Host Hotels & Resorts(HST) - 2023 Q1 - Quarterly Report

Introduction and Company Overview This section introduces Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P., detailing their structure as a REIT and their consolidated hotel portfolio Company Information and Explanatory Note Host Inc. and Host L.P. file a combined quarterly report, with Host Inc. operating as a self-managed REIT and the sole general partner of Host L.P., holding approximately 99% of its partnership interests - Host Inc. is a self-managed and self-administered REIT, operating through Host L.P., of which Host Inc. is the sole general partner and holds approximately 99% of its partnership interests[11][45] - The report combines the quarterly filings of Host Inc. and Host L.P. due to their substantially similar financial statements, with the primary difference reflected in the equity section[10][12] Consolidated Hotel Portfolio by Country (as of March 31, 2023) | Country | Hotels | | :------------ | :----- | | United States | 72 | | Brazil | 3 | | Canada | 2 | | Total | 77 | PART I. FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and detailed notes Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for both Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P., along with detailed notes on organization, accounting policies, and other financial items Financial Statements for Host Hotels & Resorts, Inc. This section provides the unaudited condensed consolidated financial statements for Host Hotels & Resorts, Inc Condensed Consolidated Balance Sheets - Host Inc. This table presents the condensed consolidated balance sheets for Host Hotels & Resorts, Inc. as of March 31, 2023, and December 31, 2022 Host Inc. Condensed Consolidated Balance Sheets (in millions) | Metric | March 31, 2023 | December 31, 2022 | | :--------------------------------------- | :------------- | :---------------- | | Property and equipment, net | $9,720 | $9,748 | | Cash and cash equivalents | $563 | $667 | | Total assets | $12,225 | $12,269 | | Total debt | $4,208 | $4,215 | | Total liabilities | $5,195 | $5,390 | | Total equity of Host Inc. stockholders | $6,858 | $6,710 | Condensed Consolidated Statements of Operations - Host Inc. This table presents the condensed consolidated statements of operations for Host Hotels & Resorts, Inc. for the first quarters of 2023 and 2022 Host Inc. Condensed Consolidated Statements of Operations (Q1 2023 vs. Q1 2022, in millions, except per share amounts) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--------------------------------------- | :------ | :------ | :--------- | | Total revenues | $1,381 | $1,074 | 28.6% | | Total operating costs and expenses | $1,133 | $952 | 19.0% | | Operating profit | $248 | $122 | 103.3% | | Net income | $291 | $118 | 146.6% | | Net income attributable to Host Inc. | $287 | $116 | 147.4% | | Basic earnings per common share | $0.40 | $0.16 | 150.0% | | Diluted earnings per common share | $0.40 | $0.16 | 150.0% | Condensed Consolidated Statements of Comprehensive Income (Loss) - Host Inc. This table presents the condensed consolidated statements of comprehensive income (loss) for Host Hotels & Resorts, Inc. for the first quarters of 2023 and 2022 Host Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (Q1 2023 vs. Q1 2022, in millions) | Metric | Q1 2023 | Q1 2022 | | :-------------------------------------------------------- | :------ | :------ | | Net income | $291 | $118 | | Other comprehensive income (loss), net of tax | $2 | $7 | | Comprehensive income attributable to Host Hotels & Resorts, Inc. | $289 | $123 | Condensed Consolidated Statements of Cash Flows - Host Inc. This table presents the condensed consolidated statements of cash flows for Host Hotels & Resorts, Inc. for the first quarters of 2023 and 2022 Host Inc. Condensed Consolidated Statements of Cash Flows (Q1 2023 vs. Q1 2022, in millions) | Metric | Q1 2023 | Q1 2022 | | :------------------------------------------ | :------ | :------ | | Net cash provided by operating activities | $308 | $261 | | Net cash used in investing activities | $(105) | $(92) | | Net cash used in financing activities | $(308) | $(693) | | Net decrease in cash and cash equivalents | $(104) | $(523) | | Cash and cash equivalents, end of period | $770 | $430 | - Cash used in financing activities in Q1 2023 included $228 million for dividends on common stock and $50 