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The Largest U.S. Hotel Real Estate Investment Trust, Host Hotels & Resorts, Reports
3rd Qtr Net Income Fell 44% to $54 million form $97 million a Year Ago

Two Hawaii Properties Report Decline in Business

Hotel Operating Data
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Host Hotels & Resorts, Inc. Reports Results of Operations for the Third Quarter of 2008 

BETHESDA, Md., Oct. 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.
For further detail of certain transactions affecting net income of the Company and Host LP, earnings per diluted share and FFO per diluted share, refer to the "Schedule of Significant Transactions Affecting Earnings per Share and Funds From Operations per Diluted Share" attached to this press release.

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

                                              September 5,     December 31,
                                                   2008              2007
                                              (unaudited)
                                   ASSETS

  Property and equipment, net                    $10,731           $10,588
  Due from managers                                   99               106
  Investments in affiliates                          210               194
  Deferred financing costs, net                       51                51
  Furniture, fixtures and equipment
   replacement fund                                  121               122
  Other                                              228               198
  Restricted cash                                     55                65
  Cash and cash equivalents                          494               488
      Total assets                               $11,989           $11,812
 

                    LIABILITIES AND STOCKHOLDERS' EQUITY

  Debt
    Senior notes, including $1,091 million
     and $1,088 million, respectively, net of
     discount, of Exchangeable Senior Debentures  $4,117            $4,114
    Mortgage debt                                  1,492             1,423
    Credit facility, including the $210 million
     term loan                                       210                 -
    Other                                             87                88
      Total debt                                   5,906             5,625
  Accounts payable and accrued expenses (b)          132               315
  Other                                              206               215
      Total liabilities                            6,244             6,155

  Interest of minority partners of Host
   Hotels & Resorts, L.P.                            223               188
  Interest of minority partners of other
   consolidated partnerships                          26                28

  Stockholders' equity
    Cumulative redeemable preferred stock
     (liquidation preference $100 million)
     50 million shares authorized; 4.0
     million shares issued and outstanding            97                97
    Common stock, par value $.01, 750 million
     shares authorized; 518.9 million shares
     and 522.6 million shares issued and
     outstanding, respectively                         5                 5
    Additional paid-in capital                     5,638             5,673
    Accumulated other comprehensive income            44                45
    Deficit                                         (288)             (379)
      Total stockholders' equity                   5,496             5,441
      Total liabilities and stockholders'
       equity                                    $11,989           $11,812

  (a)   Our consolidated balance sheet as of September 5, 2008 has been
        prepared without audit. Certain information and footnote disclosures
        normally included in financial statements presented in accordance
        with GAAP have been omitted. The consolidated balance sheets should
        be read in conjunction with the consolidated financial statements
        and notes thereto included in our most recent Annual Report on Form
        10-K.

  (b)   Amount includes $209 million at year end 2007 for the accrual of
        the year end 2007 dividend of $.40 per common share. The third
        quarter 2008 dividend of $.20 per common share was declared
        subsequent to the end of the third quarter on September 18, 2008.
 
 

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

                                         Quarter ended  Year-to-date ended
                                     September September September September
                                       5, 2008 7, 2007   5, 2008   7, 2007

  Revenues
    Rooms                                 $757    $769   $2,236   $2,216
    Food and beverage                      311     323    1,085    1,071
    Other                                   78      83      241      242
      Total hotel sales                  1,146   1,175    3,562    3,529
    Rental income                           22      22       79       78
      Total revenues                     1,168   1,197    3,641    3,607
  Expenses
    Rooms                                  191     190      547      533
    Food and beverage                      254     260      798      791
    Hotel departmental expenses            313     307      897      870
    Management fees                         49      55      173      171
    Other property-level expenses           91      93      268      268
    Depreciation and amortization          133     119      388      352
    Corporate and other expenses            14      14       45       51
    Gain on insurance settlement (b)         -      (5)      (7)      (5)
      Total operating costs and
       expenses                          1,045   1,033    3,109    3,031
  Operating profit                         123     164      532      576
  Interest income                            4       9       13       27
  Interest expense                         (83)    (82)    (240)    (312)
  Net gains on property transactions
   and other                                 -       3        2        5
  Minority interest expense                  -      (5)     (19)     (21)
  Equity in earnings of affiliates           1       -        3        5
  Income before income taxes                45      89      291      280
  Benefit (provision) for income taxes      (4)      4      (11)      (1)
  Income from continuing operations         41      93      280      279
  Income from discontinued operations ( c ) 13       4       25      154
  Net income                                54      97      305      433
  Less: Dividends on preferred stock        (2)     (2)      (6)      (6)
  Net income available to common
   stockholders                            $52     $95     $299     $427
  Basic earnings per common share:
    Continuing operations                 $.07    $.17     $.52     $.52
    Discontinued operations                .03     .01      .05      .30
      Basic earnings per common share     $.10    $.18     $.57     $.82
  Diluted earnings per common share
    Continuing operations                 $.07    $.17     $.52     $.51
    Discontinued operations                .03     .01      .04      .28
      Diluted earnings per common share   $.10    $.18     $.56     $.79

  (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)   The gain on insurance settlement reflects business interruption
        insurance proceeds from damages incurred from Hurricane Katrina in
        2005 and excludes the $2 million of management fees due to the
        manager of the hotel for the first quarter of 2008 related to the
        proceeds.

  ( c ) Reflects the results of operations and gains on sale, net of the
        related income tax, for two properties sold in 2008, and nine
        properties sold in 2007.
 
