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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 21, 1999
HOST MARRIOTT, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 0-25087 52-2095412
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
10400 Fernwood Road, Bethesda, Maryland 20817-1109
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(Address of Principal Executive Offices) (Zip Code)
The Registrant's telephone number, including area code: (301) 380-9000
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5: Other Events
Based upon its annual budget for 1999, Host Marriott L.P. ("Host")
currently estimates that on a stand-alone basis, its 1999 Earnings Before
Interest, Expense, Taxes, Depreciation and Amortization and other non-cash items
("EBITDA") will be in the range of approximately $1.0 billion to $1.05 billion
while its 1999 Funds From Operations ("FFO") will be in the range of
approximately $565 million to $595 million. The 1999 FFO per partnership unit
("unit") on a basis diluted for the assumed issuance of units upon the
conversion of convertible preferred securities of Host Marriott Corporation
("Host REIT") and other equity issuances related to Host REIT's recent
conversion to a real estate investment trust ("REIT") is estimated to be in the
range of $1.77 to $1.87 per unit.
Host's estimates of 1999 FFO and EBITDA take into account the series of recently
completed transactions involved in Host REIT's conversion to a REIT effective
January 1, 1999. These estimates also are based on a number of other factors,
including the following principal assumptions: (i) room revenue per available
room ("REVPAR") for Marriott and Ritz Carlton brand hotels would increase on
average by approximately 4% in 1999 compared to 1998; (ii) approximately $375
million of hotel properties would be acquired during the latter part of 1999;
(iii) construction of one new hotel property and expansion of three properties
would be continued, which projects are expected to require 1999 outlays of funds
of approximately $150 million in order to reach completion in 1999 but would not
generate earnings in 1999; (iv) approximately $115 million of hotel dispositions
would be consummated during 1999; (v) net borrowings would be made in the first
and third quarters of 1999 in the aggregate amount of approximately $400 million
at an assumed average interest rate of 7%; (vi) new bond debt of approximately
$400 million would be issued at an assumed average interest rate of 8.25% in the
second quarter or later in 1999 to refinance existing mortgage debt with the
remainder used for general corporate purposes; and (vii) Host REIT's existing
convertible preferred securities would be converted in full and a corresponding
number of units would be issued in respect of the shares of common stock of Host
REIT issued.
Host REIT previously indicated that it was comfortable with estimates of 1999
FFO for the combined activities of Host Marriott Corporation and Crestline
Capital Corporation, a former subsidiary, of approximately $700 million to $730
million (or $2.25 to $2.35 per diluted unit). Host Marriott Corporation
completed the spinoff of Crestline as part of the REIT conversion at the end of
December 1998. With respect to the prior estimate, Host estimates that
approximately $647 million was attributable to Host on a stand-alone basis. The
net difference between Host REIT's previous 1999 FFO estimate and the current
FFO estimate is attributable primarily to the Crestline spinoff, the final
structure of the transactions implemented in connection with the REIT
conversion, the refinancing of certain indebtedness at higher interest rates
than previously assumed, and updated assumptions and corrected calculations
relating to certain income and expense items.
For purposes of the diluted per unit estimates, Host assumed a total of
approximately 320 million units would be outstanding for 1999, including the 255
million units currently outstanding and diluted for the assumed conversion of
Host REIT's outstanding convertible preferred securities and the expected
issuance of approximately 30 million additional units in connection with the
completed acquisitions of eight public partnerships and the Blackstone portfolio
as well as the assumption that all Host REIT's stockholders elect to receive
cash under the previously declared special stock or cash election dividend. If
all Host REIT's stockholders elected to receive stock rather than cash, Host
would retain approximately $200 million of additional cash, the number of units
outstanding would increase by approximately 18 million, the estimated 1999 FFO
per unit would be reduced by approximately five cents and Host's FFO per unit
would be in the lower end of the estimated range.
Investors are cautioned that the actual FFO and EBITDA for 1999 could differ
materially and adversely from that stated or implied by Host's current estimates
due to a number of factors, many of which are beyond Host's control. In
particular, some of the assumptions relied on by Host in making the estimates as
part of the 1999 budget will inevitably not be accurate, and unanticipated
events may occur subsequent to the date hereof which may cause the actual FFO or
EBITDA for 1999 to vary materially from that set forth above. Although the
assumptions upon which Host based its current estimates reflect conditions Host
expects to exist and courses of actions it expects to take during 1999, the
estimates reflect assumptions as to significant matters affecting FFO and
EBITDA, including certain matters beyond the control of Host and/or which are
inherently difficult to predict. For example, Host assumed that a certain level
of rates and occupancy could be achieved by its properties during 1999 and that
financing would be available on terms consistent with anticipated market
conditions; that certain acquisition opportunities would be available during
1999 and that the cost of construction of new properties and of expansion of
existing hotel properties would not change materially in 1999 from those
experienced during 1998. There can be no assurance that events will not occur
which will cause these or other factors affecting FFO or EBITDA to change, which
events or factors may cause FFO and/or EBITDA for 1999 to be materially
different from those presented above. The factors which might cause such a
difference include, but are not limited to, those indicated in this Form 8-K.
Host does not intend to provide, on a regular basis, information regarding
estimated FFO and EBITDA on a going-forward basis.
Certain matters discussed in this report include forward-looking statements
within the meaning of the Private Litigation Reform Act of 1995. All forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual transactions, results, performance or
achievements to be materially different from any future transactions, results,
performance or achievements expressed or implied by such forward-looking
statements. Future transactions, results, performance and achievements will be
affected by general economic, business and financing conditions, competition and
governmental actions.
The cautionary statements set forth in reports filed under the Securities
Exchange Act of 1934 contain important factors with respect to such forward-
looking statements, including: (i) national and local economic and business
conditions that will, among other things, affect demand for hotels and other
properties, the level of rates and occupancy that can be achieved by such
properties and the availability and terms of financing; (ii) the ability to
maintain the properties in a first-class manner (including meeting capital
expenditure requirements); (iii) the ability to compete effectively in areas
such as access, location, quality of accommodations and room rate structures;
(iv) the ability to acquire or develop additional properties and risk that
potential acquisitions or developments may not perform in accordance with
expectations; (v) changes in travel patterns, taxes and government regulations;
(vi) governmental approvals, actions and initiatives; (vii) the effects of tax
legislative action; (viii) the effect on Host of the Year 2000 issues; and (ix)
the ability of Host to satisfy complex rules in order to qualify for taxation as
a real estate investment trust for federal income tax purposes and to operate
effectively within the limitations imposed by these rules. Although Host
believes the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its expectations will
be attained or that any deviations will not be material. Host undertakes no
obligation to publicly release the result of any revisions to these forward-
looking statements that may result from future events or circumstances or
otherwise.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 21, 1999 HOST MARRIOTT, L.P.
By: Host Marriott Corporation, its
general partner
By: /s/ Donald D. Olinger
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Name: Donald D. Olinger
Title: Senior Vice President
and Corporate Controller
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