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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) October 10, 1997
-------------------------
HMH PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
52-1822042 33-95058
(I.R.S. Employer Identification Number) (Commission File Number)
10400 Fernwood Road, Bethesda, Maryland 20817
(Address of Principal 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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<PAGE>
FORM 8-K/A
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
HMH Properties, Inc. (the "Company") hereby amends its Current Report on Form
8-K dated October 10, 1997 by filing financial statements of an acquired
business, the Chesapeake Hotel Limited Partnership ("CHLP"), and certain pro
forma financial information for the Company.
Certain matters discussed within this Form 8-K/A 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 the Company to be
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Although the Company 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 filing
with the Securities and Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of Chesapeake Hotel Limited Partnership:
Page
Condensed Balance Sheet as of September 12, 1997 (unaudited) 3
Condensed Statements of Operations for the
Thirty-Six Weeks Ended September 12, 1997
and September 6, 1996 (unaudited) 4
Condensed Statements of Cash Flows for the
Thirty-Six Weeks ended September 12, 1997
and September 6, 1996 (unaudited) 5
Notes to Unaudited Condensed Financial Statements 6
(b) Pro forma financial information of the Company reflecting the
acquisition of CHLP and other transactions as of and for the
thirty-six weeks ended September 12, 1997 and the fiscal year ended
January 3, 1997 (unaudited):
Page
Pro Forma Condensed Consolidated Financial Data 8
Pro Forma Condensed Consolidated Balance Sheet
as of September 12, 1997 9
Pro Forma Condensed Consolidated Statement
of Operations for the Thirty-Six Weeks
ended September 12, 1997 10
Pro Forma Condensed Consolidated Statement
of Operations for the Fiscal Year Ended
January 3, 1997 11
Notes to Pro Forma Condensed Consolidated Financial Data 12
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.
HMH Properties, Inc.
By: /s/ Donald D. Olinger
--------------------------------
Donald D. Olinger
Vice President and
Corporate Controller
Date: December 5, 1997
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<PAGE>
Chesapeake Hotel Limited Partnership
Condensed Balance Sheet
(Unaudited, in thousands)
<TABLE>
<CAPTION>
September 12,
1997
--------------
ASSETS
<S> <C>
Property and equipment, net............................. $ 126,896
Due from Marriott International, Inc.................... 2,365
Other assets............................................ 497
Cash and cash equivalents............................... 7,622
-----------
$ 137,380
===========
LIABILITIES AND PARTNERS' DEFICIT
Mortgage debt........................................... $ 2,182
Debt payable to Host Marriott
Corporation and affiliates........................... 196,656
Note and other payables due to Host
Marriott Corporation and affiliates.................. 37,129
Due to Willmar Distributors, Inc........................ 8,049
Due to Marriott International, Inc...................... 161,045
Accounts payable and accrued interest................... 3,956
-----------
Total Liabilities.................................. 409,017
-----------
PARTNERS' DEFICIT
General Partner......................................... (2,670)
Limited Partners........................................ (268,967)
-----------
Total Partners' Deficit............................ (271,637)
-----------
$ 137,380
===========
</TABLE>
See Notes to Condensed Financial Statements.
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<PAGE>
<TABLE>
Chesapeake Hotel Limited Partnership
Condensed Statements of Operations
(Unaudited, in thousands)
<CAPTION>
Thirty-Six Weeks Ended
------------------------------
September 12, September 6,
1997 1996
------------- ------------
<S> <C> <C>
REVENUES.................................... $ 35,343 $ 29,657
----------- -----------
OPERATING COSTS AND EXPENSES
Interest................................. 21,636 20,512
Depreciation and amortization............ 8,988 9,394
Incentive management fee................. 6,682 5,442
Property taxes........................... 4,377 4,310
Base management fee...................... 3,077 2,750
Ground rent, insurance and other......... 2,647 2,771
----------- -----------
47,407 45,179
----------- -----------
NET LOSS.................................... $ (12,064) $ (15,522)
=========== ===========
</TABLE>
See Notes to Condensed Financial Statements.