 

                         HOST HOTELS & RESORTS, INC.
                          Earnings per Common Share
              (unaudited, in millions, except per share amounts)

                                       Quarter ended       Quarter ended
                                     September 5, 2008   September 7, 2007
                                                  Per                  Per
                                                 Share                Share
                                   Income Shares Amount Income Shares Amount

  Net income                          $54  519.3  $.10   $97    522.3  $.19
    Dividends on preferred stock       (2)     -     -    (2)       -  (.01)
  Basic earnings available to common
   stockholders (a)(b)                 52  519.3   .10    95    522.3   .18
    Assuming distribution of common
     shares granted under the
     comprehensive stock plan less
     shares assumed purchased at
     average market price               -     .3     -     -       .8     -
    Assuming conversion of minority OP
     units issuable                     -      -     -     -      1.2     -
    Assuming conversion of 2004
     Exchangeable Senior Debentures     -      -     -     4     29.5     -
  Diluted earnings available to
   common stockholders (a)(b)         $52  519.6  $.10   $99    553.8  $.18
 

                                    Year-to-date ended   Year-to-date ended
                                     September 5, 2008    September 7, 2007
                                                  Per                  Per
                                                 Share                Share
                                   Income Shares Amount Income Shares Amount

  Net income                         $305  520.8  $.58  $433    522.0  $.83
    Dividends on preferred stock       (6)     -  (.01)   (6)       -  (.01)
  Basic earnings available to common
   stockholders (a)(b)                299  520.8   .57   427    522.0   .82
    Assuming distribution of common
     shares granted under the
     comprehensive stock plan less
     shares assumed purchased at
     average market price               -     .4     -     -       .9     -
    Assuming conversion of minority OP
     units issuable                     -      -     -     -      1.2     -
    Assuming conversion of 2004
     Exchangeable Senior Debentures    13   31.2  (.01)   13     29.5  (.03)
  Diluted earnings available to
   common stockholders (a)(b)        $312  552.4  $.56  $440    553.6  $.79

  (a)  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. Dilutive securities may include shares granted
       under comprehensive stock plans, preferred OP Units held by minority
       partners, exchangeable debt securities and other minority 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.

  (b)  Our results for both periods presented were significantly affected by
       certain transactions. For further detail see "Schedule of Significant
       Transactions Affecting Earnings per Share and Funds From Operations
       per Diluted Share."
 
 

                       HOST HOTELS & RESORTS, INC.
                     Comparable Hotel Operating Data
                               (unaudited)

                                  Comparable Hotels by Region (a)

                                                         Quarter ended
                           As of September 5, 2008     September 5, 2008

                                              Average   Average
                            No. of    No. of   Daily    Occupancy
                          Properties   Rooms    Rate   Percentages RevPAR
  Pacific                         27  15,936  $193.33     80.9%    $156.43
  Mid-Atlantic                    11   8,684   258.56     81.6      210.89
  North Central                   14   6,175   153.73     72.8      111.91
  Florida                          9   5,676   165.06     67.8      111.95
  DC Metro                        13   5,666   175.31     80.0      140.29
  New England                     11   5,663   175.51     77.4      135.76
  South Central                    8   4,358   149.97     62.7       94.09
  Mountain                         8   3,372   136.63     65.6       89.70
  Atlanta                          7   2,589   179.13     62.1      111.24
  International                    7   2,471   171.67     64.7      111.05
    All Regions                  115  60,590   187.00     74.9      140.13
 

                                   Quarter ended September 7, 2007

                                       Average   Average            Percent
                                        Daily    Occupancy         Change in
                                        Rate   Percentages  RevPAR  RevPAR
  Pacific                              $198.97     82.6%   $164.36    (4.8)%
  Mid-Atlantic                          240.98     85.8     206.70     2.0
  North Central                         157.40     75.6     119.06    (6.0)
  Florida                               161.15     68.5     110.46     1.3
  DC Metro                              175.09     77.5     135.63     3.4
  New England                           171.34     84.7     145.14    (6.5)
  South Central                         146.60     65.8      96.53    (2.5)
  Mountain                              130.13     71.0      92.45    (3.0)
  Atlanta                               184.37     66.1     121.91    (8.8)
  International                         155.41     66.6     103.50     7.3
    All Regions                         184.54     77.5     143.15    (2.1)

                                                       Year-to-date ended
                           As of September 5, 2008      September 5, 2008

                                              Average   Average
                            No. of    No. of   Daily    Occupancy
                          Properties   Rooms    Rate   Percentages RevPAR

  Pacific                         27  15,936  $201.37     76.9%    $154.86
  Mid-Atlantic                    11   8,684   255.14     79.3      202.32
  North Central                   14   6,175   150.95     66.6      100.48
  Florida                          9   5,676   218.67     75.6      165.31
  DC Metro                        13   5,666   196.54     76.4      150.13
  New England                     11   5,663   174.84     72.7      127.13
  South Central                    8   4,358   163.73     68.7      112.56
  Mountain                         8   3,372   173.01     66.8      115.57
  Atlanta                          7   2,589   190.25     67.1      127.74
  International                    7   2,471   172.50     69.3      119.60
    All Regions                  115  60,590   198.30     73.8      146.27
 

                              Year-to-date ended September 7, 2007

                                       Average   Average            Percent
                                        Daily    Occupancy         Change in
                                        Rate    Percentages RevPAR  RevPAR
  Pacific                              $201.57     77.6%   $156.33    (0.9)%
  Mid-Atlantic                          241.03     82.4     198.69     1.8
  North Central                         150.04     70.3     105.53    (4.8)
  Florida                               214.38     73.7     158.03     4.6
  DC Metro                              193.00     77.6     149.72     0.3
  New England                           168.33     74.4     125.30     1.5
  South Central                         158.83     72.0     114.30    (1.5)
  Mountain                              166.73     69.9     116.49    (0.8)
  Atlanta                               193.47     69.1     133.70    (4.5)
  International                         151.35     67.5     102.11    17.1
    All Regions                         193.26     75.3     145.46     0.6
 
 

                       HOST HOTELS & RESORTS, INC.
                     Comparable Hotel Operating Data
                               (unaudited)
 

                    Comparable Hotels by Property Type (a)

                                                         Quarter ended
                           As of September 5, 2008     September 5, 2008
                                              Average   Average
                            No. of    No. of   Daily    Occupancy
                          Properties   Rooms    Rate   Percentages  RevPAR
  Urban                           55  32,989  $204.22      78.2%   $159.70
  Suburban                        32  12,311   154.84      70.3     108.84
  Resort/Conference               13   8,082   209.98      67.3     141.32
  Airport                         15   7,208   132.26      76.4     101.10
    All Types                    115  60,590   187.00      74.9     140.13
 

