
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 8.7 million OP units which are convertible into 8.9 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 September 30,						Year-to-date ended September 30,
	2016			2015			2016			2015
Net income	$	108		$	87		$	643		$	400
Less: Net income attributable to non-controlling interests		(1	)		(2	)		(7	)		(5	)
Net income attributable to Host Inc.	$	107		$	85		$	636		$	395

Basic weighted average shares outstanding		740.6			746.4			744.8			752.1
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market		0.5			0.4			0.4			0.4
Diluted weighted average shares outstanding⁽¹⁾		741.1			746.8			745.2			752.5

Basic earnings per common share	$	.14		$	.11		$	.85		$	.53
Diluted earnings per common share	$	.14		$	.11		$	.85		$	.53
___________

(1)There were approximately 31 million potentially dilutive shares for both the quarter and year-to-date ended September 30, 2015 related to our exchangeable senior debentures, which were anti-dilutive for the period. The exchangeable senior debentures were redeemed in 2015 in exchange for 32 million shares.

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 September 30,					Year-to-date ended September 30,
	2016		2015			2016		2015
Net income	$	108	$	87		$	643	$	400
Less: Net (income) loss attributable to non-controlling interests		—		(1	)		1		—
Net income attributable to Host L.P.	$	108	$	86		$	644	$	400

Basic weighted average units outstanding		733.8		739.9			738.1		745.5
Assuming distribution of common units granted under the comprehensive stock plans, less units assumed purchased at market		0.5		0.4			0.4		0.4
Diluted weighted average units outstanding⁽¹⁾		734.3		740.3			738.5		745.9

Basic earnings per common unit	$	.15	$	.12		$	.87	$	.54
Diluted earnings per common unit	$	.15	$	.12		$	.87	$	.54
___________

(1) There were approximately 31 million potentially dilutive units for both the quarter and year-to-date ended September 30, 2015 related to our exchangeable senior debentures, which were anti-dilutive for the period. The exchangeable senior debentures were redeemed in 2015 and Host L.P. issued 31.3 million units.