Tourism Industry News

Host Hotels & Resorts, Inc. Reports Results of Operations for the Fourth Quarter and Full Year 2009

17/02/2010 14:01

Bethesda, Md., (PRNewswire / WorldTourismNews) - Host Hotels & Resorts, Inc. (NYSE:HST) , the nation's largest lodging real estate investment trust (REIT), today announced its results of operations for the fourth quarter and for the full year ended December 31, 2009.

  

  -- Total revenue decreased 16.8% to $1,331 million for the fourth quarter
     of 2009 compared to the same period in 2008 and decreased 19.1% to 
     $4,158 million for full year 2009 compared to the full year 2008.  

  -- Net loss was $72 million for the fourth quarter of 2009 compared 
     to net income of $111 million for the fourth quarter of 2008. For the
     full year 2009, net loss was $258 million compared to net income 
     of $414 million for the full year 2008.  Loss per diluted share was 
     $.12 for the fourth quarter of 2009 compared to earnings per 
     diluted share of $.18 in 2008. For the full year 2009, loss per 
     diluted share was $.45 compared to earnings per diluted share 
     of $.72 for the full year 2008.

     Operating results for 2009 were affected by non-cash 
     impairment charges in the first half of 2009 and a fourth quarter 
     accrual for a potential litigation loss, partially offset by gains 
     associated with hotel dispositions and debt extinguishments.  
     The net effect of these items was a decrease in earnings of 
     $39 million, or $.07 per diluted share for the fourth quarter of 
     2009 and a decrease in earnings of $131 million, or $.23 per 
     diluted share, for full year 2009.  Operating results for full year 
     2008 include net gains on dispositions of $22 million, or $.04 
     per diluted share.  No similar transactions occurred in the fourth 
     quarter of 2008.

  -- Funds from Operations (FFO) per diluted share was $.18 for 
     the fourth quarter of 2009 compared to $.52 for the fourth quarter 
     of 2008. For full year 2009, FFO per diluted share was $.51 
     compared to $1.71 for full year 2008. The net effect of the above 
     transactions affecting operating results also decreased FFO per 
     diluted share by $.06 and $.28 for the fourth quarter and full year 
     2009, respectively.  FFO per diluted share was not affected by 
     similar transactions in 2008.  

  -- Earnings and FFO per diluted share for all periods presented 
     also include non-cash interest expense related to the Company's 
     exchangeable debentures in accordance with accounting 
     requirements adopted on January 1, 2009.  The increase to interest 
     expense was $8 million and $9 million in the fourth quarter of 2009 
     and 2008, respectively, and $27 million and $30 million for the 
     full year 2009 and 2008, respectively.

  -- Adjusted EBITDA, which is Earnings before Interest Expense, 
     Income Taxes, Depreciation, Amortization and other items, was $229 
     million for the fourth quarter 2009 compared to $414 million for the 
     fourth quarter 2008.  For full year 2009, adjusted EBITDA was 
     $798 million compared to $1365 million for 2008.  Adjusted EBITDA 
     for the fourth quarter and full year 2009 has been decreased by 
     approximately $41 million due to the fourth quarter accrual of a 
     potential litigation loss.

For further detail of the transactions affecting net income, earnings per diluted share and FFO per diluted share, refer to the notes to the "Reconciliation of Net Income to EBITDA, Adjusted EBITDA and FFO per Diluted Share."
 

Adjusted EBITDA, FFO per diluted share and comparable hotel adjusted operating profit margins (discussed below) are non-GAAP (generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (SEC). See the discussion included in this press release for information regarding these non-GAAP financial measures.
 

 

OPERATING RESULTS
Comparable hotel RevPAR decreased 14.6% and 19.9% for the fourth quarter and full year 2009 compared to 2008. Comparable hotel adjusted operating profit margins decreased 430 basis points and 520 basis points for the fourth quarter and full year 2009, respectively. For further detail, see "Notes to the Financial Information."
 

BALANCE SHEET
 

As of December 31, 2009, the Company had over $1.6 billion of cash and cash equivalents and $600 million of available capacity under its credit facility. During the fourth quarter, the Company issued $400 million of 2.5% Exchangeable Senior Debentures due 2029 and received net proceeds of approximately $391 million, which it used in the first quarter of 2010, along with available cash, to redeem the remaining $346 million of the 7% Series M senior notes and repay the $124 million mortgage on the Atlanta Marriott Marquis. As a result of these two transactions, the Company reduced its outstanding debt by $470 million to approximately $5.4 billion and currently has approximately $1.2 billion of available cash and cash equivalents.
 

 

Beginning in August of 2009, the Company initiated a continuous equity offering program under which it may sell up to $400 million in shares of common stock in at-the-market transactions over time. The Company issued approximately 15 million shares of common stock for net proceeds of $157 million in the fourth quarter at an average net price per share of approximately $10.49. Since the inception of the program, the Company has issued nearly 28 million shares for net proceeds of over $287 million at an average net price per share of approximately $10.27.
 

CAPITAL EXPENDITURES
 

Capital expenditures totaled approximately $85 million and $340 million for the fourth quarter and full year 2009, respectively. Return on investment (ROI) and repositioning projects accounted for approximately $35 million and $176 million for the fourth quarter and full year 2009, respectively, of these expenditures. The Company expects to spend approximately $270 million to $300 million in capital expenditures in 2010.
 

 

DIVIDEND
Beginning with the first quarter of 2010, the Company intends to reinstate the payment of a quarterly dividend on its common stock and to pay a $.01 per share dividend in the first quarter. The Company paid a special common dividend of $.25 per share on December 18, 2009 to stockholders of record as of November 6, 2009, of which approximately 10% was paid with cash and approximately 90% was paid with shares of Host common stock. Based on stockholder elections and the cash requirement, the special dividend consisted of approximately $15.6 million of cash and approximately 13.4 million shares of common stock valued at a per share price of approximately $10.46. The Company intends to continue paying the cash dividend on its preferred stock.
 

