Hotel Online  Special Report

 Host Marriott Enters Into an Agreement to Sell 85%
of its Courtyard Joint Venture Interest for
Approximately $92 Million; 
Proceeds Targeted for Luxury Hotel Acquisitions


BETHESDA, Md., Dec. 15, 2004 -Host Marriott (NYSE: HMT) and Marriott International, Inc. (NYSE: MAR) today announced the signing of a purchase and sale agreement with Sarofim Realty Advisors ("Sarofim"), on behalf of an institutional investor, where Sarofim will acquire a majority interest in the Courtyard joint venture. 

Sarofim's initial equity investment will be used to acquire approximately 85% of Host Marriott's interest in the joint venture for approximately $92 million and to invest approximately $240 million of new equity into the joint venture. Based on this valuation, Host Marriott's total equity interest in the Courtyard joint venture is valued at approximately $108 million. Under the terms of the agreement, Host Marriott will have the right to cause the partnership to redeem its remaining joint venture interest under certain conditions between 2007 and 2009. Thereafter, the partnership will have the right to redeem Host Marriott's remaining interest.

Christopher J. Nassetta, president and chief executive officer, stated, "This transaction provides us with a favorable exit strategy from the majority of our interest in this non-core investment at attractive pricing. The proceeds of this sale will be reinvested either in the purchase of upper- upscale or luxury hotels consistent with our target profile, return on investment projects or the repayment of debt."

The sale is expected to close in the first quarter of 2005. The transaction is subject to several closing conditions, including Sarofim's completion of due diligence and the refinancing of certain debt, and there can be no assurances that the sale will be completed. If completed, the transaction will result in a book gain in excess of $55 million. Based on our third quarter forecast for full year 2004, our investment in the Courtyard joint venture will generate a loss per diluted share of approximately $(.03). Our investment in the Courtyard joint venture will contribute approximately $.05 to the Company's 2004 Funds from Operations (FFO) per diluted share. The dilution resulting from the sale of our interest will be partially offset by the reinvestment of the proceeds. The difference between the loss per diluted share and FFO per diluted share can be attributed to Host Marriott's pro-rata portion of the depreciation of the Courtyard joint venture's hotels, which is excluded from the calculation of FFO, totaling approximately $27 million, or $.08 per share. There have been no cash distributions to Host Marriott from the Courtyard joint venture since 2001; and therefore, no adjusted EBITDA (Earnings before Interest Expense, Income Taxes, Depreciation, Amortization and other items) has been recorded from the joint venture by Host Marriott since that time. FFO per diluted share and adjusted EBITDA are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission (SEC). For further information on these measures, see the discussions included in the Company's annual report on Form 10-K and other filings with the SEC.

The Courtyard joint venture was formed by Host Marriott and Marriott International in 2000 when the companies jointly purchased all of the partnership interests in Courtyard By Marriott and Courtyard By Marriott II, the partnerships which own the 120 hotels, in a settlement of class action litigation.

Host Marriott is a Fortune 500 lodging real estate Company that owns or holds controlling interests in upscale and luxury hotel properties primarily operated under premium brands, such as Marriott, Ritz-Carlton, Hyatt, Four Seasons, Fairmont, Hilton, Sheraton and Westin.

This press release contains forward-looking statements within the meaning of federal securities regulations. 

Host Marriott Corporation
Also See: Host Marriott Corporation Acquiring the The Fairmont Kea Lani Maui for $355 million, or $789,000 per room; Will Continue to be Managed by Fairmont / June 2004

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