SEC Filing | Host Hotels & Resorts Inc.

HOST HOTELS & RESORTS, INC.

Date: July 26, 2017

/S/ BRIAN G. MACNAMARA

Brian G. Macnamara

Senior Vice President,

Corporate Controller

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hst-8k_20170727.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 26, 2017

HOST HOTELS & RESORTS, INC.

(Exact Name of Registrant as Specified in Charter)

Maryland

001-14625

53-0085950

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

6903 Rockledge Drive, Suite 1500

Bethesda, Maryland

20817

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (240) 744-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On July 26, 2017, Host Hotels & Resorts, Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2017. The press release referred to supplemental financial information for the quarter that is available on the Company’s website at www.hosthotels.com. A copy of the press release and the supplemental financial information are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Report.

The information in this Report, including the exhibits, is provided under Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Furthermore, the information in this Report, including the exhibits, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933 regardless of any general incorporation language in such filings.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.		Description
99.1		Host Hotels & Resorts, Inc.’s earnings release for the second quarter 2017.
99.2		Host Hotels & Resorts, Inc. Supplemental Financial Information as of July 26, 2017 for the Quarters and Year-to-Date ended June 30, 2017 and 2016.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit No.		Description
99.1		Host Hotels & Resorts, Inc.’s earnings release for the second quarter 2017.
99.2		Host Hotels & Resorts, Inc. Supplemental Financial Information as of July 26, 2017 for the Quarters and Year-to-Date ended June 30, 2017 and 2016.

hst-ex991_6.htm

Exhibit 99.1

Gregory J. Larson, Chief Financial Officer

240.744.5120

Bret D.S. McLeod, Senior Vice President 240.744.5216

Gee Lingberg, Vice President

240.744.5275

NEWS RELEASE

HOST HOTELS & RESORTS, INC. REPORTS SECOND QUARTER RESULTS, RAISES FULL-YEAR OUTLOOK

BETHESDA, MD; July 26, 2017 – Host Hotels & Resorts, Inc. (NYSE: HST) (“Host Hotels” or the “Company”), the nation’s largest lodging real estate investment trust (“REIT”), today announced results of operations for the second quarter of 2017.

Operating Results¹

(in millions, except per share and hotel statistics)

	Quarter ended June 30,		Percent	Year-to-date ended June 30,		Percent
	2017	2016	Change	2017	2016	Change
Total revenues	$ 1,441	$ 1,459	(1.2)%	$ 2,789	$ 2,798	(0.3)%
Comparable hotel revenues ⁽¹⁾	1,310	1,312	(0.1)%	2,512	2,478	1.4%
Net income	212	351	(39.6)%	373	535	(30.3)%
Adjusted EBITDA ⁽¹⁾	444	436	1.8%	811	782	3.7%
Change in comparable hotel RevPAR:
Domestic properties	1.8%			2.7%
International properties - Constant US$	(3.1)%			(5.1)%
Total - Constant US$	1.7%			2.5%

Diluted earnings per share	0.28	0.47	(40.4)%	0.50	0.71	(29.6)%
NAREIT FFO per diluted share ⁽¹⁾	0.49	0.49	—	0.93	0.90	3.3%
Adjusted FFO per diluted share ⁽¹⁾	0.49	0.49	—	0.94	0.90	4.4%

Operating Performance & Other Key Highlights

GAAP Metrics

•

Net income decreased $139 million to $212 million for the quarter and $162 million to $373 million for year-to-date, primarily due to a decrease in gain on sales of assets of $143 million and $185 million, respectively.

•

Improvements in RevPAR, described below, helped drive GAAP operating profit margin growth of 50 basis points for the quarter and 100 basis points for year-to-date.

•

Total revenues decreased 1.2% for the quarter and 0.3% for year-to-date, primarily due to a decrease of $53 million and $117 million, respectively, due to lost revenues from the sale of 12 hotels in 2016 and 2017.

•

Diluted earnings per share decreased by 40.4% for the quarter and 29.6% for the year-to-date as a result of the decrease in net income.

Other Metrics

•

Comparable RevPAR on a constant dollar basis improved 1.7% for the quarter, driven by a 0.8% increase in average room rate and a 70 basis point increase in occupancy to 83.2%. Year-to-date, comparable RevPAR on a constant dollar basis improved 2.5%, driven by a 1.6% increase in average room rate and a 70 basis point increase in occupancy.

⁽¹⁾¹

NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, Adjusted EBITDA and comparable hotel results are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). See the Notes to Financial Information on why the Company believes these supplemental measures and other non-GAAP financial measures identified in this press release are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.

•

Comparable hotel revenues were consistent with the Company’s 2016 second quarter, but increased 1.4% for year-to-date. For the quarter, RevPAR improvements were offset by a decline in food and beverage revenues.

•

Comparable hotel EBITDA improved $1 million, or 0.4%, for the quarter and $21 million, or 2.9%, year-to-date, driven by comparable hotel EBITDA margin improvement of 15 basis points and 45 basis points, respectively.

•

Adjusted EBITDA increased $8 million, or 1.8%, for the quarter and $29 million, or 3.7%, year-to-date due to improvement in comparable hotel EBITDA and the strong performance of the Company’s non-comparable hotels, which was offset by the sale of 12 hotels in 2016 and 2017.

•

Adjusted FFO per diluted share was unchanged from the prior quarter and increased 4.4% year-to-date, reflecting the operating results described above.

Key Highlights

•

Completed the sale of the Sheraton Memphis Downtown for $67 million and recorded a gain of approximately $28 million in the second quarter. The Company expects to complete the sale of the Hilton Melbourne South Wharf for A$230 million ($182 million) on July 28, 2017, subject to customary closing conditions.

•

Executed an amended and restated credit facility, extending the final maturity, including extension options, which are subject to various conditions, to 2022 for the revolver portion and the $500 million term loan that was due to mature in 2017.

“We are very pleased to post another solid quarter of operating results, which exceeded our expectations, and has led to an increase in the midpoint of our full-year guidance,” said James F. Risoleo, President and Chief Executive Officer. “Our geographically diverse portfolio of irreplaceable assets, combined with our scale, asset management expertise, and enterprise analytic capabilities continues to drive value for our stockholders.”

Gregory J. Larson, Chief Financial Officer stated: “We continue to strengthen our industry-leading, investment grade balance sheet, as evidenced by the completion of the refinancing and extension of our credit facility. With this extension, we have no meaningful debt maturities until September 2020. Our balance sheet remains one of our core strategic pillars, providing the flexibility to make disciplined capital allocation decisions.”

Capital Allocation

Redevelopment and Return On Investment (“ROI”) Capital Projects

The Company deployed approximately $16 million and $32 million in the second quarter and year-to-date, respectively, on redevelopment and ROI capital expenditures.

For full-year 2017, the Company expects to invest a total of approximately $100 million to $110 million in redevelopment projects and ROI capital expenditures. Additional information regarding the Company’s capital projects can be found at www.hosthotels.com.

Renewal and Replacement Expenditures

The Company deployed approximately $47 million and $111 million in the second quarter and year-to-date, respectively, for renewal and replacement capital expenditures. Projects completed during the second quarter included the renovation of 740 rooms at The Westin Los Angeles Airport and the final phase of the rooms renovation at the Toronto Marriott Downtown Eaton Centre Hotel.

For 2017, the Company expects to invest a total of $275 million to $290 million in renewal and replacement capital expenditures.

Dividends

The Company paid a regular quarterly cash dividend of $0.20 per share on its common stock on July 17, 2017 to stockholders of record as of June 30, 2017. All future dividends are subject to approval by the Company’s Board of Directors. The Company has not repurchased any shares in 2017 and has $500 million of capacity available under its current repurchase program.

Balance Sheet

As reported, during the quarter, the Company amended and restated its credit facility agreement, extending the maturity of the revolver portion to May 2021, with two six-month extension options. The $500 million term loan that was due to

Page 2 of 25

mature in June 2017 was amended to extend the maturity to May 2021 with one 12-month extension option and to lower the interest rate margin for an all-in rate of 2.3% on June 30, 2017. The terms of the second $500 million term loan scheduled to mature in September 2020 remain unchanged.

At June 30, 2017, the Company had approximately $644 million of unrestricted cash and $775 million of available capacity remaining under the revolver portion of its credit facility. Total debt as of June 30, 2017, was $4.0 billion, with an average maturity of 5.5 years and an average interest rate of 3.9%.

2017 Outlook

The Company anticipates that its 2017 operating results as compared to the prior year will change in the following range:

	Previous Full Year 2017 Guidance	Current Full Year 2017 Guidance	Change in Full Year 2017 Guidance to the Mid-Point
Total comparable hotel RevPAR - Constant US$	0.0% to 2.0%	1.00% to 1.75%	37.5 bps
Total revenues under GAAP	(1.8)% to 0.1%	(1.1)%to (0.1)%	25 bps
Operating profit margin under GAAP	(50 bps) to 50 bps	10 bps to 60 bps	35 bps
Comparable hotel EBITDA margins	(60 bps) to 10 bps	(15 bps) to 15 bps	25 bps

Based upon the above parameters, the Company estimates its 2017 guidance as follows:

	Previous Full Year 2017 Guidance	Current Full Year 2017 Guidance	Change in Full Year 2017 Guidance to the Mid-Point
Net income (in millions)	$557 to $621	$615 to $646	$42
Adjusted EBITDA (in millions)	$1,425 to $1,490	$1,460 to $1,495	$20
Earnings per diluted share	$.73 to $.81	$.80 to $.84	$.05
NAREIT FFO per diluted share	$1.59 to $1.68	$1.64 to $1.68	$.02
Adjusted FFO per diluted share	$1.60 to $1.68	$1.64 to $1.68	$.02

See the 2017 Forecast Schedules and the Notes to Financial Information for other assumptions used in the forecasts and items that may affect forecast results. This guidance also reflects the anticipated sale of one additional property during the third quarter, subject to customary closing conditions.

About Host Hotels & Resorts

Host Hotels & Resorts, Inc. is an S&P 500 and Fortune 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 89 properties in the United States and seven properties internationally totaling approximately 53,500 rooms. The Company also holds non-controlling interests in seven joint ventures, including one in Europe that owns 10 hotels with approximately 3,900 rooms. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott^®, Ritz-Carlton^®, Westin^®, Sheraton^®, W^®, St. Regis^®, Le Méridien^®, The Luxury Collection^®, Hyatt^®, Fairmont^®, Hilton^®, Swissôtel^®, ibis^® and Novotel^®, as well as independent brands in the operation of properties in over 50 major markets. For additional information, please visit the Company’s website at www.hosthotels.com.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements include forecast results and are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,” “predict,” “project,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: changes in national and local economic and business conditions and other factors such as natural disasters, pandemics and weather that will affect occupancy rates at our hotels and the demand for hotel products and services; the impact of geopolitical developments outside the U.S. on lodging demand; volatility in global financial and credit markets; operating risks associated with the hotel business; risks and limitations in our operating flexibility associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; risks associated with our relationships with property managers and joint venture partners; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; the effects of hotel renovations on our hotel occupancy and financial results; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; risks associated with our ability to complete acquisitions and dispositions and develop new properties and the risks that acquisitions and new developments may not perform in accordance with our expectations; our ability to continue to satisfy complex rules in order for us to remain a REIT for federal income tax purposes; risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to make special dividends; and other risks and uncertainties associated with our business described in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC.

Page 3 of 25

Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of July 26, 2017, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

*	This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.

