Non-Controlling Interests

9 Months Ended

Sep. 30, 2016


11.	Non-controlling Interests

Other Consolidated Partnerships. We consolidate four majority-owned partnerships that have third-party, non-controlling ownership interests. The third-party partnership interests are included in non-controlling interests — other consolidated partnerships on the balance sheets and totaled $39 million and $40 million as of September 30, 2016 and December 31, 2015, respectively. One of the partnerships has a finite life that terminates in 2095, and the associated non-controlling interests are redeemable at our option at the end of, but not prior to, the finite life.

Net income attributable to non-controlling interests of consolidated partnerships is included in our determination of net income. Net income (loss) attributable to non-controlling interests of third parties was immaterial and $1 million for the quarters ended September 30, 2016 and 2015 and $(1) million and immaterial for the year-to-date periods ended September 30, 2016 and 2015.

Host Inc.’s treatment of the non-controlling interests of Host L.P.: Host Inc. adjusts the non-controlling interests of Host L.P. each period so that the amount presented equals the greater of its carrying value based on accumulated historical cost or its redemption value. The historical cost is based on the proportional relationship between the historical cost of equity held by our common stockholders relative to that of the unitholders of Host L.P. The redemption value is based on the amount of cash or Host Inc. common stock, at our option, that would be paid to the non-controlling interests of Host L.P. if it were terminated. Therefore, the redemption value of the common OP units is equivalent to the number of shares that would be issued upon conversion of the common OP units held by third parties valued at the market price of Host Inc. common stock at the balance sheet date. One common OP unit may be exchanged into 1.021494 shares of Host Inc. common stock. Non-controlling interests of Host L.P. are classified in the mezzanine section of our balance sheets as they do not meet the requirements for equity classification because the redemption feature requires the delivery of registered shares.

The table below details the historical cost and redemption values for the non-controlling interests:

	September 30, 2016		December 31, 2015
OP units outstanding (millions)		8.7		9.1
Market price per Host Inc. common share	$	15.57	$	15.34
Shares issuable upon conversion of one OP unit		1.021494		1.021494
Redemption value (millions)	$	138	$	143
Historical cost (millions)		86		90
Book value (millions) ⁽¹⁾		138		143
___________

(1)

The book value recorded is equal to the greater of redemption value or historical cost.

Net income is allocated to the non-controlling interests of Host L.P. based on their weighted average ownership interest during the period. Net income attributable to the non-controlling interests of Host L.P. was $1 million and $1 million for the quarters ended September 30, 2016 and 2015, respectively, and $8 million and $5 million, for the year-to-date periods ended September 30, 2016 and 2015, respectively.