Despite core gain, Host Marriott posts net loss due to write-offs

March 04, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

Host Marriott Corp. of Bethesda yesterday reported a slight gain in core earnings during the fourth quarter of last year, its first quarter as an independent company, but heavy depreciation write-offs on the company's 127 hotels forced a net loss.

Earnings before interest, taxes and depreciation were $95 million, up from the $94 million the company would have earned had it been independent during the fourth quarter of 1992. Host Marriott was then part of Marriott Corp., which split into separate units to own and manage hotels and other assets last October. The net loss in the fourth quarter of last year was $35 million, compared with $17 million in the same period in 1992.

For the full year, earnings before interest, taxation and depreciation rose 9 percent, to $346 million. The net loss went to $60 million from $37 million.

Analysts use earnings before interest, taxes and depreciation, rather than net income, to gauge the health of real estate companies, because standard accounting rules for depreciation artificially depress the value of properties and make the results look worse than they are.

Nonetheless, Wall Street initially reacted negatively to the news. Host Marriott stock fell as much as $1 a share yesterday before rebounding to close at $11.375, down 25 cents.

Host Marriott's cash earnings were 1.8 times the amount the company needs to pay interest on its $2.5 billion in debt, the company said.

Marriott Corp. bondholders last year objected to leaving most of Marriott Corp.'s debt with Host Marriott after the split, contending the company would not be able to make the payments.

Host Marriott Corp.

Ticker ... ... ... Yesterday's

Symbol ... ... ... Cls. ... Chg.

HMT ... .. ... ... 11 3/8 - 1/4

Period ended

12/31/93 ... ... ... ... ... 4th qtr. ... ... ... Year ago ... ... Chg.

Revenue ... ... ... .. .. .. $399,000 ... ... ... $367,000 ... ... +8.7%

Net Income ... ... ... .. .. $(35,000) .. ... ... $(17,000) .. ... --

Primary EPS .. ... ... .. .. $(0.29) ... .. .. .. $(0.15) .. .. .. --

... ... ... ... ... .. .. .. 12 mos. ... .. .. .. Year ago ... ... Chg.

Revenue ... ... ... .. .. .. $1,354,000 ... .. .. $1,198,000 .. .. +13.0%

Net Income ... ... ... .. .. $(60,000) .. ... ... $(37,000) ... .. --

Primary EPS .. ... ... .. .. $(0.51) ... .. .. .. $(0.33) .. .. .. --

Net income figures do not include accounting changes and extraordinary items. Figures in thousands (except per share data).

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