Host Marriott operating funds show 33% gain Commercial real estate

October 14, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Host Marriott Corp., while acknowledging that the weakening economy could cool the hotel industry's tremendous growth of the past four years, nonetheless posted a 33 percent increase yesterday in funds from operations in the third quarter.

The Bethesda-based lodging company attributed the increase in funds from operations to $76 million, 35 cents per share, to its strategy of buying upscale and luxury hotels in urban, airport, resort and convention locations.

The company's revenue in the three-month period that ended Sept. 11 totaled $293 million, a 19 percent gain from the comparable period a year ago.

"We are pleased by the continued strength of our operating results in the third quarter, even as the economy has become less certain," said Terence C. Golden, Host Marriott's president and chief executive. "The strong results validate our strategy of owning the highest-quality assets."

Host Marriott owns or holds controlling interests in 104 upscale and luxury full-service hotels and 31 senior living communities valued at $6.96 billion.

For the first three quarters of the year, funds from operations increased 40 percent to $282 million, while on a per share basis the company's income rose 35 percent to $1.27 per share.

Revenue in the quarter grew to $1.04 billion, a 35 percent increase.

Host Marriott said its 1998 revenue and income were affected by $50 million in gains from the sale of two hotels in the second quarter, however.

Despite the potential dip in the economy and its effect on the company, Host Marriott said it remains comfortable with analysts' estimates that it will earn $1.81 per share for 1998, which would represent a 33 percent gain over its 1997 results.

Meanwhile, the company said it has completed the first phase of a financial restructuring. Robert E. Parsons Jr., a Host Marriott executive vice president and its chief financial officer, said the lodging owner has issued $1.7 billion worth of bonds and obtained an expanded $1.25 billion credit line.

Pub Date: 10/14/98

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