
3.	Earnings Per Common Share (Unit)

Host Inc. Earnings Per Common Share

Basic earnings per common share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of Host Inc. common stock outstanding. Diluted earnings per common share is computed by dividing net income attributable to common stockholders, as adjusted for potentially dilutive securities, by the weighted average number of shares of Host Inc. common stock outstanding plus other potentially dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, other non-controlling interests that have the option to convert their limited partnership interests to common OP units and convertible debt securities. No effect is shown for any securities that are anti-dilutive. We have 9.2 million OP units which are convertible into 9.4 million common shares which are not included in Host Inc.’s calculation of earnings per share as their effect is not dilutive. The calculation of basic and diluted earnings per common share is shown below (in millions, except per share amounts):

	Quarter ended June 30,						Year-to-date ended June 30,
	2015			2014			2015			2014
Net income	$	216		$	159		$	320		$	344
Less: Net income attributable to non-controlling interests		(4	)		(4	)		(10	)		(10	)
Net income attributable to Host Inc.		212			155			310			334
Assuming conversion of exchangeable senior debentures		7			—			—			—
Diluted income attributable to Host Inc.	$	219		$	155		$	310		$	334

Basic weighted average shares outstanding		753.9			755.4			755.0			755.1
Assuming weighted average shares for conversion of exchangeable senior debentures		31.2			—			—			—
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market		0.4			0.5			0.4			0.5
Diluted weighted average shares outstanding ⁽¹⁾		785.5			755.9			755.4			755.6

Basic earnings per common share	$	.28		$	.21		$	.41		$	.44
Diluted earnings per common share	$	.28		$	.21		$	.41		$	.44
___________

(1)

There were approximately 31 million potentially dilutive shares for the year-to-date period ended June 30, 2015, and approximately 30 million potentially dilutive units for both the quarter and year-to-date periods ended June 30, 2014, related to our exchangeable senior debentures, which shares were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the period.

Host L.P. Earnings Per Common Unit

Basic earnings per common unit is computed by dividing net income attributable to common unitholders by the weighted average number of common units outstanding. Diluted earnings per common unit is computed by dividing net income attributable to common unitholders, as adjusted for potentially dilutive securities, by the weighted average number of common units outstanding plus other potentially dilutive securities. Dilutive securities may include units distributed to Host Inc. to support Host Inc. common shares granted under comprehensive stock plans, other non-controlling interests that have the option to convert their limited partnership interests to common OP units and convertible debt securities. No effect is shown for any securities that are anti-dilutive. The calculation of basic and diluted earnings per unit is shown below (in millions, except per unit amounts):

	Quarter ended June 30,						Year-to-date ended June 30,
	2015			2014			2015			2014
Net income	$	216		$	159		$	320		$	344
Less: Net income attributable to non-controlling interests		(1	)		(2	)		(6	)		(5	)
Net income attributable to Host L.P.		215			157			314			339
Assuming conversion of exchangeable senior debentures		7			—			—			—
Diluted income attributable to Host L.P.	$	222		$	157		$	314		$	339

Basic weighted average units outstanding		747.3			748.9			748.3			748.7
Assuming weighted average units for conversion of exchangeable senior debentures		30.5			—			—			—
Assuming distribution of common units granted under the comprehensive stock plans, less units assumed purchased at market		0.3			0.6			0.4			0.5
Diluted weighted average units outstanding⁽¹⁾		778.1			749.5			748.7			749.2

Basic earnings per common unit	$	.29		$	.21		$	.42		$	.45
Diluted earnings per common unit	$	.29		$	.21		$	.42		$	.45
___________

(1)

There were approximately 30 million potentially dilutive units for the year-to-date ended June 30, 2015, and approximately 30 million and 29 million potentially dilutive shares for the quarter and year-to-date periods ended June 30, 2014, respectively, related to our exchangeable senior debentures, which units were not included in the computation of diluted earnings per unit because to do so would have been anti-dilutive for the period.