Equity of Host Inc. and Capital of Host L.P.

6 Months Ended

Jun. 15, 2012

Equity of Host Inc. and Capital of Host L.P.

6. Equity of Host Inc. and Capital of Host L.P.

Equity of Host Inc.

Equity of Host Inc. is allocated between controlling and non-controlling interests as follows (in millions):

	Equity of Host Hotels  & Resorts, Inc.			Non-redeemable non-controlling interests			Total equity			Redeemable non-controlling interests
Balance, December 31, 2011	$	6,677		$	36		$	6,713		$	158
Net income		80			2			82			1
Issuance of common stock		235			—			235			—
Dividends declared on common stock		(42	)		—			(42	)		—
Other changes in ownership		(3	)		(2	)		(5	)		1
Other comprehensive loss		(6	)		—			(6	)		—
Balance, June 15, 2012	$	6,941		$	36		$	6,977		$	160

Capital of Host L.P.

As of June 15, 2012, Host Inc. is the owner of approximately 98.6% of Host L.P.’s common OP units. The remaining 1.4% of the common OP units are held by third party limited partners. Each OP unit may be redeemed for cash or, at the election of Host Inc., Host Inc. common stock, based on the conversion ratio of 1.021494 shares of Host Inc. common stock for each OP unit.

In exchange for any shares issued by Host Inc., Host L.P. will issue OP units to Host Inc. based on the applicable conversion ratio. Additionally, funds used by Host Inc. to pay dividends on its common stock are provided by distributions from Host L.P.

Capital of Host L.P. is allocated between controlling and non-controlling interests as follows (in millions):

	Capital of Host L.P.			Non-controlling interests			Total Capital			Limited Partnership Interests of Third Parties
Balance, December 31, 2011	$	6,677		$	36		$	6,713		$	158
Net income		80			2			82			1
Issuance of common OP units		235			—			235			—
Distributions declared on common OP units		(42	)		—			(42	)		—
Other changes in ownership		(3	)		(2	)		(5	)		1
Other comprehensive loss		(6	)		—			(6	)		—
Balance, June 15, 2012	$	6,941		$	36		$	6,977		$	160

Issuance of Common Stock

On April 24, 2012, we entered into Sales Agency Financing Agreements with BNY Mellon Capital Markets, LLC and Scotia Capital (USA) Inc., through which Host Inc. may issue and sell, from time to time, shares having an aggregate offering price of $400 million in “at the market” offerings under SEC rules, including sales made directly on the NYSE. During the second quarter, we issued 3.1 million shares of common stock under this program, at an average price of $15.75 per share, for proceeds of approximately $48 million, net of $0.5 million of commissions. Shares of Host Inc.’s common stock, having an aggregate offering price of approximately $351 million, remain issuable from time to time under the agreements. Any additional shares of common stock issued by Host Inc., whether issued under this program or otherwise, would be available in the future for sale in the public markets. Year-to-date, we have issued 14.2 million shares, at an average price of $15.69 per share, for proceeds of approximately $220 million, net of $2.2 million of commissions. This includes 11.1 million shares issued in the first quarter under our previous sales agency financing agreement.

Dividends/Distributions

On June 18, 2012, Host Inc.’s Board of Directors declared a dividend of $.07 per share on its common stock. The dividend was paid on July 16, 2012 to stockholders of record as of June 29, 2012. Accordingly, Host L.P. made a distribution of $0.07150458 per unit on its common OP units based on the current conversion ratio.