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<PAGE>
<TABLE>
Chesapeake Hotel Limited Partnership
Condensed Statements of Cash Flows
(Unaudited, in thousands)
<CAPTION>
Thirty-Six Weeks Ended
------------------------------
September 12, September 6,
1997 1996
------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss................................ $ (12,064) $ (15,522)
Noncash items........................... 24,307 22,668
Changes in operating accounts........... 573 1,007
----------- ----------
Cash provided by operations.......... 12,816 8,153
----------- ----------
INVESTING ACTIVITIES
Additions to property and equipment..... (667) (3,377)
----------- ----------
FINANCING ACTIVITIES
Repayment of Willmar loan............... (5,000) (2,853)
Repayment of mortgage and other debt.... (3,834) (3,023)
Saddle Brook renovation loan............ -- 2,139
----------- ----------
Cash used in financing activities.... (8,834) (3,737)
----------- ----------
INCREASE IN CASH AND
CASH EQUIVALENTS........................ 3,315 1,039
CASH AND CASH EQUIVALENTS
at beginning of period.................. 4,307 4,468
----------- ----------
CASH AND CASH EQUIVALENTS
at end of period........................ $ 7,622 $ 5,507
=========== ==========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
Cash paid for interest.................. $ 10,465 $ 10,267
=========== ==========
NON-CASH INVESTING ACTIVITIES
Additions to property and
equipment through capital lease......... $ 5,288 $ 5,417
=========== ==========
</TABLE>
See Notes to Condensed Financial Statements.
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<PAGE>
Chesapeake Hotel Limited Partnership
Notes to Condensed Financial Statements
(Unaudited)
1. The accompanying condensed financial statements have been prepared by
Chesapeake Hotel Limited Partnership (the "Partnership") without audit.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted from the accompanying statements.
The Partnership believes the disclosures made are adequate to make the
information presented not misleading. However, the condensed financial
statements should be read in conjunction with the Partnership's audited
financial statements for the year ended December 31, 1996. Interim results
are not necessarily indicative of fiscal year performance because of
seasonal and short-term variations.
For financial reporting purposes, the net loss of the Partnership is
allocated 99% to the limited partners and 1% to Marriott PLP Corporation
(the "General Partner"). Significant differences exist between the net loss
for financial reporting purposes and the net loss for Federal income tax
purposes. These differences are due primarily to the use, for income tax
purposes, of accelerated depreciation methods and shorter depreciable lives
on higher asset bases and differences in the timing of the recognition of
interest and incentive management fee expenses.
2. Revenues represent house profit which is hotel sales less hotel-level
expenses, excluding certain operating costs and expenses such as
depreciation and amortization, property taxes, ground rent, insurance and
other, and management fees.
Revenues consist of the following for 1997 and 1996:
<TABLE>
<CAPTION>
Thirty-Six Weeks Ended
-------------------------------
September 12, September 6,
1997 1996
------------- ------------
(in thousands)
<S> <C> <C>
HOTEL SALES
Rooms.................................. $ 66,175 $ 58,118
Food and beverage...................... 31,299 28,902
Other ................................. 5,045 4,659
----------- -----------
102,519 91,679
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HOTEL EXPENSES
Departmental Direct Costs
Rooms................................ 16,154 14,593
Food and beverage.................... 24,669 22,746
Other hotel operating expenses......... 26,353 24,683
----------- ----------
67,176 62,022
----------- ----------
REVENUES................................ $ 35,343 $ 29,657
=========== ==========
</TABLE>
3. Marriott International, Inc. was not paid any incentive management fees
during the thirty-six weeks ended September 12, 1997 since cash flow did
not meet levels specified in the hotel management agreement. However, these
fees were accrued as a liability in the condensed financial statements in
accordance with generally accepted accounting principles. Subsequently, the
hotel management agreement with Marriott International, Inc., was
renegotiated, resulting in the forgiveness of deferred incentive management
fees totalling approximately $159 million at September 12, 1997. The
deferred incentive management fees were previously assigned an estimated
fair value of $0 in the Partnership's audited financial statements for the
year ended December 31, 1996.
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<PAGE>
Chesapeake Hotel Limited Partnership
Notes to Condensed Financial Statements
(Unaudited)
4. On September 10, 1997, the General Partner of CHLP, a wholly-owned
subsidiary of Host Marriott Corporation, purchased 434 units, or 98.6% of
the limited partnership units, for an aggregate payment of $31.5 million.