                                   Quarter ended September 7, 2007
                                       Average    Average           Percent
                                        Daily    Occupancy         Change in
                                        Rate   Percentages  RevPAR  RevPAR
  Urban                                $197.08     81.0%   $159.73       -%
  Suburban                              153.75     71.2     109.48    (0.6)
  Resort/Conference                     221.06     72.9     161.26   (12.4)
  Airport                               132.42     77.6     102.70    (1.6)
    All Types                           184.54     77.5     143.15    (2.1)

                                                       Year-to-date ended
                           As of September 5, 2008      September 5, 2008
                                              Average   Average
                            No. of    No. of   Daily    Occupancy
                          Properties   Rooms    Rate   Percentages  RevPAR
  Urban                           55  32,989  $210.29     75.8%    $159.44
  Suburban                        32  12,311   159.58     67.3      107.43
  Resort/Conference               13   8,082   256.76     73.8      189.58
  Airport                         15   7,208   138.69     75.3      104.42
    All Types                    115  60,590   198.30     73.8      146.27
 

                              Year-to-date ended September 7, 2007
                                       Average   Average            Percent
                                        Daily    Occupancy         Change in
                                        Rate    Percentages RevPAR  RevPAR
  Urban                                $202.31     78.0%   $157.73     1.1%
  Suburban                              156.11     68.6     107.04     0.4
  Resort/Conference                     258.75     74.1     191.67    (1.1)
  Airport                               137.20     75.7     103.91     0.5
    All Types                           193.26     75.3     145.46     0.6

  (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  Year-to-date ended
                                     September September September September
                                         5, 2008  7, 2007  5, 2008  7, 2007

  Number of hotels                           115      115      115      115
  Number of rooms                         60,590   60,590   60,590   60,590
  Percent change in comparable hotel
   RevPAR                                  (2.1%)      -       .6%       -
  Operating profit margin under GAAP (b)   10.5%    13.7%    14.6%    16.0%
  Comparable hotel adjusted operating
   profit margin (b)                      23.45%   24.85%    26.6%    27.2%
  Food and beverage profit margin under
   GAAP (b)                                18.3%    19.5%    26.5%    26.1%
  Comparable food and beverage adjusted
   profit margin (b)                       18.5%    20.1%    26.7%    26.5%

  Comparable hotel sales
    Room                                    $741     $757   $2,204   $2,188
    Food and beverage ( c )                  308      323    1,079    1,071
    Other                                     79       84      245      247
      Comparable hotel sales (d)           1,128    1,164    3,528    3,506
  Comparable hotel expenses
    Room                                     187      186      538      524
    Food and beverage (e)                    251      258      791      787
    Other                                     45       49      132      135
    Management fees, ground rent and other
     costs                                   380      382    1,130    1,108
      Comparable hotel expenses (f)          863      875    2,591    2,554
  Comparable hotel adjusted operating
   profit                                    265      289      937      952
  Non-comparable hotel results, net (g)        5        3       22       23
  Office buildings and select service
   properties, net (h)                         -        -       (1)      (1)
  Depreciation and amortization             (133)    (119)    (388)    (352)
  Corporate and other expenses               (14)     (14)     (45)     (51)
  Gain on insurance settlement                 -        5        7        5
  Operating profit                          $123     $164     $532     $576

  (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 reconciliation of total food and beverage sales per the
        consolidated statements of operations to the comparable food and
        beverage sales is as follows:

                                         Quarter ended   Year-to-date ended
                                     September September September September
                                       5, 2008  7, 2007   5, 2008   7, 2007
       Food and beverage sales per the
        consolidated statements of
        operations                        $311    $323    $1,085    $1,071
       Non-comparable food and beverage
        sales                               (8)     (4)      (34)      (24)
       Food and beverage sales for the
        property for which we record
        rental income                        5       4        21        20
       Adjustment for food and beverage
        sales for comparable hotels to
        reflect Marriott's fiscal year
        for Marriott-managed hotels          -       -         7         4
           Comparable food and beverage
            sales                         $308    $323    $1,079    $1,071
 

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

                                          Quarter ended   Year-to-date ended
                                     September September September September
                                       5, 2008   7, 2007   5, 2008   7, 2007
       Revenues per the consolidated
        statements of operations          $1,168   $1,197   $3,641   $3,607
       Non-comparable hotel sales            (31)     (24)    (114)     (96)
       Hotel sales for the property for
        which we record rental income,
        net                                   11       10       38       37
       Rental income for office
        buildings and select service
        hotels                               (20)     (19)     (58)     (56)
       Adjustment for hotel sales for
        comparable hotels to reflect
        Marriott's fiscal year for
        Marriott-managed hotels                -        -       21       14
           Comparable hotel sales         $1,128   $1,164   $3,528   $3,506
 

  (e)  The reconciliation of total food and beverage expenses per the
       consolidated statements of operations to the comparable food and
       beverage expenses is as follows:

                                          Quarter ended   Year-to-date ended
                                     September September September September
                                       5, 2008   7, 2007   5, 2008   7, 2007
       Food and beverage expenses per
        the consolidated statements of
        operations                         $254     $260     $798     $791
       Non-comparable food and beverage
        expense                              (6)      (5)     (25)     (19)
       Food and beverage expenses for
        the property for which we
        record rental income                  3        3       13       12
       Adjustment for food and beverage
        expenses for comparable hotels
        to reflect Marriott's fiscal
        year for Marriott-managed
        hotels                                -        -        5        3
           Comparable food and beverage
            expenses                       $251     $258     $791     $787

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

                                          Quarter ended   Year-to-date ended
                                     September September September September
                                       5, 2008   7, 2007   5, 2008   7, 2007
       Operating costs and expenses per
        the consolidated statements of
        operations                        $1,045   $1,033   $3,109   $3,031
       Non-comparable hotel expenses         (26)     (20)     (87)     (70)
       Hotel expenses for the property
        for which we record rental
        income                                11        9       39       38
       Rent expense for office buildings
        and select service hotels            (20)     (19)     (59)     (57)
       Adjustment for hotel expenses for
        comparable hotels to reflect
        Marriott's fiscal year for
        Marriott-managed hotels                -        -       15       10
       Depreciation and amortization        (133)    (119)    (388)    (352)
       Corporate and other expenses          (14)     (14)     (45)     (51)
       Gain on insurance settlement            -        5        7        5
           Comparable hotel expenses        $863     $875   $2,591   $2,554

  (g)  Non-comparable hotel results, net, includes the following items: (i)
       the results of operations of our non-comparable hotels whose
       operations are included in our consolidated statement of operations
       as continuing operations and (ii) 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.