*** Tables to Follow ***

Page 4 of 25

Host Hotels & Resorts, Inc., herein referred to as “we” or “Host Inc.,” is a self-managed and self-administered real estate investment trust that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. (“Host LP”), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1% of the partnership interests in Host LP held by outside partners as of June 30, 2017, which is non-controlling interests in Host LP in our consolidated balance sheets and is included in net income attributable to non-controlling interests in our consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.

2017 OPERATING RESULTS			PAGE NO.
Condensed Consolidated Balance Sheets June 30, 2017 (unaudited) and December 31, 2016			6
Condensed Consolidated Statements of Operations (unaudited) Quarter and Year-to-Date Ended June 30, 2017 and 2016			7
Earnings per Common Share (unaudited) Quarter and Year-to-Date Ended June 30, 2017 and 2016			8
Hotel Operating Data
Hotel Operating Data for Consolidated Hotels (by Market)			9
Hotel Operating Data – European Joint Venture Hotels			11

Schedule of Comparable Hotel Results			12
Other Financial Data			14
Reconciliation of Net Income to EBITDA and Adjusted EBITDA			15
Reconciliation of Net Income to NAREIT and Adjusted Funds From Operations per Diluted Share			16
2017 FORECAST INFORMATION
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and NAREIT and Adjusted Funds From Operations per Diluted Share for 2017 Forecasts			17
Schedule of Comparable Hotel Results for 2017 Forecasts			18
Notes to Financial Information			20

Page 5 of 25

HOST HOTELS & RESORTS, INC.

Condensed Consolidated Balance Sheets ⁽¹⁾

(in millions, except shares and per share amounts)

	June 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Property and equipment, net	$	10,251		$	10,145
Assets held for sale		98			150
Due from managers		120			55
Advances to and investments in affiliates		307			286
Furniture, fixtures and equipment replacement fund		192			173
Other		240			225
Restricted cash		2			2
Cash and cash equivalents		644			372
Total assets	$	11,854		$	11,408

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY
Debt
Senior notes	$	2,776		$	2,380
Credit facility, including the term loans of $996 million and $997 million, respectively		1,215			1,206
Mortgage debt and other		1			63
Total debt		3,992			3,649
Accounts payable and accrued expenses		221			278
Liabilities held for sale		75			—
Other		269			283
Total liabilities		4,557			4,210

Non-controlling interests - Host Hotels & Resorts, L.P.		156			165

Host Hotels & Resorts, Inc. stockholders’ equity:
Common stock, par value $.01, 1,050 million shares authorized, 738.8 million shares and 737.8 million shares issued and outstanding, respectively		7			7
Additional paid-in capital		8,102			8,077
Accumulated other comprehensive loss		(77	)		(83	)
Deficit		(931	)		(1,007	)
Total equity of Host Hotels & Resorts, Inc. stockholders		7,101			6,994
Non-controlling interests—other consolidated partnerships		40			39
Total equity		7,141			7,033
Total liabilities, non-controlling interests and equity	$	11,854		$	11,408
___________

(1)	Our condensed consolidated balance sheet as of June 30, 2017 has been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted.

Page 6 of 25

HOST HOTELS & RESORTS, INC.

Condensed Consolidated Statements of Operations ⁽¹⁾

(unaudited, in millions, except per share amounts)

	Quarter ended June 30,						Year-to-date ended June 30,
	2017			2016			2017			2016
Revenues
Rooms	$	940		$	933		$	1,783		$	1,776
Food and beverage		416			439			838			847
Other		85			87			168			175
Total revenues		1,441			1,459			2,789			2,798
Expenses
Rooms		230			228			449			449
Food and beverage		275			289			552			573
Other departmental and support expenses		324			332			643			660
Management fees		69			66			125			123
Other property-level expenses		97			100			197			193
Depreciation and amortization		178			178			358			359
Corporate and other expenses⁽²⁾		26			27			55			54
Gain on insurance and business interruption settlements		(2	)		—			(5	)		(3	)
Total operating costs and expenses		1,197			1,220			2,374			2,408
Operating profit		244			239			415			390
Interest income		1			—			2			1
Interest expense		(43	)		(39	)		(82	)		(78	)
Gain on sale of assets		29			172			46			231
Gain (loss) on foreign currency transactions and derivatives		—			2			(2	)		3
Equity in earnings of affiliates		8			9			15			11
Income before income taxes		239			383			394			558
Provision for income taxes		(27	)		(32	)		(21	)		(23	)
Net income		212			351			373			535
Less: Net income attributable to non-controlling interests		(2	)		(4	)		(5	)		(6	)
Net income attributable to Host Inc.	$	210		$	347		$	368		$	529
Basic and diluted earnings per common share	$	.28		$	.47		$	.50		$	.71
___________

(1)	Our condensed consolidated statements of operations presented above have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted.

(2)	Corporate and other expenses include the following items:

	Quarter ended June 30,				Year-to-date ended June 30,
	2017		2016		2017		2016
General and administrative costs	$	24	$	24	$	49	$	48
Non-cash stock-based compensation expense		2		3		5		6
Litigation accruals and acquisition costs, net		—		—		1		—
Total	$	26	$	27	$	55	$	54

Page 7 of 25

HOST HOTELS & RESORTS, INC.

Earnings per Common Share

(unaudited, in millions, except per share amounts)

	Quarter ended June 30,						Year-to-date ended June 30,
	2017			2016			2017			2016
Net income	$	212		$	351		$	373		$	535
Less: Net income attributable to non-controlling interests		(2	)		(4	)		(5	)		(6	)
Net income attributable to Host Inc.	$	210		$	347		$	368		$	529

Basic weighted average shares outstanding		738.6			744.0			738.3			746.8
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market		.2			.3			.2			.3
Diluted weighted average shares outstanding ⁽¹⁾		738.8			744.3			738.5			747.1
Basic and diluted earnings per common share	$	.28		$	.47		$	.50		$	.71
___________

(1)

Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units (“OP Units”) held by minority partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.

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HOST HOTELS & RESORTS, INC.

Hotel Operating Data for Consolidated Hotels ⁽¹⁾

Comparable Hotels by Market in Constant US$ (by RevPAR)

	As of June 30, 2017				Quarter ended June 30, 2017							Quarter ended June 30, 2016
Market⁽²⁾	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Hawaii		3		1,682	$	328.85		89.9	%	$	295.61	$	306.58		91.3	%	$	279.80		5.7	%
New York		8		6,961		282.83		90.8			256.92		286.61		89.8			257.49		(0.2	)
Boston		4		3,185		267.82		89.9			240.86		257.23		86.7			223.10		8.0
Seattle		2		1,315		251.37		89.7			225.39		224.86		84.4			189.84		18.7
San Francisco		4		2,912		249.76		86.8			216.71		256.22		87.0			222.92		(2.8	)
Washington, D.C.		12		6,024		239.35		86.9			208.00		235.21		86.9			204.51		1.7
Chicago		6		2,392		224.95		86.6			194.82		224.61		84.8			190.52		2.3
San Diego		3		2,981		215.56		84.9			182.94		212.54		85.3			181.33		0.9
Florida		8		4,559		227.44		76.9			175.00		221.10		75.9			167.90		4.2
Los Angeles		7		2,843		203.41		85.1			173.20		199.62		84.2			168.10		3.0
Denver		2		735		184.50		85.8			158.28		185.98		78.2			145.42		8.8
Atlanta		5		1,939		189.62		79.7			151.06		191.43		81.4			155.73		(3.0	)
Phoenix		4		1,518		199.70		75.6			150.89		195.68		69.0			135.00		11.8
Houston		4		1,716		175.95		71.1			125.16		190.41		75.3			143.44		(12.7	)
Other		10		6,179		182.60		76.1			138.89		186.67		76.0			141.95		(2.2	)
Domestic		82		46,941		234.59		84.0			196.97		232.54		83.2			193.46		1.8

Asia-Pacific		1		384	$	186.41		89.5	%	$	166.81	$	192.00		89.0	%	$	170.88		(2.4	)%
Canada		2		849		179.52		65.6			117.75		164.78		64.1			105.63		11.5
Latin America		4		963		175.49		60.3			105.74		191.36		64.7			123.79		(14.6	)
International		7		2,196		179.59		67.5			121.31		181.99		68.8			125.25		(3.1	)
All Markets - Constant US$		89		49,137		232.59		83.2			193.57		230.64		82.5			190.39		1.7

All Owned Hotels in Constant US$⁽³⁾

	As of June 30, 2017				Quarter ended June 30, 2017							Quarter ended June 30, 2016
	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Comparable Hotels		89		49,137	$	232.59		83.2	%	$	193.57	$	230.64		82.5	%	$	190.39		1.7	%
Non-comparable Hotels (Pro forma)		7		4,203		242.81		78.3			190.02		243.76		70.3			171.42		10.9
All Hotels		96		53,340		233.35		82.8			193.29		231.53		81.6			188.90		2.3

Comparable Hotels in Nominal US$

	As of June 30, 2017				Quarter ended June 30, 2017							Quarter ended June 30, 2016
	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Asia-Pacific		1		384	$	186.41		89.5	%	$	166.81	$	190.69		89.0	%	$	169.72		(1.7	)%
Canada		2		849		179.52		65.6			117.75		171.79		64.1			110.12		6.9
Latin America		4		963		175.49		60.3			105.74		185.97		64.7			120.30		(12.1	)
International		7		2,196		179.59		67.5			121.31		181.99		68.8			125.25		(3.1	)
Domestic		82		46,941		234.59		84.0			196.97		232.54		83.2			193.46		1.8
All Markets		89		49,137		232.59		83.2			193.57		230.64		82.5			190.39		1.7

Page 9 of 25

HOST HOTELS & RESORTS, INC.

Hotel Operating Data for Consolidated Hotels ⁽¹⁾

Comparable Hotels by Market in Constant US$ (by RevPAR)

	As of June 30, 2017				Year-to-date ended June 30, 2017							Year-to-date ended June 30, 2016
Market⁽²⁾	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Hawaii		3		1,682	$	347.37		90.1	%	$	312.88	$	331.22		90.9	%	$	301.22		3.9	%
New York		8		6,961		258.82		84.4			218.46		262.20		84.7			222.17		(1.7	)
San Francisco		4		2,912		262.86		82.2			215.99		270.86		83.6			226.32		(4.6	)
Florida		8		4,559		257.48		78.8			202.88		251.99		79.3			199.95		1.5
Washington, D.C.		12		6,024		239.79		79.9			191.67		222.39		78.8			175.16		9.4
Seattle		2		1,315		227.60		83.3			189.65		207.14		77.3			160.04		18.5
Phoenix		4		1,518		236.06		78.4			184.97		239.66		73.7			176.61		4.7
Boston		4		3,185		232.73		79.4			184.80		225.61		77.9			175.80		5.1
San Diego		3		2,981		221.74		83.1			184.32		208.91		83.3			174.11		5.9
Los Angeles		7		2,843		204.59		83.7			171.29		201.18		83.3			167.69		2.1
Atlanta		5		1,939		194.27		79.2			153.89		193.70		78.9			152.83		0.7
Chicago		6		2,392		192.54		75.1			144.56		192.82		72.8			140.32		3.0
Denver		2		735		176.39		78.9			139.13		176.50		71.2			125.69		10.7
Houston		4		1,716		184.50		74.6			137.70		189.23		76.6			144.99		(5.0	)
Other		10		6,179		183.95		74.9			137.78		183.76		72.6			133.48		3.2
Domestic		82		46,941		232.06		80.3			186.29		228.24		79.4			181.32		2.7