LITIGATION LOSS
 

On February 8, 2010, the Company received an adverse jury verdict in a trial in the 166th Judicial District Court of Bexar County, Texas involving the sale of land encumbered by a ground lease for the San Antonio Marriott Rivercenter hotel. The jury found that the Company intentionally interfered with the attempted sale by Keystone-Texas Property Holding Corporation of the land under the San Antonio Marriott Rivercenter and slandered title to the property. The jury awarded damages that range from $42 million to $56 million, including statutory interest, as well as exemplary damages on the latter claim. The verdict is not yet final and is subject to post-trial motions. Based on the range of possible outcomes, the Company accrued an additional potential litigation loss of approximately $41 million in the fourth quarter consistent with generally accepted accounting principles. The Company believes that a number of legal rulings decided by the trial court were in error and had an adverse effect on the jury's verdict. The Company intends to vigorously pursue these issues in post trial motions and, if necessary, on appeal.
 

 

2010 OUTLOOK
While it appears that the economy has started to recover, we believe that several factors, including uncertainty in the strength and sustainability of the economic recovery and continued high unemployment, will continue to negatively affect lodging industry fundamentals in 2010. Additionally, the uncertainty in the economic climate and its effect on business and leisure travel, combined with shorter booking lead times, continue to inhibit the Company's ability to predict future operating results. However, assuming a decrease in comparable hotel RevPAR in the range of 0% to 5% for 2010, the Company would anticipate that 2010 operating profit margins under GAAP would range from an increase of 100 basis points to a decrease of 170 basis points and its comparable hotel adjusted operating profit margins would decrease approximately 175 basis points to 350 basis points. Based upon these parameters, the Company estimates the following would occur:
 

  --  loss per diluted share should be approximately $.32 to $.49;
  --  net loss should be approximately $207 million to $315 million;
  --  FFO per diluted share should be approximately $.57 to $.41 (which has
      been reduced by $.01 per share for debt prepayment costs for the
      Series M senior notes repaid in early 2010); and
  --  Adjusted EBITDA should be approximately $750 million to $635 million.

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 110 properties with approximately 61,000 rooms, and also holds a non-controlling interest in a joint venture that owns 11 hotels in Europe with approximately 3,500 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®, The Luxury Collection®, Hyatt®, Fairmont®, Four Seasons®, Hilton® and Swissotel®* in the operation of properties in over 50 major markets worldwide. 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 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 assumption 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: national and local economic and business conditions, including the potential for terrorist attacks, that will affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; relationships with property managers; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; our ability to complete acquisitions and dispositions; and our ability to continue to satisfy complex rules in order for us to remain a REIT for federal income tax purposes and other risks and uncertainties associated with our business described in the Company's filings with the SEC. 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 February 16, 2010, 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 ***
Host Hotels & Resorts, Inc., herein referred to as "we" or "Host," 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., or Host LP, of which we are the sole general partner. When distinguishing between Host and Host LP, the primary difference is approximately 2% of the partnership interests in Host LP held by outside partners as of December 31, 2009, which is non-controlling interests in Host LP in our consolidated balance sheets and is included in net income/loss 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 10K.

For information on our reporting periods and non-GAAP financial measures (including Adjusted EBITDA, FFO per diluted share and comparable hotel adjusted operating profit margin) which we believe is useful to investors, see the Notes to the Financial Information included in this release.
 

                          HOST HOTELS & RESORTS, INC.
                        Consolidated Balance Sheets (a)
                (in millions, except shares and per share amounts)

                                                            December 31,
                                                        2009           2008
                                                 (unaudited)
                                   ASSETS
                                   ------

  Property and equipment, net                        $10,231        $10,739
  Assets held for sale                                     8              -
  Due from managers                                       29             65
  Investments in affiliates                              153            229
  Deferred financing costs, net                           49             46
  Furniture, fixtures and equipment replacement fund     124            119
  Other                                                  266            200
  Restricted cash                                         53             44
  Cash and cash equivalents                            1,642            508
                                                     -------        -------
        Total assets                                 $12,555        $11,950
                                                     =======        =======

             LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY
             -------------------------------------------------

  Debt
    Senior notes, including $1,123 million and $916
     million, respectively, net of discount, of
     Exchangeable Senior Debentures (b)               $4,534         $3,943
    Mortgage debt                                      1,217          1,436
    Credit facility                                        -            410
    Other                                                 86             87
                                                     -------        -------
         Total debt                                    5,837          5,876
  Accounts payable and accrued expenses                  174            119
  Other                                                  194            183
                                                     -------        -------
       Total liabilities                               6,205          6,178
                                                     -------        -------
  Non-controlling interests-Host Hotels & Resorts, L.P.  139            158

  Host Hotels & Resorts, Inc. stockholders' equity:
    Cumulative redeemable preferred stock (liquidation
     preference $100 million) 50 million shares
     authorized; 4 million shares issued and outstanding  97             97
    Common stock, par value $.01, 1,050 million shares
     and 750 million shares authorized, respectively; 
     646.3 million shares and 525.3 million shares issued
     and outstanding, respectively                         6              5
    Additional paid-in capital                         6,875          5,868
    Accumulated other comprehensive income                12              5
    Deficit                                             (801)          (385)
                                                     -------        -------
       Total equity of Host Hotels & Resorts,
        Inc. stockholders                              6,189          5,590
  Non-controlling interests-other consolidated
   partnerships (c)                                       22             24
                                                     -------        -------
       Total equity                                    6,211          5,614
                                                     -------        -------
       Total liabilities, non-controlling
        interests and equity                         $12,555        $11,950
                                                     =======        =======


  (a)  Our consolidated balance sheet as of December 31, 2009 has been 
  prepared without audit. Certain information and footnote disclosures 
  normally included in financial statements presented in accordance with 
  GAAP have been omitted. 