  (h)  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)

                                              September 5,      December 31,
                                                 2008               2007
  Equity
    Common shares outstanding                      518.9              522.6
    Common shares and minority held
     common OP Units outstanding                   540.2              540.9
    Preferred OP Units outstanding                   .02                .02
    Class E Preferred shares outstanding             4.0                4.0

  Security pricing
    Common (a)                                    $14.32             $17.04
    Class E Preferred (a)                         $24.03             $25.05
    3 1/4% Exchangeable Senior Debentures (b)  $1,032.50          $1,153.19
    2 5/8% Exchangeable Senior Debentures (b)    $810.00            $855.44

  Dividends declared per share for calendar year
    Common ( c )                                    $.60              $1.00
    Class E Preferred ( c )                        $1.67              $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                                   348                347
  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                       497                497
  $500 million Exchangeable Senior
   Debentures, with a rate of 3 1/4% due
    April 2024                                       497                496
  $600 million Exchangeable Senior
   Debentures, with a rate of 2 5/8%
   due April 2027                                    593                592
  Senior notes, with a rate of 10.0%
   due May 2012                                        7                  7
      Total senior notes                           4,117              4,114
  Mortgage debt (non-recourse) secured by
   $2.2 billion of real estate assets, with
   an average interest rate of 6.4% and 6.6% at
   September 5, 2008 and December 31, 2007,
   respectively, maturing through December 2023    1,492              1,423
  Credit facility, including the $210 million
   term loan (d)                                     210                  -
  Other                                               87                 88
      Total debt (e)(f)                           $5,906             $5,625

  Percentage of fixed rate debt                    91.4%               100%
  Weighted average interest rate                    5.9%               6.0%
  Weighted average debt maturity               5.0 years          5.7 years
 

                                         Quarter ended    Year-to-date ended
                                     September September September September
                                       5, 2008   7, 2007   5, 2008   7, 2007
  Hotel Operating Statistics for All
   Properties (g)
     Average daily rate                 $184.53  $181.71  $195.80  $190.20
     Average occupancy                    74.7%    76.5%    73.6%    74.6%
     RevPAR                             $137.75  $138.97  $144.07  $141.81

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

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

  ( c ) On September 18, 2008, the Company declared a third quarter common
        dividend of $0.20 per share and a third quarter preferred dividend
        of $.5546875 per share for its Class E cumulative redeemable
        preferred stock.

  (d)   Subsequent to the end of the third quarter, the Company drew $200
        million under the revolver portion of its credit facility. The
        Company currently has $400 million of remaining available capacity
        under the revolver portion of the Credit Facility.

  (e)   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
        minority ownership interest and record our investment therein under
        the equity method of accounting. As of September 5, 2008, our
        minority partners' share of consolidated debt is $68 million and our
        share of debt in unconsolidated investments is $365 million.

  (f)   Total debt as of September 5, 2008 and December 31, 2007 includes
        net discounts of $11 million and $13 million, respectively.

  (g)   The operating statistics reflect all consolidated properties as of
        September 5, 2008 and September 7, 2007, respectively. The operating
        statistics include the results of operations for eleven properties
        sold as of September 5, 2008 prior to their disposition.
 
 

                       HOST HOTELS & RESORTS, INC.
      Reconciliation of Net Income Available to Common Stockholders
                to Funds From Operations per Common Share
            (unaudited, in millions, except per share amounts)

                                         Quarter ended      Quarter ended
                                       September 5, 2008  September 7, 2007
                                                  Per                  Per
                                                 Share                Share
                                   Income Shares Amount Income Shares Amount
  Net income available to common
   stockholders                       $52  519.3  $.10     $95  522.3  $.18
  Adjustments:
    Gains on dispositions, net of
     taxes                            (13)     -  (.03)      -      -     -
    Gains on insurance settlement (a)   -      -     -      (6)     -  (.01)
    Amortization of deferred gains
     and other property transactions,
     net of taxes                      (1)     -     -      (3)     -  (.01)
    Depreciation and amortization     133      -   .25     120      -   .23
    Partnership adjustments             5      -   .01       7      -   .01
    FFO of minority partners of
     Host LP (b)                       (7)     -  (.01)     (7)     -  (.01)
  Adjustments for dilutive securities:
    Assuming distribution of common
     shares granted under the
     comprehensive  stock plan less
     shares assumed purchased at
     average market price               -     .3     -       -    0.8     -
    Assuming conversion of 2004
     Exchangeable Senior Debentures     4   31.2  (.01)      4   29.5  (.01)
  FFO per diluted share ( c )(d)     $173  550.8  $.31    $210  552.6  $.38

                                     Year-to-date ended  Year-to-date ended
                                     September 5, 2008   September 7, 2007
                                                  Per                  Per
                                                 Share                Share
                                   Income Shares Amount Income Shares Amount
  Net income available to common
   stockholders                      $299  520.8  $.57    $427  522.0  $.82
  Adjustments:
    Gains on dispositions, net of
     taxes                            (23)     -  (.04)   (139)     -  (.27)
    Gains on insurance settlement (a)   -      -     -      (6)     -  (.01)
    Amortization of deferred gains
     and other property transactions,
     net of taxes                      (3)     -  (.01)     (5)     -  (.01)
    Depreciation and amortization     387      -   .74     354      -   .68
    Partnership adjustments            22      -   .04      20      -   .04
    FFO of minority partners of
     Host LP (b)                      (28)     -  (.05)    (22)     -  (.04)
  Adjustments for dilutive
   securities:
    Assuming distribution of common
     shares granted under the
     comprehensive  stock plan less
     shares assumed purchased at
     average market price               -     .4     -       -    0.9     -
    Assuming conversion of 2004
     Exchangeable Senior Debentures    13   31.2  (.04)     13   29.5  (.05)
  FFO per diluted share ( c )(d)     $667  552.4 $1.21    $642  552.4 $1.16

  (a)   Represents the gain during the period for the settlement of property
        insurance claims, including the gains that are included in
        discontinued operations related to hotels that we have sold.

