Host Hotels & Resorts, Inc. (NASDAQ: HST) today announced that it has sold the 1,780-room Sheraton New York Times Square Hotel for approximately $373 million, which represents a 28.0x EBITDA multiple1 on 2019 EBITDA. The EBITDA multiple includes approximately $136 million of estimated foregone capital expenditures over the next five years. In connection with the sale, the Company is providing a $250 million bridge loan to the purchaser.
James F. Risoleo, president and chief executive officer, said, “The sale of the Sheraton New York Times Square Hotel represents another important step in the transformation of our portfolio as we look to deploy capital into assets that will bolster our EBITDA growth profile. Since the beginning of 2021, we have invested $1.6 billion in early-cycle acquisitions, and we have disposed of eight hotels at a value of $1.4 billion, including amounts due under seller financing. The blended EBITDA multiple on our seven hotel acquisitions is 13.0x2, which compares favorably to the 17.7x1 EBITDA multiple, including estimated foregone capital expenditures, on our eight hotel dispositions.”
Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 74 properties in the United States and five properties internationally totaling approximately 42,600 rooms. The Company also holds non-controlling interests in seven domestic and one international joint ventures.
1 Consistent with industry practice, we calculate the EBITDA multiple as the ratio of the purchase price to the property’s EBITDA. EBITDA is a non-GAAP measure. The comparable GAAP metric to EBITDA multiple is the ratio of the purchase price to net income (loss). Disposition multiples are calculated as the ratio between the sales price (plus estimated avoided capital expenditures) and 2019 EBITDA. The ratio of the purchase price to 2019 net loss for the Sheraton New York Times Square Hotel is (429.9)x. The Sheraton New York Times Square Hotel 2019 net loss is $(1) million and the difference between net loss and EBITDA is depreciation expense of $19 million. The ratio of the purchase price to net income for the combined 2021 and 2022 dispositions is 34.5x and estimated avoided capital expenditures over the five years following disposition date totaled $426 million. The combined net income of the 2021 and 2022 dispositions is $39 million and the difference between net income and EBITDA is depreciation expense of $61 million.
2 The blended acquisition EBITDA multiple is based on 2019 operations for Hyatt Regency Austin, Four Seasons Resort Orlando at Walt Disney World® Resort, and Kimpton Hotel Van Zandt and the 2021 forecast at acquisition for Baker’s Cay Resort Key Largo and Alila Ventana Big Sur, as these hotels experienced renovation disruption and closures in 2019. Estimated normalized 2019 operations were used for The Laura Hotel, as the hotel was re-opened with a new manager and brand in 2021, and for The Alida, Savannah, adjusting for construction disruption to the surrounding Plant Riverside District and for initial ramp-up of hotel operations. The blended ratio of the purchase price to net income for these acquisitions is 21.1x, using net income of $74 million. The difference between combined net income and EBITDA is depreciation expense of $46 million. In addition, EBITDA includes an upward adjustment of $13 million to reflect normalized operations for both The Laura Hotel and The Alida, Savannah.