  (b)  As a result of the adoption of a new accounting requirement for 
  convertible debt instruments that may be settled in cash upon conversion 
  (including partial cash settlement) on January 1, 2009, we separately 
  account for the liability and equity components of our Exchangeable Senior
  Debentures (the "Debentures"). The principal balance shown has been 
  reduced by $124 million and $76 million as of December 31, 2009 and 
  December 31, 2008, respectively, with an offsetting increase to equity. 
  The face amount of the Debentures was $1,251 million at December 31, 2009.
  See notes to "Other Financial and Operating Data," for further discussion.

  (c) As a result of the adoption of a new accounting requirement on January
  1, 2009, non-controlling interests of other consolidated partnerships 
  (previously referred to as "Interest of minority partners of other 
  consolidated partnerships") are now included as a separate component of 
  equity.





                          HOST HOTELS & RESORTS, INC.
                   Consolidated Statements of Operations (a)
             (unaudited, in millions, except per share amounts)

                     Quarter ended December 31, Year ended December 31,
                         2009          2008        2009          2008
  Revenues
    Rooms                $796          $949      $2,497        $3,116
    Food and beverage     416           500       1,243         1,556
    Other                  88           111         311           348
                        -----         -----       -----         -----
      Total hotel sales 1,300         1,560       4,051         5,020
    Rental income          31            40         107           119
                        -----         -----       -----         -----
      Total revenues    1,331         1,600       4,158         5,139
                        -----         -----       -----         -----
  Expenses
    Rooms                 219           237         686           766
    Food and beverage     310           363         940         1,139
    Hotel departmental
     expenses             350           393       1,109         1,259
    Management fees        54            72         160           242
    Other property-level
     expenses             117           124         387           386
    Depreciation and
     amortization (b)     187           181         662           557
    Corporate and other
     expenses (c)          64            13         116            58
    Gain on insurance
     settlement             -             -           -            (7)
                        -----         -----       -----         -----
      Total operating
       costs and
       expenses         1,301         1,383       4,060         4,400
                        -----         -----       -----         -----
  Operating profit         30           217          98           739
  Interest income           1             7           7            20
  Interest expense (d)   (115)         (114)       (379)         (375)
  Net gains on property
   transactions and other   1             -          14             2
  Gain on foreign
   currency transactions
   and derivatives          -             1           5             1
    
  Equity in earnings
   (losses) of
   affiliates (b)           5           (13)        (32)          (10)
                        -----         -----       -----         -----
  Income (loss) before
   income taxes           (78)           98        (287)          377
  Benefit for
   income taxes            10            14          39             3
                        -----         -----       -----         -----
  Income (loss) from
   continuing operations  (68)          112        (248)          380
  Income (loss) from
   discontinued operations (4)           (1)        (10)           34
                        -----         -----       -----         -----
  Net income (loss)       (72)          111        (258)          414
  Less: Net (income) loss
   attributable to
   non-controlling
   interests (d)            1            (2)          6           (19)
                        -----         -----       -----         -----
  Net income (loss)
   attributable to common
   stockholders           (71)          109        (252)          395
    
  Less:  Dividends on
   preferred stock         (2)           (2)         (9)           (9)
                        -----         -----       -----         -----
  Net income (loss)
   available to common 
   stockholders          $(73)         $107       $(261)         $386
                        =====         =====       =====         =====
  Basic earnings (loss)
   per common share:
    Continuing
     operations         $(.11)         $.20       $(.43)         $.67
    Discontinued
     operations          (.01)            -        (.02)          .07
                        -----         -----       -----         -----
  Basic earnings (loss)
   per common share     $(.12)         $.20       $(.45)         $.74
                        =====         =====       =====         =====
  Diluted earnings 
   (loss) per common
   share:
    Continuing
     operations         $(.11)         $.18       $(.43)         $.65
    Discontinued
     operations          (.01)            -        (.02)          .07
                        -----         -----       -----         -----
  Diluted earnings
   (loss) per common
   share                $(.12)         $.18       $(.45)         $.72
                        =====         =====       =====         =====


  (a)  Our 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.

  (b)  During 2009, we identified several properties to be tested for 
  impairment based on certain triggering events, as prescribed by GAAP. We 
  tested these properties for impairment based on management's estimate of 
  expected future undiscounted cash flows over our expected holding period. 
  As a result, we recorded non-cash impairment charges totaling $131 million
  and $3 million in 2009 and 2008, respectively, based on the difference 
  between the properties' fair values and their carrying amounts. 
  $66 million has been included in depreciation expense and $31 million was 
  included in discontinued operations for full year 2009. The remaining 
  $34 million of impairment charges was for our investment in the European 
  joint venture, which is included in equity in earnings (losses) of 
  affiliates. 

  (c) Corporate and other expenses include a fourth quarter expense accrual 
  of approximately $41 million for a potential litigation loss.

  (d) Interest expense includes $8 million and $9 million for the fourth 
  quarter of 2009 and 2008, respectively, and $27 million and $30 million 
  for full year 2009 and 2008, respectively, in connection with the adoption
  of a new accounting requirement regarding the Debentures on January 1, 
  2009. Interest expense for full year 2009 also includes a $3 million gain 
  on the first quarter repurchase of a portion of the 3.25% Exchangeable 
  Senior Debentures issued in April 2004 (the "2004 Debentures") and a 
  $2 million gain on the third and fourth quarter repurchases of a portion 
  of the 2.625% Exchangeable Senior Debentures (the "2007 Debentures"). See 
  notes to the "Reconciliation of Net Income to EBITDA, Adjusted EBITDA and 
  FFO per Diluted Share" for further discussion.

