• Positioned the company to elect REIT status effective January 1, 1999.
• Acquired the Blackstone luxury hotel portfolio for $1.5 billion.
• Completed public and private partnership roll-ups representing new acquisitions approximating $650 million.
• Refinanced approximately $2.2 billion of debt at lower interest rates with extended maturity dates.
• Expanded the company's line of credit from $0.5 billion to $1.25 billion.
• Raised approximately $1.0 billion in equity.
• Distributed Crestline Capital Corporation, which will own all of Host Marriott's senior living communities and lease substantially all of the Company's hotels.

REIT Conversion

Earlier this year, Host Marriott determined that a conversion to a REIT structure would enhance the company's growth prospects, provide the opportunity for better overall shareholder returns, and significantly reduce the Company's corporate income taxes.  As a result of the actions taken this week, Host Marriott is positioned to elect REIT status effective January 1, 1999.  Host Marriott has consolidated the ownership of all of its assets into the Operating Partnership, thereby simplifying its corporate and financial structure.  Host Marriott is the sole general partner of the Operating Partnership, and various other parties, including Blackstone, will own Operating Partnership units (OP Units), which represent limited
partnership positions convertible into common shares.  OP unitholders receive the same cash distribution and price appreciation benefits as do shareholders, but generally are not taxed on any gains associated with their transfer into the REIT until they convert to a common share position.

"The initiatives which have now been fully implemented have improved our financial flexibility and strengthened our balance sheet, providing Host Marriott with the financial capacity to take advantage of opportunities in 1999," added Robert E. Parsons, Jr., executive vice president and chief financial officer of Host Marriott. "The conversion to a REIT will provide many benefits. First, by reducing our taxes at the corporate level, we will be able to compete more effectively with other public lodging real estate companies, most of whom are organized as REITs. Second, the ability to offer sellers of luxury hotels the opportunity to exchange their ownership for operating partnership units on a tax advantaged basis will enable us to accelerate our growth. Finally, with our initial dividend yield expected to be approximately 6.5%, we believe our shareholder base will expand to include investors attracted by yield, asset quality and good growth potential."

Blackstone Luxury Hotel Portfolio

At the beginning of 1998, Host Marriott made a decision to diversify from its focus on solely acquiring Marriott branded hotels.  In order to accelerate its growth rate, the Company made a strategic decision to begin acquiring hotels with other major brands.  In making this diversification, Host Marriott will continue to acquire only the highest quality upscale and luxury full-service hotels in difficult to replace urban, airport or resort convention locations.

The acquisition of the Blackstone luxury portfolio, which was completed today, was the first step in implementing Host Marriott's diversification strategy. The Blackstone portfolio, which represents one of the premier collections of hotel properties in the market, consists of twelve upscale and luxury hotels, 

• The Ritz-Carlton, Amelia Island (449 rooms);  
• The Ritz-Carlton, Boston (275 rooms);  
• Hyatt Regency Burlingame at San Francisco Airport (793 rooms);  
• Hyatt Regency Cambridge, Boston (469 rooms);  
• Hyatt Regency Reston, Virginia (514 rooms);  
• Grand Hyatt Atlanta (439 rooms);  
• Four Seasons Philadelphia (365 rooms);  
• Four Seasons Atlanta (246 rooms);  
• The Drake (Swissotel) New York (494 rooms);  
• Swissotel Chicago (630 rooms);  
• Swissotel Boston (498 rooms);  
• Swissotel Atlanta (348 rooms).

Through the third quarter of 1998, the portfolio's RevPAR is up approximately 16% and EBITDA is up approximately 31%," said Christopher J. Nassetta, Executive Vice President and Chief Operating Officer of Host Marriott.

In exchange for these hotel properties and other assets, which have an estimated transaction value of approximately $1.5 billion, the Operating Partnership issued approximately 44 million OP units, assumed debt and made cash payments totaling approximately $900 million and transferred 1.4 million shares of Crestline Capital Corporation (NYSE: CLJ). To compensate Blackstone with respect to the portions of the Crestline distribution it will not receive, Host Marriott expects to issue the Blackstone entities approximately 3.7 million additional OP
units in April 1999, although the exact number of units cannot yet be determined. As part of the transaction, the Operating Partnership also acquired certain other assets, including the first mortgage loan on the Four Seasons Beverly Hills and two office buildings. A 25% interest in the Swissotel U.S. management company also was acquired and immediately sold to Crestline.

