Moody's confirms Host Marriott ratings

Moody's Investors Service said it has confirmed the ratings on Host Marriott's senior unsecured debt at Ba3 and preferred stock at B3 and concurrently changed the rating outlook to stable.

Moody's said confirmation of Host Marriott's ratings reflects the REIT's announcement on Dec 3 that it has reached an insurance settlement with regard to its New York World Trade Center hotel property, and will receive proceeds of $370 million. These proceeds will boost Host Marriott's taxable income and allow the REIT to make preferred stock dividend distributions under its bond indenture covenants in fourth-quarter 2003 and should allow for preferred dividend distributions in the subsequent first three quarters of 2004.

Moody's said its stable outlook reflects the REIT's substantial liquidity and improvements in its capital structure that have resulted from the insurance settlement, as well as its recent issuance of $500 million in common stock used in part to fund the unlevered $321 million acquisition of the Hyatt Regency hotel in Maui.

In November, Host Marriott successfully placed $725 million in senior notes due 2013, using the proceeds to refinance higher coupon debt due in 2005 and 2008, lowering its financing costs and extending its debt maturities. These positive transactions demonstrate the REIT's continued access to debt and equity capital markets and ability to make strategic acquisitions on a leverage-enhancing basis.

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