  (b)   Represents FFO attributalbe to the minority interests in Host LP.

  ( c ) 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 minority partners, exchangeable debt securities and other
        minority 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.

  (d)   FFO per diluted share was significantly affected by certain
        transactions. For further detail see "Schedule of Significant
        Transactions Affecting Earnings per Diluted Share and Funds From
        Operations per Diluted Share."
 
 

                       HOST HOTELS & RESORTS, INC.
    Schedule of Significant Transactions Affecting Earnings per Share
               and Funds From Operations per Diluted Share
            (unaudited, in millions, except per share amounts)

                                         Quarter ended     Quarter ended
                                       September 5, 2008  September 7,2007
                                     Net Income           Net Income
                                       (Loss)     FFO       (Loss)      FFO
  Gain on hotel dispositions, net of
   taxes                                 $13       $-         $-         $-
  Minority interest expense (a)           (1)       -          -          -
      Total (b)                          $12       $-         $-         $-
      Diluted shares                   519.6        -          -          -
      Per diluted share                 $.02       $-         $-         $-
 

                                      Year-to-date ended  Year-to-date ended
                                       September 5, 2008   September 7, 2007
                                      Net Income          Net Income
                                        (Loss)    FFO      (Loss)       FFO
  Senior notes redemptions and
   debt prepayments ( c )                 $-       $-       $(46)      $(46)
  Gain on hotel dispositions, net
   of taxes                               23        -        139          -
  Minority interest income
   (expense) (a)                          (1)       -         (3)         2
      Total (b)                          $22       $-        $90       $(44)
      Diluted shares                   552.4        -      553.6      552.4
      Per diluted share                 $.04       $-       $.16      $(.08)

  (a)   Represents the portion of the significant transactions attributable
        to minority partners in Host LP.

  (b)   Net income of Host LP was also affected by the transactions
        discussed above, with the exception of the minority interest income
        (expense) item discussed in footnote (a). Accordingly, the total
        adjustments to the net income of Host LP were approximately $13
        million and $23 million for the third quarter and year-to-date 2008
        and $93 million for the year-to-date 2007.

  ( c ) Represents call premiums and the acceleration of original issue
        discounts and deferred financing costs, as well as incremental
        interest during the call or prepayment notice period, included in
        interest expense in the consolidated statements of operations. We
        recognized these costs in conjunction with the prepayment or
        refinancing of senior notes and mortgages during the periods
        presented.
 
 

                       HOST HOTELS & RESORTS, L.P.
                Consolidated Statements of Operations (a)
            (unaudited, in millions, except per unit amounts)

                                         Quarter ended   Year-to-date ended
                                     September September September September
                                        5, 2008 7, 2007  5, 2008  7, 2007

  Revenues
    Rooms                                  $757    $769   $2,236   $2,216
    Food and beverage                       311     323    1,085    1,071
    Other                                    78      83      241      242
      Total hotel sales                   1,146   1,175    3,562    3,529
    Rental income                            22      22       79       78
      Total revenues                      1,168   1,197    3,641    3,607
  Expenses
    Rooms                                   191     190      547      533
    Food and beverage                       254     260      798      791
    Hotel departmental expenses             313     307      897      870
    Management fees                          49      55      173      171
    Other property-level expenses            91      93      268      268
    Depreciation and amortization           133     119      388      352
    Corporate and other expenses             14      14       45       51
    Gain on insurance settlement              -      (5)      (7)      (5)
      Total operating costs and expenses  1,045   1,033    3,109    3,031
  Operating profit                          123     164      532      576
  Interest income                             4       9       13       27
  Interest expense                          (83)    (82)    (240)    (312)
  Net gains on property transactions
   and other                                  -       3        2        5
  Minority interest income/(expense)          3      (1)      (5)      (5)
  Equity in earnings of affiliates            1       -        3        5
  Income before income taxes                 48      93      305      296
  Provision for income taxes                 (4)      4      (11)      (1)
  Income from continuing operations          44      97      294      295
  Income from discontinued operations (b)    13       4       25      154
  Net income                                 57     101      319      449
  Less: Distributions on preferred units     (2)     (2)      (6)      (6)
  Net income available to common
   unitholders                              $55     $99     $313     $443
  Basic earnings per common unit:
    Continuing operations                  $.08    $.17     $.53     $.54
    Discontinued operations                 .02     .01      .05      .28
  Basic earnings per common unit           $.10    $.18     $.58     $.82
  Diluted earnings per common unit:
    Continuing operations                  $.08    $.17     $.52     $.53
    Discontinued operations                 .02     .01      .05      .27
  Diluted earnings per common unit         $.10    $.18     $.57     $.80

  (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. When distinguishing between
       Host and Host LP, the primary difference is the partnership
       interests in Host LP held by outside partners, which is reflected
       as minority interest in Host's consolidated balance sheets and
       minority interest expense in Host's consolidated statements of
       operations. The consolidated statements of operations should be
       read in conjunction with the consolidated financial statements and
       notes thereto included in our most recent Annual Report on Form
       10-K.

  (b)  Reflects the results of operations and gain on sale, net of the
       related income tax, for two properties sold in 2008 and nine
       properties sold in 2007.
 
 

                       HOST HOTELS & RESORTS, L.P.
        Reconciliation of Net Income to EBITDA and Adjusted EBITDA
                         (unaudited, in millions)

                                         Quarter ended   Year-to-date ended
                                     September September September September
                                       5, 2008   7, 2007   5, 2008   7, 2007

  Net income                               $57     $101     $319      $449
    Interest expense                        83       82      240       312
    Depreciation and amortization          133      119      388       352
    Income taxes                             4       (4)      11         1
    Discontinued operations (a)              1        1        1         4
  EBITDA                                   278      299      959     1,118
    Gains on dispositions                  (13)       -      (23)     (139)
    Amortization of deferred gains          (1)      (3)      (3)       (5)
    Property insurance gains                 -       (6)       -        (6)
    Equity investment adjustments:
      Equity in earnings of affiliates      (1)       -       (3)       (5)
      Pro rata EBITDA of equity
       investments                          12        9       29        24
    Consolidated partnership
     adjustments:
       Minority interest expense            (3)       1        5         5
       Pro rata EBITDA of minority
        partners                            (2)      (3)     (13)      (14)
  Adjusted EBITDA of Host LP              $270     $297     $951      $978

