SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) March 18, 1997
HOST MARRIOTT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-5664
(Commission File Number)
53-0085950
(I.R.S. Employer Identification Number)
10400 Fernwood Road, Bethesda, Maryland 20817
(Address of Principle Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (301) 380-9000
(Former Name or Former Address, if changed since last report.)
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Item 5. Other Events
On March 18, 1997, the Company and Marriott International, Inc. announced that
the parties have reached an agreement in principle for Host Marriott Corporation
to acquire all of the outstanding common stock of Forum Group, Inc., from
Marriott Senior Living Services, Inc., a subsidiary of Marriott International.
Host Marriott will pay approximately $433 million for the existing portfolio of
senior living communities and has established a $107 million expansion plan for
the properties. The transaction, which is subject to the completion of due
diligence and other customary closing conditions, is expected to close in the
second quarter of 1997.
The Company's press release of March 18,1997 announcing the transaction is
included as an exhibit to this filing.
Item 7. Financial Statements and Exhibits
(c) 99.1 News Release dated March 18, 1997.
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.
Host Marriott Corporation
By: /s/ Donald D. Olinger
-------------------------
Donald D. Olinger
Senior Vice President and
Corporate Controller
March 18, 1997
2
Exhibit 99.1
HOST MARRIOTT TO ACQUIRE FORUM GROUP PORTFOLIO FOR $433 MILLION;
YEAR-TO-DATE ACQUISITIONS EXCEED $800 MILLION
BETHESDA, MD, March 18, 1997 -- Host Marriott Corporation (NYSE: HMT) today
announced that it has reached an agreement in principle to acquire all of the
outstanding common stock of Forum Group, Inc., from Marriott Senior Living
Services, Inc., a subsidiary of Marriott International. Host Marriott will pay
approximately $433 million for the existing portfolio of senior living
communities and has established a $107 million expansion plan for the 29
retirement communities (see the attached list of properties). Of the $107
million expansion plan, it is estimated that units with a value of $44 million
will be completed prior to closing. The transaction, which is subject to the
completion of due diligence and other customary closing conditions, is expected
to close in the second quarter of 1997.
The Forum Group portfolio, which includes 29 retirement communities with 6,127
units located in 11 states, will be managed by Marriott Senior Living Services
under the Marriott brand name. The expansion plan will add 1,075 units and is
expected to be completed by January 1999. The acquisition will make Host
Marriott one of the five largest owners of real estate in the senior living
industry.
Upon closing, the Forum transaction will bring the aggregate value of Host
Marriott's 1997 year- to-date acquisitions to over $800 million (including $44
million of the expansion plan), which is 80% of Host Marriott's 1997 acquisition
goal of $1 billion.
The existing portfolio of senior living communities is expected to generate
approximately $55.2 million of Earnings Before Interest, Taxes, Depreciation,
Amortization and other non-cash items (EBITDA) for the full year 1997, exclusive
of the incremental EBITDA expected to be produced by the expansion plan.
"We view our entry into the senior living industry as a natural extension of our
real estate investments in the hospitality industry," said Terence C. Golden,
president and chief executive officer of Host Marriott Corporation. "Entry into
this complementary line of business will enable us to invest in an industry
enjoying double digit growth rates, expand our alliance with Marriott
International, further leverage off the benefits of the outstanding reputation
of the Marriott brand, and diversify into an industry with cash flows that are
independent of the business cycle."
Mr. Golden continued, "Looking forward, we plan to leverage off the strength of
our size, financial resources and acquisition experience to grow our senior
living real estate portfolio at a rate of 20% per annum for the next several
years. We expect to achieve this growth rate through the acquisition of existing
properties, the development of new properties, and through the acquisition of
long-term care companies as this highly fragmented industry approaches a period
of consolidation."
"We are also greatly encouraged by the prospects of forming a strategic
relationship with Marriott Senior Living Services similar in scope to the
strategic alliance we enjoy with Marriott International for the acquisition of
full service hotels. Marriott Senior Living Services is the country's largest
manager of senior living properties serving the upper tier segment of the
market, which is also Host Marriott's target market. In an industry where
consumers' selection of a senior living facility is primarily based on brand
identification and quality of service, we feel that Marriott Senior Living
Services provides Host Marriott a competitive advantage which positions us as a
leading real estate investor in the industry."
