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

12 Months Ended

Dec. 31, 2013

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

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

Equity of Host Inc.

Host Inc. has authorized 1,050 million shares of common stock, with a par value of $0.01 per share, of which 754.8 million and 724.6 million were outstanding as of December 31, 2013 and 2012, respectively. Fifty million shares of no par value preferred stock are authorized; none of such preferred shares were outstanding as of December 31, 2013 and 2012.

Capital of Host L.P.

As of December 31, 2013, Host Inc. is the owner of approximately 98.7% of Host L.P.’s common OP units. The remaining 1.3% of Host L.P.’s common OP units are held by various unaffiliated limited partners. Each common 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 connection with the issuance of shares by Host Inc., Host L.P. will issue OP units based on the same conversion ratio. As of December 31, 2013 and 2012, Host L.P. has 748.4 million and 719.2 million OP units outstanding, respectively, of which Host Inc. held 738.9 million and 709.4 million, respectively.

Issuances of Common Stock and Common OP Units

During 2013, Host Inc. issued 16.9 million shares of common stock, at an average price of $17.78 per share, for net proceeds of approximately $297 million. These issuances were made in “at-the-market” offerings pursuant to Sales Agency Financing Agreements with BNY Mellon Capital Markets, LLC and Scotia Capital (USA) Inc. In connection with the common stock issuance, Host L.P. issued 16.5 million common OP units. These issuances completed the capacity under the current agreements.

During March 2013, $174 million of the 2004 Debentures were exchanged for shares of Host Inc. common stock, totaling approximately 11.7 million shares. In connection with the exchange, Host L.P. issued 11.5 million common OP units.

In 2012, Host Inc. issued 17.5 million shares of common stock, at an average price of $15.67 per share, for net proceeds of approximately $271 million. These issuances were made in “at-the-market” offerings pursuant to Sales Agency Financing Agreements with BNY Mellon Capital Markets, LLC and Scotia Capital (USA) Inc. In connection with the common stock issuance, Host L.P. issued 17.1 million common OP units.

Dividends/Distributions

Host Inc. is required to distribute at least 90% of its annual taxable income, excluding net capital gains, to its stockholders in order to maintain its qualification as a REIT, including taxable income recognized for federal income tax purposes but with regard to which we do not receive cash. Funds used by Host Inc. to pay dividends on its common stock are provided through distributions from Host L.P. The amount of any future dividends will be determined by Host Inc.’s Board of Directors.

The dividends that were taxable to our stockholders in 2013 were considered 96.5% ordinary income and 3.5% unrecaptured Section 1250 gain. All dividends that were taxable to our stockholders in 2012 were considered 100% ordinary income. None of such dividends was considered qualified dividends subject to a reduced tax rate.

The table below presents the amount of common dividends declared per share and common distributions per unit as follows:

	Year ended December 31,
	2013		2012		2011
Common stock	$	.46	$	.30	$	.14
Common OP units		.470		.306		.143

On February 18, 2014, Host Inc.’s Board of Directors authorized a regular quarterly cash dividend of $0.14 per share on Host Inc.’s common stock. The dividend is payable on April 15, 2014 to stockholders of record on March 31, 2014.