Debt (Tables)
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12 Months Ended |
Dec. 31, 2010
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Debt |
Debt consists of the
following (in millions):
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December
31,
2010 |
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December
31,
2009 |
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Series K senior notes, with
a rate of 71/8% due November 2013
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$ |
250 |
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$ |
725 |
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Series M senior notes, with
a rate of 7% due August 2012
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— |
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344 |
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Series O senior notes, with
a rate of 63/8% due March 2015
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650 |
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|
650 |
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Series Q senior notes, with
a rate of 63/4% due June 2016
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|
800 |
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|
800 |
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Series S senior notes, with
a rate of 67/8% due November 2014
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498 |
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498 |
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Series T senior notes, with
a rate of 9% due May 2017
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|
388 |
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387 |
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Series U senior notes, with
a rate of 6% due November 2020
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|
500 |
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— |
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2004 Exchangeable Senior
Debentures, with a rate of 3 1/4% due April 2024
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325 |
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323 |
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2007 Exchangeable Senior
Debentures, with a rate of 2 5/8% due April 2027
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502 |
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484 |
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2009 Exchangeable Senior
Debentures, with a rate of 2 1/2% due October 2029
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329 |
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316 |
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Senior notes, with rate of
10.0% due May 2012
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7 |
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7 |
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Total senior
notes
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4,249 |
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4,534 |
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Credit facility
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58 |
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— |
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Mortgage debt
(non-recourse) secured by $1.1 billion and $1.5 billion
of real estate assets, with an average interest rate of 4.7% and
5.1% at December 31, 2010 and 2009, maturing through
December 2023(1)
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1,025 |
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1,217 |
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Other
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145 |
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86 |
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Total debt
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$ |
5,477 |
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$ |
5,837 |
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(1) |
The assets securing
mortgage debt represents the book value of real estate assets, net
of accumulated depreciation. These amounts do not represent the
current fair value of the assets. |
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Outstanding Debentures |
The following chart details
our outstanding Debentures as of December 31, 2010:
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Maturity
date |
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Next put
option
date |
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Redemption
date |
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Outstanding
principal
amount |
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Current exchange
rate for
each
$1,000 of principal |
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Current
equivalent
exchange price |
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Exchangeable
share
equivalents
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(in millions) |
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(in shares) |
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(in shares) |
2009 Debentures
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10/15/2029 |
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10/15/2015 |
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10/20/2015 |
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$ |
400 |
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71.0101 |
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$ |
14.08 |
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28.4 million |
2007 Debentures
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4/15/2027 |
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4/15/2012 |
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4/20/2012 |
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526 |
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32.0239 |
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31.23 |
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16.8 million |
2004 Debentures
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4/15/2024 |
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4/15/2014 |
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4/19/2009 |
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325 |
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65.3258 |
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15.31 |
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21.2 million |
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Total
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$ |
1,251 |
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Initial Allocations Between Debt and Equity Components of the Debenture |
The following
chart details the initial allocations between the debt and equity
components of the Debentures, net of the original issue discount,
based on the effective interest rate at the time of issuance, as
well as the debt balances at December 31, 2010:
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Initial Face
Amount |
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Initial
Liability
Value |
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Initial Equity
Value |
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Face Amount
Outstanding at
12/31/2010 |
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Debt Carrying
Value
at
12/31/2010 |
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Unamortized
Discount
at
12/31/2010 |
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(in millions) |
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2009 Debentures
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$ |
400 |
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$ |
316 |
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$ |
82 |
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$ |
400 |
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$ |
329 |
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$ |
71 |
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2007 Debentures
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|
600 |
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|
502 |
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|
89 |
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|
526 |
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|
502 |
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|
24 |
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2004 Debentures
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|
500 |
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|
413 |
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|
76 |
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|
325 |
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|
325 |
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— |
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Total
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$ |
1,500 |
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$ |
1,231 |
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$ |
247 |
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$ |
1,251 |
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$ |
1,156 |
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$ |
95 |
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Interest Expense for the Debentures |
Interest expense recorded
for the Debentures for the periods presented consists of the
following (in millions):
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2010 |
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2009 |
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2008 |
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Contractual interest
expense (cash)
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$ |
34 |
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$ |
26 |
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$ |
32 |
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Non-cash interest expense
due to discount amortization
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32 |
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27 |
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30 |
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Total interest
expense
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$ |
66 |
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$ |
53 |