Asia-Pacific		1		384	$	205.69		90.2	%	$	185.43	$	209.82		89.0	%	$	186.84		(0.8	)%
Latin America		4		963		183.43		59.5			109.18		198.04		65.7			130.17		(16.1	)
Canada		2		849		170.08		59.1			100.43		161.53		57.4			92.74		8.3
International		7		2,196		184.30		64.8			119.49		188.78		66.7			125.94		(5.1	)
All Markets - Constant US$		89		49,137		230.31		79.6			183.29		226.74		78.9			178.83		2.5

All Owned Hotels in Constant US$⁽³⁾

	As of June 30, 2017				Year-to-date ended June 30, 2017							Year-to-date ended June 30, 2016
	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Comparable Hotels		89		49,137	$	230.31		79.6	%	$	183.29	$	226.74		78.9	%	$	178.83		2.5	%
Non-comparable Hotels (Pro forma)		7		4,203		259.81		77.6			201.66		256.27		69.4			177.75		13.5
All Hotels		96		53,340		232.58		79.4			184.74		228.80		78.1			178.74		3.4

Comparable Hotels in Nominal US$

	As of June 30, 2017				Year-to-date ended June 30, 2017							Year-to-date ended June 30, 2016
	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Asia-Pacific		1		384	$	205.69		90.2	%	$	185.43	$	203.72		89.0	%	$	181.41		2.2	%
Latin America		4		963		183.43		59.5			109.18		188.38		65.7			123.82		(11.8	)
Canada		2		849		170.08		59.1			100.43		163.04		57.4			93.60		7.3
International		7		2,196		184.30		64.8			119.49		183.67		66.7			122.53		(2.5	)
Domestic		82		46,941		232.06		80.3			186.29		228.24		79.4			181.32		2.7
All Markets		89		49,137		230.31		79.6			183.29		226.54		78.9			178.67		2.6

(1)	See the Notes to Financial Information for a discussion of comparable hotel operating statistics and constant US$ presentation. Nominal US$ results include the effect of currency fluctuations, consistent with our financial statement presentation.

(2)	See the Notes to Financial Information for a description of these markets.

(3)

Operating statistics are presented for all consolidated properties owned as of June 30, 2017 and do not include the results of operations for properties sold in 2017 or 2016. Additionally, all owned hotel operating statistics include hotels that we did not own for the entirety of the periods presented and properties that are undergoing large-scale capital projects during the periods presented and, therefore, are not considered comparable hotel information upon which we usually evaluate our performance. Specifically, comparable RevPAR is calculated as revenues divided by the available room nights, which will rarely vary on a year-over-year basis. Conversely, the available room nights included in the non-comparable RevPAR statistic will vary widely based on the timing of hotel closings, the scope of a capital project, or the development of a new property. See the Notes to Financial Information for further information on these pro forma statistics and the limitations on their use.

•

Non-comparable hotels (pro forma) - This represents five hotels under significant renovations in either 2016 or 2017: The Axiom Hotel, the Hyatt Regency San Francisco Airport, the Denver Marriott Tech Center, the Marriott Marquis San Diego Marina and the Phoenician. It also includes the Don CeSar and W Hollywood, acquired in 2017, which are presented on a pro forma basis assuming we owned the hotels as of January 1, 2016 and includes historical operating data for periods prior to our ownership. As a result, the RevPAR increase of 10.9% and 13.5% for the quarter and year-to-date, respectively, for these seven hotels is considered non-comparable.

Page 10 of 25

HOST HOTELS & RESORTS, INC.

Hotel Operating Data for Consolidated Hotels ⁽¹⁾ (cont.)

HOST HOTELS & RESORTS, INC.

Hotel Operating Data – European Joint Venture

	As of June 30, 2017				Quarter ended June 30, 2017							Quarter ended June 30, 2016
	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Total comparable - in Constant Euros⁽¹⁾		10		3,902	€	234.49		84.6	%	€	198.43	€	228.36		80.3	%	€	183.47		8.2	%
Total comparable - in Nominal Euros⁽¹⁾		10		3,902		234.49		84.6			198.43		231.33		80.3			185.86		6.8

	As of June 30, 2017				Year-to-date ended June 30, 2017							Year-to-date ended June 30, 2016
	No. of Properties		No. of Rooms		Average Room Rate		Average Occupancy Percentage			RevPAR		Average Room Rate		Average Occupancy Percentage			RevPAR		Percent Change in RevPAR
Total comparable - in Constant Euros ⁽¹⁾		10		3,902	€	215.26		76.5	%	€	164.65	€	211.32		72.0	%	€	152.05		8.3	%
Total comparable - in Nominal Euros⁽¹⁾		10		3,902		215.26		76.5			164.65		214.22		72.0			154.13		6.8
___________

(1)	Total comparable statistics include the operating performance for all 10 properties in the joint venture (determined on the same basis as our consolidated comparable hotel portfolio). See Notes to Financial Information for a discussion of the constant Euro and nominal Euro presentation.

Page 11 of 25

HOST HOTELS & RESORTS, INC.

Schedule of Comparable Hotel Results ⁽¹⁾

(unaudited, in millions, except hotel statistics)

	Quarter ended June 30,						Year-to-date ended June 30,
	2017			2016			2017			2016
Number of hotels		89			89			89			89
Number of rooms		49,137			49,137			49,137			49,137
Change in comparable hotel RevPAR -
Constant US$		1.7	%		—			2.5	%		—
Nominal US$		1.7	%		—			2.6	%		—
Operating profit margin ⁽²⁾		16.9	%		16.4	%		14.9	%		13.9	%
Comparable hotel EBITDA margin ⁽²⁾		31.0	%		30.85	%		29.0	%		28.55	%
Food and beverage profit margin ⁽²⁾		33.9	%		34.2	%		34.1	%		32.3	%
Comparable hotel food and beverage profit margin⁽²⁾		34.2	%		34.5	%		33.7	%		32.3	%

Net income	$	212		$	351		$	373		$	535
Depreciation and amortization		178			178			358			359
Interest expense		43			39			82			78
Provision for income taxes		27			32			21			23
Gain on sale of property and corporate level income/expense		(12	)		(156	)		(6	)		(192	)
Non-comparable hotel results, net ⁽³⁾		(42	)		(39	)		(100	)		(96	)
Comparable hotel EBITDA	$	406		$	405		$	728		$	707

	Quarter ended June 30, 2017											Quarter ended June 30, 2016
				Adjustments										Adjustments
	GAAP Results			Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results		GAAP Results		Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results
Revenues
Room	$	940		$	(74	)	$	—		$	866	$	933	$	(81	)	$	—		$	852
Food and beverage		416			(42	)		—			374		439		(48	)		—			391
Other		85			(15	)		—			70		87		(18	)		—			69
Total revenues		1,441			(131	)		—			1,310		1,459		(147	)		—			1,312
Expenses
Room		230			(18	)		—			212		228		(21	)		—			207
Food and beverage		275			(29	)		—			246		289		(33	)		—			256
Other		490			(44	)		—			446		498		(54	)		—			444
Depreciation and amortization		178			—			(178	)		—		178		—			(178	)		—
Corporate and other expenses		26			—			(26	)		—		27		—			(27	)		—
Gain on insurance and business interruption settlements		(2	)		2			—			—		—		—			—			—
Total expenses		1,197			(89	)		(204	)		904		1,220		(108	)		(205	)		907
Operating Profit - Comparable Hotel EBITDA	$	244		$	(42	)	$	204		$	406	$	239	$	(39	)	$	205		$	405

Page 12 of 25

HOST HOTELS & RESORTS, INC.

Schedule of Comparable Hotel Results ⁽¹⁾

(unaudited, in millions, except hotel statistics)

	Year-to-date ended June 30, 2017											Year-to-date ended June 30, 2016
				Adjustments											Adjustments
	GAAP Results			Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results		GAAP Results			Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results
Revenues
Room	$	1,783		$	(152	)	$	—		$	1,631	$	1,776		$	(178	)	$	—		$	1,598
Food and beverage		838			(94	)		—			744		847			(102	)		—			745
Other		168			(31	)		—			137		175			(40	)		—			135
Total revenues		2,789			(277	)		—			2,512		2,798			(320	)		—			2,478
Expenses
Room		449			(35	)		—			414		449			(44	)		—			405
Food and beverage		552			(59	)		—			493		573			(69	)		—			504
Other		965			(88	)		—			877		976			(114	)		—			862
Depreciation and amortization		358			—			(358	)		—		359			—			(359	)		—
Corporate and other expenses		55			—			(55	)		—		54			—			(54	)		—
Gain on insurance and business interruption settlements		(5	)		5			—			—		(3	)		3			—			—
Total expenses		2,374			(177	)		(413	)		1,784		2,408			(224	)		(413	)		1,771
Operating Profit – Comparable Hotel EBITDA	$	415		$	(100	)	$	413		$	728	$	390		$	(96	)	$	413		$	707
___________

(1)	See the Notes to Financial Information for a discussion of non-GAAP measures and the calculation of comparable hotel results. For additional information on comparable hotel EBITDA by market, see the supplemental information posted on our website.

(2)

Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP operating profit margins are calculated using amounts presented in the condensed consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the above tables.

(3)

Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels and sold hotels, which operations are included in our condensed consolidated statements of operations as continuing operations, (ii) gains on insurance settlements and business interruption proceeds, and (iii) the results of our office spaces and other non-hotel income.

Page 13 of 25

HOST HOTELS & RESORTS, INC.

Other Financial Data

(unaudited, in millions, except per share amounts)

			June 30, 2017		December 31, 2016
Equity
Common shares outstanding				738.8		737.8
Common shares outstanding assuming conversion of OP Units ⁽¹⁾				747.3		746.5
Preferred OP Units outstanding				.02		.02

Security pricing
Common stock ⁽²⁾			$	18.27	$	18.84

			Quarter ended		Year-to-date ended
			June 30,		June 30,
Dividends declared per common share
2017			$	.20	$	.40
2016				.20		.40

Debt
Senior debt	Rate	Maturity date	June 30, 2017		December 31, 2016
Series Z	6%	10/2021	$	298	$	297
Series B	5¹⁄₄%	3/2022		347		347
Series C	4³⁄₄%	3/2023		446		446
Series D	3³⁄₄%	10/2023		398		398
Series E	4%	6/2025		496		496
Series F	4¹⁄₂%	2/2026		396		396
Series G	3⁷⁄₈%	4/2024		395		—
2017 Credit facility term loan	2.3%	5/2021		498		500
2015 Credit facility term loan	2.3%	9/2020		498		497
Credit facility revolver ⁽³⁾	1.6%	5/2021		219		209
				3,991		3,586
Mortgage debt and other
Mortgage debt and other (non-recourse)	—	—		1		63
Total debt⁽⁴⁾⁽⁵⁾			$	3,992	$	3,649
Percentage of fixed rate debt				68%		65%
Weighted average interest rate				3.9%		3.8%
Weighted average debt maturity				5.5 years		5.2 years

			Forecast Full Year 2017
Forecast GAAP interest expense ⁽⁶⁾			$	170
Forecast cash interest, net ⁽⁶⁾			$	161
Forecast GAAP cash provided by operating activities ⁽⁷⁾			$	1,240
Forecast adjusted cash from operations ⁽⁷⁾			$	957
___________

(1)	Each OP Unit is redeemable for cash or, at our option, for 1.021494 common shares of Host Inc. At June 30, 2017 and December 31, 2016, there were 8.3 million and 8.6 million common OP Units, respectively, held by non-controlling interests.

(2)	Share prices are the closing price as reported by the New York Stock Exchange.

(3)	The interest rate shown is the weighted average rate of the outstanding credit facility at June 30, 2017.