  (e) As a result of the adoption of a new accounting requirement on January
  1, 2009, net income attributable to non-controlling interests of Host LP 
  and of other non-consolidated partnerships are no longer included in the 
  determination of net income. Prior periods have been revised to reflect 
  this presentation. The net income attributable to non-controlling 
  interests is included in the net income available to common stockholders; 
  therefore, the implementation of this requirement had no effect on our 
  basic or diluted earnings per share calculation.





                             Earnings per Common Share                 
              (unaudited, in millions, except per share amounts)           
                                               
                                     
                                                Quarter ended   Year ended  
                                                 December 31,   December 31,
                                                -------------   ----------  
                                                 2009    2008   2009   2008 
                                                 ----    ----   ----   ---- 
                                               
  Net income (loss)                              $(72)   $111  $(258)  $414 
    Net (income) loss attributable to non-
     controlling interests                          1      (2)     6    (19)
    Dividends on preferred stock                   (2)     (2)    (9)    (9)
                                                  ---     ---    ---     -- 
  Earnings (loss) available to common
   stockholders                                   (73)    107   (261)   386 
    Assuming deduction of gain recognized for the
     repurchase of 2004 Exchangeable Senior                                 
     Debentures (a)                                 -     (12)    (2)    (8)
                                                  ---     ---    ---     -- 
  Diluted earnings (loss) available to common                               
   stockholders                                  $(73)    $95  $(263)  $378 
                                                 ====     ===  =====   ==== 
                                               
  Basic weighted average shares outstanding     626.5   523.3  586.3  521.6 
  Diluted weighted average shares outstanding
   (b)                                          626.5   527.1  587.2  527.4 
                                               
  Basic earnings (loss) per share (c)           $(.12)   $.20  $(.45)  $.74 
  Diluted earnings (loss) per share (c) (d)     $(.12)   $.18  $(.45)  $.72 
                                               
  (a)  During the first quarter of 2009 and fourth quarter 2008, we 
  repurchased $75 million and $100 million face amount, respectively, of the
   2004 Debentures with a carrying value of $72 million and $96 million for 
  approximately $69 million and $82 million, respectively. The adjustments 
  to dilutive earnings per common share related to the repurchased 2004 
  Debentures include a $3 million and $14 million gain, respectively, net of
   interest expense on the repurchased Debentures.       

  (b)  Dilutive securities may include shares granted under comprehensive 
  stock plans, preferred OP Units held by minority partners, exchangeable 
  debt securities 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 are anti-dilutive.     

  (c)  Basic earnings per common share is computed by dividing net income 
  available to common stockholders by the weighted average number of shares 
  of common stock outstanding. Diluted earnings per common share is computed
   by dividing net income available to common stockholders, as adjusted for 
  potentially dilutive securities, by the weighted average number of shares 
  of common stock outstanding plus potentially dilutive securities.    

  (d)  See notes to the "Reconciliation of Net Income to EBITDA, Adjusted 
  EBITDA and FFO per Diluted Share" for information on significant items 
  affecting diluted earnings per common share for which no adjustments were 
  made.




     
                           HOST HOTELS & RESORTS, INC.                     
                        Comparable Hotel Operating Data                   
                                (unaudited)                             
                                                                        
                      Comparable Hotels by Region (a)                   
                                                                        
                As of December 31, 2009  Quarter ended December 31, 2009
                -----------------------  -------------------------------
                                                     Average            
                  No. of        No. of    Average   Occupancy           
                Properties       Rooms   Room Rate Percentages    RevPAR
                ----------       -----   --------- -----------    ------
  Pacific               27      15,943     $162.94        64.8%  $105.66
  Mid-Atlantic          10       8,330      250.48        81.7    204.60
  North Central         14       6,204      134.71        61.3     82.61
  South Central          9       5,687      142.10        61.6     87.59
  Florida                9       5,677      166.62        58.3     97.18
  DC Metro              12       5,416      189.80        69.6    132.06
  New England            8       4,297      166.63        67.2    111.99
  Atlanta                8       4,252      150.86        54.5     82.26
  Mountain               7       2,889      148.35        58.9     87.41
  International          7       2,473      153.03        62.9     96.30
                       ---       -----                                  
    All Regions        111      61,168      174.73        65.4    114.27
                       ===      ======                                  
                                                                        
                                                                        
                                                                        
                  Quarter ended December 31, 2008                       
                  -------------------------------                       
                             Average                   Percent            
                  Average   Occupancy                Change in           
                 Room Rate Percentages      RevPAR      RevPAR            
                 --------- -----------      ------      ------            
  Pacific          $191.25        66.7%    $127.58       (17.2)%        
  Mid-Atlantic      296.10        79.5      235.28       (13.0)         
  North Central     155.09        63.3       98.12       (15.8)         
  South Central     162.75        65.0      105.78       (17.2)         
  Florida           189.48        56.8      107.69        (9.8)         
  DC Metro          206.01        70.1      144.49        (8.6)         
  New England       183.58        67.6      124.07        (9.7)         
  Atlanta           178.35        60.6      108.12       (23.9)         
  Mountain          175.94        62.7      110.26       (20.7)         
  International     166.44        65.5      109.04       (11.7)         
    All Regions     200.44        66.7      133.77       (14.6)





