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

Equity of Host Inc.

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


	Host Hotels & Resorts, Inc.			Non-redeemable non-controlling interests			Total equity			Redeemable non-controlling interests
Balance, December 31, 2010	$	6,303		$	29		$	6,332		$	191
Net income		2			2			4			—
Issuance of common stock		288			—			288			—
Other changes in ownership		6			9			15			(17	)
Other comprehensive income (note 9)		15			—			15			—

Balance, June 17, 2011	$	6,614		$	40		$	6,654		$	174


	Host Hotels & Resorts, Inc.			Non-redeemable non-controlling interests			Total equity			Redeemable non-controlling interests
Balance, December 31, 2009	$	6,189		$	22		$	6,211		$	139
Net income (loss)		(65	)		2			(63	)		(1	)
Issuance of common stock		55			—			55			—
Redemption of preferred stock		(101	)		—			(101	)		—
Other changes in ownership		(39	)		(3	)		(42	)		31
Other comprehensive loss(note 9)		(10	)		—			(10	)		—

Balance, June 18, 2010	$	6,029		$	21		$	6,050		$	169

Capital of Host L.P.

As of June 17, 2011, Host Inc. is the owner of approximately 98.5% of Host L.P.’s common OP units. The remaining 1.5% 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 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, 2010	$	6,302		$	29		$	6,331		$	191
Net income		2			2			4			—
Issuance of common OP units		288			—			288			—
Other changes in ownership		6			9			15			(17	)
Other comprehensive income (note 9)		15			—			15			—

Balance, June 17, 2011	$	6,613		$	40		$	6,653		$	174


	Capital of Host L.P.			Non-controlling interests			Total Capital			Limited Partnership Interests of Third Parties
Balance, December 31, 2009	$	6,187		$	22		$	6,209		$	139
Net income (loss)		(65	)		2			(63	)		(1	)
Issuance of common OP units		55			—			55			—
Redemption of preferred OP units		(101	)		—			(101	)		—
Other changes in ownership		(38	)		(3	)		(41	)		31
Other comprehensive loss (note 9)		(10	)		—			(10	)		—

Balance, June 18, 2010	$	6,028		$	21		$	6,049		$	169

Issuance of Common Stock

On April 21, 2011, we entered into a Sales Financing Agreement with BNY Mellon Capital Markets, LLC, through which Host may issue and sell, from time to time, shares having an aggregate offering price of up to $400 million. The sales will be made in “at the market” offerings under Securities and Exchange Commission (“SEC”) rules, including sales made directly on the NYSE. BNY Mellon Capital Markets, LLC is acting as sales agent. Host Inc. may sell shares of common stock under its new program from time to time based on market conditions, although it is not under an obligation to sell any shares. During the second quarter 2011, we issued approximately 11 million shares of common stock under the program at an average price of $17.29 per share for net proceeds of approximately $189 million.

Dividends/Distributions

On June 15, 2011, Host Inc.’s Board of Directors declared a dividend of $0.03 per share on its common stock. The dividend was paid on July 15, 2011 to stockholders of record as of June 30, 2011. Accordingly, Host L.P. made a distribution of $0.03064482 per unit on its common OP units based on the current conversion ratio.