(4)

Total debt excludes the mortgage loan on the Hilton Melbourne South Wharf of $66 million which is classified as a liability held for sale. In accordance with GAAP, total debt includes the debt of entities that we consolidate, but of which we do not own 100%, and excludes the debt of entities that we do not consolidate, but of which we have a non-controlling ownership interest and record our investment therein under the equity method of accounting. As of June 30, 2017, our non-controlling partners’ share of a mortgage loan classified as a liability held for sale is $17 million and our share of debt in unconsolidated investments is $403 million.

(5)	Total debt as of June 30, 2017 and December 31, 2016 includes net discounts and deferred financing costs of $33 million and $25 million, respectively.

(6)

Reflects 2017 forecast cash interest expense, net of debt extinguishment costs, as of the balance sheet date. The following chart reconciles GAAP interest expense to forecast cash interest expense for Forecast Full Year 2017. See footnote (1) to the Reconciliation of Net Income to EBITDA, Adjusted EBITDA and NAREIT and Adjusted Funds From Operations per diluted share for 2017 Forecasts for full year forecast assumptions:

Forecast GAAP interest expense full year 2017	$	170
Amortization of deferred financing costs		(7	)
Change in accrued interest		(2	)
Forecast cash interest full year 2017, net	$	161

See the Notes to Financial Information for a discussion of non-GAAP measures.

(7)	The following chart reconciles Forecast Full Year 2017 GAAP cash provided by operating activities to forecast adjusted cash from operations:

	Forecast Full Year 2017
Forecast GAAP cash provided by operating activities	$	1,240
Renewal and replacement expenditures		(283	)
Forecast adjusted cash from operations	$	957

See the Notes to Financial Information for a discussion of non-GAAP measures.

Page 14 of 25

HOST HOTELS & RESORTS, INC.

Reconciliation of Net Income to

EBITDA and Adjusted EBITDA ⁽¹⁾

(unaudited, in millions)

	Quarter ended June 30,						Year-to-date ended June 30,
	2017			2016			2017			2016
Net income ⁽²⁾	$	212		$	351		$	373		$	535
Interest expense		43			39			82			78
Depreciation and amortization		178			178			358			359
Income taxes		27			32			21			23
EBITDA ⁽²⁾		460			600			834			995
Gain on dispositions ⁽³⁾		(28	)		(172	)		(43	)		(230	)
Gain on property insurance settlement		—			—			—			(1	)
Acquisition costs		—			—			1			—

Equity investment adjustments:
Equity in earnings of affiliates		(8	)		(9	)		(15	)		(11	)
Pro rata Adjusted EBITDA of equity investments		22			20			39			35
Consolidated partnership adjustments:
Pro rata Adjusted EBITDA attributable to non-controlling partners in other consolidated partnerships		(2	)		(3	)		(5	)		(6	)
Adjusted EBITDA ⁽²⁾	$	444		$	436		$	811		$	782
___________

(1)	See the Notes to Financial Information for discussion of non-GAAP measures.

(2)	Net Income, EBITDA, Adjusted EBITDA, NAREIT FFO and Adjusted FFO include a gain of $1 million for each of the year-to-date periods ended June 30, 2017 and 2016 for the sale of the portion of land attributable to individual units sold by the Maui timeshare joint venture.

(3)	Reflects the sale of two hotels in 2017 and the sale of eight hotels in 2016.

Page 15 of 25

HOST HOTELS & RESORTS, INC.

Reconciliation of Net Income to NAREIT and

Adjusted Funds From Operations per Diluted Share ⁽¹⁾

(unaudited, in millions, except per share amounts)

	Quarter ended June 30,						Year-to-date ended June 30,
	2017			2016			2017			2016
Net income ⁽²⁾	$	212		$	351		$	373		$	535
Less: Net income attributable to non-controlling interests		(2	)		(4	)		(5	)		(6	)
Net income attributable to Host Inc.		210			347			368			529
Adjustments:
Gain on dispositions ⁽³⁾		(28	)		(172	)		(43	)		(230	)
Tax on dispositions		—			9			—			9
Gain on property insurance settlement		—			—			—			(1	)
Depreciation and amortization		177			177			357			357
Equity investment adjustments:
Equity in earnings of affiliates		(8	)		(9	)		(15	)		(11	)
Pro rata FFO of equity investments		15			16			28			26
Consolidated partnership adjustments:
FFO adjustment for non-controlling partnerships		(1	)		(1	)		(2	)		(3	)
FFO adjustments for non-controlling interests of Host L.P.		(2	)		—			(4	)		(1	)
NAREIT FFO ⁽²⁾		363			367			689			675
Adjustments to NAREIT FFO:
Acquisition costs		—			—			1			—
Loss on debt extinguishment		1			—			1			—
Adjusted FFO ⁽²⁾	$	364		$	367		$	691		$	675

For calculation on a per share basis⁽⁴⁾:
Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO		738.8			744.3			738.5			747.1
NAREIT FFO per diluted share	$	.49		$	.49		$	.93		$	.90
Adjusted FFO per diluted share	$	.49		$	.49		$	.94		$	.90
___________

(1-3)

Refer to the corresponding footnote on the Reconciliation of Net Income to EBITDA and Adjusted EBITDA.

(4)

Earnings per diluted share and NAREIT FFO and Adjusted FFO per diluted share are adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, preferred OP units held by non-controlling partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP units. No effect is shown for securities if they are anti-dilutive.

Page 16 of 25

HOST HOTELS & RESORTS, INC.

Reconciliation of Net Income to EBITDA, Adjusted EBITDA and

NAREIT and Adjusted Funds From Operations per Diluted Share for 2017 Forecasts ⁽¹⁾

(unaudited, in millions, except per share amounts)

	Full Year 2017
	Low-end of range			High-end of range
Net income	$	615		$	646
Interest expense		170			170
Depreciation and amortization		717			717
Income taxes		50			54
EBITDA		1,552			1,587
Gain on dispositions		(129	)		(129	)
Acquisition costs		1			1
Equity investment adjustments:
Equity in earnings of affiliates		(22	)		(22	)
Pro rata Adjusted EBITDA of equity investments		67			67
Consolidated partnership adjustments:
Pro rata Adjusted EBITDA attributable to non-controlling partners in other consolidated partnerships		(9	)		(9	)
Adjusted EBITDA	$	1,460		$	1,495

	Full Year 2017
	Low-end of range			High-end of range
Net income	$	615		$	646
Less: Net income attributable to non-controlling interests		(26	)		(26	)
Net income attributable to Host Inc.		589			620
Gain on dispositions		(129	)		(129	)
Depreciation and amortization		713			713
Equity investment adjustments:
Equity in earnings of affiliates		(22	)		(22	)
Pro rata FFO of equity investments		49			49
Consolidated partnership adjustments:
FFO adjustment for non-controlling partners in other consolidated partnerships		15			15
FFO adjustment for non-controlling interests of Host LP		(7	)		(7	)
NAREIT FFO		1,208			1,239
Acquisition costs		1			1
Loss on debt extinguishments		1			1
Adjusted FFO	$	1,210		$	1,241

Weighted average diluted shares - EPS, NAREIT and Adjusted FFO		738.8			738.8
Earnings per diluted share	$	0.80		$	0.84
NAREIT FFO per diluted share	$	1.64		$	1.68
Adjusted FFO per diluted share	$	1.64		$	1.68
___________

(1)	The forecasts are based on the below assumptions:

•

Total comparable hotel RevPAR in constant US$ will increase 1.0% to 1.75% for the low and high end of the forecast range, which excludes the effect of changes in foreign currency. However, the effect of estimated changes in foreign currency has been reflected in the forecast of net income, EBITDA, earnings per diluted share and Adjusted FFO per diluted share.

•

Comparable hotel EBITDA margins will decrease 15 basis points or increase 15 basis points for the low and high ends of the forecasted range, respectively.

•

We expect to spend approximately $100 million to $110 million on ROI/redevelopment capital expenditures and approximately $275 million to $290 million on renewal and replacement expenditures.

•

The above forecast reflects the anticipated sale of the Hilton Melbourne South Wharf on July 28, 2017 and one additional property that is under contract. The sales are subject to various closing conditions which may not be satisfied. There can be no assurances that the properties will be sold or will be sold at the contract price.

For a discussion of additional items that may affect forecasted results, see the Notes to Financial Information.

Page 17 of 25

HOST HOTELS & RESORTS, INC.

Schedule of Comparable Hotel Results

for 2017 Forecasts ⁽¹⁾

(unaudited, in millions, except hotel statistics)

							Full Year 2017
							Low-end of range			High-end of range
Operating profit margin ⁽²⁾								12.7	%		13.2	%
Comparable hotel EBITDA margin ⁽³⁾								27.6	%		27.9	%

Net income							$	615		$	646
Depreciation and amortization								717			717
Interest expense								170			170
Provision for income taxes								50			54
Gain on sale of property and corporate level income/expense								(45	)		(46	)
Non-comparable hotel results, net⁽⁴⁾								(176	)		(183	)
Comparable hotel EBITDA							$	1,331		$	1,358


	Low-end of range
				Adjustments
	GAAP Results			Non-comparable hotel results, net⁽⁴⁾			Depreciation and corporate level items			Comparable Hotel Results
Revenues
Rooms	$	3,480		$	(313	)	$	—		$	3,167
Food and Beverage		1,561			(176	)		—			1,385
Other		331			(61	)		—			270
Total Revenues		5,372			(550	)		—			4,822
Expenses
Hotel expenses		3,870			(379	)		—			3,491
Depreciation		717			—			(717	)		—
Corporate and other expenses		106			—			(106	)		—
Gain on insurance and business interruption settlements		(5	)		5			—			—
Total expenses		4,688			(374	)		(823	)		3,491
Operating Profit - Comparable Hotel EBITDA	$	684		$	(176	)	$	823		$	1,331


	High-end of range
				Adjustments
	GAAP Results			Non-comparable hotel results, net⁽⁴⁾			Depreciation and corporate level items			Comparable Hotel Results
Revenues
Rooms	$	3,506		$	(315	)	$	—		$	3,191
Food and Beverage		1,585			(180	)		—			1,405
Other		335			(62	)		—			273
Total Revenues		5,426			(557	)		—			4,869
Expenses
Hotel expenses		3,890			(379	)		—			3,511
Depreciation and amortization		717			—			(717	)		—
Corporate and other expenses		106			—			(106	)		—
Gain on insurance and business interruption settlements		(5	)		5			—			—
Total expenses		4,708			(374	)		(823	)		3,511
Operating Profit - Comparable Hotel EBITDA	$	718		$	(183	)	$	823		$	1,358
___________

Page 18 of 25

HOST HOTELS & RESORTS, INC.

Schedule of Comparable Hotel Results

for 2017 Forecasts ⁽¹⁾(cont.)

(unaudited, in millions, except hotel statistics)

(1)

Forecast comparable hotel results include 87 hotels that we have assumed will be classified as comparable as of December 31, 2017. See “Comparable Hotel Operating Statistics” in the Notes to Financial Information. No assurances can be made as to the hotels that will be in the comparable hotel set for 2017. Also, see the notes to the “Reconciliation of Net Income to EBITDA, Adjusted EBITDA and NAREIT and Adjusted Funds From Operations per Diluted Share for 2017 Forecasts” for other forecast assumptions and further discussion of our comparable hotel set.

(2)	Operating profit margin under GAAP is calculated as the operating profit divided by the forecast total revenues per the condensed consolidated statements of operations.

(3)	Comparable hotel EBITDA margin is calculated as the comparable hotel EBITDA divided by the comparable hotel sales per the tables above.