million for common stock repurchases[24] - Noncash investing activities included issuing a $72 million loan to the buyer of The Camby, Autograph Collection in March 2023[26] Financial Statements for Host Hotels & Resorts, L.P. This section provides the unaudited condensed consolidated financial statements for Host Hotels & Resorts, L.P Condensed Consolidated Balance Sheets - Host L.P. This table presents the condensed consolidated balance sheets for Host Hotels & Resorts, L.P. as of March 31, 2023, and December 31, 2022 Host L.P. Condensed Consolidated Balance Sheets (in millions) | Metric | March 31, 2023 | December 31, 2022 | | :--------------------------------------- | :------------- | :---------------- | | Property and equipment, net | $9,720 | $9,748 | | Cash and cash equivalents | $563 | $667 | | Total assets | $12,225 | $12,269 | | Total debt | $4,208 | $4,215 | | Total liabilities | $5,195 | $5,390 | | Total Host Hotels & Resorts, L.P. capital| $6,858 | $6,710 | Condensed Consolidated Statements of Operations - Host L.P. This table presents the condensed consolidated statements of operations for Host Hotels & Resorts, L.P. for the first quarters of 2023 and 2022 Host L.P. Condensed Consolidated Statements of Operations (Q1 2023 vs. Q1 2022, in millions, except per unit amounts) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--------------------------------------- | :------ | :------ | :--------- | | Total revenues | $1,381 | $1,074 | 28.6% | | Total operating costs and expenses | $1,133 | $952 | 19.0% | | Operating profit | $248 | $122 | 103.3% | | Net income | $291 | $118 | 146.6% | | Net income attributable to Host L.P. | $291 | $117 | 148.7% | | Basic earnings per common unit | $0.41 | $0.17 | 141.2% | | Diluted earnings per common unit | $0.41 | $0.17 | 141.2% | Condensed Consolidated Statements of Comprehensive Income (Loss) - Host L.P. This table presents the condensed consolidated statements of comprehensive income (loss) for Host Hotels & Resorts, L.P. for the first quarters of 2023 and 2022 Host L.P. Condensed Consolidated Statements of Comprehensive Income (Loss) (Q1 2023 vs. Q1 2022, in millions) | Metric | Q1 2023 | Q1 2022 | | :-------------------------------------------------------- | :------ | :------ | | Net income | $291 | $118 | | Other comprehensive income (loss), net of tax | $2 | $7 | | Comprehensive income attributable to Host Hotels & Resorts, L.P. | $293 | $124 | Condensed Consolidated Statements of Cash Flows - Host L.P. This table presents the condensed consolidated statements of cash flows for Host Hotels & Resorts, L.P. for the first quarters of 2023 and 2022 Host L.P. Condensed Consolidated Statements of Cash Flows (Q1 2023 vs. Q1 2022, in millions) | Metric | Q1 2023 | Q1 2022 | | :------------------------------------------ | :------ | :------ | | Net cash provided by operating activities | $308 | $261 | | Net cash used in investing activities | $(105) | $(92) | | Net cash used in financing activities | $(308) | $(693) | | Net decrease in cash and cash equivalents | $(104) | $(523) | | Cash and cash equivalents, end of period | $770 | $430 | - Cash used in financing activities in Q1 2023 included $231 million for distributions on common OP units and $50 million for repurchase of common OP units[40] - Noncash investing activities included issuing a $72 million loan to the buyer of The Camby, Autograph Collection in March 2023[42] Notes to Condensed Consolidated Financial Statements This section details the company's organization, significant accounting policies, earnings per share, revenue disaggregation, and other financial notes Note 1. Organization This note describes the organizational structure of Host Inc. as a REIT operating through Host L.P. and its consolidated hotel portfolio - Host Inc. operates as a self-managed and self-administered REIT, with operations conducted solely through Host L.P. and its subsidiaries. Host Inc. is the sole general partner of Host L.P. and holds approximately 99% of its partnership interests[45] Consolidated Hotel Portfolio by Country (as of March 31, 2023) | Country | Hotels | | :------------ | :----- | | United States | 72 | | Brazil | 3 | | Canada | 2 | | Total | 77 | Note 2. Summary of Significant Accounting Policies This note outlines the accounting principles, estimates, and assumptions used in preparing the unaudited condensed consolidated financial