                                                                       
                As of December 31, 2009   Year ended December 31, 2009 
                -----------------------   ---------------------------- 
                                                      Average            
                  No. of       No. of      Average   Occupancy           
                Properties      Rooms     Room Rate Percentages RevPAR
                ----------      -----     --------- ----------- ------
  Pacific               27      15,943    $169.46        67.4%  $114.22
  Mid-Atlantic          10       8,330     219.22        76.4    167.47
  North Central         14       6,204     130.93        60.8     79.64
  South Central          9       5,687     143.88        63.8     91.83
  Florida                9       5,677     182.88        62.9    115.04
  DC Metro              12       5,416     190.52        73.6    140.13
  New England            8       4,297     161.76        63.7    103.11
  Atlanta                8       4,252     152.32        58.2     88.63
  Mountain               7       2,889     157.85        59.4     93.69
  International          7       2,473     143.29        61.6     88.21
                       ---       -----                                 
    All Regions        111      61,168     171.61        66.2    113.68
                       ===      ======                                 
                                                                       
                                                                       
                                                                       
                   Year ended December 31, 2008                        
                   ----------------------------                        
                             Average                Percent            
                  Average   Occupancy              Change in           
                 Room Rate Percentages    RevPAR     RevPAR            
                 --------- -----------    ------     ------            
  Pacific          $198.45        73.7%   $146.16       (21.9)%        
  Mid-Atlantic      270.15        79.8     215.56       (22.3)         
  North Central     152.23        65.5      99.72       (20.1)         
  South Central     161.26        67.7     109.11       (15.8)         
  Florida           211.20        69.7     147.21       (21.9)         
  DC Metro          199.85        74.4     148.77        (5.8)         
  New England       179.11        71.9     128.85       (20.0)         
  Atlanta           172.87        66.0     114.01       (22.3)         
  Mountain          182.43        66.5     121.36       (22.8)         
  International     170.63        68.1     116.22       (24.1)         
    All Regions     198.30        71.6     141.97       (19.9)





                                                                     
                                                                     
                 Comparable Hotels by Property Type (a)              
                                                                     
              As of December 31, 2009 Quarter ended December 31, 2009
              ----------------------- -------------------------------
                                                   Average            
                No. of        No. of    Average   Occupancy           
              Properties       Rooms   Room Rate Percentages   RevPAR
              ----------       -----   --------- -----------   ------
  Urban               53      34,485    $194.12        68.7%  $133.28
  Suburban            31      11,646     134.47        60.1     80.85
  Resort/Conference   13       8,082     199.44        55.7    110.99
  Airport             14       6,955     113.27        69.5     78.67
                     ---       -----                                 
    All Types        111      61,168     174.73        65.4    114.27
                     ===      ======                                 
                                                                     
                                                                     
                                                                     
               Quarter ended December 31, 2008                       
               -------------------------------                       
                           Average                  Percent            
                Average   Occupancy               Change in           
               Room Rate Percentages     RevPAR      RevPAR            
               --------- -----------     ------      ------            
  Urban          $220.98        69.5%   $153.55       (13.2)%        
  Suburban        157.88        61.6      97.31       (16.9)         
  Resort/                                                            
   Conference     226.81        58.6     132.96       (16.5)         
  Airport         135.77        71.1      96.58       (18.5)         
    All Types     200.44        66.7     133.77       (14.6)





                                                                     
              As of December 31, 2009   Year ended December 31, 2009 
              -----------------------   ---------------------------- 
                                                   Average
                No. of        No. of    Average   Occupancy           
              Properties       Rooms   Room Rate Percentages    RevPAR
              ----------       -----   --------- -----------    ------
  Urban               53      34,485    $183.44        69.0%  $126.64
  Suburban            31      11,646     138.72        60.2     83.45
  Resort/                                                            
   Conference         13       8,082     215.19        61.1    131.57
  Airport             14       6,955     115.61        68.5     79.18
                     ---       -----                                 
    All                                                              
     Types           111      61,168     171.61        66.2    113.68
                     ===      ======                                 
                                                                     
                                                                     
                                                                     
                 Year ended December 31, 2008                 
                 ----------------------------    
                           Average                  Percent          
                Average   Occupancy               Change in          
               Room Rate Percentages    RevPAR       RevPAR          
               --------- -----------    ------       ------          
  Urban          $211.15        73.6%   $155.39       (18.5)%        
  Suburban        160.68        66.1     106.19       (21.4)         
  Resort/                                                            
   Conference     248.61        69.0     171.45       (23.3)         
  Airport         136.71        74.0     101.14       (21.7)         
    All Types     198.30        71.6     141.97       (19.9)         


  (a) See the notes to financial information for a discussion of reporting 
  periods and comparable hotel results.




                           HOST HOTELS & RESORTS, INC.
                        Comparable Hotel Operating Data
                    Schedule of Comparable Hotel Results (a)
               (unaudited, in millions, except hotel statistics)


                          Quarter ended December 31, Year ended December 31,
                                   2009         2008     2009         2008


  Number of hotels                  111          111      111          111
  Number of rooms                61,168       61,168   61,168       61,168
  Percent change in comparable
   hotel RevPAR                   (14.6)%           -   (19.9)%           -
  Operating profit
   margin under GAAP (b)            2.3%        13.6%     2.4%        14.4%
  Comparable hotel adjusted
   operating profit margin (b)(c)  21.2%        25.5%    21.1%        26.3%