(4)

Acquisitions (includes forecast results from date of acquisition through year-end):

•

The Don CeSar and Beach House Suites complex

•

W Hollywood

Renovations:

•

Denver Marriott Tech Center

•

Hyatt Regency San Francisco

•

Marriott Marquis San Diego Marina

•

The Phoenician

•

Axiom Hotel

Dispositions or properties under contract (includes forecast or actual results from January 1, 2017 through the anticipated or actual sale date):

•

JW Marriott Desert Springs Resort & Spa

•

Sheraton Memphis Downtown

•

Hilton Melbourne South Wharf

•

One unspecified disposition

Page 19 of 25

HOST HOTELS & RESORTS, INC.

Notes to Financial Information

Forecasts

Our forecast of earnings per diluted share, NAREIT and Adjusted FFO per diluted share, EBITDA, Adjusted EBITDA, comparable hotel EBITDA margins and cash from operations are forward-looking statements and are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause actual results and performance to differ materially from those expressed or implied by these forecasts. Although we believe the expectations reflected in the forecasts are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that the results will not be materially different. Risks that may affect these assumptions and forecasts include the following: potential changes in overall economic outlook make it inherently difficult to forecast the level of RevPAR and margin growth; the amount and timing of acquisitions and dispositions of hotel properties is an estimate that can substantially affect financial results, including such items as net income, depreciation and gains on dispositions; the level of capital expenditures may change significantly, which will directly affect the level of depreciation expense and net income; the amount and timing of debt payments may change significantly based on market conditions, which will directly affect the level of interest expense and net income; the amount and timing of transactions involving shares of our common stock may change based on market conditions; and other risks and uncertainties associated with our business described herein and in our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC.

Comparable Hotel Operating Statistics

To facilitate a quarter-to-quarter comparison of our operations, we present certain operating statistics (i.e., RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in this report on a comparable hotel basis.

Because these statistics and operating results relate only to our hotel properties, they exclude results for our non-hotel properties and other real estate investments. We define our comparable hotels as properties:

(i) that are owned or leased by us and the operations of which are included in our consolidated results for the entirety of the reporting periods being compared; and

(ii) that have not sustained substantial property damage or business interruption, or undergone large-scale capital projects (as further defined below) during the reporting periods being compared.

The hotel business is capital-intensive and renovations are a regular part of the business. Generally, hotels under renovation remain comparable hotels. A large scale capital project that would cause a hotel to be excluded from our comparable hotel set is an extensive renovation of several core aspects of the hotel, such as rooms, meeting space, lobby, bars, restaurants and other public spaces. Both quantitative and qualitative factors are taken into consideration in determining if the renovation would cause a hotel to be removed from the comparable hotel set, including unusual or exceptional circumstances such as: a reduction or increase in room count, rebranding, a significant alteration of the business operations, or the closing of the hotel during the renovation.

We do not include an acquired hotel in our comparable hotel set until the operating results for that hotel have been included in our consolidated results for one full calendar year. For example, we acquired The Don CeSar in February 2017. The hotel will not be included in our comparable hotels until January 1, 2019. Hotels that we sell are excluded from the comparable hotel set once the transaction has closed. Similarly, hotels are excluded from our comparable hotel set from the date that they sustain substantial property damage or business interruption or commence a large-scale capital project. In each case, these hotels are returned to the comparable hotel set when the operations of the hotel have been included in our consolidated results for one full calendar year after completion of the repair of the property damage or cessation of the business interruption, or the completion of large-scale capital projects, as applicable.

Of the 96 hotels that we owned on June 30, 2017, 89 have been classified as comparable hotels. The operating results of the following hotels that we owned as of June 30, 2017 are excluded from comparable hotel results for these periods:

•

Denver Marriott Tech Center, removed in the first quarter of 2016 (business disruption due to extensive renovations, including conversion of 64 rooms to 41 suites, conversion of the concierge lounge into three meeting rooms, and the repositioning of the public space and food and beverage areas);

•

Hyatt Regency San Francisco Airport, removed in the first quarter of 2016 (business disruption due to extensive renovations, including all guestrooms and bathrooms, meeting space, the repositioning of the atrium into a new restaurant and lounge, and conversion of the existing restaurant to additional meeting space);

•

Marriott Marquis San Diego Marina, removed in the first quarter of 2015 (business interruption due to the demolition of the existing conference center and construction of the new exhibit hall);

•

The Phoenician (acquired in June 2015 and, beginning in the second quarter of 2016, business disruption due to extensive renovations, including all guestrooms and suites, a redesign of the lobby and public areas, renovation of pools, recreation areas and a restaurant and a re-configured spa and fitness center);

•

Axiom Hotel (acquired as the Powell Hotel in January 2014, then closed during 2015 for extensive renovations and reopened in January 2016);

•

The Don CeSar and Beach House Suites complex (acquired in February 2017); and

Page 20 of 25

HOST HOTELS & RESORTS, INC.

Notes to Financial Information

•

W Hollywood (acquired in March 2017).

The operating results of 12 hotels disposed of in 2017 and 2016 are not included in comparable hotel results for the periods presented herein. These operations are also excluded from the hotel operating data for all owned hotels on pages 9 and 10.

Operating statistics for the non-comparable hotels listed above are included in the hotel operating data for all owned hotels. By definition, the RevPAR results for these properties are not comparable due to the reasons listed above, and, therefore, are not indicative of the overall trends for our portfolio. The operating results for the two hotels acquired in 2017 are included in the all owned hotel operating data on a pro forma basis, which includes operating results assuming the hotels were owned as of January 1, 2016 and based on actual results obtained from the manager for periods prior to our ownership. For these hotels, since the year-over-year comparison includes periods prior to our ownership, the changes will not necessarily correspond to changes in our actual results. All owned hotel operating statistics are provided for completeness and to show the difference between our comparable hotel information (upon which we usually evaluate performance) and all of our hotels, including non-comparable hotels. Also, while they may not be illustrative of trends (as compared to comparable hotel operating statistics), changes in all owned hotel statistics will have an effect on our overall revenues. We also present all owned hotel statistics for our joint venture in Europe using the same methodology as our consolidated hotels.

We evaluate the operating performance of our comparable hotels based on market. This division is generally consistent with groupings recognized in the lodging industry.

Our markets consist of the following:

Domestic

•

Atlanta – Atlanta Metropolitan area;

•

Boston – Greater Boston Metropolitan area;

•

Chicago – Chicago Metropolitan area;

•

Denver – Denver Metropolitan area;

•

Florida – All Florida locations;

•

Hawaii – All Hawaii locations;

•

Houston – Houston Metropolitan area;

•

Los Angeles – Greater Los Angeles area, including Orange County;

•

New York – Greater New York Metropolitan area, including northern New Jersey;

•

Phoenix – Phoenix Metropolitan area, including Scottsdale;

•

San Diego – San Diego Metropolitan area;

•

San Francisco – Greater San Francisco Metropolitan area, including San Jose;

•

Seattle – Seattle Metropolitan area;

•

Washington, D.C. – Metropolitan area, including the Maryland and Virginia suburbs; and

•

Other – Select cities in California, Indiana, Louisiana, Minnesota, Ohio, Pennsylvania, Tennessee and Texas.

International

•

Asia-Pacific – Australia;

•

Canada – Toronto and Calgary; and

•

Latin America – Brazil and Mexico.

Constant US$, Nominal US$ and Constant Euros

Operating results denominated in foreign currencies are translated using the prevailing exchange rates on the date of the transaction, or monthly based on the weighted average exchange rate for the period. For comparative purposes, we also present the RevPAR results for the prior year assuming the results for our foreign operations were translated using the same exchange rates that were effective for the comparable periods in the current year, thereby eliminating the effect of currency fluctuation for the year-over-year comparisons. For the full year forecast results, we use the applicable forward currency curve (as published by Bloomberg L.P.) for each monthly period to estimate forecast foreign operations in U.S. dollars and have restated the prior year RevPAR results using the same forecast exchange rates to estimate year-over-year growth in RevPAR in constant US$. We believe this presentation is useful to investors as it shows growth in RevPAR in the local currency of the hotel consistent with how we would evaluate our domestic portfolio. However, the estimated effect of changes in foreign currency has been reflected in the actual and forecast results of net income, EBITDA, earnings per diluted share and Adjusted FFO per diluted share. Nominal US$ results include the effect of currency fluctuations, consistent with our financial statement presentation.

We also present RevPAR results for our joint venture in Europe in constant Euros using the same methodology as used for the constant US$ presentation.

Page 21 of 25

HOST HOTELS & RESORTS, INC.

Notes to Financial Information

Non-GAAP Financial Measures

Included in this press release are certain “non-GAAP financial measures,” which are measures of our historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. They are as follows: (i) FFO and FFO per diluted share (both NAREIT and Adjusted), (ii) EBITDA, (iii) Adjusted EBITDA, (iv) Comparable Hotel Property Level Operating Results and (v) forecast interest expense and forecast adjusted cash from operations. The following discussion defines these measures and presents why we believe they are useful supplemental measures of our performance.

NAREIT FFO and NAREIT FFO per Diluted Share

We present NAREIT FFO and NAREIT FFO per diluted share as non-GAAP measures of our performance in addition to our earnings per share (calculated in accordance with GAAP). We calculate NAREIT FFO per diluted share as our NAREIT FFO (defined as set forth below) for a given operating period, as adjusted for the effect of dilutive securities, divided by the number of fully diluted shares outstanding during such period, in accordance with NAREIT guidelines. NAREIT defines FFO as net income (calculated in accordance with GAAP) excluding gains and losses from sales of real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation, amortization and impairments and adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect our pro rata share of the FFO of those entities on the same basis.

We believe that NAREIT FFO per diluted share is a useful supplemental measure of our operating performance and that the presentation of NAREIT FFO per diluted share, when combined with the primary GAAP presentation of earnings per share, provides beneficial information to investors. By excluding the effect of real estate depreciation, amortization, impairments and gains and losses from sales of depreciable real estate, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe that such measures can facilitate comparisons of operating performance between periods and with other REITs, even though NAREIT FFO per diluted share does not represent an amount that accrues directly to holders of our common stock. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. As noted by NAREIT in its April 2002 “White Paper on Funds From Operations,” since real estate values have historically risen or fallen with market conditions, many industry investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For these reasons, NAREIT adopted the FFO metric in order to promote an industry-wide measure of REIT operating performance.

Adjusted FFO per Diluted Share

We also present Adjusted FFO per diluted share when evaluating our performance because management believes that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. Management historically has made the adjustments detailed below in evaluating our performance, in our annual budget process and for our compensation programs. We believe that the presentation of Adjusted FFO per diluted share, when combined with both the primary GAAP presentation of earnings per share and FFO per diluted share as defined by NAREIT, provides useful supplemental information that is beneficial to an investor’s complete understanding of our operating performance. We adjust NAREIT FFO per diluted share for the following items, which may occur in any period, and refer to this measure as Adjusted FFO per diluted share:

•

Gains and Losses on the Extinguishment of Debt – We exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of the write-off of deferred financing costs associated with the original issuance of the debt being redeemed or retired and incremental interest expense incurred during the refinancing period. We also exclude the gains on debt repurchases and the original issuance costs associated with the retirement of preferred stock. We believe that these items are not reflective of our ongoing finance costs.

•

Acquisition Costs – Under GAAP, costs associated with completed property acquisitions are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.

•

Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.

In unusual circumstances, we may also adjust NAREIT FFO for gains or losses that management believes are not representative of the Company’s current operating performance. Typically, gains from the disposition of non-depreciable property are included in the determination of NAREIT and Adjusted FFO.

EBITDA

Page 22 of 25

HOST HOTELS & RESORTS, INC.