statements - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, requiring management to make estimates and assumptions[47][48] - Interim results are not necessarily indicative of full-year performance due to seasonal variations[49] - Four partnerships, including Host L.P., are considered variable interest entities (VIEs)[50] Note 3. Earnings Per Common Share (Unit) This note provides the calculation and reconciliation of basic and diluted earnings per common share for Host Inc. and per common unit for Host L.P Earnings Per Common Share (Unit) (Q1 2023 vs. Q1 2022, in millions, except per share/unit amounts) | Metric | Host Inc. Q1 2023 | Host Inc. Q1 2022 | Host L.P. Q1 2023 | Host L.P. Q1 2022 | | :--------------------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Net income attributable | $287 | $116 | $291 | $117 | | Basic weighted average shares/units outstanding | 713.4 | 714.3 | 708.3 | 708.9 | | Diluted weighted average shares/units outstanding | 714.9 | 716.1 | 709.8 | 710.6 | | Basic earnings per common share/unit | $0.40 | $0.16 | $0.41 | $0.17 | | Diluted earnings per common share/unit | $0.40 | $0.16 | $0.41 | $0.17 | - 9.9 million Host L.P. common units, convertible into 10.1 million Host Inc. common shares, were not included in Host Inc.'s diluted EPS calculation as their effect was not dilutive[52] Note 4. Revenue This note disaggregates total revenues by geographic location, primarily reflecting property-level operations - Substantially all operating results represent revenues and expenses generated by property-level operations[53] Hotel Revenues by Geographic Location (Q1 2023 vs. Q1 2022, in millions) | Location | 2023 | 2022 | | :-------------------- | :------ | :------ | | Orlando | $141 | $108 | | Phoenix | $129 | $111 | | Maui/Oahu | $126 | $116 | | San Diego | $125 | $87 | | San Francisco/San Jose| $100 | $52 | | Domestic Total | $1,362 | $1,066 | | International Total | $19 | $8 | | Total | $1,381| $1,074| Note 5. Property and Equipment This note details the composition of property and equipment, net, including land, buildings, furniture, and construction in progress Property and Equipment (in millions) | Category | March 31, 2023 | December 31, 2022 | | :-------------------------------------- | :------------- | :---------------- | | Land and land improvements | $2,011 | $2,020 | | Buildings and leasehold improvements | $13,797 | $13,849 | | Furniture and equipment | $2,217 | $2,249 | | Construction in progress | $388 | $313 | | Less accumulated depreciation and amortization | $(8,693) | $(8,683) | | Total Property and equipment, net | $9,720 | $9,748 | Note 6. Debt This note describes the company's debt structure, including its credit facility, available capacity, and interest rate characteristics - As of March 31, 2023, the company had $1.5 billion of available capacity under the revolver portion of its credit facility[57] - During the first quarter, the company entered into the sixth amended and restated senior revolving credit and term loan facility, converting the underlying reference rate from LIBOR to SOFR plus a credit spread adjustment of 10 basis points[58][60] - The credit facility includes a $1.5 billion revolving facility and a fully utilized $1 billion term loan facility, with maturities extending to January 2027 and January 2028[58][60] Note 7. Equity of Host Inc. and Capital of Host L.P. This note outlines the changes in Host Inc. stockholders' equity and Host L.P. capital, including share repurchases and dividends Host Inc. Stockholders' Equity (in millions) | Metric | December 31, 2022 | March 31, 2023 | | :--------------------------------------- | :---------------- | :------------- | | Total equity of Host Inc. stockholders | $6,715 | $6,863 | | Net income | $287 | $287 | | Repurchase of common stock | $(50) | $(50) | | Dividends declared on common stock | $(87) | $(87) | - During Q1 2023, Host Inc. repurchased 3.2 million shares for $50 million at an average price of $15.65 per share, with $923 million remaining available under the repurchase program[65] - A regular quarterly cash dividend of $0.12 per share was announced on February 15, 2023, and paid on April 17, 2023[67] Note 8. Dispositions This note details the sale of The Camby, Autograph Collection, including the gain on sale and seller financing provided - During the first quarter, the company sold The Camby, Autograph