Host Hotels & Resorts Announces Pricing Of $700 Million Of 5.500% Senior Notes Due 2035, By Host Hotels & Resorts, L.P.

Rhea-AI Summary

Host Hotels & Resorts, Inc. (NASDAQ: HST) has announced the pricing of a $700 million offering of 5.500% Senior Notes due 2035 through its operating partnership, Host Hotels & Resorts, L.P. The offering is expected to close on August 12, 2024, with estimated net proceeds of $683 million. The company plans to use the proceeds to repay $525 million of outstanding borrowings under its revolver credit facility, including amounts used for recent hotel acquisitions, and for general corporate purposes. The offering is being made through a shelf registration statement and is managed by major financial institutions.

Positive

• Successful pricing of $700 million in senior notes
• Expected net proceeds of $683 million
• Repayment of $525 million in outstanding borrowings
• Potential for funding future hotel acquisitions

Negative

• Increase in long-term debt with 5.500% interest rate

Financial Analyst

Host Hotels & Resorts' $700 million senior notes offering at 5.500% due 2035 is a strategic move to refinance debt and fund recent acquisitions. The estimated net proceeds of $683 million will be used to repay $525 million of outstanding revolver borrowings and support future growth initiatives. This debt restructuring could potentially lower the company's overall interest expenses and extend its debt maturity profile, improving financial flexibility. However, investors should note that while this offering provides immediate liquidity, it also increases the company's long-term debt obligations. The successful pricing of these notes in the current market environment suggests investor confidence in Host's credit quality and future prospects in the lodging REIT sector.

Real Estate Investment Expert

This senior notes offering by Host Hotels & Resorts demonstrates the company's proactive approach to capital management in the competitive lodging REIT space. By using the proceeds to repay revolver borrowings and fund recent high-profile acquisitions like The Ritz-Carlton O'ahu and 1 Hotel Central Park, Host is strategically positioning itself in premium markets. This move aligns with the industry trend of focusing on luxury and upscale properties in key destinations. The company's ability to secure financing at 5.500% for a 10-year term is relatively favorable in the current interest rate environment, potentially indicating strong market confidence in Host's business model and growth strategy. However, investors should monitor how effectively the company leverages these funds to drive RevPAR growth and enhance shareholder value in the long term.

Market Research Analyst

Host Hotels & Resorts' latest debt offering signals confidence in the recovery and growth prospects of the hospitality sector. The company's focus on repaying revolver borrowings and funding recent acquisitions suggests a bullish outlook on travel demand, particularly in the luxury segment. This aligns with broader market trends showing resilience in high-end travel. However, investors should consider potential risks such as economic uncertainties and their impact on discretionary spending. The successful pricing of the notes indicates strong investor appetite for lodging REITs, which could positively influence sector sentiment. The use of proceeds for 'general corporate purposes' provides Host with flexibility to capitalize on market opportunities, potentially enhancing its competitive position. Overall, this offering strengthens Host's financial position, but its long-term impact will depend on the company's execution in a dynamic hospitality landscape.

BETHESDA, Md., Aug. 07, 2024 (GLOBE NEWSWIRE) -- Host Hotels & Resorts, Inc. (NASDAQ: HST) (the “Company”), the nation’s largest lodging real estate investment trust, today announced that Host Hotels & Resorts, L.P. ("Host L.P."), for whom the Company acts as sole general partner, has priced its offering (the "Offering") of $700 million aggregate principal amount of 5.500% Senior Notes due 2035 (the "Notes"). The Notes are the Company’s senior unsecured obligations. The Offering is expected to close on August 12, 2024, subject to the satisfaction or waiver of customary closing conditions.

The estimated net proceeds of the Offering, after deducting the underwriting discount, de minimis original issue discount and fees and expenses, are expected to be approximately $683 million. Host L.P. intends to use the net proceeds from the sale of the Notes to repay all $525 million of its borrowings outstanding under the revolver portion of its senior credit facility, including amounts borrowed in connection with the recent acquisitions of The Ritz-Carlton O’ahu, Turtle Bay and 1 Hotel Central Park, and for general corporate purposes, which may include capital expenditures, dividends and/or funding for future acquisitions of hotel properties.

Goldman Sachs & Co. LLC, BofA Securities, Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, Morgan Stanley & Co. LLC and PNC Capital Markets LLC are the joint book-running managers for the Offering.

The Offering is being made pursuant to an effective shelf registration statement and accompanying prospectus filed with the Securities and Exchange Commission on April 9, 2024 and a preliminary prospectus supplement filed with the Securities and Exchange Commission on August 7, 2024. A copy of the final prospectus supplement and the accompanying prospectus relating to the Notes may be obtained, when available, by contacting Goldman Sachs & Co. LLC, at 200 West Street, New York, New York 10282, telephone: (866) 471-2526, or by email: prospectus-ny@ny.email.gs.com; BofA Securities, Inc., at 201 North Tryon Street, NC1-022-02-25, Charlotte, NC 28255, Attention: Prospectus Department, or Toll-free: 1-800-294-1322, or by email at dg.prospectus_requests@bofa.com; J.P. Morgan Securities LLC, at 383 Madison Avenue, New York, New York 10179, Attention: Investment Grade Syndicate Desk – 3^rd Floor, or by calling (collect) (212) 834-4533; and Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000 Minneapolis, MN 55402, Attention: WFS Customer Service, by email: wfscustomerservice@wellsfargo.com or Toll-Free: 1-800-645-3751. This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the securities, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

This press release contains information about pending transactions, and there can be no assurance that these transactions will be completed.

FORWARD LOOKING STATEMENTS

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,” “predict,” “project,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: general economic uncertainty in U.S. markets where we own hotels and a worsening of economic conditions or low levels of economic growth in these markets; our ability to close this Offering and apply the proceeds as currently intended; other changes in national and local economic and business conditions and other factors such as natural disasters and weather that will affect occupancy rates at our hotels and the demand for hotel products and services; the impact of geopolitical developments outside the U.S. on lodging demand; volatility in global financial and credit markets; operating risks associated with the hotel business; risks and limitations in our operating flexibility associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; risks associated with our relationships with property managers and joint venture partners; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; the effects of hotel renovations on our hotel occupancy and financial results; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; risks associated with our ability to complete acquisitions and develop new properties and the risks that acquisitions and new developments may not perform in accordance with our expectations; our ability to continue to satisfy complex rules in order for us to remain a real estate investment trust for federal income tax purposes; risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to make special dividends; and other risks and uncertainties associated with our business described in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

SOURAV GHOSH Chief Financial Officer (240) 744-5267	JAIME MARCUS Investor Relations (240) 744-5117 ir@hosthotels.com

FAQ

What is the interest rate and maturity of Host Hotels & Resorts' new senior notes (HST)?

Host Hotels & Resorts (HST) has priced $700 million of 5.500% Senior Notes due 2035.

How much net proceeds does Host Hotels & Resorts (HST) expect from the senior notes offering?

Host Hotels & Resorts (HST) expects to receive approximately $683 million in net proceeds from the offering.

What will Host Hotels & Resorts (HST) use the proceeds from the senior notes for?

HST plans to use the proceeds to repay $525 million of borrowings under its revolver credit facility, including amounts used for recent hotel acquisitions, and for general corporate purposes.

When is the closing date for Host Hotels & Resorts' (HST) senior notes offering?

The senior notes offering by Host Hotels & Resorts (HST) is expected to close on August 12, 2024.