Notes to Financial Information

Management also believes the use of EBITDA facilitates comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. Management uses EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO and Adjusted FFO per diluted share, is widely used by management in the annual budget process and for our compensation programs.

Adjusted EBITDA

Historically, management has adjusted EBITDA when evaluating the performance of Host Inc. and Host LP because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance. Adjusted EBITDA also is a relevant measure in calculating certain credit ratios. We adjust EBITDA for the following items, which may occur in any period, and refer to this measure as Adjusted EBITDA:

•

Real Estate Transactions – We exclude the effect of gains and losses, including the amortization of deferred gains, recorded on the disposition or acquisition of depreciable assets and property insurance gains in our consolidated statement of operations because we believe that including them in Adjusted EBITDA is not consistent with reflecting the ongoing performance of our assets. In addition, material gains or losses from the depreciated book value of the disposed assets could be less important to investors given that the depreciated asset book value often does not reflect the market value of real estate assets as noted above.

•

Equity Investment Adjustments – We exclude the equity in earnings (losses) of affiliates as presented in our consolidated statement of operations because it includes our pro rata portion of the depreciation, amortization and interest expense related to such investments, which are excluded from EBITDA. We include our pro rata share of the Adjusted EBITDA of our equity investments as we believe this reflects more accurately the performance of our investments. The pro rata Adjusted EBITDA of equity investments is defined as the EBITDA of our equity investments adjusted for any gains or losses on property transactions multiplied by our percentage ownership in the partnership or joint venture.

•

Consolidated Partnership Adjustments – We deduct the non-controlling partners’ pro rata share of Adjusted EBITDA of our consolidated partnerships as this reflects the non-controlling owners’ interest in the EBITDA of our consolidated partnerships. The pro rata Adjusted EBITDA of non-controlling partners is defined as the EBITDA of our consolidated partnerships adjusted for any gains or losses on property transactions multiplied by the non-controlling partners’ percentage ownership in the partnership or joint venture.

•

Cumulative Effect of a Change in Accounting Principle – Infrequently, the Financial Accounting Standards Board promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments because they do not reflect our actual performance for that period.

•

Impairment Losses – We exclude the effect of impairment expense recorded because we believe that including them in Adjusted EBITDA is not consistent with reflecting the ongoing performance of our remaining assets. In addition, we believe that impairment expense, which is based on historical cost book values, is similar to gains and losses on dispositions and depreciation expense, both of which are excluded from EBITDA.

•

Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider outside the ordinary course of business, which is consistent with the definition of Adjusted FFO that we adopted effective January 1, 2011. We believe that including these items is not consistent with our ongoing operating performance.

In unusual circumstances, we may also adjust EBITDA for gains or losses that management believes are not representative of the Company’s current operating performance. Typically, gains from the disposition of non-depreciable property are included in the determination of Adjusted EBITDA.

Limitations on the Use of NAREIT FFO per Diluted Share, Adjusted FFO per Diluted Share, EBITDA and Adjusted EBITDA

We calculate NAREIT FFO per diluted share in accordance with standards established by NAREIT, which may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. In addition, although FFO per diluted share is a useful measure when comparing our results to other REITs, it may not be helpful to investors when comparing us to non-REITs. We also calculate Adjusted FFO per diluted share, which is not in accordance with NAREIT guidance and may not be comparable to measures calculated by other REITs. EBITDA and Adjusted EBITDA, as presented, may also not be comparable to measures calculated by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations or any other operating performance measure calculated in accordance with GAAP. Cash expenditures for various long-term assets (such as renewal and replacement capital expenditures), interest expense (for EBITDA and Adjusted EBITDA purposes only) and other items have been and will be made and

Page 23 of 25

HOST HOTELS & RESORTS, INC.

Notes to Financial Information

are not reflected in the EBITDA, Adjusted EBITDA, NAREIT FFO per diluted share and Adjusted FFO per diluted share presentations. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statement of operations and cash flows include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures. Additionally, NAREIT FFO per diluted share, Adjusted FFO per diluted share, EBITDA and Adjusted EBITDA should not be considered as a measure of our liquidity or indicative of funds available to fund our cash needs, including our ability to make cash distributions. In addition, NAREIT FFO per diluted share and Adjusted FFO per diluted share do not measure, and should not be used as a measure of, amounts that accrue directly to stockholders’ benefit.

Similarly, Adjusted EBITDA, NAREIT FFO and Adjusted FFO per diluted share include adjustments for the pro rata share of our equity investments and non-controlling partners in consolidated partnerships. Our equity investments primarily consist of our approximate one-third interest in a European joint venture, a 25% interest in an Asian joint venture, a 67% ownership in a joint venture that owns a vacation ownership property in Hawaii and interests ranging from 11% to 50% in three partnerships that each own one hotel. Due to the voting rights of the outside owners, we do not control and, therefore, do not consolidate these entities. The non-controlling partners in consolidated partnerships primarily consist of the approximate 1% interest in Host LP held by outside partners and interests ranging from 15% to 48% held by outside partners in three partnerships each owning one hotel for which we do control the entity and, therefore, consolidate its operations. These pro rata results for Adjusted EBITDA were calculated as set forth in the definition above under “Equity Investment Adjustments” and ”Consolidated Partnership Adjustments.” Similar adjustments were made in the calculation of both NAREIT FFO and Adjusted FFO per diluted share. Readers should be cautioned that the pro rata results presented in these measures for consolidated and non-consolidated partnerships may not accurately depict the legal and economic implications of our investments in these entities.

Comparable Hotel Property Level Operating Results

We present certain operating results for our hotels, such as hotel revenues, expenses, food and beverage profit, and EBITDA (and the related margins), on a comparable hotel, or “same store,” basis as supplemental information for investors. Our comparable hotel results present operating results for hotels owned during the entirety of the periods being compared without giving effect to any acquisitions or dispositions, significant property damage or large scale capital improvements incurred during these periods. We present comparable hotel EBITDA to help us and our investors evaluate the ongoing operating performance of our comparable properties after removing the impact of the Company’s capital structure (primarily interest expense), and its asset base (primarily depreciation and amortization). Corporate-level costs and expenses are also removed to arrive at property-level results. We believe these property-level results provide investors with supplemental information into the ongoing operating performance of our comparable hotels. Comparable hotel results are presented both by region and for the Company’s comparable properties in the aggregate. We eliminate depreciation and amortization because, even though depreciation and amortization are property-level expenses, these non-cash expenses, which are based on historical cost accounting for real estate assets, implicitly assume that the value of real estate assets diminishes predictably over time. As noted earlier, because real estate values have historically risen or fallen with market conditions, many real estate industry investors have considered presentation of historical cost accounting for operating results to be insufficient by themselves.

As a result of the elimination of corporate-level costs and expenses and depreciation and amortization, the comparable hotel operating results we present do not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.

We present these hotel operating results on a comparable hotel basis because we believe that doing so provides investors and management with useful information for evaluating the period-to-period performance of our hotels and facilitates comparisons with other hotel REITs and hotel owners. In particular, these measures assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at comparable hotels (which represent the vast majority of our portfolio) or from other factors, such as the effect of acquisitions or dispositions. While management believes that presentation of comparable hotel results is a “same store” supplemental measure that provides useful information in evaluating our ongoing performance, this measure is not used to allocate resources or to assess the operating performance of each of these hotels, as these decisions are based on data for individual hotels and are not based on comparable hotel results. For these reasons, we believe that comparable hotel operating results, when combined with the presentation of GAAP operating profit, revenues and expenses, provide useful information to investors and management.

Cash Interest Expense

We present Cash Interest Expense when evaluating our performance because management believes that the exclusion of certain items from interest expense as calculated under GAAP provides useful supplemental information to investors regarding payment obligations under our debt agreements. Management historically has made the adjustments detailed below to provide investors with a measure of the level of required cash expenditures associated with our outstanding debt without regard to cost associated with refinancing activity or non-cash expense. We believe that the presentation of Cash Interest Expense, when combined with the primary GAAP presentation, provides useful

Page 24 of 25

HOST HOTELS & RESORTS, INC.

Notes to Financial Information

supplemental information related to our capital structure. We adjust GAAP interest expense for the following items, which may occur in any period, and refer to this measure as Cash Interest Expense:

•

Amortization for deferred financing cost and original issue discounts/premiums – These costs represent cash payments or principal discounts or premiums made at the time of issuance and are amortized over the life of the debt. The amount and timing of these costs is dependent upon the level of financing activities and therefore, management does not believe they are reflective of the run-rate for interest expense.

•

Debt extinguishment costs – These costs represent cash payments for premiums associated with prepayment of debt prior to maturity and the acceleration of previously unrecognized deferred financing costs. The amount and timing of these is dependent upon the level of financing activities and therefore, management does not believe they are reflective of the run-rate for interest expense.

•

Changes in accrued interest – Represents the change in accrued interest on our balance sheet based on the timing of the payment of interest.

Adjusted Cash from Operations

We also present Adjusted Cash from Operations when evaluating our performance because management believes that the adjustment of certain additional items described below provides useful supplemental information to investors regarding the growth in cash flow from operations. We believe that the presentation of Adjusted Cash from Operations, when combined with the primary GAAP presentation of cash provided by operating activities from our consolidated statement of cash flows, provides useful supplemental information of cash available for acquisitions, capital expenditures, payment of dividends, stock repurchases and other corporate purposes. We adjust cash provided by operating activities for the following items, which may occur in any period, and refer to this measure as Adjusted Cash from Operations:

•

Renewal and replacement capital expenditures (R&R) – Under the terms of our contracts with our managers we are required to provide cash for regular maintenance capital expenditures which we define as R&R. For this reason, we deduct these required cash expenditures in determining Adjusted Cash From Operations. These amounts are shown in cash from investing activities in our statement of cash flows.

•

Cash debt extinguishment costs and incremental interest expense – These costs represent cash payments for premiums associated with prepayment of debt prior to maturity and cash interest expense during the period subsequent to the issuance of the new debt and prior to the repayment of the old debt. The amount and timing of these is dependent upon the level of financing activities and therefore, management does not believe they are reflective of the run-rate for interest expense.

Limitations on the Use of Cash Interest Expense and Adjusted Cash from Operations

We calculate Cash Interest Expense and Adjusted Cash from Operations as noted above. These measures should not be considered as an alternative to interest expense or cash provided by operating activities determined in accordance with GAAP. Additionally, these items should not be considered as a measure of our liquidity or indicative of funds available to fund our cash needs, including the ability to make cash distributions, without consideration of the impact of the investing and financing cash requirements that are excluded from these calculations to the extent they are material to operating decisions.

Page 25 of 25

hst-ex992_38.htm

Exhibit 99.2

Host Hotels & Resorts, Inc.

Supplemental Financial Information

As of July 26, 2017

For the Quarters and Year-to-Date ended

June 30, 2017 and 2016

About Host Hotels & Resorts

Host Hotels & Resorts, Inc. is an S&P 500 and Fortune 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 89 properties in the United States and seven properties internationally totaling approximately 53,500 rooms. The Company also holds non-controlling interests in seven joint ventures, including one in Europe that owns 10 hotels with approximately 3,900 rooms. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott^®, Ritz-Carlton^®, Westin^®, Sheraton^®, W^®, St. Regis^®, Le Méridien^®, The Luxury Collection^®, Hyatt^®, Fairmont^®, Hilton^®, Swissôtel^®, ibis^®, and Novotel^® as well as independent brands in the operation of properties in over 50 major markets. For additional information, please visit the Company’s website at www.hosthotels.com.