Collection for $110 million, recording a gain on sale of $69 million[68] - In connection with the sale, the company provided $72 million in seller financing to the buyer, included in notes receivable[68] Note 9. Fair Value Measurements This note presents the fair value of financial assets and liabilities, determined using discounted cash flow models or market prices Fair Value of Financial Assets and Liabilities (as of March 31, 2023, in millions) | Instrument | Carrying Amount | Fair Value | | :---------------- | :-------------- | :--------- | | Notes receivable | $485 | $480 | | Senior notes | $3,116 | $2,806 | | Credit facility | $986 | $1,000 | | Mortgage debt | $101 | $92 | - Fair values are determined based on expected future payments discounted at risk-adjusted rates or quoted market prices[69] Note 10. Geographic Information This note provides a breakdown of total revenues and property and equipment by geographic area, considering each hotel as an operating segment - The company considers each hotel an operating segment and reports one segment: hotel ownership[71] Total Revenues and Property and Equipment, Net by Geographic Area (in millions) | Geographic Area | Q1 2023 Total Revenues | Q1 2022 Total Revenues | Mar 31, 2023 Property & Equipment, net | Dec 31, 2022 Property & Equipment, net | | :---------------- | :--------------------- | :--------------------- | :------------------------------------- | :------------------------------------- | | United States | $1,362 | $1,066 | $9,650 | $9,678 | | Brazil | $6 | $4 | $34 | $33 | | Canada | $13 | $4 | $36 | $37 | | Total | $1,381 | $1,074 | $9,720 | $9,748 | Note 11. Non-controlling Interests This note describes the accounting treatment and valuation of non-controlling interests in Host L.P., classified as redeemable - Non-controlling interests of Host L.P. are classified as redeemable non-controlling interests and are adjusted to the greater of historical cost or redemption value[73] Non-controlling Interests of Host L.P. (as of March 31, 2023, in millions) | Metric | Value | | :--------------------------------------- | :------ | | Common OP units outstanding (millions) | 9.9 | | Market price per Host Inc. common share | $16.49 | | Redemption value | $167 | | Historical cost | $99 | | Book value (greater of redemption or historical cost) | $167 | Note 12. Contingencies This note addresses contingencies, including the impact of Hurricane Ian on The Ritz-Carlton, Naples, and related insurance recoveries - The Ritz-Carlton, Naples remains closed due to Hurricane Ian damage, with reopening targeted for July 2023[76] - Estimated book value of property and equipment written off and remediation costs is approximately $105 million, with a corresponding insurance receivable[77] - Received $55 million in property insurance proceeds by March 31, 2023, and an additional $43 million subsequent to quarter end[78] Note 13. Legal Proceedings This note outlines the company's involvement in various legal proceedings in the ordinary course of business, with immaterial expected losses - The company is involved in various legal proceedings in the ordinary course of business, including hotel-level contracts, employment litigation, and tax disputes[79] - Immaterial accruals have been recorded as of March 31, 2023, and estimated aggregate losses related to these proceedings are not expected to be material[80] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operating results for the quarter ended March 31, 2023, including forward-looking statements, strategic initiatives, and an outlook Forward-Looking Statements This section discusses forward-looking statements, which are based on management's expectations and assumptions, and highlights key risk factors that could cause actual results to differ materially - Forward-looking statements are based on management's current expectations and assumptions and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[83] - Key risk factors include changes in national and local economic conditions, geopolitical developments, volatility in global financial markets, operating risks (e.g., labor costs, supply chain), and the ability to maintain REIT qualification[84] Operating Results and Outlook This section reviews the company's Q1 2023 performance, highlighting significant improvements driven by leisure and group travel demand, and provides an outlook for