  Comparable hotel sales
    Room                           $810         $948   $2,533       $3,166
    Food and beverage               425          505    1,266        1,591
    Other                            91          111      321          362
                                  -----        -----    -----        -----
      Comparable hotel sales (d)  1,326        1,564    4,120        5,119
                                  -----        -----    -----        -----
  Comparable hotel expenses
    Room                            223          238      694          779
    Food and beverage               317          367      957        1,164
    Other                            49           57      160          189
    Management fees, ground rent
     and other costs                456          504    1,438        1,639
                                  -----        -----    -----        -----
  Comparable hotel expenses (e)   1,045        1,166    3,249        3,771
                                  -----        -----    -----        -----
  Comparable hotel adjusted
   operating profit                 281          398      871        1,348
  Non-comparable hotel
   results, net (f)                  (1)           4        3           (1)
  Office buildings and select
   service properties, net (g)        1            8        1            7
  Comparable hotels classified as
   held-for-sale, net                 -            1        1            -
  Depreciation and amortization    (187)        (181)    (662)        (557)
  Corporate and other expenses      (64)         (13)    (116)         (58)
                                  -----        -----    -----        -----
  Operating profit                  $30         $217      $98         $739
                                  =====        =====    =====        =====


  (a) See the notes to the financial information for discussion of non-GAAP
  measures, reporting periods and comparable hotel results.

  (b) Operating profit margins are calculated by dividing the applicable 
  operating profit by the related revenue amount. GAAP margins are 
  calculated using amounts presented in the consolidated statement of 
  operations. Comparable margins are calculated using amounts presented in 
  the above table.  

  (c) The decline in GAAP margins and comparable hotel adjusted operating 
  profit margins includes the effect of the following two items of 
  approximately 50 basis points for the quarter and full year periods ended 
  December 31, 2009. (1) The 2008 full year comparable hotel operating 
  profit includes business interruption proceeds of approximately 
  $5 million, net of expenses, received in 2008 for the New Orleans Marriott
  which had previously been non-comparable. We did not receive any business 
  interruption proceeds in 2009. (2) We have incurred additional expenses in
  2009 due to the treatment of the ground lease payments related to the New 
  York Marriott Marquis. Since the renegotiation of the ground lease on the 
  New York Marriott Marquis in 1998, the ground lease payments have reduced 
  the deferred ground rent liability, and more recently, have been applied 
  against the deferred purchase price of the land. As a result, there was no
  operating profit reduction for these payments. In 2009, a small portion of
  the payments funded the deferred purchase price and the remainder of 
  approximately $7 million and $19 million for the quarter and full year, 
  respectively, have been treated as rent and deducted from operating 
  profit.  

  (d) The reconciliation of total revenues per the consolidated statements 
  of operations to the comparable hotel sales is as follows:



                                    Quarter ended           Year ended
                                     December 31,          December 31,
                                    2009      2008       2009         2008
  Revenues per the consolidated
   statements of operations       $1,331    $1,600     $4,158       $5,139
  Hotel sales for comparable hotels
   classified as held-for-sale         4         4         11           12
  Business interruption revenues
   for comparable hotels               -         -          -            7
  Hotel sales for the property for
   which we record  rental income,
   net                                12        13         42           51
  Rental income for office buildings
   and select service hotels         (26)      (33)       (84)         (91)
  Adjustment for hotel sales for
   comparable hotels  to reflect
   Marriott's fiscal year for
   Marriott managed hotels             5       (20)        (7)           1
                                  ------    ------     ------       ------
       Comparable hotel sales     $1,326    $1,564     $4,120       $5,119
                                  ======    ======     ======       ======



  (e) The reconciliation of operating costs per the consolidated statements 
  of operations to the comparable hotel expenses is as follows:



                                    Quarter ended          Year ended
                                     December 31,          December 31,
                                    2009      2008       2009         2008
  Operating costs and expenses
   per the consolidated statements
   of operations                  $1,301    $1,383     $4,060       $4,400
  Hotel expenses for comparable
   hotels classified as
   held-for-sale                       4         5         12           12
  Hotel expenses for the property
   for which we record rental
   income                             12        12         42           51
  Rent expense for office buildings
   and select service hotels         (25)      (25)       (83)         (84)
  Adjustment for hotel expenses
   for comparable hotels to reflect
   Marriott's fiscal year for
   Marriott-managed hotels             4       (15)        (4)           -
  Depreciation and amortization     (187)     (181)      (662)        (557)
  Corporate and other expenses       (64)      (13)      (116)         (58)
  Gain on insurance settlement         -         -          -            7
                                  ------    ------     ------       ------
       Comparable hotel expenses  $1,045    $1,166     $3,249       $3,771
                                  ======    ======     ======       ======


  (f) Non-comparable hotel results, net, includes the results of operations 
  of our non-comparable hotels whose operations are included in our 
  consolidated statements of operations as continuing operations and the 
  difference between the number of days of operations reflected in the 
  comparable hotel results and the number of days of operations reflected in
  the consolidated statements of operations.    

  (g) Represents rental income less rental expense for select service 
  properties and office buildings.




                        HOST HOTELS & RESORTS, INC.
                   Other Financial and Operating Data
            (unaudited, in millions, except per share amounts)


                                                     December 31,
                                                  2009           2008
  Equity
  ------
    Common shares outstanding                    646.3          525.3
    Common shares outstanding assuming
     conversion of minority partner OP Units (a) 658.2          540.4
    Preferred OP Units outstanding                 .02            .02
    Class E Preferred shares outstanding           4.0            4.0

  Security pricing
  ----------------
    Common (b)                                  $11.67          $7.57
    Class E Preferred (b)                       $25.23         $17.20
    3 1/4% Exchangeable Senior Debentures (c) $1,002.8        $861.51
    2 5/8% Exchangeable Senior Debentures (c)   $942.1        $663.70
    2 1/2% Exchangeable Senior Debentures (c) $1,062.8             $-