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

                       HOST HOTELS & RESORTS, INC.
     Reconciliation of Net Income Available to Common Stockholders to
               Funds From Operations per Diluted Share for
                       Full Year 2008 Forecasts (a)
            (unaudited, in millions, except per share amounts)

                                                 Low-end of Range
                                              Full Year 2008 Forecast
                                                                  Per Share
                                            Income      Shares      Amount
  Forecast net income available to
   common stockholders                        $428       521.2        $.82
  Adjustments:
    Depreciation and amortization              559           -        1.07
    Gain on dispositions, net of taxes         (27)          -        (.05)
    Partnership adjustments                     30           -         .05
    FFO of minority partners of Host LP (b)    (38)          -        (.07)
  Adjustment for dilutive securities:
    Assuming distribution of common shares
     granted under the comprehensive stock
     plan less shares assumed purchased at
     average market price                        -          .3           -
    Assuming conversion of 2004
     Exchangeable Senior Debentures             19        32.3        (.07)
  FFO per diluted share                       $971       553.8       $1.75

                                                   High-end of Range
                                               Full Year 2008 Forecast
                                                                  Per Share
                                            Income      Shares      Amount
  Forecast net income available to
   common stockholders                        $456       521.2        $.87
  Adjustments:
    Depreciation and amortization              559           -        1.07
    Gain on dispositions, net of taxes         (27)          -        (.05)
    Partnership adjustments                     30           -         .05
    FFO of minority partners of Host LP (b)    (39)          -        (.07)
  Adjustment for dilutive securities:
    Assuming distribution of common shares
     granted under the comprehensive stock
     plan less shares assumed purchased at
     average market price                        -          .3           -
    Assuming conversion of 2004
     Exchangeable Senior Debentures             19        32.3        (.07)
  FFO per diluted share                       $998       553.8       $1.80

  (a)   The full year 2008 forecasts were based on the following
        assumptions:

        -- Comparable hotel RevPAR will range from flat to a decrease of 1%
           for the full year for the low and high ends of the
           forecasted range, respectively.
        -- Comparable hotel adjusted operating profit margins will range
           from a decrease of 100 basis points to 125 basis points for
           the full year for the low and high ends of the forecasted
           range, respectively.
        -- We do not anticipate that any acquisitions will be made
           during 2008.
        -- We do not anticipate that any hotel dispositions will be made
           during the fourth quarter of 2008.
        -- We expect to spend approximately $650 million on capital
           expenditures in 2008.
        -- Fully diluted weighted average shares for FFO per diluted
           share and earnings per diluted share will be approximately
           553.8 million for the full year.

        The amounts shown in these forecasts are based on these and other
        assumptions, as well as management's estimate of operations for
        2008. These forecasts are forward-looking and are not guarantees of
        future performance and involve known and unknown risks,
        uncertainties and other factors which may cause actual transactions,
        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 be materially different. Risks that may affect
        these assumptions and forecasts include the following:

        -- the level of RevPAR and margin growth or decline may change
           significantly;
        -- 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 number of shares of the Company's common stock
           repurchased may change based on market conditions; and
        -- other risks and uncertainties associated with our business
           described herein and in the Company's filings with the SEC.
 

  (b)   Represents FFO attributable to the minority interests in Host LP.
 
 

                         HOST HOTELS & RESORTS, INC.
        Schedule of Comparable Hotel Adjusted Operating Profit Margin
                     for Full Year 2008 Forecasts (a)(b)
              (unaudited, in millions, except hotel statistics)

                                                      Full Year 2008
                                                 Low-end          High-end
                                                of range          of range
  Operating profit margin under GAAP ( c )         14.4%             14.7%
  Comparable hotel adjusted operating
   profit margin (d)                               26.2%             26.5%

  Comparable hotel sales
    Room                                          $3,203            $3,236
    Other                                          1,939             1,950
      Comparable hotel sales (e)                   5,142             5,186
  Comparable hotel expenses
    Rooms and other departmental costs             2,135             2,148
    Management fees, ground rent and
     other costs                                   1,659             1,666
      Comparable hotel expenses (f)                3,794             3,814
  Comparable hotel adjusted operating profit       1,348             1,372
  Non-comparable hotel results, net                   39                39
  Office buildings and select service
   properties, net                                     8                 8
  Depreciation and amortization                     (559)             (559)
  Corporate and other expenses                       (70)              (70)
      Operating profit                              $766              $790

  (a)   Forecasted comparable hotel results include assumptions on the
        number of hotels that will be included in our comparable hotel set
        in 2008. We have assumed that 115 hotels will be classified as
        comparable as of December 31, 2008. No assurances can be made as to
        the hotels that will be in the comparable hotel set for 2008. Also,
        see the notes following the table reconciling net income available
        to common shareholders to Funds From Operations per Diluted Share
        for assumptions relating to the full year 2008 forecasts.

  (b)   Our comparable hotel results are recorded based on the reporting
        cycle used by Marriott International, Inc., or Marriott, for our
        Marriott-managed hotels. Marriott uses a fiscal year ending on the
        Friday closest to December 31 and will generally report 52 weeks of
        operations in a given year. However, Marriott will report its
        results of operations based on a 53-week year for 2008 based on a
        fourth quarter of 17 weeks. For comparative purposes, we include the
        standard 52 weeks and exclude the extra week of operations in our
        forecast comparable hotel operating data for the full year 2008. For
        further information, see "Reporting Periods for Statement of
        Operations" and "Reporting Periods for Hotel Operating Statistics
        and Comparable Hotel Results" in the Notes to Financial
        Information.

  ( c ) Operating profit margin under GAAP is calculated as the operating
        profit divided by the forecast total revenues per the consolidated
        statements of operations. See (d) below for forecasted revenues.

  (d)   Comparable hotel adjusted operating profit margin is calculated as
        the comparable hotel adjusted operating profit divided by the
        comparable hotel sales per the table above. We forecasted a
        decrease in margins of 100 basis points to 125 basis points under
        the 2007 comparable hotel adjusted operating profit margin of 27.5%.