comparable hotel RevPAR growth and anticipated margin changes for the full year 2023 Historical Income Statement Data (Q1 2023 vs. Q1 2022, in millions, except per share amounts) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--------------------------------------- | :------ | :------ | :--------- | | Total revenues | $1,381 | $1,074 | 28.6% | | Net income | $291 | $118 | 146.6% | | Operating profit | $248 | $122 | 103.3% | | Diluted earnings per common share | $0.40 | $0.16 | 150.0% | | EBITDAre and Adjusted EBITDAre | $444 | $306 | 45.1% | | NAREIT FFO per diluted share | $0.54 | $0.39 | 38.5% | | Adjusted FFO per diluted share | $0.55 | $0.39 | 41.0% | Comparable Hotel Data (Q1 2023 vs. Q1 2022) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--------------------------- | :-------- | :-------- | :--------- | | Comparable hotel revenues | $1,353 | $1,010 | 34.0% | | Comparable hotel EBITDA | $439 | $305 | 43.9% | | Comparable hotel EBITDA margin | 32.5% | 30.3% | 220 bps | | Comparable hotel Total RevPAR| $365.93 | $273.06 | 34.0% | | Comparable hotel RevPAR | $217.77 | $166.12 | 31.1% | - Q1 2023 results improved significantly due to strong leisure demand at resort hotels and recovery of group travel at convention hotels, with city-center properties like New York, Washington, D.C., and San Francisco/San Jose showing substantial Total RevPAR increases (105.8%, 99.1%, and 92.7% respectively)[88][89] - For the full year 2023, comparable hotel RevPAR growth is expected to be between 7.5% and 10.5%, but margins are anticipated to decline in the second half due to closer to stable staffing levels, higher wages, insurance, utility expenses, and lower attrition/cancellation fees[94] Strategic Initiatives This section outlines the company's strategic capital allocation, including the sale of The Camby, Autograph Collection, and projected capital expenditures for ROI projects, renewals, and hurricane restoration for the full year 2023 - During Q1 2023, the company sold The Camby, Autograph Collection for $110 million, recording a gain on sale of $69 million[96] - Capital expenditures in Q1 2023 included approximately $51 million for return on investment (ROI) projects, $65 million for renewal and replacement projects, and $30 million for hurricane restoration work[97] - The Marriott transformational capital program is nearing completion (approximately 98% spent as of March 31, 2023), with the final hotel expected to be completed in Q2 2023[98][99] - Total capital expenditures for full year 2023 are projected to be $600 million to $725 million, including $250-$300 million for ROI projects, $250-$300 million for renewal and replacement, and $100-$125 million for Hurricane Ian restoration[100][101] Results of Operations This section details the company's total revenues and property-level operating expenses for Q1 2023 compared to Q1 2022, highlighting increases in rooms, food and beverage revenues, and associated operating costs due to recovery and increased hiring Total Revenues (Q1 2023 vs. Q1 2022, in millions) | Revenue Category | Q1 2023 | Q1 2022 | Change (%) | | :---------------- | :------ | :------ | :--------- | | Rooms | $820 | $655 | 25.2% | | Food and beverage | $431 | $297 | 45.1% | | Other | $130 | $122 | 6.6% | | Total revenues| $1,381| $1,074| 28.6% | Property-level Operating Expenses (Q1 2023 vs. Q1 2022, in millions) | Expense Category | Q1 2023 | Q1 2022 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Rooms | $193 | $160 | 20.6% | | Food and beverage | $269 | $200 | 34.5% | | Other departmental and support expenses | $315 | $273 | 15.4% | | Management fees | $65 | $40 | 62.5% | | Other property-level expenses | $91 | $84 | 8.3% | | Depreciation and amortization | $169 | $172 | (1.7%) | | Total property-level operating expenses | $1,102| $929 | 18.6% | - Wages and employee benefits, comprising approximately 56% of rooms, food and beverage, and other departmental and support expenses, increased 33% year-over-year in Q1 2023 due to increased hiring as operations recovered[107] - Incentive management fees increased 170.0% for the quarter, primarily reflecting improved operations at the properties[112] Comparable Hotel Operating Statistics and Results This section presents comparable hotel operating statistics, excluding properties with substantial damage or large-scale capital projects, to provide insights into