Partnership Roll-Ups

Host Marriott has served as general partner for eleven limited partnerships formed in the 1980s and early 1990s to own 26 full-service Marriott hotels or resorts.  As an element of the REIT conversion, Host Marriott offered the partners in eight of these partnerships the opportunity to exchange their existing ownership interests either for OP units or for common shares of the REIT.  Since each of these partnerships has voted in favor of the proposal, all of the limited partner's positions in the partnership will be converted to equity ownership in the Operating Partnership, which will represent new equity of approximately $340 million. The exact number of units or shares to be issued to these partners will not be determined until January 29, 1999 when the pricing period ends and the former limited partners have elected whether to retain their units or exchange them for Host Marriott stock or Operating Partnership notes.  In connection with the REIT conversion, the Company also completed acquisition and restructuring of three other partnerships.  A list of the assets included in these transactions is attached.

W. Edward Walter, senior vice president and treasurer of Host Marriott, stated, "Consistent with our fiduciary responsibility to our limited partners, we have accomplished several significant goals. First, by issuing each limited partner OP units which are convertible into common stock, we have provided each partner with liquidity, exercisable at the partner's option. Partners electing to retain OP units will generally be able to defer their tax liability until they desire to liquidate the investment. Finally, the transaction has provided Host Marriott with complete control over these great assets, and added approximately $340 million in equity to the company."

These acquisition transactions follow the recent completion of several other steps in connection with Host Marriott's efforts to complete its REIT conversion by year-end. On December 18th, Host Marriott's Board of Directors declared a special dividend, payable on or about January 27, 1999, in either $1.00 of cash or .087 share of Host Marriott stock per share of Host Marriott stock owned, at the election of each Host Marriott stockholder of record on December 28, 1998. Based on the cash amount, the implied value of the Host REIT stock in the special dividend is $11.50 per share. Election forms are being mailed to stockholders by year-end. On December 29, 1998, Host Marriott completed its re-incorporation from Delaware to Maryland through its merger into a wholly-owned subsidiary which changed its name to Host Marriott Corporation.

Crestline Capital Spin-Off

In addition, Host Marriott also completed the previously announced spin-off of Crestline Capital Corporation, a former subsidiary.  Each Host Marriott stockholder of record on December 28, 1998 received one Crestline share for every ten shares of Host Marriott stock owned.  Crestline owns one of the nation's premier portfolios of senior living assets and will lease virtually all of Host Marriott's hotels.  The special dividend and the Crestline distribution are taxable dividends.  Additional detail with respect to Crestline is outlined in a separate press release.

Mr. Golden stated, "After months of planning and hard work, I am extremely pleased that we have been able to complete the REIT conversion. This process involved an extraordinary effort by our management and employees and substantial cooperation from Marriott International, our lenders, partners, and others. Host Marriott has taken a number of actions to increase shareholder value and put itself in position to accelerate growth."

Host Marriott Corporation is a lodging real estate company, which owns 126 upscale, and luxury full-service hotel properties primarily operated under Marriott, Ritz-Carlton, Four-Seasons, Hyatt and Swissotel brand names. For further information on Host Marriott Corporation, please visit our Website at http. 1/4 1/4www.hostmarriott.com. Certain matters discussed in this press release include forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. All forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual transactions, results, performance or achievements to be materially different from any future transactions, results, performance or achievements expressed or implied by such forward-looking statements. Certain of the transactions described herein are subject to certain consents of lenders, debtholders and lessors of Host Marriott and its affiliates and of other third parties that have not yet been obtained and to various other conditions and contingencies, but the Company does not expect the failure to obtain these consents prior to the REIT conversion to have a material adverse effect on the Company. Future results, performance and achievements will be affected by general economic, business and financing conditions, competition and governmental actions. The cautionary statements set forth in reports filed under the Securities Exchange Act of 1934 contain important factors with respect to such forward-looking statements including: (i) national and local economic and business conditions that will, among other things, affect demand for hotels and other properties, the level of rates and occupancy that can be achieved by such properties and the availability and terms of financing; (ii) the ability to maintain the properties in a first-class manner (including meeting capital expenditure requirements); (iii) the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; (iv) the ability to acquire or develop additional properties and risk that potential acquisitions or developments may not perform in accordance with expectations; (v) the ability to obtain required consents of lenders, debtholders and lessors in connection with the Company's conversion to a real estate investment trust (REIT) and to consummate all of the transactions constituting the REIT conversion; (vi) changes in travel patterns, taxes and government regulations; (vii) governmental approvals, actions and initiatives; (viii) the effects of tax legislative action; (ix) the effect on the Company of the Year 2000 issues; and (x) the ability of the Company to satisfy complex rules in order to qualify for taxation as a REIT for federal income tax purposes and to operate effectively within the limitations imposed by these rules. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained or that any deviations will not be material. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.