  (e)   The reconciliation of forecast total revenues to the forecast
        comparable hotel sales is as follows (in millions):
 

                                                      Full Year 2008
                                                 Low-end          High-end
                                                 of range          of range
        Revenues                                  $5,332            $5,377
        Non-comparable hotel sales                  (152)             (153)
        Hotel sales for the property for which
         we record rental income, net                 54                54
        Rental income for office buildings and
         select service hotels                       (92)              (92)
            Comparable hotel sales                $5,142            $5,186
 

  (f)   The reconciliation of forecast operating costs and expenses to the
        comparable hotel expenses is as follows (in millions):
 

                                                       Full Year 2008
                                                 Low-end          High-end
                                                 of range          of range
        Operating costs and expenses              $4,566            $4,587
        Non-comparable hotel expenses               (113)             (114)
        Hotel expenses for the property
         for which we record rental income            54                54
        Rent expense for office buildings and
         select service hotels                       (84)              (84)
        Depreciation and amortization               (559)             (559)
        Corporate and other expenses                 (70)              (70)
            Comparable hotel expenses             $3,794            $3,814
 
 

                         HOST HOTELS & RESORTS, L.P.
                 Reconciliation of Net Income to EBITDA and
              Adjusted EBITDA for Full Year 2008 Forecasts (a)
                          (unaudited, in millions)

                                                        Full Year 2008
                                                  Low-end          High-end
                                                  of range          of range
  Net income                                        $456              $485
    Interest expense                                 359               359
    Depreciation and amortization                    559               559
    Income taxes                                       1                (3)
  EBITDA                                           1,375             1,400
    Gains on dispositions                            (27)              (27)
    Equity investment adjustments:                    (8)               (8)
      Equity in earnings of affiliates
      Pro rata Adjusted EBITDA of equity
       investments                                    48                48
    Consolidated partnership adjustments:
      Minority interest expense                        5                 5
      Pro rata Adjusted EBITDA of minority
       partners                                      (18)              (18)
  Adjusted EBITDA of Host LP                      $1,375            $1,400

  (a)   See the notes following the table reconciling net income available
        to common shareholders to Funds From Operations per Diluted Share
        for assumptions relating to the full year 2008.

                       
HOST HOTELS & RESORTS, INC.
                      