underlying growth trends and business mix by location and segment - The company has returned to a comparable hotel presentation for hotel-level results, excluding properties with substantial property damage or large-scale capital projects, to better understand underlying growth trends[118][149][151] - As of March 31, 2023, 75 of the 77 owned hotels were classified as comparable, excluding Hyatt Regency Coconut Point Resort & Spa and The Ritz-Carlton, Naples due to Hurricane Ian closures[155][156] Comparable Hotel Performance by Location (Q1 2023 vs. Q1 2022) | Location | Q1 2023 Total RevPAR | Q1 2022 Total RevPAR | Change in Total RevPAR (%) | | :-------------------- | :------------------- | :------------------- | :------------------------- | | New York | $313.90 | $152.56 | 105.8% | | Washington, D.C. (CBD)| $261.11 | $131.17 | 99.1% | | San Francisco/San Jose| $267.55 | $138.84 | 92.7% | | Boston | $213.40 | $112.42 | 89.8% | | Seattle | $156.16 | $87.48 | 78.5% | | All Locations (Comparable) | $365.93 | $273.06 | 34.0% | Comparable Hotel Business Mix (Q1 2023 vs. Q1 2022, in millions) | Metric | Q1 2023 Transient | Q1 2023 Group | Q1 2023 Contract | Q1 2022 Transient | Q1 2022 Group | Q1 2022 Contract | | :---------------------- | :---------------- | :------------ | :--------------- | :---------------- | :------------ | :--------------- | | Room nights (thousands) | 1,332 | 1,038 | 159 | 1,220 | 648 | 142 | | Rooms Revenues | $476 | $300 | $29 | $420 | $173 | $21 | Liquidity and Capital Resources This section details the company's liquidity position, including cash, escrow reserves, and available credit, along with share repurchase activities and debt maturity profile - As of March 31, 2023, the company had $563 million of cash and cash equivalents, $203 million in FF&E escrow reserves, and $1.5 billion available under the revolver portion of its credit facility[130] - The company repurchased 3.2 million shares for $50 million in Q1 2023, with $923 million remaining available under its common share repurchase program[131] - The company has no significant debt maturities until 2024 and relies primarily on external sources of capital to finance future growth, including acquisitions[129][130] - Net cash provided by operating activities increased by $47 million to $308 million in Q1 2023 compared to Q1 2022, primarily due to improved hotel operations[135] Debt and Financial Covenants This section provides an overview of the company's debt structure, including total debt, weighted average interest rate and maturity, and compliance with financial covenants - As of March 31, 2023, total debt was $4.2 billion, with a weighted average interest rate of 4.5% and a weighted average maturity of 5 years. 76% of the debt has a fixed rate of interest[140] - Only one of the consolidated hotels is encumbered by mortgage debt[140] Financial Covenants (as of March 31, 2023, trailing twelve-month basis) | Covenant | Actual Ratio | Covenant Requirement | | :---------------------------- | :----------- | :------------------- | | Leverage ratio | 2.2x | Maximum ratio of 7.25x | | Fixed charge coverage ratio | 9.0x | Minimum ratio of 1.25x | | Unsecured interest coverage ratio | 10.2x | Minimum ratio of 1.75x | - The Board of Directors authorized repurchases of up to $1.0 billion of senior notes, with the entire amount remaining available under this authority[132] Dividend Policy This section outlines Host Inc.'s dividend policy, emphasizing its REIT distribution requirements and the recent declaration of a regular quarterly cash dividend - Host Inc. is required to distribute at least 90% of its annual taxable income to maintain its qualification as a REIT[145] - The company's policy on common dividends generally is to distribute, over time, 100% of its taxable income[147] - On February 15, 2023, a regular quarterly cash dividend of $0.12 per share was announced and paid on April 17, 2023[147] Critical Accounting Estimates This section discusses the critical accounting estimates and assumptions made by management in preparing the financial statements, acknowledging that actual results may differ due to future uncertainties - The financial statements are prepared in conformity with GAAP, requiring management to make estimates and assumptions that affect reported amounts[148] - Application of these policies involves judgment and assumptions about future