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62 |
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Mortgage Debt Issuances and Repayments |
We had the
following mortgage debt issuances and repayments since January
2009. Interest for our mortgage debt is payable on a monthly
basis:
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Transaction
Date
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Property
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Rate |
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Maturity
Date |
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Amount |
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(in millions) |
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Issuances/Assumptions
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September
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2010 |
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W New York, Union Square(1) |
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6.39 |
% |
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10/11/2011 |
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$ |
119 |
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July
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2010 |
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Le Méridien Piccadilly(2) |
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1.91 |
% |
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1/20/2012 |
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51 |
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March
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2009 |
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JW Marriott, Washington, D.C.(3) |
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7.50 |
% |
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4/2/2013 |
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120 |
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Repayments/Defeasance
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December
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2010 |
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Partial repayment of
Orlando World Center mortgage (4)
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3.76 |
% |
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12/30/2010 |
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54 |
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December
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2010 |
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JW Marriott, Desert Springs |
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9.8 |
% |
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12/11/2022 |
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71 |
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October
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2010 |
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W New York, Union Square(1) |
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6.39 |
% |
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10/11/2011 |
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119 |
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February
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2010 |
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Atlanta Marriott Marquis |
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7.4 |
% |
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2/11/2023 |
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124 |
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September
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2009 |
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Westin Kierland Resort & Spa |
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5.08 |
% |
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9/1/2009 |
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135 |
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July
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2009 |
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San Diego Marriott Hotel & Marina |
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8.45 |
% |
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7/1/2009 |
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173 |
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March
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2009 |
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The Westin Indianapolis |
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9.21 |
% |
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3/11/2022 |
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34 |
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(1) |
The amount shown reflects
our recorded book value of the mortgage debt on the date of
acquisition and defeasance, respectively. The face principal of the
mortgage debt assumed was $115 million. We defeased this loan on
October 19, 2010, which released us from obligations under the
mortgage. |
(2) |
This floating mortgage is
based on LIBOR plus 118 basis points. The rate shown reflects the
rate in effect at December 31, 2010. We have the right to
extend the maturity for a one year period subject to certain
conditions. |
(3) |
The JW Marriott,
Washington, D.C. mortgage debt has a floating interest rate of
LIBOR plus 600 basis points, with a LIBOR floor of 1.5%. The
interest rate shown reflects the rate in effect at
December 31, 2010. Additionally, we have the right to extend
the maturity for an additional one-year period, subject to certain
conditions. In addition, as required by the loan agreement, we
entered into an interest rate cap agreement which caps the LIBOR
rate at 3% through the life of the loan. |
(4) |
On December 17, 2010,
we entered into an amendment under the $300 million mortgage loan
secured by the Orlando World Center Marriott. As a result of the
amendment, we repaid $54 million of the outstanding principal on
December 30, 2010 and extended the maturity of the loan to
July 1, 2013. We implemented a fixed annual interest rate of
4.75% on the remaining $246 million outstanding. |
|
Aggregate Debt Maturities |
Aggregate debt maturities
at December 31, 2010 are as follows (in millions):
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2011(1)
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$ |
192 |
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2012(2)
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|
588 |
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2013
|
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|
609 |
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2014
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|
1,292 |
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2015
|
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|
1,062 |
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Thereafter
|
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1,769 |
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5,512 |
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Unamortized (discounts)
premiums, net
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(95 |
) |
Capital lease
obligations
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60 |
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$ |
5,477 |
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(1) |
The debt maturing in 2011
includes $58 million outstanding on our credit facility, for which
we have the option to extend the maturity for an additional year,
subject to the satisfaction of certain financial
covenants. |
(2) |
In January 2011, we
extended the maturity of the $50 million Le Méridien
Piccadilly mortgage to January 20, 2012 and, therefore, have
included it in the 2012 maturities. The mortgage loan can be
extended for an additional one-year period, subject to the
satisfaction of certain financial covenants. |
|
Interest Expense |
The following are included
in interest expense for the years ended December 31, (in
millions):
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2010 (1) |
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2009 (2) |
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2008 |
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Interest expense
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$ |
384 |
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$ |
379 |
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$ |
375 |
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Amortization of debt
premiums/discounts, net (3)
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(34 |
) |
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(31 |
) |
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(33 |
) |
Amortization of deferred
financing costs
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(12 |
) |
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(12 |
) |
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(12 |
) |
Non-cash gains/(losses) on
debt extinguishments
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(1 |
) |
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2 |
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14 |
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Change in accrued
interest
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10 |
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(11 |
) |
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(4 |
) |
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Interest paid
(4)
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$ |
347 |
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$ |
327 |
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$ |
340 |
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(1) |
Interest expense and
interest paid for 2010 includes cash prepayment premiums of
approximately $20 million. No significant prepayment premiums
were paid in 2009 or 2008. |
(2) |
Interest expense and
interest paid for 2009 is net of $7 million received in connection
with the 2007 defeasance of $514 million in collateralized
mortgage-backed securities. |
(3) |
Primarily represents the
amortization of the debt discount, which is non-cash interest
expense, on our Debentures established at the date of issuance. See
“–Exchangeable Debentures”. |
(4) |
Does not include
capitalized interest of $3 million, $5 million and
$10 million during 2010, 2009 and 2008,
respectively. |
|