Largest U.S. REIT, Host, Reports 3rd Qtr Net Income Fell 44% Compared to Last Year

Two Hawaii Properties Report Decline in Business

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. October 14, 2008

BETHESDA, MD, October 10, 2008. Host Hotels & Resorts, Inc. (NYSE:HST) , the nation's largest lodging real estate investment trust (REIT), today announced its results of operations for the third quarter ended September 5, 2008:

-- Total revenue decreased $29 million, or 2.4%, to $1,168 million for the third quarter and increased $34 million, or 0.9%, to $3,641 million for year-to-date 2008.

-- Net income decreased $43 million to $54 million and income from continuing operations decreased $52 million to $41 million for the third quarter of 2008. For year-to-date 2008, net income decreased $128 million to $305 million and income from continuing operations increased $1 million to $280 million compared to year-to-date 2007. Earnings per diluted share decreased $.08 to $.10 for the third quarter and decreased $.23 to $.56 for year-to-date 2008. Net income in 2008 included a net gain of approximately $12 million, or $.02 per diluted share, for the third quarter and $22 million, or $.04 per diluted share, for year-to-date associated with hotel dispositions.

-- By comparison, net income in 2007 included a net gain of approximately $90 million, or $.16 per diluted share, for year-to-date 2007 associated with gains from hotel dispositions, partially offset by debt refinancing costs. There were no dispositions in the third quarter of 2007.

-- Funds from Operations (FFO) per diluted share decreased 18.4% to $.31 for the third quarter and increased 4.3% to $1.21 for year-to-date 2008. For year-to-date 2007, FFO was reduced by $.08 per diluted share for costs associated with debt refinancings.

The Company also announced the following third quarter results for Host Hotels & Resorts, L.P., (Host LP) through which it conducts all of its operations and, as of September 5, 2008, holds approximately 96% of the partnership interests:

-- Net income decreased $44 million to $57 million for the third quarter and decreased $130 million to $319 million for year-to-date 2008.

-- Adjusted EBITDA, which is Earnings before Interest Expense, Income Taxes, Depreciation, Amortization and other items, decreased $27 million, for both third quarter and year-to-date 2008, to $270 million for the third quarter and to $951 million for year-to-date 2008.

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).

Operating Results

Comparable hotel RevPAR for the third quarter of 2008 decreased 2.1% when compared to the third quarter of 2007. RevPAR for the third quarter was significantly affected by the performance of the Company's two properties in Hawaii, which experienced a significant decline as a result of a decrease in leisure transient and group demand in this market. Excluding the two Hawaiian hotels from our comparable portfolio, the Company's RevPAR decline is reduced by 170 basis points to a decline of .4%. Year-to-date 2008 comparable hotel RevPAR increased .6% when compared to year-to-date 2007. Comparable hotel adjusted operating profit margins decreased 140 basis points and 60 basis points for the third quarter and year-to-date 2008, respectively. For further detail, see "Notes to the Financial Information."

Balance Sheet

As of September 5, 2008, the Company had approximately $494 million of cash and cash equivalents. Subsequent to the end of the third quarter, the Company increased its available cash by $200 million through a draw under the revolver portion of its credit facility. Currently the Company has access to an additional $400 million of available capacity under the credit facility. The Company intends to maintain higher than historical cash levels for working capital because of the uncertainty in the financial markets. In addition to working capital, the Company intends to use its available funds for dividend payments, stock repurchases, investments in its portfolio, to acquire new properties or to make debt repayments.

Stock Repurchase Program

Under its previously announced stock repurchase program, the Company repurchased 2.1 million shares of its common stock valued at approximately $27.7 million during the third quarter. Year-to-date, the Company has repurchased approximately 6.5 million shares for approximately $100 million.

Capital Expenditures

The Company continued its capital expenditure program which totaled approximately $153 million and $463 million for the third quarter and year-to-date 2008, respectively. These expenditures included return on investment (ROI) and repositioning projects of approximately $78 million and $218 million for the third quarter and year-to-date 2008, respectively.

Dividend

As previously announced, the Company expects to declare a fixed $.20 per share common dividend each quarter, as well as a special dividend in the fourth quarter of each year, the amount of which will be based on the Company's estimated taxable income. Based on the Company's current guidance for 2008, which assumes that no hotel sales will be completed in the fourth quarter, the Company expects that the fourth quarter special dividend will be in the range of zero to $.05.

2008 Outlook

The Company expects comparable hotel RevPAR to decline approximately 3% to 5% for the fourth quarter and to range from flat to a decrease of 1% for the full year. For full year 2008, the Company expects its operating profit margins under GAAP to decrease approximately 280 basis points to 320 basis points and its comparable hotel adjusted operating profit margins to decrease approximately 100 basis points to 125 basis points. Based upon this guidance, the Company estimates that full year 2008 guidance for Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. is as follows:

Host Hotels & Resorts, Inc.

-- earnings per diluted share should be approximately $.81 to $.86 for the full year;

-- net income should be approximately $437 million to $465 million for the full year; and

-- FFO per diluted share should be approximately $1.75 to $1.80 for the full year.

Host Hotels & Resorts, L.P.

-- net income for 2008 should be approximately $456 million to $485 million; and

-- Adjusted EBITDA for 2008 should be approximately $1,375 million to $1,400 million.