uncertainties, and actual results could differ from these estimates[148] Non-GAAP Financial Measures This section explains the company's use of non-GAAP financial measures like EBITDAre, Adjusted EBITDAre, NAREIT FFO, and Adjusted FFO to provide supplemental information for investors, along with their reconciliations to GAAP net income - The company uses non-GAAP financial measures such as EBITDA, EBITDAre, Adjusted EBITDAre, NAREIT FFO, Adjusted FFO, and comparable hotel operating results to provide useful supplemental information for investors[157][158] Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre (Q1 2023 vs. Q1 2022, in millions) | Metric | Q1 2023 | Q1 2022 | | :-------------------------- | :------ | :------ | | Net income | $291 | $118 | | EBITDA | $507 | $310 | | EBITDAre and Adjusted EBITDAre | $444 | $306 | Host Inc. Reconciliation of Diluted Earnings per Common Share to NAREIT and Adjusted FFO per Diluted Share (Q1 2023 vs. Q1 2022, in millions, except per share amount) | Metric | Q1 2023 | Q1 2022 | | :--------------------------------------- | :------ | :------ | | Net income attributable to Host Inc. | $287 | $116 | | NAREIT FFO | $388 | $279 | | Adjusted FFO | $392 | $279 | | Diluted earnings per common share | $0.40 | $0.16 | | NAREIT FFO per diluted share | $0.54 | $0.39 | | Adjusted FFO per diluted share | $0.55 | $0.39 | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk by maintaining a significant portion of its debt at fixed rates and may use derivatives for hedging, also addressing currency exchange risk for international operations through potential hedging strategies - As of March 31, 2023, 76% of the company's outstanding debt bore interest at fixed rates[182] - The company may enter into interest rate swaps or caps to hedge interest rate risk, but had no such derivatives outstanding as of March 31, 2023[182] - Currency exchange risks arise from operations in Brazil, Canada, and a minority investment in India. The company may use forward or option contracts or foreign currency denominated debt to manage this risk[183] - Currently holds three foreign currency forward purchase contracts with a total notional amount of CAD 99 million ($75 million), maturing in August and September 2023[183] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures for both Host Inc. and Host L.P. were effective as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures for Host Inc. and Host L.P. were evaluated and concluded to be effective as of March 31, 2023[186][188] - There have been no changes in internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[187][189] PART II. OTHER INFORMATION This part covers unregistered sales of equity securities, use of proceeds, and a list of required exhibits filed with the report Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Host Inc. repurchased 3.2 million common shares for $50 million in March 2023, with $923 million remaining available under its repurchase program, while Host L.P. common OP units were redeemed for Host Inc. common stock - Host Inc. repurchased 3,190,047 common shares for $50 million in March 2023 at an average price of $15.65 per share[192] - As of March 31, 2023, $923 million remained available for repurchase under Host Inc.'s common share repurchase program[192] - Host L.P. common OP units were redeemed by limited partners in exchange for shares of Host Inc.'s common stock[192][193] Item 6. Exhibits This section lists the exhibits filed as part of the report, including amended bylaws, the Sixth Amended and Restated Credit Agreement, CEO/CFO certifications, and financial data in iXBRL format - Exhibits include amended and restated bylaws, the Sixth Amended and Restated Credit Agreement, and CEO/CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[197] - Financial statements and related notes are provided in iXBRL (Inline Extensible Business Reporting Language) format[200] Signatures This section contains the formal attestations and signatures for the report on behalf of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P Report Signatures The report is formally signed by the Senior Vice President, Corporate Controller, on behalf of both Host Inc. and Host L.P - The report was signed by Joseph C. Ottinger, Senior Vice President, Corporate Controller, on behalf of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. on May 5, 2023[205][207]