Notes to Financial Information

  Reporting Periods for Statement of Operations
The results we report in our consolidated statements of operations are based on results of our hotels reported to us by our hotel managers. Our hotel managers use different reporting periods. Marriott International, Inc., or Marriott, the manager of the majority of our properties, uses a fiscal year ending on the Friday closest to December 31 and reports twelve weeks of operations for the first three quarters and sixteen or seventeen weeks for the fourth quarter of the year for its Marriott-managed hotels. In contrast, other managers of our hotels, such as Starwood and Hyatt, report results on a monthly basis. Additionally, Host, as a REIT, is required by tax laws to report results on a calendar year. As a result, we elected to adopt the reporting periods used by Marriott except that our fiscal year always ends on December 31 to comply with REIT rules. Our first three quarters of operations end on the same day as Marriott but our fourth quarter ends on December 31 and our full year results, as reported in our consolidated statement of operations, always includes the same number of days as the calendar year.
Two consequences of the reporting cycle we have adopted are: (1) quarterly start dates will usually differ between years, except for the first quarter which always commences on January 1, and (2) our first and fourth quarters of operations and year-to-date operations may not include the same number of days as reflected in prior years. For example, the third quarter of 2008 ended on September 5, and the third quarter of 2007 ended on September 7, though both quarters reflect twelve weeks of operations. In contrast, the September 5, 2008 year-to-date operations included 249 days of operations, while the September 7, 2007 year-to-date operations included 250 days of operations.
While the reporting calendar we adopted is more closely aligned with the reporting calendar used by the manager of a majority of our properties, one final consequence of our calendar is we are unable to report the month of operations that ends after our fiscal quarter-end until the following quarter because our hotel managers using a monthly reporting period do not make mid- month results available to us. Hence, the month of operation that ends after our fiscal quarter-end is included in our quarterly results of operations in the following quarter for those hotel managers (covering approximately 41% of our hotels). As a result, our quarterly results of operations include results from hotel managers reporting results on a monthly basis as follows: first quarter (January, February), second quarter (March to May), third quarter (June to August) and fourth quarter (September to December). While this does not affect full-year results, it does affect the reporting of quarterly results.
Reporting Periods for Hotel Operating Statistics and Comparable Hotel Results
In contrast to the reporting periods for our consolidated statement of operations, our hotel operating statistics (i.e., RevPAR, average daily rate and average occupancy) and our comparable hotel results are always reported based on the reporting cycle used by Marriott for our Marriott-managed hotels. This facilitates year-to-year comparisons, as each reporting period will be comprised of the same number of days of operations as in the prior year (except in the case of fourth quarters comprised of seventeen weeks (such as fiscal year 2008) versus sixteen weeks). This means, however, that the reporting periods we use for hotel operating statistics and our comparable hotels results may differ slightly from the reporting periods used for our statements of operations for the first and fourth quarters and the full year. Results from hotel managers reporting on a monthly basis are included in our operating statistics and comparable hotels results consistent with their reporting in our consolidated statement of operations herein:
-- Hotel results for the third quarter of 2008 reflect 12 weeks of operations for the period from June 14, 2008 to September 5, 2008 for our Marriott-managed hotels and results from June 1, 2008 to August 31, 2008 for operations of all other hotels which report results on a monthly basis.
-- Hotel results for the third quarter of 2007 reflect 12 weeks of operations for the period from June 16, 2007 to September 7, 2007 for our Marriott-managed hotels and results from June 1, 2007 to August 31, 2007 for operations of all other hotels which report results on a monthly basis.
-- Hotel results for year-to-date 2008 reflect 36 weeks for the period from December 29, 2007 to September 5, 2008 for our Marriott-managed hotels and results from January 1, 2008 to August 31, 2008 for operations of all other hotels which report results on a monthly basis.
-- Hotel results for year-to-date 2007 reflect 36 weeks for the period from December 30, 2006 to September 7, 2007 for our Marriott-managed hotels and results from January 1, 2007 to August 31, 2007 for operations of all other hotels which report results on a monthly basis.
Comparable Hotel Operating Statistics
We present certain operating statistics (i.e., RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, adjusted operating profit and adjusted operating profit margin) for the periods included in this report on a comparable hotel basis. 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, whether as continuing operations or discontinued operations, 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 during the reporting periods being compared. Of the 117 hotels that we owned as of September 5, 2008, 115 hotels have been classified as comparable hotels. The operating results of the following hotels that we owned as of September 5, 2008 are excluded from comparable hotel results for these periods:
-- Atlanta Marriott Marquis (a two-year major renovation that was completed in June 2008); and
-- New Orleans Marriott (property damage and business interruption from Hurricane Katrina in August 2005).
The operating results of the two hotels we disposed of in 2008 and the nine hotels we disposed of in 2007 are also not included in comparable hotel results for the periods presented herein. Moreover, because these statistics and operating results are for our hotel properties, they exclude results for our non-hotel properties and other real estate investments.
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 per diluted share of Host, (ii) EBITDA of Host LP, (iii) Adjusted EBITDA of Host LP and (iv) Comparable Hotel Operating Results of Host. The following discussion defines these terms and presents why we believe they are useful supplemental measures of our performance.
FFO per Diluted Share
We present FFO per diluted share as a non-GAAP measure of our performance in addition to our earnings per share (calculated in accordance with GAAP). We calculate FFO per diluted share for a given operating period as our FFO (defined as set forth below) for such period divided by the number of fully diluted shares outstanding during such period. The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (calculated in accordance with GAAP) excluding gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization and adjustments for unconsolidated partnerships and joint ventures. We present FFO on a per share basis after making adjustments for the effects of dilutive securities and the payment of preferred stock dividends, in accordance with NAREIT guidelines.
We believe that FFO per diluted share is a useful supplemental measure of our operating performance and that the presentation of 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 and gains and losses from sales of real estate, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe such measures can facilitate comparisons of operating performance between periods and with other REITs, even though 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 definition of FFO in order to promote an industry-wide measure of REIT operating 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 and 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 per diluted share, it is widely used by management in the annual budget process.
Adjusted EBITDA
As of September 5, 2008, Host owns approximately 96% of the partnership interest of Host LP and is its sole general partner. We conduct all of our operations through Host LP, and Host LP is the obligor on our senior notes and on our credit facility. Historically, management has adjusted EBITDA when evaluating our performance because we believe that the exclusion of certain additional recurring and non-recurring 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. In addition, the Adjusted EBITDA of Host LP is presented because we believe it is a relevant measure in calculating certain credit ratios, since Host LP is the owner of all of our hotels and is the obligor on our debt noted above. 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 of 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 remaining assets. In addition, material gains or losses from the depreciated value of the disposed assets could be less important to investors given that the depreciated asset often does not reflect the market value of real estate assets (as noted above for FFO).
-- Equity Investment Adjustments - We exclude the equity in earnings (losses) of unconsolidated investments in partnerships and joint ventures as presented in our consolidated statement of operations because it includes our pro-rata portion of depreciation, amortization and interest expense. We include our pro rata share of the Adjusted EBITDA of our equity investments as we believe this more accurately reflects the performance of our investment. 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 exclude the minority interest in the income or loss of our consolidated partnerships as presented in our consolidated statement of operations because it includes our minority partners' pro-rata portion of depreciation, amortization and interest expense. We deduct the minority partners' pro rata share of the Adjusted EBITDA of our consolidated partnerships as we believe this more accurately reflects the minority owners' interest in our consolidated partnerships. The pro rata Adjusted EBITDA of minority partners is defined as the EBITDA of our consolidated partnerships adjusted for any gains or losses on property transactions multiplied by the minority partners' positions in the partnership or joint venture.
-- Cumulative Effect of a Change in Accounting Principle - Infrequently, the Financial Accounting Standards Board (FASB) 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 losses 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 charges are similar to gains (losses) on dispositions and depreciation expense, both of which are also excluded from EBITDA.
Limitations on the Use of FFO per Diluted Share, EBITDA and Adjusted EBITDA
We calculate 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 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. 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 incurred and are not reflected in the EBITDA, Adjusted EBITDA and 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, 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, FFO per diluted share does not measure, and should not be used as a measure of, amounts that accrue directly to stockholders' benefit.
Comparable Hotel Operating Results
We present certain operating results for our hotels, such as hotel revenues, expenses, adjusted operating profit (and the related margin) and food and beverage adjusted profit (and the related margin), 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 these comparable hotel operating results by eliminating corporate-level costs and expenses related to our capital structure, as well as depreciation and amortization. We eliminate corporate-level costs and expenses to arrive at property-level results because we believe property-level results provide investors with supplemental information into the ongoing operating performance of our hotels. 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 industry investors have considered presentation of operating results for real estate companies that use historical cost accounting 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 operating profit margin 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. 

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 117 properties with approximately 64,000 rooms, and also holds a minority 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(R), Ritz-Carlton(R), Westin(R), Sheraton(R), W(R), St. Regis(R), The Luxury Collection(R), Hyatt(R), Fairmont(R), Four Seasons(R), Hilton(R) and Swissotel(R)* 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," "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 qualify as 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 October 9, 2008, 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.

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. For each share of our common stock, Host LP has issued to us one unit of operating partnership interest, or OP Unit. When distinguishing between Host and Host LP, the primary difference is approximately 4% of the partnership interests in Host LP held by outside partners as of September 5, 2008, which is reflected as minority interest in our consolidated balance sheets and minority interest expense 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.
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.
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Contact:

Host Hotels & Resorts, Inc. 
Gregory J. Larson, 
Executive Vice President of Host Hotels &
Resorts, Inc., 
+1-240-744-5120
Web site: http://www.hosthotels.com
 
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Also See: Host Hotels & Resorts, Inc. Reports Net Income Up $45 million to $199 million for the 2nd Qtr 2008 But Decreased $86 million to $262 million for Year-to-date 2008; Full-year Comparable Hotel RevPAR Projected to be Between Positive 1% and Negative 1% / Hotel Operating Data / July 2008
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