Host Hotels & Resorts, Inc., herein referred to as “we” or “Host Inc.,” is a self-managed and self-administered real estate investment trust (“REIT”) that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. (“Host LP”), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1% of the partnership interests in Host LP held by outside partners as of June 30, 2017, which is non-controlling interests in Host LP in our consolidated balance sheets and is included in net income attributable to non-controlling interests in our consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.

Supplemental Financial Information

To facilitate a quarter-to-quarter comparison of our operations, we present certain operating results (revenues, expenses, hotel EBITDA and associated margins) on a comparable hotel basis, which are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). These are included in our earnings press release dated July 26, 2017 and related Current Report on Form 8-K filed with the SEC on the same day. In addition to comparable hotel results for Host Inc. as a whole found in the press release (and repeated here starting on page 7) this supplemental information also contains additional detail on comparable hotel EBITDA by market. Also included are reconciliations to the most directly comparable GAAP measures. See the Notes that follow for information on why we believe these supplemental measures are useful and the limitations on their use.

In addition, also included in this supplemental information is our current quarter end leverage ratio, calculated in accordance with our credit facility, a reconciliation to the leverage ratio calculated in accordance with GAAP, and infomation on how this supplemental measure is calculated and why we believe it is useful.

*	This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained herein.

HOST HOTELS & RESORTS, INC.

Comparable Hotel EBITDA by Market in Nominal US$

(unaudited, in millions, except hotel statistics)

	Quarter ended June 30, 2017
Market⁽¹⁾	No. of Properties		No. of Rooms		Total Revenues			Hotel Net Income⁽²⁾			Plus: Depreciation		Plus: Interest Expense⁽²⁾		Less: Income tax⁽²⁾		Equals: Hotel EBITDA
Hawaii		3		1,682	$	70.7		$	15.2		$	9.2	$	—	$	—	$	24.4
New York		8		6,961		229.4			21.2			28.3		—		—		49.5
Boston		4		3,185		94.0			27.1			9.0		—		—		36.1
Seattle		2		1,315		35.5			9.0			3.9		—		—		12.9
San Francisco		4		2,912		82.0			17.0			7.0		—		—		24.0
Washington, D.C.		12		6,024		166.3			42.6			16.4		—		—		59.0
Chicago		6		2,392		57.0			16.0			7.2		—		—		23.2
San Diego		3		2,981		82.0			13.0			12.6		—		—		25.6
Florida		8		4,559		147.4			31.3			15.1		—		—		46.4
Los Angeles		7		2,843		67.0			12.8			6.6		—		—		19.4
Denver		2		735		14.4			3.4			1.7		—		—		5.1
Atlanta		5		1,939		41.7			8.3			5.1		—		—		13.4
Phoenix		4		1,518		41.4			7.2			5.5		—		—		12.7
Houston		4		1,716		29.2			3.2			5.5		—		—		8.7
Other		10		6,179		117.1			19.6			15.6		—		—		35.2
Domestic		82		46,941		1,275.1			246.9			148.7		—		—		395.6

Asia-Pacific		1		384		7.6			1.7			—		0.6		—		2.3
Canada		2		849		15.2			2.4			2.4		—		—		4.8
Latin America		4		963		12.3			1.0			1.5		1.1		—		3.6
International		7		2,196		35.1			5.1			3.9		1.7		—		10.7
Comparable Hotels All Markets		89		49,137	$	1,310.2		$	252.0		$	152.6	$	1.7	$	—	$	406.3
Non-comparable hotels		7		4,203		131.0			17.2			24.8		—		—		42.0
Gain on sale of property and corporate level income/ expense						(0.2	)		(57.2	)		0.8		41.4		27.1		12.1
Total		96		53,340	$	1,441.0		$	212.0		$	178.2	$	43.1	$	27.1	$	460.4

HOST HOTELS & RESORTS, INC.

Comparable Hotel EBITDA by Market in Nominal US$

(unaudited, in millions, except hotel statistics)

	Quarter ended June 30, 2016
Market⁽¹⁾	No. of Properties		No. of Rooms		Total Revenues			Hotel Net Income⁽²⁾		Plus: Depreciation		Plus: Interest Expense⁽²⁾		Plus: Income tax⁽²⁾		Equals: Hotel EBITDA
Hawaii		3		1,682	$	67.8		$	14.2	$	8.7	$	—	$	—	$	22.9
New York		8		6,961		230.9			23.5		31.0		—		—		54.5
Boston		4		3,185		91.0			22.9		9.2		—		—		32.1
Seattle		2		1,315		31.7			6.4		4.0		—		—		10.4
San Francisco		4		2,912		85.5			18.9		7.2		—		—		26.1
Washington, D.C.		12		6,024		166.1			43.1		16.1		—		—		59.2
Chicago		6		2,392		57.1			15.8		7.0		—		—		22.8
San Diego		3		2,981		80.9			11.6		13.0		—		—		24.6
Florida		8		4,559		147.8			29.8		15.7		—		—		45.5
Los Angeles		7		2,843		65.9			12.3		6.6		—		—		18.9
Denver		2		735		13.3			2.7		1.7		—		—		4.4
Atlanta		5		1,939		44.3			8.8		5.3		—		—		14.1
Phoenix		4		1,518		38.9			5.1		5.7		—		—		10.8
Houston		4		1,716		32.4			4.9		5.7		—		—		10.6
Other		10		6,179		121.5			21.6		15.0		—		—		36.6
Domestic		82		46,941		1,275.1			241.6		151.9		—		—		393.5

Asia-Pacific		1		384		7.7			0.3		1.3		1.0		—		2.6
Canada		2		849		14.4			1.6		2.1		—		—		3.7
Latin America		4		963		14.3			1.5		2.1		1.3		—		4.9
International		7		2,196		36.4			3.4		5.5		2.3		—		11.2
Comparable Hotels All Markets		89		49,137	$	1,311.5		$	245.0	$	157.4	$	2.3	$	—	$	404.7
Non-comparable hotels		7		4,203		147.2			19.5		19.8		0.1		—		39.4
Gain on sale of property and corporate level income/ expense						(0.2	)		86.9		1.0		36.2		31.5		155.6
Total		96		53,340	$	1,458.5		$	351.4	$	178.2	$	38.6	$	31.5	$	599.7

HOST HOTELS & RESORTS, INC.

Comparable Hotel EBITDA by Market in Nominal US$

(unaudited, in millions, except hotel statistics)

	Year-to-date ended June 30, 2017
Market⁽¹⁾	No. of Properties		No. of Rooms		Total Revenues		Hotel Net Income⁽²⁾			Plus: Depreciation		Plus: Interest Expense⁽²⁾		Plus: Income tax⁽²⁾		Equals: Hotel EBITDA
Hawaii		3		1,682	$	145.4	$	32.8		$	19.1	$	—	$	—	$	51.9
New York		8		6,961		394.9		(6.6	)		57.7		—		—		51.1
San Francisco		4		2,912		164.4		33.1			14.2		—		—		47.3
Florida		8		4,559		331.8		87.6			30.3		—		—		117.9
Washington, D.C.		12		6,024		303.6		66.5			32.8		—		—		99.3
Seattle		2		1,315		61.4		10.6			7.9		—		—		18.5
Phoenix		4		1,518		96.1		25.7			11.0		—		—		36.7
Boston		4		3,185		148.4		24.5			18.0		—		—		42.5
San Diego		3		2,981		172.5		31.6			25.3		—		—		56.9
Los Angeles		7		2,843		132.1		24.3			13.1		—		—		37.4
Atlanta		5		1,939		85.1		16.9			10.3		—		—		27.2
Chicago		6		2,392		84.4		10.1			14.3		—		—		24.4
Denver		2		735		25.3		4.5			3.4		—		—		7.9
Houston		4		1,716		62.6		8.7			11.2		—		—		19.9
Other		10		6,179		237.0		39.5			30.4		—		—		69.9
Domestic		82		46,941		2,445.0		409.8			299.0		—		—		708.8

Asia-Pacific		1		384		16.2		3.5			0.9		1.1		—		5.5
Latin America		4		963		24.7		1.8			3.1		2.4		—		7.3
Canada		2		849		25.7		1.7			4.6		—		—		6.3
International		7		2,196		66.6		7.0			8.6		3.5		—		19.1
Comparable Hotels All Markets		89		49,137	$	2,511.6	$	416.8		$	307.6	$	3.5	$	—	$	727.9
Non-comparable hotels		7		4,203		277.0		51.0			49.0		—		—		100.0
Gain on sale of property and corporate level income/ expense						0.4		(94.8	)		1.8		78.7		20.7		6.4
Total		96		53,340	$	2,789.0	$	373.0		$	358.4	$	82.2	$	20.7	$	834.3

HOST HOTELS & RESORTS, INC.

Comparable Hotel EBITDA by Market in Nominal US$

(unaudited, in millions, except hotel statistics)

	Year-to-date ended June 30, 2016
Market⁽¹⁾	No. of Properties		No. of Rooms		Total Revenues			Hotel Net Income⁽²⁾			Plus: Depreciation		Plus: Interest Expense⁽²⁾		Plus: Income tax⁽²⁾		Equals: Hotel EBITDA
Hawaii		3		1,682	$	140.9		$	33.8		$	17.2	$	—	$	—	$	51.0
New York		8		6,961		401.8			(2.4	)		62.4		—		—		60.0
San Francisco		4		2,912		171.6			38.0			14.5		—		—		52.5
Florida		8		4,559		332.4			84.9			31.5		—		—		116.4
Washington, D.C.		12		6,024		281.6			51.0			32.7		1.0		—		84.7
Seattle		2		1,315		53.8			5.5			8.2		—		—		13.7
Phoenix		4		1,518		94.4			23.4			11.0		—		—		34.4
Boston		4		3,185		146.5			20.4			18.6		—		—		39.0
San Diego		3		2,981		161.8			27.1			25.5		—		—		52.6
Los Angeles		7		2,843		131.3			24.6			13.1		—		—		37.7
Atlanta		5		1,939		86.8			16.3			10.6		—		—		26.9
Chicago		6		2,392		84.4			9.6			13.9		—		—		23.5
Denver		2		735		22.3			2.5			3.4		—		—		5.9
Houston		4		1,716		65.8			11.6			11.1		—		—		22.7
Other		10		6,179		233.4			35.9			30.0		—		—		65.9
Domestic		82		46,941		2,408.8			382.2			303.7		1.0		—		686.9

Asia-Pacific		1		384		15.9			1.3			2.6		2.0		—		5.9
Latin America		4		963		28.9			3.4			4.1		2.6		—		10.1
Canada		2		849		24.0			—			4.3		—		—		4.3
International		7		2,196		68.8			4.7			11.0		4.6		—		20.3
Comparable Hotels All Markets		89		49,137	$	2,477.6		$	386.9		$	314.7	$	5.6	$	—	$	707.2
Non-comparable hotels		7		4,203		320.4			53.1			42.2		0.4		—		95.7
Gain on sale of property and corporate level income/ expense						(0.4	)		95.4			1.8		71.9		22.5		191.6
Total		96		53,340	$	2,797.6		$	535.4		$	358.7	$	77.9	$	22.5	$	994.5
___________

(1)	See the Notes to Supplemental Information for a description of these markets.

(2)

Certain items from our statement of operations are not allocated to individual regions, including interest on our senior notes, the majority of corporate and other expenses, and the benefit (provision) for income taxes. These items are included in gain on sale of property and corporate level income/expense. Interest on mortgage debt is allocated to the respective regions.

HOST HOTELS & RESORTS, INC.

