 3, 2021

The Company has engaged HEI to manage the property as a luxury lifestyle hotel and the hotel is expected to reopen in 2021.

Year-to-date, the Company has acquired four hotels and land for a total purchase price of $1.1 billion. The Company considers these properties to be opportunistic acquisitions that are expected to improve the quality and EBITDA growth profile of its portfolio.

CAPITAL EXPENDITURES

The following presents the Company's 2021 capital expenditures spend and forecast for full year 2021 (in millions):

			Year-to-date ended
			June 30, 2021				2021 Full Year Forecast
ROI - Marriott transformational capital program		Actuals				Low-end of range				High-end of range
$	50			$	110			$	140
ROI - All other ROI projects............................................		67				165				185
..................................................Total ROI project spend		117				275				325
Renewals and Replacements.........................................		63				125				150
.............................................Total Capital Expenditures	$	180			$	400			$	475

The Company is utilizing the lower occupancy environment to accelerate certain projects and minimize future disruption and believes the renovations will position these hotels to capture additional revenue during the economic recovery. The Company is on track to complete 85% of the Marriott transformational capital program by the end of 2021. The Company expects to receive approximately $15 million in operating profit guarantees in 2021 under the Marriott transformational capital program. As of June 30, 2021 the Company has received $10 million in operating profit guarantees, with $5 million received in each of the second and first quarters.

BALANCE SHEET

The Company maintains a robust balance sheet with the following balances at June 30, 2021:

• Total assets of $12.8 billion.
• Debt balance of $5.5 billion, with an average maturity of 4.5 years, an average interest rate of 3.0%, and no maturities until 2023.

The Company entered into a distribution agreement with J. P. Morgan Securities LLC, BofA Securities, Inc., BTIG, LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc. and Wells Fargo Securities, LLC on May 6, 2021 by which the Company may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $600 million. The shares can be offered and sold through sales agents in transactions that are deemed to be "at-the-market" offerings at then-current market prices. The Company is not obligated to sell any shares. During the second quarter, the Company issued 7.8 million shares at an average price of approximately $18 per share for net proceeds of $138 million. There is $460 million of remaining issuance capacity available under the program.

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 or its variants and the current U.S. vaccination deployment on its operations.

The Company believes that recovery within the lodging industry will be driven by the strength of the economy, increased consumer confidence that the risks associated with travelling and contracting COVID-19 have been significantly reduced through vaccine deployment and the return of business and group customers.

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

		Full Year 2021
		Low-end of			High-end of
Interest expense		range			range
$	171		$	177
Corporate and other expenses...........................................................		98			100

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