Combined with its general partner and existing limited partnership
positions, Host Marriott Corporation now owns, through affiliates, 99.9% of
the Partnership.
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<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The unaudited Pro Forma Condensed Consolidated financial data of the Company
reflect the following transactions for the thirty-six weeks ended September 12,
1997 and for the fiscal year ended January 3, 1997, as if such transactions had
been completed at the beginning of each of the periods:
. 1997 acquisition of a controlling interest in the Chesapeake Hotels
Limited Partnership ("CHLP") (3,054 rooms);
. 1997 acquisition of three full-service hotel properties (1,090 rooms);
. 1996 acquisition of nine full-service hotel properties (3,124 rooms);
. 1996 sale/leaseback of 18 Residence Inn properties;
. 1996 sale of 16 Courtyard properties; and
. the Offering and the Merger (defined below).
The unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company as
of September 12, 1997 reflects the acquisition of a controlling interest in CHLP
from Host Marriott Corporation ("Host Marriott") on October 10, 1997. On
September 10, 1997, Host Marriott purchased a controlling interest in the
Chesapeake Hotel Limited Partnership ("CHLP") which owns six full-service hotel
properties for approximately $32 million in cash. Prior to the purchase of CHLP,
HMH Properties, Inc., an indirect wholly-owned subsidiary of Host Marriott, held
non-recourse mortgages secured by the properties with a principal balance of
approximately $137 million at September 10, 1997 ("CHLP Mortgages"). The Company
purchased a 95% controlling interest in CHLP, along with certain receivables due
to Host Marriott from CHLP with a fair market value of approximately $105
million, on October 10, 1997 for approximately $135 million. The Company has
purchased or acquired controlling interests in nine properties totalling 4,144
rooms during 1997, including the six hotels owned by CHLP.
In July 1997, the Company issued $600 million in aggregate principal amount of
new senior notes (the "Offering") simultaneously with the merger of HMC
Acquisitions, Inc. into and with the Company (the "Merger").
In 1996, the Company acquired nine full-service properties with 3,124 rooms for
approximately $292 million, including the acquisition of controlling interests
in two full-service properties. During the first half of 1996, the Company sold,
subject to leaseback, 18 Residence Inns to an unrelated real estate investment
trust (the "REIT"). The Company also sold 16 Courtyard properties to the REIT
during 1996, the deferred proceeds and gain related to the sale of which were
sold to Host Marriott for $13 million.
The Pro Forma Condensed Consolidated Financial Data of the Company are unaudited
and presented for informational purposes only and may not reflect the Company's
future results of operations and financial position or what the results of
operations and financial position of the Company would have been had such
transactions occurred as of the dates indicated. The unaudited Pro Forma
Condensed Consolidated Financial Data and Notes thereto should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto.
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<PAGE>
HMH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
As of September 12, 1997
(in millions)
<TABLE>
<CAPTION>
CHLP
Acquisition Pro
Historical Adjustments Forma
---------- ----------- -----
ASSETS
------
<S> <C> <C> <C>
Property and Equipment, net....................................... $ 1,571 $ 167 (A) $ 1,738
Notes and Other Receivables....................................... 137 (137) (A) --
Due from Managers................................................. 42 2 (A) 44
Investments in Affiliates......................................... 17 -- 17
Other Assets...................................................... 81 (2) (A) 79
Cash and Cash Equivalents......................................... 615 (132) (A) 483
--------- ----------- ---------
$ 2,463 $ (102) $ 2,361
========= =========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Debt
Senior notes................................................... $ 1,550 $ -- $ 1,550
Mortgage debt.................................................. 96 -- 96
Other ......................................................... 34 -- 34
--------- ----------- ---------
1,680 -- 1,680
Deferred Income Taxes............................................. 89 (9)(A) 80
Other Liabilities................................................. 85 1 (A) 86
--------- ----------- ---------
Total Liabilities.............................................. 1,854 (8) 1,846
--------- ----------- ---------
Shareholders' Equity
Common Stock................................................... -- -- --
Additional Paid-in Capital..................................... 626 (94)(A) 532
Retained Deficit............................................... (17) -- (17)
--------- ----------- ---------
Total Shareholders' Equity..................................... 609 (94) 515
--------- ----------- ---------
$ 2,463 $ (102) $ 2,361
========= =========== =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Data.