  Dividends declared per share for calendar
   year
    Common (d)                                    $.25           $.65
    Class E Preferred (e)                        $2.22          $2.22

  Debt
  ----
  Series K senior notes, with a rate of 7 1/8%
   due November 2013                              $725           $725
  Series M senior notes, with a rate of 7%
   due August 2012 (f)                             344            348
  Series O senior notes, with a rate of 6 3/8%
   due March 2015                                  650            650
  Series Q senior notes, with a rate of 6 3/4%
   due June 2016                                   800            800
  Series S senior notes, with a rate of 6 7/8% 
  due November 2014                                498            497
  Series T senior notes, with a rate of 9%
   due May 2017                                    387              -
  Exchangeable Senior Debentures, with a rate of
   3 1/4% due April 2024 (g)(h)                    323            383
  Exchangeable Senior Debentures, with a
   rate of 2 5/8% due April 2027 (g)(h)            484            533
  Exchangeable Senior Debentures, with a
   rate of 2 1/2% due October 2029 (the "2009 
   Debentures") (h)                                316              -
  Senior notes, with rate of 10.0% due May 2012      7              7
                                                 -----          -----
       Total senior notes                        4,534          3,943
  Mortgage debt (non-recourse) secured by $1.5
   billion and $2.1 billion of real estate assets,
   with an average interest rate of 5.1% and 6.2%
   at December 31, 2009 and December 31, 2008,
   respectively, maturing through December 2023
   (f)(i)                                        1,217          1,436
  Credit facility, including the $210 million
   term loan(j)                                      -            410
  Other                                             86             87
       Total debt  (k)(l)                       $5,837         $5,876
                                                ======         ======

  Percentage of fixed rate debt                     88%            88%
  Weighted average interest rate                   6.6%           6.4%
  Weighted average debt maturity             4.4 years      4.6 years


                          Quarter ended December 31, Year ended December 31,
                          -------------------------  -----------------------
                                2009         2008       2009           2008
  Hotel Operating Statistics
   for All Properties (m)
    Average daily rate       $174.31      $198.84    $170.93        $196.70
    Average occupancy           65.2%        66.6%      65.9%          71.4%
    RevPAR                   $113.61      $132.36    $112.57        $140.35

  (a) In connection with the 2009 $.25 per share common dividend described
   below, common OP unit holders received the cash distribution of 10% of 
  the $0.25 per share dividend paid by Host to its common stockholders, or 
  $0.025 per OP unit, but did not receive an equivalent per unit 
  distribution for the 90% of the dividend paid with Host common stock. 
  Therefore, subsequent to the issuance of shares of common stock to 
  stockholders of Host, each OP Unit is now convertible into 1.021494 common
  shares. At December 31, 2009, there are ll.7 million common OP Units held
  by  minority partners that are convertible into 11.9 million shares of 
  Host common stock.  


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

  (c) Amount reflects market price of a single $1,000 debenture as quoted by
  Bloomberg L.P.

  (d) In reliance on the specific terms of guidance issued by the IRS and, 
  subject to certain elections by our stockholders and the effect of a 10% 
  cash limitation, Host paid approximately 90% of the special dividend with 
  Host common stock or 13.4 million common shares, with the remaining 10% 
  paid with cash of approximately $15.6 million.

  (e) On December 16, 2009, we declared a fourth quarter preferred cash 
  dividend of $.5546875 per share for our Class E cumulative redeemable 
  preferred stock.  

  (f) During the first quarter of 2010, we used the proceeds from the 
  issuance of the 2009 Debentures and available cash to repurchase 
  $346 million face amount of our Series M senior notes and to repay the 
  mortgage debt on Atlanta Marriott Marquis of $124 million. 

  (g) During the first quarter of 2009, we repurchased $75 million face 
  amount of the 2004 Debentures with a carrying value of $72 million for 
  $69 million. We recorded a gain on repurchase of approximately $3 million.
  During the third and fourth quarters of 2009, we repurchased approximately
  $74 million face amount of the 2007 Debentures with a carrying value of 
  $68 million for $66 million. We recorded a gain on repurchase of 
  approximately $2 million. 

  (h) During the first quarter of 2009, we adopted a new accounting 
  requirement that issuers of cash-settled exchangeable debentures must 
  separately account for the liability and equity components in a manner 
  that will reflect the entity's nonconvertible debt borrowing rate on the 
  instrument's issuance date. Therefore, we are required to record the debt
  components of the Debentures at fair value as of the date of issuance with
  the adjustment to additional paid-in capital and amortize the resulting 
  discount as an increase to interest expense over the expected life of the 
  debt. The principal balance shown has been reduced by $124 million 
  and $76 million as of December 31, 2009 and December 31, 2008, 
  respectively, which reflects the remaining unamortized discount at these 
  dates. The discounts will be amortized through the first date at which the
  holders can require Host to repurchase the Debentures for cash (April 2010
  for the 2004 Debentures, April 2012 for the 2007 Debentures and October 
  2015 for the 2009 Debentures). The face amount of the 2004, 2007 and 2009 
  Debentures is $325 million, $526 million and $400 million, respectively, 
  at December 31, 2009. 

  (i) The assets securing mortgage debt represents the book value of real 
  estate assets, net of accumulated depreciation. These amounts do not 
  represent the current market value of the assets.

  (j) Currently, we have $600 million of available capacity under the 
  revolver portion of the credit facility.     

  (k) In accordance with GAAP, total debt includes the debt of entities that
  we consolidate, but do not own 100% of the interests, and excludes the 
  debt of entities that we do not consolidate, but have a non-controlling 
  ownership interest and record our investment therein under the equity 
  method of accounting. As of December 31, 2009, our non-controlling 
  partners' share of consolidated debt is $68 million and our share of debt 
  in unconsolidated investments is $332 million.

