Posted on: Thursday, December 4, 2003

$370M paid for loss of Trade Center hotel

By Stephen Manning
Associated Press

BETHESDA, Md. — Host Marriott Corp. has received a $370 million insurance payment to cover the destruction of its World Trade Center hotel on Sept. 11. The company said yesterday the payment would boost its earnings outlook for the year.

The settlement with its insurer and the Port Authority of New York and New Jersey over the World Trade Center Marriott also includes insurance payments for damage sustained by the nearby Marriott Financial Center hotel, which has since reopened.

The agreement frees up the southwest edge of the 16-acre World Trade Center site for redevelopment as a memorial. Although the Port Authority owns the site, its ability to redevelop is subject to several long-term leases, and it has been negotiating with various parties to buy out those leases.

Host gave up its lease and is no longer obligated to rebuild but retained the right of first offer to build a hotel on the World Trade Center site through 2023. It also paid $65 million to cover its outstanding debt on the destroyed hotel.

The company said the insurance payment will add $210 million to its 2003 financial statements and significantly raise its previously grim outlook for the year.

The company said it expects the payment will shrink its 2003 loss by 70 cents per share to a range of between 3 cents and 8 cents per share. Funds from operations, a financial measure for real estate investment trusts, are expected to range between $1.01 to $1.05 per share.

Analysts surveyed by Thomson Financial had predicted Host would post funds from operations of between 64 cents and 66 cents for 2003.

Host Marriott said it also reversed an earlier decision not to pay a fourth-quarter dividend on its preferred stock and said it may be able to pay dividends for the first three quarters of 2004 on the preferred shares.

The Australian company Westfield America Trust recently said that it sold its interest in a shopping mall destroyed in the attacks to the Port Authority for $140 million.

Shares of Host Marriott were up 22 cents to close at $11.62 on the New York Stock Exchange.

Host Marriott, a separate company from Marriott International Inc., recently agreed to purchase the Hyatt Regency Maui Resort and Spa in Ka'anapali, its first hotel in the state.