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<PAGE>
HMH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Thirty-Six Weeks Ended September 12, 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
CHLP
Acquisition Other Pro
Historical Adjustments Adjustments Forma
----------- ------------- ------------- -------
<S> <C> <C> <C> <C>
Revenues
Hotels....................... $ 279 $ 35 (B) $ 7 (C) $ 321
Other........................ 5 -- -- 5
------ ------ ----- ------
284 35 7 326
------ ------ ----- ------
Operating costs and expenses
Hotels....................... 153 17 (B) 4 (C) 174
------ ------ ----- ------
Operating profit.............. 131 18 3 152
Minority interest............. -- -- (1)(C) (1)
Corporate expenses............ (8) -- -- (8)
Interest expense.............. (80) -- (26)(G) (106)
Interest income............... 18 (10)(B) (1)(C) 7
------ ------ ----- ------
Income (loss) before income
taxes....................... 61 8 (25) 44
Benefit (provision) for
income taxes................ (24) (3)(H) 10 (H) (17)
------ ------ ------ ------
Net Income (loss)............. $ 37 $ 5 $ (15) $ 27
====== ====== ====== ======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Data.
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<PAGE>
HMH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Fiscal Year Ended January 3, 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
CHLP
Acquisition Other Pro
Historical Adjustments Adjustments Forma
----------- ------------- ------------ -------
<S> <C> <C> <C> <C>
Revenues
Hotels...................... $ 313 $ 45 (B) $ 20 (C) $ 401
(5)(E)
28 (F)
Other........................ 6 -- -- 6
------ ------- ------- -------
319 45 43 407
------ ------- ------- -------
Operating costs and expenses
Hotels...................... 175 23 (B) 11 (C) 220
4 (D)
(4)(E)
11 (F)
------ ------- ------- -------
175 23 22 220
------ ------- ------- -------
Operating profit............. 144 22 21 187
Minority interest............ -- -- (1)(C) (1)
Corporate expenses........... (15) -- -- (15)
Interest expense............. (101) -- (57)(G) (158)
Interest income.............. 26 (14)(B) (3)(C) 2
(7)(F)
------ ------- ------- -------
Income (loss) before
income taxes............... 54 8 (47) 15
Benefit (provision) for
income taxes................ (22) (3)(H) 19 (H) (6)
------ ------- ------- -------
Net income (loss)............ $ 32 $ 5 $ (28) $ 9
====== ======= ======= =======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Data.
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<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL DATA
A. Represents the adjustment to record the acquisition of a controlling
interest in CHLP:
- Record property and equipment of $167 million
- Record the elimination in consolidation of the mortgage receivable of
$137 million and interest receivable of $2 million
- Record hotel working capital (due from managers) of approximately $2
million
- Record the net use of cash of $132 million, which represents the $135
million payment to Host Marriott plus the prepayment of CHLP's third
party mortgage debt of $2 million and the repayment of $2 million in
notes payable due to Marriott International, Inc. less the
consolidation of $7 million of CHLP cash
- Record other liabilities of $1 million
- Record the reduction in additional paid-in capital of $94 million to
reflect the difference between the cash transferred to Host Marriott
and the carried-over book basis of the acquired assets, net of the
related deferred taxes of $9 million.
B. Represents the adjustment to record the revenue and operating costs and to
reduce interest income related to the CHLP Mortgage for the purchase of a
controlling interest in CHLP.
C. Represents the adjustment to record the revenue, operating costs and to
reduce interest income for the 1997 acquisition of three full-service hotel
properties, including the acquisition of controlling interests in two
full-service properties.
D. Represents the net adjustment to eliminate the depreciation expense and
record the incremental lease expense for the 1996 sale/leaseback of the 18
Residence Inns.
E. Represents the net adjustment to eliminate revenues, operating costs and
depreciation for the 1996 sale of 16 Courtyard properties.
F. Represents the adjustment to record the revenue and operating costs, and to
reduce interest income for the 1996 acquisitions of nine full-service hotel
properties, including the acquisition of controlling interests in two
full-service properties.
G. Represents the adjustment to record interest expense and related
amortization of deferred financing fees as a result of the Offering.
H. Represents the income tax impact of pro forma adjustments at statutory
rates.
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