Schedule of Comparable Hotel Results ⁽¹⁾

(unaudited, in millions, except hotel statistics)

	Quarter ended June 30,						Year-to-date ended June 30,
	2017			2016			2017			2016
Number of hotels		89			89			89			89
Number of rooms		49,137			49,137			49,137			49,137
Change in comparable hotel RevPAR -
Constant US$		1.7	%		—			2.5	%		—
Nominal US$		1.7	%		—			2.6	%		—
Operating profit margin ⁽²⁾		16.9	%		16.4	%		14.9	%		13.9	%
Comparable hotel EBITDA margin ⁽²⁾		31.0	%		30.85	%		29.0	%		28.55	%
Food and beverage profit margin ⁽²⁾		33.9	%		34.2	%		34.1	%		32.3	%
Comparable hotel food and beverage profit margin⁽²⁾		34.2	%		34.5	%		33.7	%		32.3	%

Net income	$	212		$	351		$	373		$	535
Depreciation and amortization		178			178			358			359
Interest expense		43			39			82			78
Provision for income taxes		27			32			21			23
Gain on sale of property and corporate level income/expense		(12	)		(156	)		(6	)		(192	)
Non-comparable hotel results, net ⁽³⁾		(42	)		(39	)		(100	)		(96	)
Comparable hotel EBITDA	$	406		$	405		$	728		$	707

	Quarter ended June 30, 2017											Quarter ended June 30, 2016
				Adjustments										Adjustments
	GAAP Results			Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results		GAAP Results		Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results
Revenues
Room	$	940		$	(74	)	$	—		$	866	$	933	$	(81	)	$	—		$	852
Food and beverage		416			(42	)		—			374		439		(48	)		—			391
Other		85			(15	)		—			70		87		(18	)		—			69
Total revenues		1,441			(131	)		—			1,310		1,459		(147	)		—			1,312
Expenses
Room		230			(18	)		—			212		228		(21	)		—			207
Food and beverage		275			(29	)		—			246		289		(33	)		—			256
Other		490			(44	)		—			446		498		(54	)		—			444
Depreciation and amortization		178			—			(178	)		—		178		—			(178	)		—
Corporate and other expenses		26			—			(26	)		—		27		—			(27	)		—
Gain on insurance and business interruption settlements		(2	)		2			—			—		—		—			—			—
Total expenses		1,197			(89	)		(204	)		904		1,220		(108	)		(205	)		907
Operating Profit - Comparable Hotel EBITDA	$	244		$	(42	)	$	204		$	406	$	239	$	(39	)	$	205		$	405

HOST HOTELS & RESORTS, INC.

Schedule of Comparable Hotel Results ⁽¹⁾

(unaudited, in millions, except hotel statistics)

	Year-to-date ended June 30, 2017											Year-to-date ended June 30, 2016
				Adjustments											Adjustments
	GAAP Results			Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results		GAAP Results			Non-comparable hotel results, net⁽³⁾			Depreciation and corporate level items			Comparable Hotel Results
Revenues
Room	$	1,783		$	(152	)	$	—		$	1,631	$	1,776		$	(178	)	$	—		$	1,598
Food and beverage		838			(94	)		—			744		847			(102	)		—			745
Other		168			(31	)		—			137		175			(40	)		—			135
Total revenues		2,789			(277	)		—			2,512		2,798			(320	)		—			2,478
Expenses
Room		449			(35	)		—			414		449			(44	)		—			405
Food and beverage		552			(59	)		—			493		573			(69	)		—			504
Other		965			(88	)		—			877		976			(114	)		—			862
Depreciation and amortization		358			—			(358	)		—		359			—			(359	)		—
Corporate and other expenses		55			—			(55	)		—		54			—			(54	)		—
Gain on insurance and business interruption settlements		(5	)		5			—			—		(3	)		3			—			—
Total expenses		2,374			(177	)		(413	)		1,784		2,408			(224	)		(413	)		1,771
Operating Profit - Comparable Hotel EBITDA	$	415		$	(100	)	$	413		$	728	$	390		$	(96	)	$	413		$	707
___________

(1)	See the Notes to Supplemental Information for a discussion of non-GAAP measures and the calculation of comparable hotel results.

(2)

Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP operating profit margins are calculated using amounts presented in the consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the above tables.

(3)

Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels and sold hotels, which operations are included in our consolidated statements of operations as continuing operations, (ii) gains on insurance settlements and business interruption proceeds, and (iii) the results of our office spaces and other non-hotel income.

HOST HOTELS & RESORTS, INC.

Reconciliation of Credit Facility Leverage Ratio to GAAP Leverage Ratio

(unaudited, in millions, except ratios)

The following table presents the calculation of Host's leverage ratio using GAAP measures:

	GAAP Leverage Ratio
	June 30, 2017
Debt	$	3,992
Net income - trailing twelve months		609
GAAP Leverage Ratio		6.6	x

The following table presents the calculation of Host's leverage ratio as used in the financial covenants of the credit facility:

	Leverage Ratio per Credit Facility
	June 30, 2017
Net debt ⁽¹⁾	$	3,541
Adjusted Credit Facility EBITDA - trailing twelve months ⁽²⁾		1,463
Leverage Ratio		2.4	x
___________

(1)	The following presents the reconciliation of debt to net debt per our credit facility definition:

	June 30, 2017
Debt	$	3,992
Debt related to assets held for sale		66
Deferred financing cost		30
Contingent obligations		6
Less: Debt related to outside parties		(17	)
Less: Unrestricted cash over $100 million		(536	)
Net debt per credit facility definition	$	3,541

(2)	The following presents the reconciliation of net income to EBITDA, Adjusted EBITDA and EBITDA per our credit facility definition in determining Net Debt/EBITDA:

	Trailing twelve months
	June 30, 2017
Net income	$	609
Interest expense		158
Depreciation and amortization		723
Income taxes		38
EBITDA		1,528
Gain on dispositions		(63	)
Acquisition costs		1
Partnership EBITDA adjustments		34
Adjusted EBITDA		1,500
Pro forma EBITDA - Acquisitions		18
Pro forma EBITDA - Dispositions		(18	)
Restricted stock expense and other non-cash items		5
Non-cash partnership adjustments		(42	)
Adjusted Credit Facility EBITDA	$	1,463

Net Debt/EBITDA (per credit facility definition)		2.4	x

HOST HOTELS & RESORTS, INC.

Notes to Supplemental Information

Comparable Hotel Operating Statistics

To facilitate a quarter-to-quarter comparison of our operations, we present certain operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in this supplemental information on a comparable hotel basis.

(i) that are owned or leased by us and the operations of which are included in our consolidated results for the entirety of the reporting periods being compared; and

(ii) that have not sustained substantial property damage or business interruption, or undergone large-scale capital projects (as further defined below) during the reporting periods being compared.

•

Marriott Marquis San Diego Marina, removed in the first quarter of 2015 (business interruption due to the demolition of the existing conference center and construction of the new exhibit hall);

•

Axiom Hotel (acquired as the Powell Hotel in January 2014, then closed during 2015 for extensive renovations and reopened in January 2016);

•

The Don CeSar and Beach House Suites complex (acquired in February 2017); and

•

W Hollywood (acquired in March 2017).

The operating results of 12 hotels disposed of in 2017 and 2016 are not included in comparable hotel results for the periods presented herein.

We evaluate the operating performance of our comparable hotels based on market. The division is generally consistent with groupings recognized in the lodging industry.

Our markets consist of the following:

Domestic

•

Atlanta – Atlanta Metropolitan area;

•

Boston – Greater Boston Metropolitan area;

•

Chicago – Chicago Metropolitan area;

•

Denver – Denver Metropolitan area;

•

Florida – All Florida locations;

•

Hawaii – All Hawaii locations;

•

Houston – Houston Metropolitan area;

•

Los Angeles – Greater Los Angeles area, including Orange County;

•

New York – Greater New York Metropolitan area, including northern New Jersey;

•

Phoenix – Phoenix Metropolitan area, including Scottsdale;

•

San Diego – San Diego Metropolitan area;

•

San Francisco – Greater San Francisco Metropolitan area, including San Jose;

•

Seattle – Seattle Metropolitan area;

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Washington, D.C. – Metropolitan area, including the Maryland and Virginia suburbs; and

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Other – Select cities in California, Indiana, Louisiana, Minnesota, Ohio, Pennsylvania, Tennessee and Texas.

International

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Asia-Pacific – Australia;

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Canada – Toronto and Calgary; and

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Latin America – Brazil and Mexico.

Non-GAAP Financial Measures

The comparable hotel results included in this supplemental information are “non-GAAP financial measures,” which are measures of our historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. The following discussion defines these measures and presents why we believe they are useful supplemental measures of our performance.

EBITDA

Earnings before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”) is a commonly used measure of performance in many industries. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of the Company’s capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. Management uses EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and is widely used by management in the annual budget process and for our compensation programs.

Limitations on the Use of EBITDA

EBITDA, as presented, may not be comparable to measures calculated by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations or any other operating performance measure calculated in accordance with GAAP. Cash expenditures for various long-term assets (such as renewal and replacement capital expenditures), interest expense and other items have been and will be made and are not reflected in the EBITDA presentation. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statement of operations and cash flows include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures. Additionally, EBITDA should not be considered as a measure of our liquidity or indicative of funds available to fund our cash needs, including our ability to make cash distributions.

Comparable Hotel Property Level Operating Results

We present certain operating results for our hotels, such as hotel revenues, expenses, food and beverage profit, and EBITDA (and the related margins), on a comparable hotel, or “same store,” basis as supplemental information for investors. Our comparable hotel results present operating results for hotels owned during the entirety of the periods being compared without giving effect to any acquisitions or dispositions, significant property damage or large scale capital improvements incurred during these periods. We present comparable hotel EBITDA to help us and our investors evaluate the ongoing operating performance of our comparable properties after removing the impact of the Company’s capital structure (primarily interest expense), and its asset base (primarily depreciation and amortization). Corporate-level costs and expenses are also removed to arrive at property-level results. We believe these property-level results provide investors with supplemental information into the ongoing operating performance of our comparable hotels. Comparable hotel results are presented both by region and for the Company’s comparable properties in the aggregate. We eliminate depreciation and amortization because, even though depreciation and amortization are property-level expenses, these non-cash expenses, which are based on historical cost accounting for real estate assets, implicitly assume that the value of real estate assets diminishes predictably over time. Because real estate values have historically risen or fallen with market conditions, many real estate industry investors have considered presentation of historical cost accounting for operating results to be insufficient by themselves.

Credit Facility Leverage Ratio

Host L.P.’s credit facility contains certain financial covenants which we are required to meet, including allowable leverage ratio, which is determined using EBITDA and net debt, each as calculated under the terms of our credit facility (“Adjusted Credit Facility EBITDA” and “Net Debt,” respectively). The leverage ratio is defined as Net Debt to Adjusted Credit Facility EBITDA. This calculation is based on pro forma results for the prior four fiscal quarters, giving effect to transactions such as acquisitions, dispositions and financings as if they occurred at the beginning of the period. Under the terms of the credit facility, interest expense excludes items such as the gains and losses on the extinguishment of debt, deferred financing charges related to the senior notes or the credit facility, amortization of debt premiums or discounts that were recorded at issuance of a loan to establish its fair value and non-cash interest expense, all of which are included in interest expense on our consolidated statement of operations.

Additionally, total debt used in the calculation of our leverage ratio is based on a “net debt” concept, under which cash and cash equivalents in excess of $100 million are deducted from our total debt balance. In this supplemental financial information we have presented our credit facility leverage ratio, which is considered a non-GAAP financial measure. Management believes this financial ratio provides useful information to investors by demonstrating where the company is in terms of meeting this important financial covenant, and accordingly our ability to access the capital markets and in particular debt financing.