"The year-to-date operating performance of our hotel portfolio has been
outstanding and we anticipate significant additional hotel acquisition activity
from our acquisition pipeline. As a result of our outstanding first quarter, we
are in the process of reviewing our 1997 acquisition goal," added Mr. Golden.
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The Forum Group portfolio is the largest collection of assets in the United
States serving the upper tier segment of the industry. The communities have a
median age of eight years and generally represent the premier assets within
their respective market areas, achieving the highest rental rates within these
markets. The portfolio offers independent living, assisted living, Alzheimer's
and nursing care units and enjoys a 95% system-wide occupancy rate, comparing
favorably to an industry average of 92%. It is estimated that the properties are
being acquired at approximately 75% of replacement cost.
Host Marriott will acquire the existing Forum Group portfolio for approximately
$433 million. Approximately $244 million of this purchase price is comprised of
debt ($229 million at fixed rates) with the remainder to be paid by Host
Marriott in cash. The expansion plan includes 22 of the 29 communities. The
expansion plan will add 1,075 units and is expected to be completed by January
1999 at a total cost of $107 million. Approximately 500 of the expansion units
are expected to be completed in 1997. The Forum Group owns 100% of 19 of the 29
communities, a 59% interest in one property, and a 79% interest in the nine
remaining communities through its ownership interest in FRP Retirement Partners,
L.P., a publicly held master limited partnership.
The growth prospects for the senior living industry are substantial. The
industry is expected to grow at an annual rate approaching 20% into the next
decade. With 25% of its population residing in senior living facilities, the 85+
age group will help sustain this growth rate as it is projected to double in
size between the years 1990 and 2010. Changing social patterns are also playing
a role in generating demand for the industry. The increased participation of
dual income families in the work force has greatly reduced a traditional source
of an alternative means of care. In addition, reduction in the issuance of
certificates of need have substantially restricted the supply of licensed
nursing care beds. Together, these factors have helped generate growing demand
for assisted living and independent living facilities.
The transaction is subject to approval by Host Marriott's Board of Directors and
receipt of a fairness opinion from BT Wolfensohn, Host Marriott's financial
advisor. Arnold & Porter, a Washington, DC law firm, is Host Marriott's legal
advisor.
Host Marriott is a lodging real estate company which currently owns or holds
controlling interests in 83 upscale and luxury full-service hotel properties
operated primarily under the Marriott and Ritz- Carlton brand names. The company
also serves as general partner and holds minority interests in various
unconsolidated partnerships that own 251 lodging properties, 31 of which are
full-service hotels.
Certain matters discussed within this news release are forward-looking
statements within the meaning of the Private Litigation Reform Act of 1995 and
as such may involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements of Host Marriott
to be different from any future results, performance or achievements expressed
or implied by such forward-looking statements. Although Host Marriott 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. These risks are detailed from time to time in the company's filings
with the Securities and Exchange Commission.
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THE FORUM GROUP, INC. PORTFOLIO
Name Location Total Units(a)
- ---- -------- --------------
Brookside Louisville, KY 396
Deer Creek Deerfield Beach, Fl 294
Desert Harbor Peoria, AZ 285
Knightsbridge Columbus OH 316
Lafayette Lexington, KY 171
Lexington Lexington, KY 111
Memorial Woods Houston, TX 430
Overland Park Overland Park, KS 205
Park Lane Dallas, TX 318
Pueblo Norte Scottsdale, AZ 293
Tucson Tuscon, AZ 326
Foulk Manor North Wilmington, DE 158
Foulk Manor South Wilmington, DE 113
Lincoln Heights San Antonio, TX 319
Millcroft Newark, DE 198
Montebello Albuquerque, NM 209
Montevista El Paso, TX 262
Myrtle Beach Manor Myrtle Beach, SC 219
Park Summit Coral Springs, FL 304
Shipley Manor Wilmington, DE 159
Tiffany House Ft. Lauderdale, FL 131
Fountainview W. Palm Beach, FL 340
Chambrel Houston, TX 351
Independence Court Fort Myers, FL 85
Coral Oaks Palm Harbor, FL 319
Remington Club II San Diego, CA 222
Forum at the Crossing Indianapolis, IN 221
Forwood Manor Wilmington, DE 242
Remington Club I San Diego, CA 205
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Total 7,202
(a) Unit counts include 1,075 planned expansion units.
