Host Hotels Reports a 2nd Qtr 2009 Net Loss

Total Revenue Decreased $324 million, or 23.3%

. July 22, 2009

BETHESDA, MD, July 22, 2009 - Host Hotels & Resorts, Inc. (NYSE:HST) , the nation's largest lodging real estate investment trust (REIT), today announced its results of operations for the second quarter ended June 19, 2009.

-- Total revenue decreased $324 million, or 23.3%, to $1,064 million for

the second quarter and $494 million, or 20.3%, to $1,936 million for

year-to-date 2009 as compared to last year.

-- Net loss was $69 million for the second quarter of 2009 compared to

net income of $193 million for the second quarter of 2008. For

year-to-date 2009, net loss was $129 million compared to net income of

$256 million for year-to-date 2008. Loss per diluted share was $.12

for the second quarter of 2009 compared to earnings per diluted share

of $.34 in 2008. For year-to-date 2009, loss per diluted share was

$.24 compared to earnings per diluted share of $.45 for year-to-date

Operating results for the periods presented were affected by several items including:

-- non-cash impairment charges recorded on four hotels and the Company's

investment in its European joint venture of $91 million and $131

million for second quarter and year-to-date 2009, respectively;

-- non-cash interest expense in 2008 and 2009 due to an accounting change

implemented retrospectively in the first quarter of 2009 related to

the Company's exchangeable debentures; and

-- gains associated with hotel dispositions and other items.

The net effect of these items on loss per diluted share for the second quarter of 2009 was a decrease in earnings of $89 million, or $.16 per diluted share. For the second quarter of 2008, these items increased earnings by $6 million, or $.01 per diluted share. The net effect of these items was a decrease in earnings of $117 million, or $.21 per diluted share, and $4 million, or $.01 per diluted share, for year-to-date 2009 and 2008, respectively.

-- Funds from Operations (FFO) per diluted share was $.12 for the second

quarter of 2009 compared to $.55 per diluted share for the second

quarter of 2008. FFO per diluted share was also affected by the

non-cash interest expense, non-cash impairment charges and other items

described above. The net effect of these items was a decrease in FFO

per diluted share of $.15 and $.01 for the second quarter 2009 and

2008, respectively. For year-to-date 2009, FFO per diluted share was

$.22 compared to $.88 per diluted share for year-to-date 2008. The net

effect the non-cash interest expense, non-cash impairment charges and

other items was a decrease in FFO per diluted share of $.24 and $.01

for year-to-date 2009 and 2008, respectively.

-- Adjusted EBITDA, which is Earnings before Interest Expense, Income

Taxes, Depreciation, Amortization and other items, decreased $163

million to $256 million for the second quarter, and $251 million to

$430 million for year-to-date 2009 when compared to last year.

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 for the second quarter of 2009 decreased 24.9% when compared to the second quarter of 2008. Year-to-date 2009 comparable hotel RevPAR decreased 22.7% when compared to year-to-date 2008. Comparable hotel adjusted operating profit margins decreased 560 basis points and 500 basis points for the second quarter and year-to-date 2009, respectively. For further detail, see "Notes to the Financial Information."

LIQUIDITY

As of June 19, 2009, the Company had over $1.3 billion of cash and cash equivalents and $600 million of available capacity under its credit facility. During the second quarter, the Company completed two significant transactions which enhanced its financial flexibility and liquidity. These transactions were:

-- the issuance of 75,750,000 shares of common stock for net proceeds of

approximately $480 million; and

-- the issuance of $400 million, 9% Series T senior notes maturing May

15, 2017 for net proceeds of approximately $380 million;

The proceeds from these transactions, when combined with the first quarter $120 million mortgage loan obtained on the JW Marriott, Washington D.C. and the sale of the Hyatt Regency Boston for $113 million resulted in total proceeds raised year-to-date of over $1.1 billion. Subsequent to the end of the second quarter, we also disposed of three non-core properties: the 253-room Washington Dulles Marriott Suites, the 448-room Sheraton Stamford and the 430-room Boston Marriott Newton, for net proceeds of approximately $64 million. The proceeds from these transactions have been and will continue to be used to repay or redeem near-term debt maturities and to maintain higher than historical cash balances due to the current uncertainty in the credit markets. During the second quarter, the Company repaid $200 million outstanding under the revolver portion of the credit facility. Additionally, subsequent to quarter end, the Company repaid the $175 million mortgage debt secured by the San Diego Marriott Hotel & Marina. As a result of these transactions, the Company's remaining debt maturities total $480 million through year end 2010, which includes principal amortization of $20 million.

CAPITAL EXPENDITURES

Capital expenditures totaled approximately $84 million and $192 million for the quarter and year-to-date, which was a decline of approximately 48% and 38%, respectively, from the prior year. These expenditures included return on investment (ROI) and repositioning projects of approximately $47 million and $101 million for the second quarter and year-to-date 2009, respectively.

DIVIDEND

The Company intends to declare a common dividend of approximately $.23 to $.25 per share in the first half of September 2009. The common dividend is expected to consist of cash in the amount of approximately $.03 per share with the remainder to be paid in shares of common stock, both of which will be taxable to stockholders. The common dividend will be paid by the end of 2009. The Company intends to continue paying a cash dividend on its preferred stock.

2009 OUTLOOK

The Company's ability to predict future operating results continues to be significantly affected by the current recession and its effect on business and leisure travel. The Company expects that the trends affecting the economy will continue to depress hotel operating results across the portfolio for the remainder of 2009. In the event that comparable hotel RevPAR were to decline approximately 20% to 23% for the full year 2009, the Company would anticipate that full year 2009 operating profit margins under GAAP would decrease approximately 1,170 basis points to 1,290 basis points and its comparable hotel adjusted operating profit margins would decrease approximately 600 basis points to 650 basis points. Based upon these parameters, the Company would estimate the following would occur for full year 2009:

-- loss per diluted share should be approximately $.46 to $.53;

-- net loss should be approximately $267 million to $310 million;

-- FFO per diluted share should be approximately $.43 to $.50 (including

the effect of the deduction of $131 million in non-cash impairment

charges and $26 million of non-cash interest expense on the

exchangeable debentures due to an accounting change for 2009, or, in

total, a reduction of $.25 per diluted share); and

-- Adjusted EBITDA should be approximately $750 million to $800 million.

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