  (l) Total debt as of December 31, 2009 and December 31, 2008 includes net 
  discounts of $142 million and $86 million, respectively.

  (m) The operating statistics reflect all consolidated properties as of 
  December 31, 2009 and December 31, 2008, respectively. The operating 
  statistics include the results of operations for six properties 
  disposed of in 2009 (including one hotel for which our ground 
  lease expired in 2009 and will revert back to the ground lessor) 
  and two properties disposed of in 2008 prior to their disposition.




                       HOST HOTELS & RESORTS, INC.
         Reconciliation of Net Income to EBITDA, Adjusted EBITDA
                and Funds From Operations per Diluted Share
            (unaudited, in millions, except per share amounts)


                        Quarter ended December 31,   Year ended December 31,
                               2009          2008        2009          2008
  Net income (loss)            $(72)         $111       $(258)         $414
    Interest expense            115           114         379           375
    Depreciation and
     amortization               187           181         597           557
    Income taxes                (10)          (14)        (39)           (3)
    Discontinued operations (a)   -            10           8            23
                                ---           ---         ---           ---
  EBITDA                        220           402         687         1,366
    Gains on dispositions         -             -         (35)          (24)
    Non-cash impairment charges   -             3         131             3
    Amortization of deferred
     gains                       (1)           (1)         (4)           (4)
    Equity investment
     adjustments:
     Equity in (earnings)
      losses of affiliates       (5)           13          (3)           10
     Pro rata EBITDA of equity
      investments                17             1          33            30
    Consolidated partnership
     adjustments:
     Pro rata EBITDA
      attributable to non-
      controlling partners in
      other consolidated
      partnerships               (2)           (4)        (11)          (16)
                                ---           ---         ---           ---
  Adjusted EBITDA (b)          $229          $414        $798        $1,365
                               ====          ====        ====        ======

  (a) Reflects the interest expense, depreciation and amortization and 
  income taxes included in discontinued operations.

  (b) Adjusted EBITDA for the fourth quarter and full year 2009 has been 
  reduced by $41 million due to the accrual of a potential litigation loss.




                         Quarter ended December 31, Year ended December 31,
                             2009          2008        2009          2008
  Net income (loss)          $(72)         $111       $(258)         $414
   Less: Net (income) loss
          attributable to
          non-controlling
          interests             1            (2)          6           (19)
         Dividends on
          preferred stock      (2)           (2)         (9)           (9)
                              ---           ---         ---           ---
  Net income (loss)
   available to common
   Stockholders               (73)          107        (261)          386
  Adjustments:
    Gains on dispositions,
     net of taxes               -             -         (31)          (23)
    Amortization of deferred
     gains and other
     property transactions,
     net of taxes              (1)           (1)         (4)           (4)
    Depreciation and
     amortization (a)         187           191         604           578
    Partnership adjustments     2             6           4            27
    FFO of non-controlling
     interests of Host LP      (2)          (10)         (7)          (37)
  Adjustments for dilutive
   securities (b):
    Assuming conversion of
     2004 Exchangeable Senior
      Debentures                -             8           -            26
    Assuming deduction of
     gain recognized for the
     repurchase of 2004
     Exchangeable Debentures
     (c)                        -           (12)         (2)           (8)
                              ---           ---         ---           ---
  Diluted FFO (d)            $113          $289        $303          $945
                             ====          ====        ====          ====

  Diluted weighted average
   shares outstanding (d)   628.9         552.4       589.0         552.8
  Diluted FFO per share (d)  $.18          $.52        $.51         $1.71



  (a) In accordance with the guidance on FFO per diluted share provided by 
  the National Association of Real Estate Investment Trusts, we do not 
  adjust net income for the non-cash impairment charges when determining our
   FFO per diluted share. 

  (b) FFO per diluted share in accordance with NAREIT is 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, exchangeable debt securities and other non-
  controlling interests that have the option to convert their limited 
  partnership interest to common OP Units. No effect is shown for securities
   if they are anti-dilutive.

  (c) During the first quarter of 2009 and fourth quarter of 2008, we 
  repurchased $75 million and $100 million face amount, respectively, of the
   2004 Debentures with a carrying value of $72 million and $96 million for 
  $69 million and $82 million, respectively. The adjustments to dilutive FFO
   related to the 2004 Debentures repurchased include the $3 million and 
  $14 million gain on repurchase in 2009 and 2008, respectively, net of 
  interest expense on the repurchased Debentures. 

  (d) FFO per diluted share and earnings per diluted share were 
  significantly affected by certain transactions, the effects of which are 
  shown in the table below (in millions, except per share amounts):






                                 Quarter ended             Quarter ended
                               December 31, 2009         December 31, 2008
                               -----------------         -----------------
                             Net Income                Net Income
                                  (Loss)     FFO           (Loss)        FFO
                                   ---       ---             ---         ---
  Loss on litigation (1)           $(41)        $(41)         $-          $-
  Gain (loss) on debt
   extinguishments (2)                1            1           -           -
  (Gain) loss attributable to
   non-controlling interests (3)      1            1           -           -
                                    ---          ---         ---         ---
      Total (4)                    $(39)        $(39)         $-          $-
                                   ====         ====         ===         ===
      Diluted shares              626.5        628.9       527.1       552.4
      Per diluted share           $(.07)       $(.06)         $-          $-
                                  =====        =====         ===         ===

                                  Year ended                  Year ended
                               December 31, 2009           December 31, 2008
                               -----------------           -----------------
                             Net Income                Net Income
                                  (Loss)     FFO           (Loss)        FFO
                                   ---       ---             ---         

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